I just wrapped up an article with SCM Expert author Yogesh Lohiya on the use of quantity contracts instead of discrete purchase orders for frequently ordered materials.
“As a general rule,” Yogesh writes, “if your organization is buying a specific material more than five times a year, you should use a quantity contract instead of creating a PO for every order. This way, you won’t need to assign proper authorization to planners each time additional material is low or out — they can simply release orders against this contract themselves as the material is needed.”
If you’re not already using quantity contracts (or value contracts if you’d rather), I highly recommend it. Creating individual purchase orders each time you order a common material is a pretty big waste of time for all those involved in the approval process for that PO. When you create a quantity contract, you specify the amount of material you’ll need over the course of a longer-term period like a year. All the approvals are done during the initial contract creation, which means each time a buyer releases a new order against that contract, the request can go straight from the buyer to the supplier without the need to collect those approvals again. The whole process is simplified and saves everyone involved time and effort.
To read more from Yogesh on this topic and to learn how to streamline your procure-to-pay process with the use of quantity contracts, check
out the full article here: Use SAP Quantity Contracts to Optimize Your Procure-to-Pay Process
-Laura, SCM Expert