Scheduling agreements

Rotors are consumed every day on the Detroit alternator line. Creating a PO for each delivery would be slow and expensive. A scheduling agreement is an outline agreement that holds the total quantity and terms, plus a delivery schedule: a list of dates and quantities that tells the supplier exactly what to deliver when. New schedule lines are added as demand changes, without new POs.

Creating the agreement

Scheduling agreements are created in the Manage Scheduling Agreements app or with ME31L. Two standard document types matter: LP, without release documentation, and LPA, with release documentation. Contoso creates LPA 5500000310 with Lakeside Components for 16,800 rotors in 2027 at $41.50, plant 1710, storage location 171A.

Delivery schedules and releases

Schedule lines are maintained manually with ME38 or, far more commonly, generated by MRP. With release documentation, the schedule lines are not sent as they are. Instead Contoso generates releases (with ME84 or a scheduled job) that freeze what was communicated: a forecast release gives Lakeside a medium- to long-term view for capacity planning, and a JIT release gives the firm short-term schedule for the next days. Each release is output to the supplier, and the history shows exactly which quantities Contoso committed to at each point.

MRP and scheduling agreements

For MRP to create schedule lines directly (instead of purchase requisitions), the scheduling agreement must be the source MRP finds, typically through a source list entry with MRP indicator 2, which allows schedule lines to be generated automatically. With MRP indicator 1, MRP assigns the source to requisitions instead. Lesson 4 covers source lists in detail.

Receipts and invoices

Goods receipts reference the scheduling agreement and its item, just as they reference a PO. Invoice verification works against the scheduling agreement item, usually with GR-based invoice verification so each delivery is invoiced and cleared individually (course sap-mm-204). Some companies use evaluated receipt settlement for scheduling agreements, where Contoso creates the invoice from the receipts without waiting for Lakeside's paper; if you do, the scheduling agreement price must be exactly right.

Firm and trade-off zones in the agreement help both sides. Within the firm zone (for example the next five working days), Contoso is committed to take and pay for what the JIT release says; in the trade-off zone beyond it, Contoso may be liable for materials Lakeside bought in on the strength of the forecast. These zones are agreed commercially and recorded on the agreement, and they decide who pays when demand drops suddenly. Planners who change near-term schedule lines should know where those zones end.