Z pricing procedure determination...

[Former Member]

Hi experts,

I have to implement a new pricing procedures for a company where actually the same sales area has more than one business lines and the material division is the one taken into account in order to determine the business line.

Now it is needed to have different pricing procedures for each business line.  

At this point, creating new sales area in order to split business lines for this purpose is going to be so complicated due to the amount of existing interfaces with 3P systems currently related to the business processes; Instead of doing that they need to determine the pricing procedures based on the sales office, which is not a standard configuration.

1) What is the best way to do this? (something similar to OVKK + sales office)

2) The worst case is to create new division (new sales area) but if this is the case in order to avoid the development, what should I take into account due to the current process to ensure that creating new sales division is not going to affect dramatically?

Thank you for your help,

Regards.

[Former Member · Accepted solution]

Thank you TW and JP.

Current pricing procedure is shared between 3 or more business lines and it contains a very basic structure:

1) List Price condition

    Subtotal 1

2) Manual condition for Discount (Adjustment + or -)

    Subtotal 2

3) All additional services and freight are considered as individual materials with their price.

    Rounding

    Subtotal 3

4) Plus cash discount

    Subtotal 4

5) Taxes as usual

    Subtotal 5

This pricing procedure is applicable to all business lines and they just differentiate them by Customer Sales Group for reporting purposes.

Now they need the business lines pricing structures to be independent and they need to have at least 2 different pricing procedures because each business line pricing conditions are going to be different regarding the following concepts:

- Freights

- Discounts

- Surcharges

- Rebates

Additionaly they need to apply some pricing routines specific for a business line that are not applying to another.

Let's say they are now going to convert the current pricing procedure into the following two different structures (And keep the original one as well):

Business line (1)
Material Division (X)
Sales Group (111)
Pricing Proc (AAA)
     List Price
      KPI A
      KPI B
     Subtotal 1
      KPI C
      KPI D
     Subtotal 2
      KPI E
     Subtotal 3
      KPI H
     Subtotal 4

Business line (2)
Material Division (Y)
Sales Group (222)
Pricing Proc (BBB)
     List Price
      KPI A
      KPI I
     Subtotal 1
      KPI J
      KPI K
      KPI L
     Subtotal 2
      KPI E
      KPI M
      KPI N
      KPI O
     Subtotal 3
      KPI H
     Subtotal 4

That's going to be probably better to restructure organization in order to have every sales area separated with its own pricing procedure, which implies a BIG operational impact (This is the standard way and from my point of view the most recommended) but I have to consider a "Z" development in order to keep the current sales area structure since the business has to have both points of view or any other options you can forsee at this point. (One additional option would sound so crazy but probably can works and it implies to get all KPIs needed for all the business lines individually and get them together in only one pricing schema with a lot of exclusions and routines that I don't recomend... Have you ever done this before?).

I would like to have your expert point of view in order to get the best recommendation and impacts for each of both scenarios.

Hope this explanations helps to clarify my original question.

Thank you.

Best.

Alex.

[former_member182378 · Accepted solution]

Alex,

Thank you for your post!

To conclude there are two points -

1. How many pricing procedures to use?

2. How to determine the procedures?

1. How many procedures -

It looks like the "structure" of the pricing procedures are different (steps, condition types etc.), in this case it would be better / simpler to go with different pricing procedures.

I would not recommend single pricing procedure with too many routines (requirements, alt calculation types, base calculation type)

2. For determination of procedure -

Going for change in sales area would be too risky and lot of work (change in master data) which I would not recommend.

What about my below suggestion -

Can you create new sales document types, for each business line?
Document pricing procedure is also a determining factor in the pricing procedure determination.

If you can create different sales document types, then you could use standard pricing procedure determination.

If this is not an option, then you could go for Z determination.

[Former Member · Accepted solution]

Thank you TW, this give me a confirmation of my ideas.

I think that the option of creating new document types implies to create duplicates or triplicates of the current ones (VBAK, LIKP and VBRK doc types), unless I can share the current LIKP and VBRK doc types with the new ones from VBAK, that probably can happen. Is that feasible? If so I think this is going to be the best way in order to maintain the most standard flow as possible and avoid Z determination.

Thank you so much.

Regards.

[former_member184065 · Accepted solution]

Dear,

After reading your whole document , you think that you want to show your caliber in this case .Actually, Pricing procedure is Heart for SD .If you keep all things ( all requirements ) in one PR to run the project ,it is probably you are keeping your eye in fire why because you and me never know that what all are when disturbs ( in Pricing procedure settings ).So,finally what I am saying / suggesting is try to go by new pricing procedure ( PR ) with new document types in standard way of determination process.It would be very well to you.

