Oracle Fusion Procurement

How Purchase Order is linked to Contract Purchase Agreement?

In today’s article, I will cover the details of how the Contract Purchase Agreement is linked to Purchase Order and how the system limits Purchase Orders for approval submission if the Purchase Order amount exceeds the agreed Agreement amount.

Contract Purchase Agreement

You create a contract purchase agreement with your supplier to agree on specific terms and conditions without indicating the goods and services that you will be purchasing. You can later issue purchase orders referencing your contracts using terms negotiated on a contract purchase agreement by a procurement business unit.

You can specify the limit or maximum amount you intend to buy from the supplier over the lifetime of the agreement. The application prevents you from issuing purchase orders against the agreement once the amount limit has been reached. However, the application does not prevent you to issue purchase requisitions against the agreement once the amount limit has been reached.

Below is the Agreed amount of the Purchase Agreement (1500). Please note that the status of an Agreement is OPEN meaning APPROVED. We can now proceed with Purchase Requisition and Purchase Order creation.