Mascidon, LLC


SAP Business  One Add-on Products



Surcharges

The volatility of commodity prices from oil to steel to copper has led to the widespread use of surcharges for buying and selling inventory with high content of these commodities.  The surcharge add-on addresses commodity price adjustments based on current market pricing as compared to pricing when a contract is signed.  The surcharge add-on addresses pricing adjustments in the purchasing and the sales processes.


Purchasing Surcharges

Setting up the purchasing surcharge requires the following:

  • A 'commodity' item must be set up in the item master as a non-stocking item - 'COPPER' for example
  • Any item subject to a copper purchase surcharge would have as its 'commodity' = COPPER
  • If the commodity field is set, then a 'Percentage' flag (0 - 100%) must also be set for this item. Think of this as the % of this part made from the 'commodity'
  • if a vendor uses surcharges as part of PO processing then a record for this vendor - commodity must be created within the BP Catalog table 
    • A flag within this table is set to indicate whether to apply the surcharge by price or by weight


Assume the surcharge is applied by weight:

    • Item base price is $12.00 - as defined for this item and the vendor's associated price list (or any other SAP means for defining the base price)
    • Item weight is 1.8 pounds
    • Item '% flag' is set to 80%
    • COPPER item has a 'base price' of $4.00 - the COPPER price /pound at the time the contract went into effect
    • COPPER item has a special price setup for this vendor of $6.50 - the current price of copper
    • Based on these parameters, the PO price for this item - vendor defaults to:
      • $12.00 + Surcharge = $12.00 + (80% x 1.8 pounds) * ($6.50 - $4.00) = 12.00 + 1.44 pounds x $2.40 = $15.36


Assume the surcharge is applied by price:

    • Item base price is $12.00 - as defined for this item and the vendor's associated price list (or any other SAP means for defining the base price)
    • Item weight is 1.8 pounds - irrelevant information for this scenario
    • Item '% flag' is set to 80%
    • COPPER item has a 'base price' of $4.00 - the COPPER price /pound at the time the contract went into effect
    • COPPER item has a special price setup for this vendor of $6.50 - the current price of copper
    • Based on these parameters, the PO price for this item - vendor defaults to:
      • $12.00 + Surcharge = $12.00 + 80% * ($6.50 - $4.00) = $14.00


The maintenance of the surcharge pricing is done by periodically changing the special pricing of the item 'COPPER' for this vendor.


If purchasing from multiple vendors, the special pricing for 'COPPER' needs to be maintained for each vendor.


    Surcharges to your customer are more complex.  For instance, if you are selling solenoids - with copper as a main component - then the surcharge for the finished goods should apply to the copper component of the solenoid.  If there are a lot of components to the assembly you are selling, your customer is only willing to pay the surcharge on the weight of the copper in the solenoid assembly.  Mascidon's SAP Business  One surcharge add-on addresses this issue.  Additionally, Mascidon can vary the pricing to the customer for the full assembly or have a static price for the full assembly and a second line on the sales documents for the surcharge.

    The surcharge module is a mixture of enhancements to SAP using standard SAP Business One tools and an add-on to handle creation of the surcharge line item on the sales order.