To create contract classifications

  1. Access Contract Administrator > Contract Setup > Contract Classification.
  2. From the Actions menu, select Create.
  3. Select the contract group to assign to the classification, and type the classification and description. Decide whether the contract classification is to be Active.

    A Type must be selected for determining approval processing. After Type is selected and the record is saved, the appropriate approval processing options must be selected for the Type that is used by clicking the Approvals tab (if it is a Type that uses approvals). Select one of the following options in the Type field:

    No Approvals

    Classification is not used to perform approvals.

    Approvals With No Redlining

    Contracts with this classification use Process Automation to approve the contract. No document or contract redlining is involved in the process. Instead it uses a Process Automation flow named cmcontractappr.lpd.

    Approvals With Redlining On Document

    Contracts with this classification use Process Automation to route a document with redlining between internal approvers, then provide the redlined document to a Supplier for Negotiation. It uses a Process Automation flow named CMWordAppr.lpd.

    Approvals With Redlining On Contract

    Contracts with this classification use Contract forms and Process Automation to route a Contract between Contract Primary Contacts, internal approvers, and Suppliers, with the ability to make direct changes to Terms and Conditions and use redlining to indicate changes. This process allows the suppliers to use Supplier Portal to make redlining changes to Contract forms. It uses a Process Automation flow named ContNegFinalAppr.lpd.

    Note: 

    If you set up a contract classification as Inactive, you cannot assign it to a new or existing contract.

  4. On the Classification Detail tab, use the following guidelines to enter field values.
    Require Commodity Code For Non Service Items On Contract Lines

    If this checkbox is selected and the classification is not defaulted from an Item Master record, Commodity Code must be entered on the Contract line (for special items) or on the Item Master record (for item master items) before the contract line can create an agreement line.

    Require Manufacturer Code for Items On Contract Lines

    If this checkbox is selected and the classification is not defaulted from a Vendor Item, a Manufacturer Code must be entered on the Contract Line. If the Vendor Item exists and does not have a Manufacturer Code, Manufacturer Code must be entered on the Vendor Item.

    Require Manufacturer Number for Items On Contract Lines

    If this checkbox is selected and the classification is not defaulted from a Vendor Item, a Manufacturer Number must be entered on the Contract Line. If the Vendor Item exists and does not have a Manufacturer Number, Manufacturer Number must be entered on the Vendor Item.

    Require Commodity Code For Service Items On Contract Lines

    If this checkbox is selected, Commodity Code must be entered on a service contract line before it can create an agreement line.

    Document Template, Addendum Template

    Select a default document template to use with contracts assigned to this classification.

    These templates are used for creating contract documents and addendum documents.

    Eligible for Event Creation

    If this checkbox is selected the classification defaults to the Contract. The Contract Lines are displayed in the list of Contract Lines that can create an Event after the Contract is activated.

    For information on events, see the Strategic Sourcing User Guide.

  5. After the Classification is created, if the Type is set to an Approval type, an additional panel is displayed which must have at least one checkbox selected. Most of the options have a Draft, Addendum, and Amendment checkbox. If one is selected, the Approval process is invoked if the release of the Contract is complete, depending on the Status of the Contract prior to release.

    Unless described differently for the field, an option that is selected invokes the full Contract Approval process in Process Automation.

    Anywhere that Negotiations is used in a field name, it refers to negotiation of the Contract with a Supplier.

    Prior to these processes, the Contract is in Draft, Addendum, or Amendment status. If a Before Negotiation option is selected, releasing the Contract puts the Contract in Released status. If a Supplier Negotiation option is selected, the Contract is in Negotiation status after release or completion of internal Contract approval. If an After Negotiation option is selected, the Contract is in Final Approval status after Supplier Negotiation. After these processes are complete, the Contract is in a Ready To Activate status.

    While in Contract Approval processes before and after Supplier Negotiation, unless otherwise noted there are the following options:

    • Approve: Moves a contract to the next status or step in the process.

    • Disapprove: Sets a Contract back to Draft status.

    • Reject: Sets a Contract to Inactive status and puts it on hold.

  6. Use the following guidelines to enter field values depending on the approval type for the classification.
    1. If Type is set to Approvals With No Redlining, the Approvals tab is displayed.
      Require Internal Contract Approval Before Negotiations

      Select this checkbox to ensure that neither Terms nor Documents can be updated within Process Automation. The Contract can only be viewed.

      Require Supplier Contract Negotiations

      If this checkbox is selected, Contract negotiation with the Supplier can take place after Contract release and Internal Contract Approval (if required). For this type, it is assumed that all Contract negotiation with the Supplier takes place outside the Contract Management system. When Supplier Negotiation is complete, one of the following actions can be chosen on the Contract to indicate what took place: Complete Negotiation, Disapprove, or Reject.

      Require Internal Contract Approval After Negotiations

      If this checkbox is selected, the Contract can be viewed and approved in Process Automation after Supplier Negotiations are complete and the action Complete Negotiation action has been performed. Completion of this process with approval puts the Contract in Ready to Activate status.

    2. If Type is set to Approvals With Redlining On Document, the Document Redline Approvals tab is displayed.
      Require Internal Contract Approval Using Document Redlining Before Negotiations

      If this checkbox is selected, documents can be updated in Process Automation using redlining. Only draft and addendum contracts use this process.

      Require Contract Approval Before Negotiations

      If this checkbox is selected, amendment contracts use the same process as Approvals with No Redlining. There is no document redlining.

      Require Supplier Contract Negotiations

      If this checkbox is selected, Supplier negotiation can take place by emailing Contracts to Suppliers and negotiating via redlining documents through email. The email negotiation process can take place whether or not this checkbox is selected. Selecting this checkbox sets the contract status to Negotiation.

      Require Internal Contract Approval After Negotiations

      If this checkbox is selected, the Contract can be viewed and approved in Process Automation after Supplier Negotiations are complete and the action Complete Negotiation action has been performed. Completion of this process with approval puts the Contract in Ready to Activate status.

    3. If Type is set to Approvals With Redlining On Contract, the Contract Redline Approvals tab is displayed.
      Require Approval Of Term And Condition Updates On Contract

      If this checkbox is selected, terms and conditions can be changed using redlining on the Contract.

      Require Internal Contract Approval Before Negotiations

      If this checkbox is selected, terms and conditions can be changed using redlining in Process Automation.

      Require Supplier Contract Negotiations On Supplier Portal

      If this checkbox is selected, terms and conditions can be changed using redlining in Supplier Portal.

      Require Final Approval After Supplier Portal Negotiations

      If this checkbox is selected, terms and conditions can be changed using redlining in Process Automation.

      Require Internal Contract Approval Using Document Redlining Before Negotiations

      If this checkbox is selected, documents can be updated in Process Automation using redlining. Only draft and addendum contracts use this process.

      Require Internal Contract Approval After Negotiations

      If this checkbox is selected, the Contract can be viewed and approved in Process Automation after Supplier Negotiations are complete and the action Complete Negotiation action has been performed. Completion of this process with approval puts the Contract in Ready to Activate status.

  7. Click Save.