Short-term special pricing agreements

Short-term special pricing agreements, or SPAs, are one-time contracts with your vendor to purchase a specific line item at a lower cost. Typically, the purchase is associated with a specific sales order. These short-term agreements affect your cost for the item, and although you can pass along the savings on to your customer, the customer's price is not directly or automatically changed.

Use this functionality if your customer service representatives and buyers commonly work closely with vendors to, for example, pass along closeout costs or address a customer's situational purchases, such as a special project or a volume purchase.

You can also sell inventory currently in stock at a lower SPA cost and recoup the difference during replenishment. Or, you could benefit from a prebate offer, in which the rebate amount is deducted from the cost at the time of purchase.

The SPA functionality provides various methods you can use to meet your special needs. All methods require a valid contract number to tie the agreed amount and vendor's authorization to a specific line item, but unlike normal work flow, these contracts are set up during the sales order process. The short term SPA is applicable to a specific order line item.

Contracts are reconciled during purchase order entry. And, although both the sales order and purchase order user processes for short-term SPAs are manual, the system uses a process specifically for these SPAs. This process is called PD Vendor Contract Pricing Setup and the process runs in the background and is used to automatically create and update vendor contract pricing records.

Much of the functionality of the one time cost hinges on the sales order being invoiced. It is at that point that the vendor contract record in PD Pricing Setup is created. The PD Setup Vendor Contract Pricing process creates or updates the vendor contract cost record in the system based on the contract being used to make the calculation at invoice processing.

Note that the SPA functionality does not automatically tie the cost to the RRAR report when the report is generated with Purchase Entry Recommended Replenishment Action Report. However, after the report is generated, within the Purchase Demand Center Entry, there is the functionality to select the contract and tie it to the line, after the order has been invoiced and the PDSVC record has been created. The typical validation of the contract # in Purchase Order Entry includes a check for a valid contract number on a tied sales order, in addition to a PD Pricing Setup record, so that uninvoiced orders that have not yet created the contract record are considered valid contracts.