1 Overview to Agreement Management
This chapter contains these topics:
Agreements are established between partners to move inventory between the partners' locations or to the partners' customers. You enter into agreements with business partners to save money and time, provide better service to your customers, and save on capital expenses. The Agreement Management system complements and enhances your day-to-day contract negotiations by providing a comprehensive documentation and tracking system.
The purpose of the Agreement Management system is to record all transactions, track volume or amount balances, and determine whether you and your business partners are in compliance with the contracts' terms. With the Agreement Management system, you can establish agreements easily, enter orders against them immediately, and maintain volume or amount tracking.
1.1 System Integration
The Agreement Management system is designed to be fully integrated with other JD Edwards World systems. The Agreement Management system allows you to create and monitor the status of many types of distribution agreements. This system integrates with JD Edwards World Advanced Pricing and Energy and Chemical systems to:
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Allow you to enter transactions to move inventory to fulfill contracts
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Create unique pricing structures for transactions used to fulfill the terms of contracts
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Create penalty schedules to apply if your business partner does not meet the terms of the contract
The following diagrams illustrate how Agreement Management integrates with other systems.
1.2 Types of Agreements
Many companies use actual written legal documents that include all the terms and stipulations for each contract. Different kinds of agreements are used in the purchasing and sales cycle. These might be informal or formal (contractual) agreements, such as:
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Exchange agreements
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Loan or borrow agreements
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Tonne per tonne agreements
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Throughput agreements
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Consignment agreements
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Storage contracts
With the Agreement Management system, you can readily track many types of contracts. You can identify the volume or currency amount on each transaction that has been assigned a specific contract number and identify any out-of-balance contracts.
1.2.1 Exchange Agreements
An exchange agreement allows products to be traded between companies. The partners often agree to exchange specific quantities of product for a given time period. Exchanges involve different products or multiple products and often include a differential that one party pays per unit of product exchanged. Financial differentials are not currently handled by the Agreement Management system, but are supported with the integrated systems.
If the agreement is for an extended period (one year, for example), the parties normally agree on monthly quantities to exchange. Partners generally expect exchanges of physical product to remain roughly in balance. However, imbalances do occur and are usually monitored on a monthly basis. Partners often review their contracts annually to bring the contracts in balance with adjustments, monetary payment, or product repayment.
1.2.2 Loan or Borrow Agreements
A loan or borrow agreement is the most simple type of product exchange and often is used in response to a potential stock shortage. It is usually for the same product and does not involve product or price differentials. In a shared facility, a simple borrow and loan agreement can occur when a company depletes its stock. If another company at the depot has stock available, it might agree to loan the stock against a planned replenishment. Or, a company might pick up product from a partner at another depot and replace it with product at a later date. Normally, loans and borrows are informal agreements that are settled in product.
1.2.3 Tonne per Tonne Agreements
A tonne per tonne (transport) agreement involves moving product for a partner. Partner A transports its product along with Partner B's product and then unloads, stores, and delivers the product to Partner B. Partner B does the same for Partner A at another location. These agreements are limited to one physical product, but can involve one or more depots per partner.
Imbalance settlements usually involve throughput fees and transport charge differentials and are settled with a financial transaction instead of physical product.
1.2.4 Throughput Agreements
A throughput agreement is essentially a service agreement in which Partner A agrees to store and manage product for Partner B for a specified time period. Partner B actually owns the stock stored in Partner A's depot, but Partner A monitors the stock level, suggests replenishments, and unloads, stores, and delivers product to the partner or its customers. Partner A might process customer sales for Partner B, or Partner B might simply pick up product for distribution to its customers. Partner A charges Partner B a service fee for managing, transporting, storing, and delivering product.
1.2.5 Consignment Agreements
In a consignment agreement, the retailer acts as agent for the company. The product sold from the retail site is owned by the company. The company agrees to supply a specific volume of product to the retailer, based upon expected demand. The agent does not pay for the product upon delivery, but only upon sale of the product (at the agreed-upon price).
1.2.6 Storage Agreements
In a storage agreement, one company provides storage facilities for another and charges a fee based on the quantity stored (cost per unit volume) and for the time that the product is stored or the storage space is held. The volume is tracked through the Agreement Management system and the associated fees are handled through supporting systems.
1.3 Information Structure
The Agreement Management system contains master maintenance and transaction processing tables.
1.3.1 Master Maintenance Tables
| Table | Description |
|---|---|
| Agreement Management Master (F38010) | Contains information on the partner, contract effective dates, and other information that the system uses to process the contract. |
| Contract Quantities (F38011) | Contains information on products and quantities, which partner is receiving or shipping the product, and the unit of measure used to measure the product. |
| Product Source/Destination Master (F38012) | Contains information on all sources from which product can be moved. |
| Quantity Schedule (F38013) | Contains information on the forecasted schedule for shipment and receipt of product between you and your business partner. |
| Exchange Ratios (F38014) | Includes the information to balance unlike products on an agreement. |
| Agreement Master Notes (F0016) | Contains notes attached to an agreement that were entered on the Agreement Management Master form. |
| Agreement Management Constants (F38001) | Contains the agreement constants that the system uses to process the search function. |
1.3.2 Transaction Processing Tables
| Table | Description |
|---|---|
| Agreement Transaction Ledger (F38111) | Contains quantity and amount information for all agreement transactions and adjustments. |
| Committed Quantities (F38112) | Temporarily holds the quantities committed on transactions until the processing moves them to actual quantities. |
| Sales Order Detail (F4211) | Contains detail information for each sales order line. |
| Purchase Order Detail (F4311) | Contains detail information for each purchase order line. |
| Item Ledger (F4111) | Contains history information for all inventory transactions. The system records any changes to the inventory in this table. |
| Bulk Transaction (F41500) | Contains supplemental information pertaining to bulk transactions only. |