Oracle E-Business Advanced Pricing - Implementing Your Pricing Policy Using Standard Functionality
Executive Summary
The Oracle E-Business Suite uses the Advanced Pricing module to help ensure accurate pricing across the organization. Accurate pricing of a transaction is key to maintaining a good relationship with your customers and ensuring accurate financial reporting. It removes the responsibility from the user, who may not be aware of organisation pricing policy, or margin considerations.
Applying the correct price up-front improves efficiency, and reduces the need to revisit transactions to adjust the price at a later stage. Accurate pricing improves communication in outsourcing, contract manufacturing and Back-to-Back environments. It also provides tangible benefits in communicating with customers and partners.
Using Oracle's Advanced Pricing module helps achieve accurate pricing by allowing great flexibility in choosing what price to apply. The application uses the technology to enable standard pricing models such as Volume discounting, Promotions and Price breaks.
Oracle also allows extending the standard functionality using fully supported customizations, and allows detailed reporting on the price charged at a particular time, and the reasons why that price was charged.
This document discusses some of the possible applications of Advanced Pricing in business situations. Various scenarios are outlined, along with practical examples of how Advanced Pricing has been used to help implementation.
Advanced Pricing allows the use of complex pricing models and configuration of other useful pricing options. For instance, the system will allow the creation of adjustments using modifiers to create pricing models such as · Discounts
· Surcharges · Promotions
Apply the modifiers using various methods:
· New Price · Formula · Percentage uplifts
Selectively apply the modifiers using conditions based on seeded or custom attributes:
· Customer · Order Type · Supplier · Item · Contents of customer flexfield
Apply the modifiers at various phases in a transaction cycle. In Order Management for instance, apply the modifiers at:
· Fetch List Price · Book Order · Ship Order
Options that are more complicated are available, such as:
· Range Pricing · Price Breaks · Other Item Discount
Most of the above options are available as part of standard Advanced Pricing functionality. Whatever pricing policy your company requires, Oracle can implement that policy across the enterprise.
2. Using Advanced Pricing when the price is different every time
Some business scenarios require a sales price that changes often, in which case, maintenance of price lists and modifiers requires a lot of effort. Basic pricing cannot easily manage this kind of pricing model, as the price changes too often.
Advanced Pricing provides a very flexible solution to this by allowing each call to the pricing engine to generate a custom price. This price does not have to relate to a price list, it can depend on any number of factors.
For instance, the following scenarios all require that the same product can have a different price, depending on the timing of the transaction.
· Create a discount scheme based on the am
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ount ordered in a single calendar month. Customers achieve increasing levels of discount as they order more of a particular product class. · Calculate a sales price based on 10% uplift over the average cost of an item. · Calculate sales price based on 10% uplift over the average purchase price for that item.
Since Oracle can generate a custom price, it can perform this kind of once-off pricing, and record what adjustments have been applied on each transaction line.
Generating a custom price allows total flexibility in which price to apply, and reduces the time spent maintaining price lists and modifiers.
3. Using Advanced Pricing in outsourced manufacturing
Outsourced manufacturing has become the norm as businesses leave the manufacturing and distribution to specialists, and concentrate on core business. As part of good customer relationship management, it is important to know who your customers are and what they are ordering. This allows the seller to better understand the identity and buying patterns of its customers.
In order to achieve this, we could interface products sold by the manufacturing partner onto Oracle as sales orders.
An outsourced manufacturing model consists of the seller, the manufacturing partner, and the end customer. The manufacturing partner ships the goods on behalf of the seller, and transmits shipping details electronically. In this case, the sales order could have the manufacturing partner as the ship from party, and the end customer as the ship to party.
Consider a scenario where the seller wishes to give additional discounts to the end customers depending on the volume of goods ordered, in addition to the true sales price. Advanced Pricing allows the seller to create internal adjustments, at time of sales order creation, without informing the manufacturing partner as part of the sales price.
These line-by-line adjustments are stored in standard pricing adjustment tables at the time of pricing. Later the adjustments can be reviewed to allow additional discounts to the end customers based on a discount policy.
4. Using Advanced Pricing in Back to Back
The term "Back to Back" represents a situation where products sold to customers, are purchased directly from suppliers. The goods may be bundled with services, or require configuration before being sold onto the end customer.
To represent this transaction in Oracle, a sales order and a purchase order are required. We need to determine both a purchase price and sales price for each order.
The sales and buy prices are related, but Order Management and Purchasing are different modules, and normally need separate price lists. This is, in effect, duplicate information and increases maintenance or interface effort.
Integrating Order Management with Advanced Pricing, you could generate a sales order price from a supplier contract, plus an uplift percentage. In this way, the business need only maintain a single price list to perform purchasing and selling.
Using Advanced Pricing the system can generate a price based on related information in another part of the business. This ability allows great flexibility in choosing which price to apply to a transaction.
5. Using Advanced Pricing in Procurement
Integrating Procurement with Advanced Pricing allows a business to assign variable prices to items on purchase orders or requisitions; so managing changes in supplier pricing policies. This feature also allows a business to negotiate complex pricing deals, and ensure the Oracle system can apply the best possible purchase price.
Integrating Procurement with Advanced Pricing and using contract purchase agreements can be used to satisfy the following scenarios:
If a supplier offers a discount during a slow sales month, the system should apply the discounted price, without affecting the standard price.
The details entered on each purchase order dictate the supplier price for an item. The grade or colour could affect the purchase price of cardboard, for instance. This would allow operation with a single item representing cardboard, reducing item and price list maintenance considerably.
This structure allows the dynamic adjustment of agreement prices based on reference fields such as:
· Purchase Order Need by Date · Purchase Order Deliver To location · Supplier Name · Supplier Site · Buyer Name · Contents of Supplier Flexfield · Contents of Purchase order flexfield
Modifying the pricing date, and purchase order or requisition price is possible by using fully supported PL/SQL hooks to extend standard functionality. A further discussion is available in section two, "Using Advanced Pricing when the price is different every time".
6. Using Advanced Pricing when list price frequently changes
Accurate transactions require up-to-date pricing data; this presents problems when the price changes often. To maintain the correct price list, the business needs to perform frequent price list maintenance, or import using the standard price list interface.
Accurate sales order pricing depends on up-to-date price lists; delays in loading price lists using an interface can result in the further delays to subsequent sales orders.
A selling company may want to import a price from an external pricing system; a contract manufacturer may need to import their price lists from a sales partner; companies using outsourced partners may require the import of sales price lists.
Using the High-Volume price list loader program is the fastest method to load large volume price lists. This fully supported interface loads pricing data files into Oracle, and reports on any exceptions.
Those customers who make extensive use of modifiers can import these at the same time via the High-Volume price list loader program.
7. Using Advanced Pricing in configuration of Bills of Material
Advanced Pricing allows the system to price items based on items chosen at run-time using the configurator. This avoids the need to have separate items and price list entries for similar items with different configurations.
Oracle allows entry of the top-level item onto a price list using standard Bills of Material and Order Management. For products sold with different optional items, where the user chooses one of a set number of options, how does the system adjust t