Explain Contract Management?

Answer

Through different SAP CRM channels, SAP CRM Sales offers Contract Management which is embedded into the sales cycle. Contract is an agreement with your customer based upon agreed conditions related to price, target value, or target quantity. It allows your company to release products or services based upon these conditions. It could be created based upon an opportunity which is won by the sales employee responsible. Further to this opportunity sales employee responsible and the customer agrees to favourable conditions, based upon which the sales order is then created. Customer needs to accept this contract and then the sales manager releases this contract. Customer can then order products against this released contract. Around completion date of the contract, Sales representative can contact the customer to renew the contract.

The sales orders created are linked to the contract as follow-up documents and thus it keeps record of the entire required information from all the sales orders created.

SAP CRM offers two types of contract:

• Quantity contract is an agreement with a customer that he or she will buy certain quantity of particular in a specified timeframe.
• Whereas Value Contract is an agreement with a customer that he or she will buy certain value of particular in a specified timeframe.

Following are relevant status values for a CRM sales contract:

• Open - This is set by default when contract is created.
• In Process - You can set this status while negotiating the contract with customer.
• Released - This status needs to be set, when an item in the contract is ready and can be used to release products and create sales orders against it.
• Completed - This status is set for the items whose validity has expired or, whose target value or quantity has been released completely. It could be set automatically or manually. Once an item in contract is in this status it will not be possible to release products against it.

In order to create an order against a contract, you can open the contract and create the order as a follow-up document. Also, you can create the order and use the contract determination to fetch the possible contracts and then select the appropriate one. The order maintains release order list and keeps the check against the agreed maximum quantity and value.