Understanding Purchase & Trade agreements in D365 – Part 2

Introduction

In Purchase & trade agreements in D365 – Part 1 blog we have gone through overview of Purchase & trade agreements in D365 & how to setup different types of Purchase agreements in D365.

In this blog will go through how to setup purchase agreement of type Product category value commitment & Value commitment.

To give brief overview of Purchase & trade agreements in D365, for those who have not gone through part 1 of this blog.

In D365 we can create Purchase agreements for blanket orders to buy certain fixed quantity of item from specific vendor within specified time. & Trade agreement can be used to create discounts generally for short period for specific vendor or vendor group.

In D365 there are different types of Purchase agreement & trade agreements.

Below are different types of Purchase agreements based on commitment in D365 –

1. Product quantity commitment
2. Product value commitment
3. Product category value commitment
4. Value commitment

Product category value commitment is setup when there is commitment to buy fixed amount of specific category of goods from specific vendor over fixed period & vendor provide discount%. For example, purchaser have committed to buy Travel luggage bags category SKUs from vendor A worth 10million over next 1 year then vendor will offer 20% discount for same.

Value commitment when there is commitment to buy fixed amount from specific vendor over fixed period & vendor provide discount%. For example, purchaser have committed to buy from vendor A worth 15million over next 1 year then vendor will offer 20% discount for same.

Below are different types of Trade agreements based on relation in D365 –

1. Trade agreement for Purchase price
2. Trade agreement for Line discount for purchase
3. Trade agreement for Multiline discount for purchase
4. Trade agreement for Total discount for purchase

Problem statement –

In this scenario we need to setup purchase agreement of type Product category value commitment & Value commitment for vendor.

Solution steps –

1 – Will create purchase agreement for Product category value commitment

1.1 Go to Procurement & Sourcing -> Purchase agreements -> Purchase agreements

1.2 Click on New -> Vendor account -> Select respective vendor (In this case it is VEN-000002) -> Purchase agreement classification -> Blanket purchase agreement -> Default commitment -> Product category value commitment -> Effective date -> Select respective date (In this case it is 1 Aug 24) -> Expiration date -> Select respective date (In this case it is 1 Aug 25) -> Ok

1.3 Fill the respective details of Item/Category name – Spinner, Net amount – 100000, Discount percent – 15 & Max enforced – Yes. Max enforced Yes means quantity consumed against purchase agreement is tracked. If purchase quantity exceeds quantity mentioned in agreement, then message will be displayed & link of Purchase agreement is removed from purchase order. & confirm purchase agreement.

1.4 Then create new Purchase order, select Purchase agreement to link

1.5 Add any Item with category mentioned in purchase agreement, in this case it is “Spinner” & required quantity in purchase order, discount will be automatically taken from purchase agreement.

1.6 We can check which agreement is linked, click on Update line -> Purchase agreement -> Attached.

1.7 Similarly, In Purchase agreement also same is reflected.

2 – Will create purchase agreement for Value commitment

2.1 Go to Procurement & Sourcing -> Purchase agreements -> Purchase agreements -> Click on New -> Vendor account ->  Select respective vendor (In this case it is VEN-000005) -> Purchase agreement classification -> Blanket purchase agreement -> Default commitment -> Value commitment -> Effective date ->  Select respective date (In this case it is 1 Aug 24) -> Expiration date ->  Select respective date (In this case it is 1 Aug 25) -> Ok

2.2 Fill the respective details of Item/Category name – can select highest category in this case it is Bags, Net amount – 500000, Discount percent – 20 & Max enforced – Yes. Max enforced Yes means quantity consumed against purchase agreement is tracked. If purchase quantity exceeds quantity mentioned in agreement, then message will be displayed & link of Purchase agreement is removed from purchase order. & confirm purchase agreement.

2.3Then create new Purchase order, select Purchase agreement to link

2.4 Add any Item with category mentioned in purchase agreement in this case it is “Bag” & required quantity in purchase order, discount will be automatically taken from purchase agreement.

2.5 We can check which agreement is linked, click on Update line -> Purchase agreement -> Attached.

In this blog we completed purchase agreement types. In next blog (Part 3) will cover setup of trade agreement.

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