Setting Up Contract Categories
This section provides an overview of contract categories and discusses how to define contract category lines and define contract category item exclusions. It also discusses how to adjust contract category item prices and define contract category agreements.
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Page Name |
Definition Name |
Usage |
|---|---|---|
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CNTRCT_HDR |
Define contract category lines. |
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CNTRCT_CAT_EXC_SEC |
Define contract category item exclusions. |
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CNTRCT_PRC_ADJ_SEC |
Adjust contract category item prices. |
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CS_AGREE_CAT |
Define contract category agreements. |
Contract categories enable you to specify groups of items on a contract, rather than having to enter the items one at a time. Using contract categories, you can add categories to a contract along with item exclusions, upper and lower limits, and price adjustments. When you create requisitions and purchase orders, the system locates and verifies that it uses the appropriate contracts automatically. You can use categories in conjunction with contract lines and open items, but you cannot create contract releases using category contracts.
When you link a category or a group of categories to a contract, requisitions and purchase orders can reference the contract with any items within those categories. A category can include hundreds or thousands of items. In these cases, you can specify exceptions for category items by adding excluded items to the Item Exclusions page. You use the Category grid on the Contract page to add and update categories for the contract. The Category grid appears only for contracts that use Purchase Order, General Contracts, and Release to Single Purchase Order Only process options.
Using contract category features, you can:
Make price adjustments for category lines.
Define contract category deliverable agreements at the header and category-line level.
Define item exclusions by which you remove category items that you don't want included on the contract.
Define the maximum amount that can be released for a category.
Establish spend thresholds for a category.
Inactivate a line, category, or exclusion even when purchase orders or requisitions exist against the line or category.
View category information using a variety of system reports and inquiries, such as the Contract Event Inquiry.
When you inactivate a category line, the system:
Does not permit activity against the inactivated category or line after the Draft contract version is approved and becomes the Current version.
Enables activity against the Current version until the Draft version is approved and becomes the Current version.
Continues to display the category or line after it is inactivated.
Continues to update released amounts and quantities until it processes all existing purchase orders against the contract's History version.
Inactivates all related exclusions when a category is inactivated.
Use the Contract page (CNTRCT_HDR) to define contract category lines.
Navigation:
You use the Lines grid to define basic information for contract category line items. Category information helps reduce redundant data entry during both item setup and requisition and purchase order processing. Item categories can provide transaction information for requisitions and requests for quotes, contracts, and purchase orders and can serve as the organizational unit for item catalogs. With categories tied to contracts, requisitions and purchase orders can reference the contract with any items within those categories.
Category information includes item adjustments, exclusions, and category agreements. You can define release amounts and spend thresholds for categories and add and delete category lines as long as the category is in an Active status. You cannot delete the line if it is in a Cancelled status.
Field or Control |
Description |
|---|---|
Line |
Displays the system-defined line number. The number is incremental by one depending on the number of contract categories that you define. |
Category |
Select a category to use with this contract. You can select multiple categories. |
View Category Line Exclusions |
Click to view and maintain category line items that should be excluded from the contract. |
Price Adjustments |
Click to view and maintain category line item prices for the contract. |
Contract Category Agreement |
Click to add and maintain the contract category agreement. The agreement applies to all category items. |
Status |
Displays the current status for the contract category. Status values include Active and Inactive. You inactivate a category line by clicking the Cancel button. You must also have the authority to cancel a category line. You define the authority to cancel contracts using the Contract Process link in Procurement user preferences. Note: You can reactivate a category only if the contract is in a Draft version. You cannot reactivate the category line unless you canceled it while it was in a Draft version. |
Pricing Options
Select the Pricing Options tab.
Use this page to define pricing settings for a category of items.
Field or Control |
Description |
|---|---|
Price Can Be Changed on Order |
Select if you want the capability to change the system-calculated prices on purchase orders for this category. |
Use Supplier Adjustments |
Select to indicate that you can use supplier-adjusted pricing for this category. |
Apply Supplier Adjustments |
Select whether the system calculates supplier price adjustments before or after the contract price adjustments. Values include: After Contract Adjustments: Select to have supplier price adjustments calculated after the contract price adjustments. Before Contract Adjustments: Select to have supplier price adjustments calculated before the contract price adjustments. The supplier adjustments will be applied first if the calculation type is defined as Increment Adjustments. |
Release Amounts
Select the Release Amounts tab.
Use this page to define the maximum amount that can be released against the contract for a contract category line. After you select a category, use the Maximum Line Amt field to set the maximum value. The page also displays the totals for contracts when purchase order transactions are created against them. This total is also used for threshold amount notifications. You cannot release category amounts using the category functionality. The system derives the currency value from the contract currency.
