Configuring Purchase Pricing Rules

Process Definition: Purchase Pricing Hierarchy Options for Vendor-Specific Pricing Options for General Item Pricing Option for Individual Order Pricing Process in Deacom: Configuring Vendor Part Pricing Setting up Pricing and Blanket Orders Configuring Facility Part Pricing Entering an Item Master Purchase Price

Purchase order pricing may be configured to automatically populate the default item pricing anytime new orders are entered in the system.

Process Definition:

Pricing should be set up before entering Purchase Orders so that the price that a product is purchased for will automatically default when the item and Vendor are already selected.

Purchase Pricing Hierarchy

1. Vendor Part Pricing (see ‘Configuring Vendor Part Pricing’ below)
2. Pricing Order (see ‘Setting Up Pricing/Blanket Orders’ below)
3. Facility Specific Purchase Price (see ‘Configuring Facility Part Pricing’ below)
4. Item Master Purchase Price (see ‘Entering an Item Master Purchase Price’ below)

Options for Vendor-Specific Pricing

• Vendor Part Cross References (see ‘Configuring Vendor Part Pricing’ below)
  • Allows for quantity breaks and effectivity dates, however this method does require an entry for each Vendor/Part combination.
  • Since Deals and Promotions are restricted to Sales pricing, Vendor Part Cross References are a much more important player on the Purchasing side than Customer Part Cross References are on the Sales side.
  • Advantages: Easily reportable via the Vendors "Items Supplied" report, contain effectivity dates, allows quantity price breaks.
  • Disadvantages: Not easily modifiable.
• Pricing Orders/Blanket Orders (see ‘Setting Up Pricing/Blanket Orders’ below)
  • Multiple pricing orders may exist for any one Vendor and Part.
  • Option to set total order pricing for an item if the company orders a set quantity of all items on the pricing order.
  • Best option for contract pricing/blanket orders.
  • Advantages: Useful for planning and configuring future prices; Easy to setup, maintain, and report on; can use with the Import Excel function.
  • Disadvantages: Cannot use with family quantity breaks.
  • Recommended option – similar to a ‘Price Book’. It can be imported and also sent to a Vendor in a specific report.

Options for General Item Pricing

• Facility Part Cross References (see ‘Configuring Facility Part Pricing’ below)
  • Good option to ensure that the company is not losing money if one Facility is at a cost disadvantage over another.
  • Used only if no other pricing options have been set and there is a Facility entry with the "Use Prices" flag checked for the item in the Item Master record.
  • Example: If a Facility building is rented from a different company and the Facility houses a specific set of products, the associated costs can be built into the Part's Facility Purchase Price.
  • Example: If there are high shipping costs associated with getting the item from the Vendor to the storage/selling Facility, the cost can be built into each of the Parts it applies to.
  • Disadvantages: Not easily reportable or updated, cannot be used to set future prices (no effectivity dates).
• Item Master Purchase Price (see ‘Entering an Item Master Purchase Price’ below)
  • Indicated by the selection in the "PO Price Type" field on the Item Master General 1 tab. Options include Standard Cost, Purchase Price, and Last Cost.
  • If no other level of the hierarchy is being used and this field is empty, manual pricing will have to be used when entering a new Purchase Order.
  • Advantages: Easily reportable and modifiable.
  • Disadvantages: Cannot be used to set future prices (no effectivity dates), does not allow quantity price breaks.

Option for Individual Order Pricing

• Manual pricing
  • Much more prevalent and acceptable than it is on the Sales side.
  • Discounts, in addition to the regular Terms discounts available, are configured on the Purchase Order header and respected when making payment on the order.
  • Advantages: Can set or manipulate populated pricing to account for one-off costs.
  • Disadvantages: Requires a user to touch the price of every order entered.

Process in Deacom:

Configuring Vendor Part Pricing

Also see ‘Purchasing - Creating Vendor Part Cross References’.

