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How to Use the Novation Scenario for Contracts in SAP SRM?

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How to Use the Novation Scenario for Contracts in SAP SRM?
Stechies

You can transfer some or all contracts from one supplier to another in the case of a merger or buyout. This is known as novation.

Novation should be used for mergers and buyouts only.

Read the following points before using the novation scenaro:

a) Those contracts which have distribution cannot be novated as the distributed contracts (backend contracts), as ERP contracts cannot have more than one supplier for one contract. Only local contracts can be used for novation. Contracts that have local items as well as items with distribution cannot be novated.

b) Novation date of the new vendor should be after the novation start date of the previous vendor. Suppose the user wishes to novate contract from vendor A to B, then the user cannot novate the contract to supplier B before the start of validity period of vendor A.

c) Suppose the contract has been novated from supplier A to supplier B. Now the user realises that he novated to wrong vendor (Vendor B), then he can novate to vendor C instead of vendor B, but the validity period (date and time) of vendor C should be same as vendor B. In this case,the contract will be novated from vendor A to vendor C.

d) Those contracts, which are “on hold” status and does not have any changed version, should not be novated.

e) The novation start date of new vendor must always be after the novation end date of old vendor. At a given point in time, there must not be overlap of validity dates of vendors. Only one supplier is valid at any given point in time.

f) After novation, the contract goes to the status maitained as per workflow settings as there is changed version created and does not goto "published" status.

g) You cannot change the start date of novated contracts but you have an option of changing the contract end date.

h) If the contract is already novated, and then if the user wishes to change the end date of contract, the following has to be taken care:

1) If the contract is novated from vendor A to vendor B. Now if the user wishes to extend the validity (postpone the validity end date to a future date) for contract, then the validity of vendor B is also extended to the contract end date.

2) If the contract is novated from vendor A to vendor B. Now, if the user wishes to expire the contract by changing the contract end date to earlier date, then the user should make sure that he can only do it when the validity of last novated vendor has started, i.e, suppose vendor A is valid from 01.01.1900 to 01.03.2016 and vendor B is valid from 02.03.2016 to 01.10.2016, then the user can only change the contract to expiration when the validity of vendor B starts (can do it between 01.03.2016 - 01.10.2016) and cannot do it when the contract has vendor A as valid supplier.

3) If the user wishes to expire the contract and he has reached the validity period of last supplier (Vendor B), then the end date of contract must lie within the validity period of vendorB. The system will not take the expiration of contract into consideration if the new end date lies between validity periof of vendor A.


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