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Using Price Conditions in SAP Sourcing

The two-part series about SAP Sourcing price conditions,“How to configure Price Conditions in SAP Sourcing (from Wave 8 onwards)” focused on the kinds of price conditions attributes, and how to configure them. This edition, focuses on working with price conditions in RFx and master agreement documents. Please note that these features are available starting with SAP Sourcing OnDemand Wave 8. Price conditions are only available within integrated RFx and agreements.

Assuming that price conditions in SAP Sourcing have been created and are assigned to RFx and/or master agreement document types it is worth checking the price conditions, which are used for the sourcing process and if the field Description is maintained. This field is much longer than the name field, and can be used for a more detailed explanation of the purpose of the condition. Other fields/columns such as Condition ID or Name can be hidden using page customization.

RFx Response with multiple Price Conditions 
RFx Response with multiple Price Conditions

When creating an RFx (or for master agreement), the valid price conditions for the document can be selected on the document setup page. The table pre-sorted by item type (materials first) and the first line shows the gross price (condition class = Prices). Further it displays the main attributes of a condition. A new column Is Required (only in RFx) is added. If the checkbox is checked for one or multiple conditions the system will show an error message if an RFx response does not have a valid entry. The entry must be valid for each line item.

Choose valid Price Conditions for a RFx

Choose valid Price Conditions for an RFx document

Selected price conditions on header level are displayed on the Integration tab for  buyers (RFx) or on the Questions tab (sell-side for the RFx Response). The buyer can check the selected conditions on the item level for the item details. If the specific item is of item type Material or Service only the relevant conditions are displayed. For example the conditions PB00 (Gross Price) and RB00 (Rebate) for materials and PRS (Gross Price) for services have been selected. At the item details of a service item only the condition PRS is displayed, for a material item the conditions PB00 and RB00 are displayed.

For an RFx event with multiple price conditions, it might get quite complex, and it might be difficult to make a decision which response to award. To support this decision process, price conditions can be used within a line item formula and can be combined with Supplier Entered Attributes. I suggest reading the blog “Complex Pricing using Formula Based Pricing in RFx or Auction in SAP Sourcing” by RFx expert Mahesh Jeswani (SAP Sourcing Product Management) which focuses on Formula Pricing, but also provides useful information about creating formulas in general.

Line Item Formulas can be created on the Line Item Setup (a button is available on the Line Items tab). Make sure that the RFx document type you are using has Formula Pricing enabled! It is possible to decide for each formula if suppliers are able to see the formula result. If you create several line item groups, you can assign formulas to specific (line item) groups.

RFx Line Item Formulas

RFx Line Item Formulas

If the RFx event uses more than one Incoterm each price condition will be available for each Incoterm. For example, let’s assume that the Free On Board (FOB) & Delivered Duty Paid (DDP) Incoterms and the PB00 (Gross Price), RB00 (Rebate) and FR00 (Freight) price conditions have been assigned to an RFx event. The dropdown box for price conditions will contain six values such as PB00(DDP), PB00(FOB) and so on.

An example of a formula calculating a net price could be PB00(FOB) + RB00(FOB) + FR00(FOB) where all conditions have the Quantity calculation type . The formula automatically subtracts the RB00  condition if the Impact on Price attribute is maintained as Price reducing. If the rebate uses the Fixed amount calculation type the formula can be changed as follows:

PB00(FOB) + (RB00(FOB)/quantity) + FR00(FOB).

 Create an RFx Line Item Formula with price conditions

Creating an RFx Line Item Formula with price conditions 
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