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Dynamics 365 Community / Forums / Supply chain | Supply Chain Management, Commerce / Trade Agreement vs Pur...
Supply chain | Supply Chain Management, Commerce
Answered

Trade Agreement vs Purchase/ Sales agreement scenarios

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Posted on by Indiguna 321

Hello,

I understand there is quite a few posts explaining the difference between Trade vs Purchase/ Sales Agreements.

However, from what I can see, both can be used for similar purposes. 

How can we determine what exactly to use?

Can someone please explain with a scenario/ example for each agreement type rather than with explanations from Microsoft?

Thank You!

Indiguna

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  • Verified answer
    MATTGUO Profile Picture
    MATTGUO 22,349 Moderator on at

    Hi,

    Two agreements are similar.

    Purchase/sales agreement can be seen as a contract with the committed quantity/amount.

    Trade agreement is more flexible than purchase/sales agreement.

    Here is a blog with the great explanation: www.encorebusiness.com/.../

  • Indiguna Profile Picture
    Indiguna 321 on at

    Thanks I had read this. It gives an example of a trade agreement scenario which is good.

    But I was hoping to see another scenario under purchase agreement explanation that shows the difference from the previous scenario.

    So I can not still find the answer for my question "how do we determine which one to use"?

    In a practical scenario, do vendors typically state agreements with the type "if you purchase more than 100 widgets, you will receive a 12% discount" which can be achieved by trade agreement and then on top of that can they again send an agreement to say "here's the price for 150 if you purchase during this time" that can fall under Purchase agreement?

    Please adjust my example here to determine which agreement type to use.

    On a separate note "if we want to apply a price break, is Trade agreement the option to go along with its "from and to fields' as another difference of usage?

    Best Regards,

    Indiguna

  • Suggested answer
    Christoph Thaler Profile Picture
    Christoph Thaler 5,442 on at

    Hi Indiguna,

    purchase or sales contracts are usually used to define a contract with a vendor/customer for a given time period. Example: you agree to purchase something with a value of 50.000 during the next 3 months but it is not clear yet what items. Therefor you can create a purchase agreenest of type „value commitment“. During the next 3 months you create purchase orders out of the purchase agreement. Because of that you can always follow up the realized value and compare with the target. 

    you can find a lot of information and possibilities here https://docs.microsoft.com/en-us/dynamics365/supply-chain/procurement/purchase-agreements

  • Indiguna Profile Picture
    Indiguna 321 on at

    Thanks Christoph! That's a good scenario and Customer/ Vendor specific commitments seem to be a major difference on Purchase/ Sales agreement  which differentiates from Trade agreements.

    Regards,

    Indiguna

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