The flowchart depicts the SAP purchasing contract process, emphasizing the strategic use of contracts to acquire materials or services under specific conditions over a set timeframe. It distinguishes between quantity contracts and value contracts and outlines the steps from the initiation of the contract through the material procurement to monitoring contract fulfillment.

SAP Procurement Contract Process:

• Need for Contract 📜: The process starts with recognizing the necessity for a contractual agreement with vendors to supply materials or provide services.
• MRP Generated Procurement Needs / A Need for Material Is Identified 🧮: Material requirements planning (MRP) or other needs identification methods trigger the procurement process.
• Purchase Requisition 📝: A purchase requisition is generated as a formal request for the required materials or services in SAP.
• Create Procurement Contract 🤝: The buyer or purchasing manager creates a procurement contract that specifies the negotiated terms.
• Procurement Contract 📃: The contract is formalized and differentiates between quantity contracts (for specific quantities of product) and value contracts (for purchase up to a total value).
• Assign Requisition to Contract and Create Purchase Order 🛒: The requisition is linked to the contract, and a purchase order is then created accordingly.
• Total Net Order Value > Contract Value ✅/❌: There is a check to ensure that the total net order value aligns with the contract terms, such as remaining within a value limit.
• Released PO / Maintenance of Contract 🔓: The purchase order is released for processing. If the order value exceeds the contract value, there is a need to maintain or adjust the contract.
• Monitor Contracts 👀: Ongoing monitoring of contracts to track fulfillment and compliance with the terms.
• Value or Quantity Contracts Report 📊: Regular reporting on the status of contracts, including utilized quantities or values, is conducted to manage and assess contract performance.
• Material Arrival at Plant Dock 🚚: Once the order is placed, the materials arrive at the plant’s dock for acceptance.
• Goods Receipt with Reference to PO 📦: A goods receipt is posted with reference to the corresponding purchase order to update inventory and financial records.

In this SAP process, the focus is on ensuring procurement efficiency and compliance with agreed-upon terms through contracts. The roles involved are typically those of purchasing managers and buyers, who are responsible for creating and overseeing these contracts within the SAP Materials Management (MM) module. This procedure facilitates streamlined procurement activities, budget control, and strategic vendor management.