## Understanding Pricing in Procurement

This chapter discusses pricing in procurement.

### Pricing in Procurement

This section discusses:

- Matrix item.

- Price matrix.

- Minimum or maximum price adjustment.

- Pricing on quality attributes.

- Manual purchase price override.

- Pricing at receipts.

- Repricing for procurement.

Because pricing is probably one of the most complex aspects of the business, planning, setting up, and maintaining pricing information might take a considerable amount of time. When you enter a purchase order, the system retrieves the unit cost for the item based on characteristics, such as the branch/plant, the supplier, and the quantity. Before the system processes any type of advanced price adjustment to the purchase order, it must first retrieve the unit cost. Depending on the purchase price level for the item, the system retrieves the unit cost from either the Supplier Price/Catalog File table (F41061) or the Item Cost File table (F4105). After the system retrieves the unit cost, it verifies that Oracle's JD Edwards EnterpriseOne Advanced Pricing is active. If Advanced Pricing for Procurement is active, the system bypasses standard price adjustments and searches for applicable schedules and adjustments in JD Edwards EnterpriseOne Advanced Pricing.

See Understanding Pricing in JD Edwards EnterpriseOne Procurement.

JD Edwards EnterpriseOne Advanced Pricing provides flexibility when defining pricing. Setting up advanced pricing for procurement enables you to price items by using an advanced pricing structure and to streamline pricing setup and maintenance. You can easily adjust prices for each purchase order; and then combine the adjustments into a pricing structure or schedule.

See Understanding Advanced Pricing.

#### Matrix Item

Products often have a number of variations, though they share the same basic properties. Thus, products such as bottled water and T-shirts can be matrix items, which consist of a parent item and child items. You must enter a parent item in the Item Master program (P4101) to create all of the variations (child items) of the parent item. You enter a parent item just as you would any other item in the inventory, except that you specify a template and indicate that the item is matrix-controlled or not matrix-controlled. The system uses this information to display forms that enable you to add all variations of the parent item.

The Matrix Order Entry program (P41902) enables you to create purchase orders for matrix items. You also can access existing purchase orders to order quantities of a matrix item. When you enter a purchase order, you can access the Matrix Order Entry program.

See Working with Matrix and Parent Items.

Matrix Item Receipts and Tolerance

When a matrix receipt is done, the matrix child items generate new purchase order detail lines at the same time the purchase order receipt is generated so that no difference can ever exist between amounts on the purchase order detail line and the receipt. To process the tolerance correctly, the total of the child lines needs to be accumulated and compared to the purchase order detail line of the matrix parent item.

Important! When the quantity of all matrix child items selected is different from the Control Quantity (quantity of matrix parent items) on Matrix Order Entry, the system issues a warning.

See Using Receipt Processing.

#### Price Matrix

In JD Edwards EnterpriseOne Advanced Pricing, you can use the Price Matrix program (P4590) to add and edit a multitude of adjustment detail records in the Price Adjustment Detail table (F4072). Using this program enables you to access a view to suit business needs and quickly enter and maintain pricing information. You can use the price matrix with Advanced Pricing for Procurement.

See Working with the Price Matrix.

See Working with Schedules and Adjustments.

#### Minimum or Maximum Price Adjustment

In JD Edwards EnterpriseOne Advanced Pricing, you add an adjustment to indicate the minimum or maximum price to pay for an item. The minimum or maximum price adjustment enables you to adjust the unit price of a particular item, customer, item group, customer group, or combinations of these. The sequence of the minimum or maximum price adjustment on the adjustment schedule determines what the price will be at that point in the schedule.

See Understanding Schedules and Adjustments.

See Working with Adjustment Definitions.

#### Pricing on Quality Attributes

In JD Edwards EnterpriseOne Advanced Pricing, price setup is based on the quantity, weight, or amount of an item that is entered on an order. Pricing can also be based on quality attributes of the product that is purchased. Quality attribute pricing is a quality level-break adjustment. Therefore, for quality level-break type adjustments, the system will not process adjustments that use quantity, weight, or amount entered for the order.

As you receive shipments of items, you perform the quality tests and enter the test results on the receipt. For the quality level-break adjustment, the system searches for test results and uses the adjustment definition to determine the price.

Note. The quality attributes functionality is supported for JD Edwards EnterpriseOne Procurement receipts only.

Before you define quality attribute price adjustments:

- Ensure that Oracle's JD Edwards EnterpriseOne Quality Management system is activated.

- Set up quality tests on the Quality Management Setup menu (G3741).

- Set up a UDC conversion from an alpha to a numeric value for alpha type test results.

See Setting Up Advanced Pricing Constants.

See Understanding Schedules and Adjustments.

See Setting Up Adjustment Definitions.

#### Manual Purchase Price Override

In JD Edwards EnterpriseOne Procurement, you can provide a manual purchase price override for detail lines on an order. When you are manually overriding a price, the JD Edwards EnterpriseOne Advanced Pricing system applies any designated adjustments over the price.

Before you can override prices and apply adjustments:

- Activate the Advanced Procurement Pricing constant.

- Set the Apply on override price option for each adjustment that should be applied to the overridden price.

If you manually override a price and the system constant is activated, the system reprices the item. The overridden price is the starting price. The system then searches for applicable adjustments and applies those adjustments to the manually entered price.

See Understanding Advanced Pricing Constants.

See Working with Adjustment Definitions.

#### Pricing at Receipts

JD Edwards EnterpriseOne Procurement Management integrates with JD Edwards EnterpriseOne Advanced Pricing to reprice at receipts by retrieving the purchase price and applying adjustments according to the adjustment schedule that is attached to the purchase order or contract. Repricing at receipts uses the standard PO Receipt program (P4312).

To price at receipts:

1. Activate the Advanced Procurement Pricing constant.

2. Set the Price at Receipt processing option on the Process tab of the PO Receipts program (P4312) to reprice purchase prices at receipt entry.

3. Define procurement type adjustments or receipt type adjustments to apply when the purchase order is received.

See Understanding Advanced Pricing Constants.

See Setting Processing Options for PO Receipts (P4312).

See Understanding Schedules and Adjustments.

See Working with Adjustment Definitions.

See Defining Order Detail Groups.

#### Repricing for Procurement

After pricing has occurred on a purchase order or receipt, you can change the price adjustment detail or purchase price and then include the most recent changes on a batch of purchase order or receipt records. You set a processing option on the Reprice Procurement / Receipts program (R45620) to indicate whether the system should process purchase order records from the Purchase Order Detail File table (F4311), receipt records from the Purchase Order Receiver File table (F43121), or both.

See Repricing Purchase Orders and Receipts.