Kindly ,let me know if you need any thing on this.

Thanks,

Naren

[jpfriends079 · Accepted solution]

Alex,

Thanks for elaborating your requirement & understanding. But, I have lttle different understanding & thought on this.

Business jargon for KPI is "A key performance indicator is a quantifiable measure a company uses to determine how well it meets the set operational and strategic goals. This means different businesses have different KPIs depending on their respective performance criteria or priorities."

In simple words and in my opinion KPIs are focused measurable common goals. And that will ensure those goals stay aligned within the organization. Thus, more separate KPIs for different business line. More difficult it will be to align/scale its up with your organisation.

Following are some revenue based KPI.

1.Product performance - Product sales revenue - Price

2.Sales Growth - period based sales revenue / Current period sales revenue

3.Customer Metrics - revenue per customer or customer hierarchy

4.Sales Per Sales Group - Actual sales reveunev per sales group per time period

5.Sales Target - Project vs actual vs target vs pipeline

Let me give you and example, how pricing is done in one of the project I'm working onm which help us in getting relevant KPI:.

Price Points	Adjustments (Behaviour)
Base Price
	Product Value adjustment (+/-)
	Manual Override like cash discount  (+/-)
Country Price
	Tax & if any, tax relief  (+/-)
Market Price
	Negotiable discount (+/-)
Customer Negotiated Price
	Promotional discount (+/-)
	Volume discount  (+/-)
	Freight  (+/-)

However, whatever or how elaborated your pricing is but this fixed or subtotaled for Gross Price, Price After Discount/Surcharge. Price with Freight, Price before tax, Price after tax & Net Price.

For above, we one price.

EK01	Actual Costs
YGRT	Serv.bill.-BasePrice
Y030	Customer/Mat.Pr.Grp
YSUB	Subcontract Price
YPAR	F/R Repair Price
PB00	Price (Gross)
YPR0	List Price
YSER	Service Related
YPRT	Parts
YLAB	Hourly labor
YFLB	Fixed price labor
YFIX	Fixed price
YALC	A la carte (parts)
YINC	Incentives
	Gross
KA00	Sales deal
K032	Price Group/Material
K005	Customer/Material
K005	Customer/Material
K007	Customer Discount
K004	Material
K020	Price Group
K029	Material pricing grp
K030	Customer/Mat.Pr.Grp
K031	Price Grp/Mat.Pr.Grp
RA01	% Disc.from Gross
RA00	% Discount from Net
RC00	Quantity Discount
RB00	Discount (Value)
RD00	Weight Discount
HI01	Hierarchy
HI02	Hierarchy/Material
YAXP	Advance Exchange Fee
YLAD	Labor discount
YMAD	Material Surch/Disc
YCSN	Price Group Discount
YCCS	Concession
YRA1	% Adj. from Gross
YSPO	Price Overwrite %
YMSB	Misc. Biling amt
YWDC	100% Warranty Disc.
YFLT	Fixed Labor Charge
	Surcharge / Discount Amount
NETP	Price
BA00	Material
	Rebate basis
PN00	Price (net)
PMIN	Minimum Price
YCTR	Contractual Price
YPAF	Net Rework Price
R100	100% discount
	Rebate basis
YRA0	% Adj. from Net
YREJ	Shopfloor Rejection
YRLF	Liquidation Fixed
YRLQ	Liquidation percent
YRLD	Prepay w Tax Liquid%
YALE	Liquid.EUPrepaynoTax
	Net Value for Item
YMHF	Matl Handling Fee
YMHS	SO Matl Handl Fee
YKUM	Cumulation condition
YCCF	Matl Other Fee
YMHC	Matl Handling Charge
KP00	Pallet Discount
KP01	Incomp.Pallet Surch.
KP02	Mixed Pallet Disc.
KP03	Mixed Pallet Surch.
HA00	Percentage Discount
HM00	Order value
SKTV	Cash Discount
YSUR	Flat Amt Surrcharge
	Net value 2
HD00	Freight
YFRT	Freight Total Amount
YCHT	Tariff
YCHC	Clearance & Freight
YF00	Freight
YGCF	Cost Fund Adj.
BO01	Mat/Group Rebate
BO02	Material Rebate
BO03	Customer Rebate
BO04	Hierarchy Rebate
BO05	Hierarchy rebate/mat
PI02	Inter-company %
PI01	Inter-company Price
AYWR	Down Pay./Settlement
MWST	Output Tax
YALF	Liquid.EUTax
DIFF	Rounding Off
	Total Amount
SKTO	Cash Discount
RL00	Factoring Discount
YCMF	AgentCommissionFixMn
YRYF	AgentRoyaltyFixManua
MW15	Factoring Disc. Tax
VPRS	Cost
YWAC	Ext Warranty Accrual
	Profit Margin
EDI1	Cust.expected price
EDI2	Cust.expected value
YTRA	Tire Accrual
GRWR	Statistical value
YCDV	Brazil Cust Decl Val
	Unit Customs Value

