Mr. Thomson enjoys his hot oil Massage
A rubber products company called RUBCOM makes rubber based products. RUBCOM makes rubber linings used in the Automobiles and gaskets used in pressure cookers. RUBCOM has manufacturing plants situated at Gurgaon and Manesar for Maruti and two more plants at Wagle Estate Thane (Mumbai) and Jaunpur (UP) that make gaskets for pressure cookers made by Hawkins. RUBCOM has many purchasing organizations locally and one central Purchasing organization as shown in the chart below. RUBCOM gets all its rubber from Kerala.
It is economical for RUBCOM to group together all its raw-material needs. This way it can negotiate a better price with Rubber supplier.So RUBCOM entered into a contract with Thomson Rubbers in Kerala to buy 3000 tonnes of rubber for the next three years. This is good for Thomson Rubbers because Mr. Thomson is assured of his rubber sale for the next three years (validity period) and doesn’t have to run around looking for customers. Instead he can relax at Punnamada Backwater Resorts getting a hot oil massage .
Different types of Contracts
- Value Contracts
- Quantity Contracts
LAB
Create a quantity contract with the central Purchasing organization and using this contract to make Purchase orders for a Plant specific Purchasing organization
Prerequisites for creating Contracts
- Create the material master common to all the different plants
- Create a vendor common to all the different purchasing organisations
- Create Purchasing organization of different kinds by making the necessary assignments – Plant-specific, Cross-Plant , Cross-Company, Standard and Referential (Refer to the article)
SAP MM 
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