Contract Strategy
Contract strategy defines how customers and vendors are linked to specific agreements, and how revenue and cost lines are automatically generated based on those contract terms. This includes determining which contracts apply to different document types, parties, and routing scenarios.
Tip
Contract strategy eliminates manual rate lookup and entry, ensuring that the correct contract terms are applied consistently across all documents.
Overview
Contract strategy serves as a bridge between document parties (customers and vendors) and their associated agreements. When executed on a document, the system automatically finds applicable contracts, matches them to document characteristics, and creates revenue or cost lines with the correct pricing from the contracts.
How Contract Strategy Works
Execution Process
When contract strategy is executed, the system:
- Validates the Document: Ensures the document has a posting date before proceeding
- Finds Contract Strategy: Searches for contract strategy headers that match the customer or vendor
- Evaluates Strategy Lines: Evaluates each contract strategy line against the document using:
- Source Matching: Checks if the customer/vendor matches the strategy's source type (specific customer, customer price group, or all customers)
- Area Type Matching: Verifies the area type code matches (or is empty for all areas)
- Date Validity: Ensures the strategy is valid for the document's posting date
- Priority Order: Processes multiple matching strategies in priority order
- Table Filters: Applies any header-level filters configured on the strategy line
- Criteria Functions: Evaluates criteria function sets for complex matching logic
- Finds Contracts: Locates the specific agreements referenced by the contract strategy lines
- Aggregates Contract Data: Collects applicable contract detail lines based on document characteristics
- Creates Lines: Generates revenue lines (for customer contracts) or cost lines (for vendor contracts) automatically
- Applies Discounts: Calculates and applies any contract-level discounts
- Calculates Prices: Performs unit price calculations if specified in the contract detail lines
Source Determination
The system determines the source customer or vendor for contract strategy using one of two methods, configured in Forwarding Setup:
- Document Party / Fallback Cust./Carrier: Uses the document party (for example, Shipper or Consignee) first, falling back to the document's customer or carrier if no party is specified
- Document Party: Uses only the document party, without fallback
Note
This ensures contracts are matched based on the actual party involved in the freight movement, providing accurate pricing for pre-carriage, main carriage, and on-carriage segments.
Contract Strategy Matching
Contract strategy lines support multiple levels of matching:
Source Type Matching
- Specific Customer/Vendor: Matches only the exact customer or vendor number
- Customer/Vendor Price Group: Matches customers or vendors within a specific price group
- All Customers/Vendors: Applies to all customers or vendors (often used for standard rates)
Priority and Order
When multiple contract strategy lines match the same document, the system processes them by priority. Higher priority strategies are evaluated first, allowing you to set up:
- Customer-specific rates that override group rates
- Special agreements that take precedence over general contracts
Tip
Use priority settings to create a hierarchy of contracts—for example, set customer-specific agreements to priority 1 and general rates to priority 10 to ensure the most specific rates are always applied first.
Filtering and Criteria
Contract strategy lines can include:
- Table Filters: Filter based on document header fields (for example, mode of transport, movement type)
- Criteria Function Sets: Complex business logic to determine if a strategy applies based on multiple document characteristics
Note
This flexibility ensures that the right contracts are applied to the right documents automatically, even in complex multi-modal or multi-leg scenarios.
Execution Scenarios
Customer Contract Strategy
When executing customer contract strategy:
- Revenue lines are created for services specified in customer contracts
- Pricing is determined from Forwarding (FMS) Contract agreements
- Rates reflect the agreed prices between your company and the customer
- Multiple contracts can be applied if they match different area types or criteria
Vendor Contract Strategy
When executing vendor contract strategy:
- Cost lines are created for services specified in vendor contracts
- Pricing reflects the costs you will pay to vendors
Integration with Documents
Contract strategy execution is integrated throughout the document lifecycle:
- Manual Execution: Users can execute contract strategy lines individually or all at once
- Status Changes: Strategy execution can be triggered by document status changes
- Recalculation: Strategy lines can be recalculated by a user when document details change