How to Create Purchase Agreement in AX 2012

Cindy Scott

The Microsoft Dynamics AX/D365 Support Team at Avantiico is focused on solving our client’s problems, from daily issues to large and more complex problems.

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September 15, 2016
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Creating a purchase agreement is new in Dynamics AX 2012 and replace the Blanket order functionality in prior versions.

While this blog is specific to Purchase agreements, similar functionality is available in the Sales and Marketing module for Sales agreements.

Purchase agreements are contractual obligations with a vendor to buy an agreed upon quantity or value of goods generally for a reduced price or discount. Delivery of the product does not need to be at the same time or on the same Purchase order. With Purchase agreements you can create purchase orders when needed (release orders), within the agreement validity period, until the contract is fulfilled.

Below are the steps to create a purchase agreement and related release orders (Purchase orders).

Navigate to Procurement and sourcing→ Common→ Purchase orders→ Purchase agreements.

Create the Purchase agreement header and lines similar to how you would create a purchase order. In the Action pane click on New→ Purchase agreement to get started.

Note the below highlighted fields in the Purchase agreements header.

Figure 1: Create Purchase agreement header

Validity Period Effective and Expiration dates: Enter the valid delivery dates for the related released purchase orders.

Status: The default status of a Purchase agreement is ‘On hold’. Release orders (Purchase orders) cannot be created if an agreement is on hold.

The Status can be manually updated to ‘Effective’ when creating a new Purchase agreement, by editing the Purchase agreement header or when confirming the agreement.

Document title: Enter an optional free-text description of the agreement.

Default commitment: Select from one of four predefined commitments:

Product quantity commitment. Order a specific product quantity.
Product value commitment. Order a specific product value.
Product category value commitment. Order a specific Product category value.
Value commitment. Order a specific value across products and categories (applies to all lines on the agreement).

Purchase agreement classification: Select a classification for the agreement. Depending on the company specific values created, each classification can have different requirements for the agreement – such as enabling the entry of subcontractors on the agreements, enabling the entry of insurance policies and requiring direct invoicing and preventing the use of release orders.

Figure 2: Purchase agreement classifications setup form

In the Action pane, click on the ‘Line view’ button to enter the agreement lines.

Figure 3: Purchase agreement lines

After creating the agreement lines, in the Action pane, click on the ‘Confirm’ button to save, print and send the agreement.

Mark the ‘Mark agreement as effective’ checkbox to update Agreement header ‘Status’ field from ‘On hold’ to Effective.

Figure 4: Confirm purchase agreement dialog

At this point the purchase order does not yet exist as a purchase order.

To release an order (create a purchase order) for all or part of the line quantities/values, in the action pane click on New→ Release order.

Update the delivery address in the header section if necessary.
Since the agreement in this example is a quantity commitment, enter the purchase quantity desired in the lines section.
Remember the Delivery date must fall within the Validity period as set in the Purchase agreement header or an error will be received.

Figure 5: Create release order

Figure 6: Purchase order is created for the quantities released

Repeat step 5 to create release orders for additional quanitities until the commitment is fulfilled.

From the new Purchase order created, the user can view the original agreement from the PO header→ General tab→ Purchase agreement.

Figure 7: Inquire on the Purchase agreement from the PO

To inquire on all Purchase orders and lines released from a Purchase order agreement, from the Purchase agreements form, from the Action pane go to Purchase agreement tab→ Release order lines.

Figure 8: Inquire on all release orders from the Purchase agreement

Additional updates, parameters and inquiries are available on the Purchase agreement lines. For example:

General tab:

Update the Validity dates
Set Minimum and Maximum release amounts. If a Minimum and Maximum is set, a warning will be received upon creating the release order. The Purchase order can be adjusted if necessary.
Mark the ‘Max is enforced’ parameter to enforce the total release amount or quantity for all order lines.

Figure 9: Purchase agreement lines→ General tab

Fulfillment tab:

View the total line quantities Remaining to be released, Released, Received and Invoiced.

Figure 10: Purchase agreement lines→ Fulfillment tab

Now that you know how to create Purchase agreements, Sales agreements can be created in a similar way in the Sales and marketing module.

For additional information on Purchase agreements see the below Microsoft Technet article: https://technet.microsoft.com/en-us/library/aa571142.aspx

HAVE A QUESTION ABOUT PURCHASE AGREEMENTS OR ANY OTHER FEATURE IN AX 2012? DROP US A LINE WITH THE FORM BELOW OR LET US KNOW WHAT YOU THINK ABOUT THE NEW PURCHASE AGREEMENTS FEATURE IN THE COMMENT SECTION!

How to Create Purchase Agreement in AX 2012

Cindy Scott

CU12 Public Sector Enhancements

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