| Using margin controlIf margin control is used, when a sales order or quotation is
specified, several checks are performed and exceeded margins are
logged. The following steps are completed: - LN searches the margin control parameters for the login code of the user who
specifies the sales order or quotation. For each login code, margin control
parameters determine the action(s) that must be taken when the sales price
falls outside the margin. If no margin control parameters exist for the login
code of a particular user, margin control is not used for sales orders or
quotations that are specified by that user.
- LN checks the item sales data and the sold-to business partner data for the
allowed margin variances, which are defined as a percentage and compared
against a target price or cost price depending on the type of margin being
checked.
-
LN determines any of the following: - For (price) margin control, the target price for an item.
The target price can be the sales price, cost price, recommended retail price,
or the price defined in the price structure. The target price is multiplied by
the upper and lower margins, as defined in the item sales data to determine the
margin range.
- For gross margin control, the standard cost of the item
from the item costing data. The cost price is multiplied by the upper and lower
margins, as defined in the item sales data or sold to business partner
data.
- LN checks the net price defined for the sales order or quotation line. If this
price falls within the margins, the order is processed. If the price falls
outside the allowed margin, LN takes the action specified for the user in the Margin Control Parameters (tdsls0120m000) session.
-
Sales orders or quotations whose margins are exceeded and
that must be logged, can be viewed in the following sessions: - Sales Orders below/above Allowed Margin (tdsls4518m000)
- Sales Quotations below/above Allowed Margin (tdsls1518m000)
Sales orders whose margins are exceeded and that must be
blocked, can be viewed in the following session: - Blocked Sales Order (Lines) (tdsls4520m000)
- Logged instances of sales orders or quotations whose margins
are exceeded can be deleted in the Delete Margin Log for Sales Orders below/above Allowed Margin (tdsls4218m000) session or
the Delete Margin Log for Sales Quotations below/above Allowed Margin (tdsls1218m000) session if these margins are no longer required.
Note - When a sales order or quotation falls outside the defined
margins, more than one action can be taken at a time. For example, LN can signal,
log, and block a quotation or an order.
- If an order is blocked due to margin guidelines, the block must
be manually removed, even if the price is corrected.
- Blocking occurs at the step specified as the blocking step for
the order type.
Example For ITEM 1, the following is applicable: - The target price, which is the sales price, is $500.
- The upper margin is 25%.
- The lower margin is 10%.
- The standard cost is $389.
In addition, the following data is available: - For ITEM 2, the standard cost is $317.
- For sold-to business partner NS Materieel, the upper margin is
20%, and the lower margin is –5%.
- NS Materieel places an order for 25 pieces of ITEM 1 at $600,
and 25 pieces of ITEM 2 at $515.
As a result, the following margin checks are
calculated: - (Pice) margin check for ITEM 1.
The formulas for this check are as follows: - Upper margin = target price * (1 + upper margin
percentage)
- Lower margin = target price * (1 - lower margin
percentage)
- Gross margin check on line level for ITEM 1.
- Gross margin check on header level.
(Pice) margin
check for ITEM 1 |
---|
Upper margin | 500 * (1.25) = $625 | Lower margin | 500 * (.9) = $450 |
Because the net selling price is $600, margins are not
exceeded. Gross margin check
on line level for ITEM 1 |
---|
Upper margin | $389 * (1.25) = $486.25 | Lower margin | $389 * (.9) = $350.10 |
Because the net selling price is $600, the upper gross margin is
exceeded. Gross margin check
on header level |
---|
Standard cost of both items | $389 + $317 = $706 | Upper
margin | $706 *(1.2) = $847.20 | Lower margin | $706 *(1.05) =
$741.30 | Net selling price for both items | $600 + $515 = $1115 |
Because the net selling price is $1115, the upper gross margin
is exceeded. | |