Contract releases enable you to set up standard purchase orders or vouchers that are the by-product of the agreement that is identified in a contract. They also enable you to generate releases.
Note: Released amounts are not version controlled. The released amounts displayed reflect current released amounts to date on all contract versions.
Spend Threshold
Select the Spend Threshold tab.
Use this page to define the maximum amount that can be released against the contract for a contract category line. Using the Spend Threshold feature, you can define the threshold and then notify users when spending on a contract crosses the threshold amount. After you define a category, select the Notify on Spend Threshold check box to notify the buyer when a contract reaches or exceeds the spend threshold. A buyer must be defined or the system displays a warning message.
The page also displays the threshold notification amount and the amount that has been released.
Use the Item Exclusions page (CNTRCT_CAT_EXC_SEC) to define contract category item exclusions.
Navigation:
Click the View Item Category Exclusions button on the Contract page
Categories might cover hundreds or thousands of items. When some items within the category are not applicable to the contract, you can specify exceptions to the category's items. Use this page to select items for a category that you want to exclude from the contract.
Note: You cannot generate contract releases from category contracts.
Field or Control |
Description |
|---|---|
Version |
Displays the contract version. The version is always 1. If you are using version control, the Current version number appears in this field. |
Contract ID |
Displays the contract to which this category has been assigned. |
Category |
Displays the item category that you selected on the Contract page. |
Category Line Number |
Displays the line number for the category. The system assigns line numbers based on the number of item categories that you assign to the contract. The more categories you assign, the greater the line numbers. |
Line Status |
Displays the status of the contract category. This status is different from the status for individual items that appears in the Item Exclusions grid. |
Line |
Displays the line number that the system assigned to an item's row of data. |
Item ID |
Select the category item that you want to exclude from use with this contract. You can also type the item and click the Look Up Item ID button to locate and select it. You can select multiple items, but cannot select the same item twice. You can also delete items. The system provides a warning message if contract events exist for the item. |
Status |
Displays the status of the category item for this contract. An Active status indicates that the item is currently excluded from use with this contract. An Inactive status indicates that the item is not excluded from the contract. Other points to consider about contract category exclusions:
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Cancel |
Click to cancel a contract category item. You can cancel a category line exclusion when the contract is in an Open status and when no releases exist that are against it. You can cancel an item exclusion when version control is not in use. When version control is in use, you can cancel items for the Current and Draft versions. |
Activate |
Click to activate an inactive category item. If you are using version control, you can inactivate a line, category, or exclusion. Note: The system permits category line and exclusion inactivation instead of deletions so that it can maintain released amounts and quantities. If the system permitted deletions of lines and exclusions, it would lose the released amounts and quantities. The system enables the inactivation of a contract line depending on whether version control is in use. When the contract is a Draft version and no other version exists, the system enables the Inactivate button in the grid for categories, lines, and exclusions. The system permits an exclusion to be inactivated only when the category or line is active. When you inactivate an exclusion, the system:
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Use the Price Adjustments for Category Line page (CNTRCT_PRC_ADJ_SEC) to adjust contract category item prices.
Navigation:
Click the Price Adjustments button on the Contract page.
You use the Price Adjustments for Category Line page to adjust prices for a category line. You can set price adjustments and their effective dates at the contract category line. You can create prices adjustments that are effective-dated and for each of those dates define the details that the system uses to make adjustments. Adjusting category prices is similar to adjusting open-item prices.
See Open Item Price Adjustments Page.
When the system processes purchase order pricing, it bases the category price on the order's item supplier price or the manually entered price when the order line is based on description only. Although pricing is associated with specific categories on the contract, no category base price exists. The system retrieves that price from the transaction's item or from the manually entered price, and then applies any category adjustments to calculate the final price.
Field or Control |
Description |
|---|---|
Method |
Displays the percent method that the system uses to process the category price adjustment. The system makes the adjustment to either the base price or calculated price. The Percentage field appears with this method. Percent adjustments can be either positive (surcharge) or negative (discount). |
Percentage |
Enter a category adjustment percentage. The system applies the value for the adjustment method to arrive at a final adjusted price. |
Amount |
Enter a category adjustment amount. The system applies the value for the adjustment method to arrive at a final adjusted price. |
Use the Contract Category Agreement Assignments page (CS_AGREE_CAT) to define contract category agreements.
Navigation:
Click the Contract Category Agreement button on the Contract page.
Use this page to define a set of negotiated conditions for items in a category. The agreement specifically spells out the conditions and terms that apply to the items in the category. Using category agreements, you can define, monitor, update, and review agreements and their verification steps, statuses, and workflow notifications.
After assigning agreements to a contract category you can, for example, manage agreements to track whether a verification step is in process or has been completed successfully and whether the agreement meets the requirements for compliance.