A Contract PO is one which is for a particular part (it is not possible to have a contract PO for multiple parts) but which is left open and the call-offs can be amended based on the contract requirements. The requirements can be automatically updated by MRP.
To prepare the system to allow Contract PO's, set the CONTRACT_PURCHASE_ORDERS flag to "Yes"
To create a Contract Purchase Order follow these steps:
Go to Purchase -> Purchase Order Maintenance
Press F4 to create a new Purchase Order, and choose 'Raise a new purchase order from a SPECIFIC SUPPLIER'
Choose the relevant supplier in the Supplier box and then tick the 'Contract Order?' box on the right-hand side of the Purchase Order.
Enter the Stock Type, Part Number and press OK. You will be unable to fill in the bottom section as this will be populated automatically.
The next window allows you to enter the Unit Price and minimum order. It also allows you at the bottom to allocate a 'Contract Maximum Quantity' and a 'Contract Expires On' date if you wish, but this is not mandatory.
You can now add order lines to the order. Press F4 to do this, you will not be able to select a part number here as you cannot have a Contract Order for more than one part number.
Choose your Quantity, Date Required and Date Expected lines for the order line, and press OK to add to the PO. (There are numerous optional fields you can fill in here too)
Once these lines have been done you can 'Book In' the lines in the usual way on the Purchase Order Maintenance screen.
As long as there is demand then you can also use MRP to raise the PO's for you and the call-offs will then be added to the Contract PO line by line and for the required date, if no expected date is set.