Considerations for Creating Supplier Agreements

A supplier agreement is a long-term agreement for the purchase of goods and services from a supplier. The two types of supplier agreements are blanket purchase agreements and contract purchase agreements.

Procurement agents can create a draft supplier agreement by any of the following methods:

• Create a supplier agreement in the user interface.

• Duplicate an existing agreement.

• Import a supplier agreement from an external application.

• Process a negotiation award into a supplier agreement.

• Process a supplier contract deliverable into a supplier agreement

Consider the following main attributes when entering a supplier agreement.

• Document Style

• Business Unit: Procurement BU

• Supplier, Supplier Site, and Supplier Contact

• Currency

• Communication Method

• Agreement Amount and Amount Limit

• Price Update Tolerance Percent

Document Style

When you create a supplier agreement, you select an appropriate document style to reduce the complexity of creating the supplier agreement. The document style exposes only the needed functionality on the agreement. For example, you may want to create a blanket purchase agreement with your supplier only for services. You can choose a document style that allows only services lines on the agreement.

Procurement BU

Procurement business units are responsible for procurement business functions, including supplier management, contract negotiation and administration, and order issuance and administration.

Depending on business requirements, a procurement business unit can either:

• Perform these functions in response to its own requirements for purchased goods and services.

• Serve as a shared procurement service center that can process requisitions from multiple client business units.

As a buyer, you can choose a procurement business unit to own and manage the supplier agreement through its life cycle. You can then provide the client business units access to the agreement so they can purchase using the agreement.

Supplier, Supplier Site, and Supplier Contact

Enter or select the name of the Supplier for this supplier agreement. To submit a supplier agreement for approval, you must provide a supplier.

Enter or select the Supplier Site for this supplier agreement.

You can optionally enter the name of the contact at the supplier site. If the supplier you choose has only one contact name, the value populates this field.

Currency

Enter or select the Currency for the supplier agreement. You can change currency information until the supplier agreement is approved.

Communication Method

You can communicate your agreements, along with any attachments to suppliers using print, fax, or email. Attachments might include amendments, contract terms and contractual deliverables.

You can also communicate supplier agreements using Oracle Collaboration Messaging.

For electronic business to business communication, you can't communicate attachments with agreements.

Communication Method is populated with a value based on the specified supplier site's preferred communication method.

The application automatically initiates the communication process upon approval of the document, if:

• A communication method other than None is specified on the document.

• Or the supplier site is set up for communication by means of business to business electronic communication.

Alternatively, you can communicate documents to your supplier in batch by scheduling the Communicate Purchasing Documents process. The process sends the communication using the method specified on the purchasing document.

If the automatic communication fails for any reason, you can resend the document using the Communicate action. Use this action to select a communication method different from the supplier's preferred communication method.

Agreement and Limit Amount

You can specify the agreement amount, which represents the amount you expect to buy from the supplier over the lifetime of the agreement.

You can specify the limit or maximum amount you intend to buy from the supplier over the lifetime of the agreement. The application prevents you from issuing purchase orders against the agreement once the amount limit has been reached.

Price Update Tolerance Percent

The application alerts you if the price change percent on any change order for the agreement exceeds the Price Update Tolerance Percent on any line. Such lines are clearly highlighted in the approval request task detail to enable an approver to make an informed decision.