1. Navigate to Inventory > Item Master.
2. Select a part in the ‘Part Number’ field.
3. Click View.
4. Click View Vendors on Item Master -- Standard.
5. To add a New Vendor Part Cross Reference:
   1. Click Add.
   2. Enter a ‘Vendor’.
   3. Update the ‘Part Number’ to the Vendor Part Number if known.
   4. Update ‘Retail Code’ and ‘Part Description’ accordingly.
   5. Select the ‘Pricing Unit’ and ‘Purchase Unit’.
   6. If MRP settings between this vendor and part should be used, leave ‘Use MRP Settings’ and fill out MRP fields.
   7. Uncheck ‘Use MRP Settings’ if this cross reference should use the Item Master options.
   8. If this vendor will be the most used vendor for this item, select the ‘Preferred’ checkbox. When this box is checked, MRP will automatically select this vendor when creating a PO.
      1. Note: cross-references can be set up for multiple vendors but only one vendor can be set as the preferred vendor.
6. To update an Existing Vendor Part Cross Reference:
   1. Highlight the line and click Modify.
7. Click + on the Pricing tab.
   1. Enter the ‘Min Quantity’ that must be purchased before the price indicated in the ‘Price’ field will be applied.
   2. Enter the ‘Price’ for this item and vendor when selected on a PO.
   3. Select the ‘Date Based On’ to define if the price should be based on the ordered or received date.
   4. Note: if ‘Received’ is selected, the price will recalculate when the Purchase Order is Received.
   5. Enter a ‘Start’ and ‘End’ date for the pricing effectivity.
   6. Click Next to add more pricing effectivities or to create a price break for this Vendor Part.
   7. Click Save and Exit once completed.
8. Click the Save.

Setting up Pricing and Blanket Orders

Also see ‘Purchasing - Setting up & Using Pricing and Blanket Orders’. The SOP will review how to set up a standard Pricing Order, Pricing Order based on Quantity Increments, and Blanket PO. It will also review how to enter a Purchase Order off the Pricing Order and how to report against it.

1. Navigate to Purchasing > Order Entry.
2. On the General tab:
   1. Set ‘Order Type’ is set to “Pricing”.
   2. Select appropriate vendor in the ‘Vendor’ field.
      1. Once a Vendor is selected, the other fields will automatically populate with the order defaults from the vendor record but can be over-ridden by the user.
   3. Select the appropriate ‘Facility’.
3. On the Dates tab:
   1. If applicable, enter the Start Date in ‘Pricing Starts’ (PO Date 5).
   2. Enter the End Date in ‘Expires’.
4. Click the Add button on the purchase order header to display the Edit Purchase Order Line form.
   1. Use ‘Vendor Part’ or ‘Part Number’ to search for an item to add.
   2. For a Standard Pricing Order:
      1. Enter the ‘Quantity’ for this item that the price will be applicable for.
      2. Enter the ‘Unit Price’ to be used when the minimum quantity is purchased on a normal PO.
      3. To add additional parts, click Next. When finished, click Save and Exit.
   3. For a Pricing Order based on Quantity Increments:
      1. Enter a ‘Quantity’.
         • Note: when creating pricing orders, the quantity entered in the quantity field indicates the quantity at which the unit price will take effect. For example, if part A costs 5.00, but customers that buy a quantity of 10 or more will pay 4.00 each for part A, then the pricing order would be set for a quantity of 10 and a unit price of 4.00.
      2. Enter the ‘Unit Price’ for this item. This represents the price for the quantity or quantities that will be ordered from the vendor.
      3. Click Next to continue adding the quantity increments. An example of the PO lines would be:
         • Part A, quantity of 10, unit price of $4.00.
         • Part A, quantity of 15, unit price of $3.50.
         • Part A, quantity of 20, unit price of $3.00.
      4. To add additional parts, click Next. When finished, click Save and Exit.
   4. For a Blanket Order:
      1. Enter a ‘Quantity’ of “1”.
      2. Enter the ‘Unit Price’ for this item. This represents the price for the quantity or quantities that will be ordered from the vendor.
      3. Enter the desired blanket quantity in ‘Blanket Quantity’.
      4. To add additional parts, click Next. When finished, click Save and Exit.
5. Review the lines added and click Save when ready.

Configuring Facility Part Pricing

1. Navigate to Inventory > Item Master.
2. Select a part in the ‘Part Number’ field.
3. Click View.
4. Click View Facilities on Item Master -- Standard.
5. To add a New Facility Part Cross Reference:
   1. Click Add.
   2. Enter a ‘Facility’.
6. To update an Existing Facility Part Cross Reference:
   1. Highlight the line and click Modify.
7. On the Costs 2 tab:
   1. Check ‘Use Prices’.
   2. Enter a ‘Purchase Price’.
8. Click Save and Exit.

Entering an Item Master Purchase Price

1. Navigate to Inventory > Item Master.
2. Select a part in the ‘Part Number’ field.
3. Click Modify.
4. On the General tab:
   1. Ensure ‘PO Price Type’ is set to “Purchase Price”.
5. On the Costs 2 tab:
   1. Enter a ‘Purchase Price’.
6. Click Save.