Configuring Purchase Pricing Rules

Purchase order pricing may be configured to automatically populate the default item pricing anytime new orders are entered in the system. There are a few ways to setup purchasing pricing, with a hierarchy described in the DEACOM Pricing Hierarchy Best Practice page. 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.

Configuration

Prior to setting up pricing, there are a few pieces of data that must exist in DEACOM:

Chart of accounts - the accounts should be in the system at this point even though none will get hit during the order entry process. An AP Account is needed for an order to be saved.
Vendors must be entered into the system.
Payment Terms must be populated and can come directly from the vendor record in order to enter a Purchase Order
Facilities - Each purchase order is going to need to have a facility linked to the order for it to be saved
Items - Every purchase order needs an item added to it and that item must have a purchase to account.

In addition, the following system settings should be verified if using pricing orders.

"Pricing Order Date" and "Pricing Order Sort" fields in Purchasing > Options. These fields define the criteria for how and when pricing orders will be applied.

Process

Understanding the DEACOM Pricing Hierarchy

In order to fully utilize the Pricing Hierarchy, several different items with overlapping information (date validity range, Part number, Facility, etc.) are required. Once an item is selected during Purchase Order entry, the DEACOM application will immediately check to see what, if any, Pricing Hierarchy exists for the specified item. More information on the different levels of the hierarchy are available on the DEACOM Pricing Hierarchy Best Practice page. If no other hierarchy levels exist, the system will default to the Item Master list price. At this point the user has the option to keep the Unit Price that populates or manually override the "Unit Price" field of the Purchase Order. It is easy to report on different pricing methods used across Purchase Orders; more information is contained in the Reporting section below.

Purchase Order pricing options

Using the existing hierarchy, there are a few methods available for establishing pricing.

What are the different options for configuring Vendor-specific pricing?

Vendor Part Cross References

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.
Refer to the "Setting up Vendor Part pricing" section below for process information.

Pricing Orders

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.
Refer to the "Setting up Pricing Orders" section below for process information.

How is general item pricing configured?

Facility Part Cross References

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).
Refer to the "Setting up Facility-specific prices" section below for process information.

Item Master purchase prices

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 effective dates), does not allow quantity price breaks.
Refer to the "Setting up Item Master purchase prices" section below for process information.

How is pricing configured on individual orders?

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.
Refer to Entering Purchase Orders for information on creating new orders.

Setting up Vendor Part pricing

Navigate to Inventory > Item Master.
Select any part in the pre-filter and click "View".
Select the "View Vendors" button.
The "Vendors of Part" form will be displayed.
Click the "Add" button to display the "Edit Vendor Info" form.
On the "General" tab enter a vendor name and fill in all appropriate fields, including required fields which are marked in blue. See the link in step #1 for a list of all the fields and options when entering vendor pricing.
Go to the "Pricing" tab.
Click the "Add" button to display the "Edit Vendor Price" form.
Enter the following fields:
1. Min Quantity — Defines the minimum quantity that must be purchased before the price indicated in the Price field will be applied.
2. Price - The price for this item and vendor when selected on a PO
3. Start & End Dates - Must be filled in as well for the dates that the pricing is going to be applicable for
If additional pricing rules for this vendor are needed, click the "Next" button to enter the appropriate information. If no additional pricing will be entered, or after additional pricing rules have been entered, click the "Save" then "Exit" buttons to complete the process and close the "Edit Vendor Info" form.
Click the "Save" and "Exit" buttons to close the Vendors of Part form.

Note: Price breaks can be established for Vendor Parts by creating multiple pricing rules, each for the appropriate minimum quantity and price, on the "Pricing" tab. For example, one pricing rule might indicate a minimum quantity of 10 must be purchased in order to receive a price of 100.00 and another pricing rule might indicate a minimum quantity of 50 must be purchased in order to receive a price of 80.00.

Setting up Pricing Orders

Note: Version 16.03.018 introduces a new Purchasing Option, "Re-Calc Purchase Order Prices on Receipt". Ifchecked, the system will reevaluate all valid pricing orders and, if applicable, will apply any pricing changes for items on purchase orders after purchase order receipt. This option is useful in situations where pricing orders are modified frequently and Purchase Orders have already been entered in DEACOM. Vendors may price items based on a different purchase order date, such as ordered date, pick up date, or received date. If this box is checked, then modification to Pricing Orders can still be applied after applicable purchase orders have been entered but before items/lots are received into inventory. When operating in FIFO cost mode, the lots received will reflect updated prices.

Navigate to Purchasing > Order Entry.
Change the order type in the top right to "Pricing".
Select appropriate vendor. Note that the other header fields will be automatically populated after selecting a vendor, but can be over-ridden by the user.
If a specific time period is required, navigate to the Dates tab and enter the start date in the user-defined field "PO Date 5" and the end date in the field entitled "Expires". The captions of user-defined fields may be set in System > Maintenance > Captions.
Click the "Add" button to begin adding parts to the purchase order.
Use the "Part Number" search box to locate the part.
Enter the quantity for this item that the price will be applicable for.
Enter the price to be used when the minimum quantity is used on a normal PO type.
If adding more lines to the pricing order, the user can click the "Next" button to save the first line and bring up a blank second line, or continuously click add to add more lines.
When finished adding lines to the pricing order, the user can click the "Save" button, to save the last line added, and the "Exit" button, to exit from entering purchase order lines and return to the purchase order header.
Once all information has been entered, click the "Save" button on the purchase order header to complete the process.

The next time a normal purchase order with this vendor and item is entered, the price used on this Pricing Order will be used as long as there is no Vendor Part cross reference pricing set to override it. Note that if multiple pricing orders exist for the same Vendor and item(s) the system will apply pricing orders based on the option made in the "Pricing Order Sort" field in Purchasing > Options.

Note: When entering pricing orders, users may choose to utilize the "Total Order Pricing" flag on the "Edit Purchase Order Line" form. This option is only applicable for Pricing Orders. If checked, allows a Pricing Order line to consider the entire quantity in terms of the Purchase Unit when checking for the minimum quantity. If the Purchasing Unit of the pricing line is "lbs" then the quantities of all of the order lines are converted to "lbs" and summed; if the total is greater than or equal to the quantity on the pricing line, then its price is used. In addition, when a Pricing Order has a line item set to use Total Order Pricing and the quantity is in a weight unit, the unit and tare weights of the items on the order are summed

Setting up Facility-specific prices

Navigate to Inventory > Item Master.
Select the appropriate criteria on the Item Master pre-filter, i.e. select a specific Part Number or Category.
Click the "View" button to generate the list of items.
Select the appropriate item and click the "View Facilities" button to generate the Facility Parts form.
Click the "Add" button to display the Edit Item Facility form.
Navigate to the Costs 2 tab, fill in the "Purchase Price" field, and check the "Use Prices" box.
Once all information has been entered, click the "Save" button to commit the changes.

Setting up Item Master purchase prices

Navigate to Purchasing > Options.
Ensure the value in the "PO Price Type" field is set to "Purchase Price". This is the default setting and is generally not changed, however companies do have the option to select "Last Cost" or "Standard Cost". The setting in this field indicates what field on the item master should be used when entering new lines on purchase orders.
Navigate to Inventory > Item Master.
Use the "Part Number" field to select the appropriate part.
Click the "Modify" button to display the "Edit Item Master" form.
Click the "Costs 2" tab and enter a value in the "Purchase Price" field.
Click the "Save" button to complete the process.

The next time this part is entered on a normal purchase order, the price used on the order line will be the purchase price from the item record, unless a Vendor Part cross reference or Pricing Order exits to override it.