Contracts and SAs have many similar functions. The decision to be used is less important than when a framework agreement should be used compared to a regular order. A contract offers the advantage of familiarity and usability, as sharing order screens do not differ from a normal order. However, the SA has the strong advantage of integration with MRP, which eliminates the administrative burden of managing an intermediate requirement document (e.g. B plan or public relations mandate) related to a contract. The contract does not contain any specific delivery date or individual delivery quantities. These are specified a posteriori in the release orders issued against the contract if the customer requires them. Characteristics of the contract:  contracts are framework contracts. They do not contain information on delivery dates for each of the items.  To inform suppliers of the quantity needed for which date, record orders to terminate a contract. But it will contain different areas, namely the company/compromise/forecast. Fixed area plans are confirmed requirements and must be taken over by the designated party.

The requirement of the Tradeoff area is the purchase of raw materials and the customer is required to pay the cost of raw materials in case of cancellation of requirement. The forecast area requirement should help the supplier plan its requirements. Supplier selection is an important process in the procurement cycle. Suppliers can be selected through the offer process. After pre-selecting a supplier, an organization enters into an agreement with that particular supplier to deliver certain items with certain conditions….