How to configure Price Conditions in SAP Sourcing (from Wave 8 onwards)

[Former Member]

This blog will start with a short overview about Price Conditions (or Condition Types as they are called in ERP) and their attributes in SAP Sourcing. The required configuration steps will be explained in a second blog. Please note that these features are available starting with SAP Sourcing OnDemand Wave 8.

Price Conditions are an important part of a SAP ERP system to determine a price in a Purchase Order item. In MM a Purchase Order is linked to a calculation schema which includes the conditions to calculate costs, prices, period-end rebates, and taxes. This concept is referred in the Sales and Distribution (SD) area as a pricing procedure (= a framework of steps used to calculate or determine something). Different schemas can be defined to distinguish between various purchasing organizations and suppliers.

Overview of calculation schemas in ERP

ERP calculation schema

In the calculation schema will be specified which condition types are to be taken into account and in which sequence. For example when creating a contract the ERP system automatically determines which is the correct calculation schema and which price conditions can be used. When a purchase order gets created with reference to a contract the conditions are copied to calculate the accurate price. Please check here for further details about ‘Conditions and Price Determination (MM-PUR-VM)’.

Condition types/Price conditions within an ERP contract

To integrate ERP conditions with SAP Sourcing the standard report BBP_ES_CUSTOMIZINGDATA_EXTRACT in ERP has been extended to allow as well the extraction of condition types for Purchasing. The generated XML file can be imported into SAP Sourcing to ensure that all conditions with the correct attributes are created. Even as a replicated Condition can be maintained in SAP Sourcing manually, it is recommended not to do so to avoid issues with the document integration with ERP.

Price Condition attributes in SAP Sourcing in detail

Experienced ERP users will have an easy understanding of Price Conditions as SAP Sourcing is using similar terms and icons. To reduce the complexity only a subset of the available features of ERP Condition types are used in SAP Sourcing. A condition in SAP Sourcing has as well a 4-character ID and a name; further an optional field description to explain the purpose of a condition for suppliers responding to an RFx.

SAP Sourcing Wave 8 supports free text service items and thus needs to distinguish between material and service items using the attribute Item Type. The Condition Class can have the values ‘Prices’ and ‘Discount or Surcharges’ which are used to determine the net price of a Purchase Order.

Maintain a price condition in SAP Sourcing Wave 8

The attribute ‘Condition Applies to’ determines if a condition will be available on header or item level or both. An example for a header condition is that for all items a 2% Discount should be provided. The field ‘Impact on Price’ clarifies if a condition of type ‘Discount of Surcharge’ is reducing or increasing the net price (for conditions of type ‘Prices’ is has no meaning) which is required for calculating of a net price. It is planned to use this information in future for calculations within the SAP Sourcing RFx process.

SAP Sourcing supports 3 different Calculation Types: Fixed amount, Percentage and Quantity. The basic type is ‘Quantity’ which will be often used for a price. Conditions with ‘Fixed amount’ could be used on header level for a discount or surcharge or on item level for an amount which is independent of the item quantity, for example for the costs required to adjust a machine to produce a specific material. Conditions with type ‘Percentage’ could be used for a % discount which could be combined with the next attribute ‘Scale Base’. SAP Sourcing allows a Quantity scale on item and a Value scale on header level. An example for a value scale is that starting from a value of 10.000 Euro a discount of 2% is negotiated, which increases to 3% from 50.000 Euro etc.

The attribute ‘Scale Type’ is used to distinguish between a ‘Base-scale’ (From-Scale) and a ‘To-scale’. By selecting ‘Can be maintained in condition record’ the user can make that decision within the document. With a ‘Base-scale’ users can decide that from a specific quantity (on item level) or a specific value (header level) the price will change.

For example when ordering laptops the price is 599 Euro, but when ordering more than 20 laptops the price gets reduced to 580 Euro and further to 570 Euro ordering more than 50 laptops. This corresponds to a ‘From-scale’ starting with 1 and a price of 599, etc. Here a screenshot how it looks like within a SAP Sourcing Master Agreement:

Maintaing a scale

Last but not least the attribute ‘Scale Check‘ can be used to ensure that scale values are Ascending or Descending.

To reduce issues when transferring an RFx Award or a Master Agreement to ERP several validations have been created. For example a condition of type Prices cannot be assigned to Header (level) or use the Calculation type Percentage. Within a document only one condition of type Price can be used (but many conditions of type Discount or Surcharges). Further validations will be introduced with SAP Sourcing Wave 9.

This topic will be continued at another blog explaining the configuration steps.