Central Purchase Contracts

Central contracts are global long-term agreements negotiated between an organization and a supplier. This helps in getting the best rates and conditions while bundling purchasing volume across multiple subsidiaries. These contracts are typically negotiated by the central purchasing organization, mostly at the headquarters, and used for globally driving operational efficiency, reduced cost while complying with regulations across multiple subsidiaries.

The central contract, created at the headquarters, can be distributed to subsidiaries to generate local contracts or scheduling agreements. Subsidiaries can then continue with the operational procurement in a seamless manner by leveraging this local contract or Scheduling agreement. Central monitoring of contract consumption across subsidiaries and renewal of expiring contracts is easily managed by the headquarters.

Key Process Steps Covered

  • Create central purchase contract and distribution
  • Release central purchase contract (optional)
  • Check distributed purchase contracts or scheduling agreements in the back-end system
  • Create purchase order or schedule lines in the back-end system
  • Import release orders
  • Post goods receipt in the back-end system
  • Create supplier invoice in the back-end system
  • Create credit memo (optional) in the back-end system
  • Perform mass changes to central purchase contracts
  • Monitor central purchase contract items (optional)
  • Create hierarchy central contracts
  • Display version history in central purchase contracts
  • Maintain formula and rate for commodity pricing

Benefits

  • Lower your costs for contract negotiation
  • Lower your costs based on scaled purchasing