And from above not all pricing condition applicable on one sales process.

Maintenance of pricing is one time configuration. Correct? We generally do enhancement for controlling the determination of condition.

In SAP, better rely on COPA for business line-wise profitability analysis. You have many fields in master data for customer and material there, which can be used for for differentiating your business line.Like Material Group 1....5, Customer 1....5, Prcing Group, plant, storage location, valuation type. so on and so forth. Most reliable would to have "Business Line = Division".

If your pricing is done manually(w/o condition record) then you need to have more than one pricing in under sales organisation.

Thanks, JP

[former_member182378 · Accepted solution]

Alex,

Yes, you can create different sales document types and use the existing delivery types and billing types.

Furthermore, you can also use the existing item categories.

Your requirement is to have different pricing procedures for different business lines, but the process (i.e. delivery, billing) is the same across different business lines. Thus you pricing procedure determination you can create new sales document types.

For the creation of new sales document types, some comments -

1. You can have (in addition to different Document pricing procedures) different descriptions, different number ranges for easy identification of different processes.

2. Assignment of sales area to different sales document types

3. Copy control between new sales document types with delivery types (existing).

Copy control Delivery type to Billing type is not needed, if you use the existing item categories.

4. In the new sales document types - input the delivery type and the billing types; also check for the basic functions - incompletion procedure, etc. etc.

(assignment of output procedure to the new document types, if necessary)

5. Lastly configuring pricing procedures and pricing procedure determinations.

Keep in mind, if you have different CRs then the sequence could be important (e.g. CR with the DoPP should go first and then the determination of pricing procedure) 

[Former Member]

Thank you all for your comments.

[jpfriends079]

Alejandro

Apart for what analysed & suggest presented by TW.

Frankly, it doesn't matter how many TPA interface you have to determine pricing.

Can you share your pricing procedure from 2 different business line? This will assist us in understanding whether you really need separate pricing procedure. Please refer my post in following link to understand under one sales org better we have one pricing procedure: How many pricing procedures to be created?

Sales Organisation 2  or 3 additional pricing is acceptable, if your client operates from one or 2 or 3 country. But, visualize a situation, where your client operated in more than 5 counties. This will be really complex & complicated handle. Refer standard pricing procedure RVAA01, check skillfully it is configured.

Let us know your concern.

Thanks, JP

[former_member182378]

Alejandro,

JP has touched upon an important point - Explain why different business lines require different pricing procedures?

Please explain a little more about the different business lines.

Currenly, how many pricing procedures are in use? And how is the pricing procedure determination being done?

Thanks!

[former_member182378]

Alejandro,

Creation of new division (and new sales area) would involve many configuration steps (e.g. assign division to sales org; create new sales area; assign new sales area to the sales document types etc.) and many master data maintenance (extension of customer; would you have to change the division in the material master record? etc.)

Furthermore, there are existing interfaces with 3P system.

Can you create new sales document types, for each business line?

Document pricing procedure is also a determining factor in the pricing procedure determination.

You want to determine pricing procedure based on sales office.

Could you please explain why? Different offices handle different business lines?

Sales office is at header level in the sales order. This is ok.

But it is at item level in the billing document. So in the billing documnent

- is pricing going to be re-dertermined?

- can a billing document have more than one sales offices?

This Z pricing procedure determination is for the entire business or for only some part.

In other words would z determination work for some cases (orders) and the standard determination work for other orders?

It is possible to go for z procedure determination, it would involve coding in a userexit, at sales order level.

What is the document flow? Do you have any presales documents too? (e.g. quotations)

Then here to the z pricing procedure determination has to get triggered.

Also to look into would to make the field Sales office mandatory in the sales order, if you choose to go with this z procedure determination.

This can be done with incompletion procedure (assigned to the sales document type).