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144 CHAPTER 5 The Fulfi llment Process

Demo 5.3: Review customer–material info record

PRICING CONDITIONS
Pricing conditions are master data that companies use to determine the selling
prices of their products. Companies create conditions for various components
of the fi nal selling price, including gross prices, discounts, freight, surcharges,
and taxes. Conditions can be fi xed amounts, percentages, or based on a sliding
scale, and they can be either independent of or relative to other conditions. For
example, the price of a product can be material specifi c and customer inde-
pendent, meaning that the seller charges the same price to all of its customers.
Alternatively, the price can be customer specifi c, in which case the company
charges different customers different prices, perhaps based on some agree-
ments between the company and the customer. Similarly, discounts can be
uniform, or they can be based on the quantity or value of the purchase. For
example, GBI offers a 10% discount for purchases of between 100 and 500
units and a 20% discount for purchases of more than 500 units. Freight is gen-
erally based on the weight of the shipment, and it may be waived for purchases
greater than a predetermined amount. Thus, the fi nal price to the customer is a
function of, or conditioned on, numerous variables.
Because numerous conditions are defi ned for a product, a company must
have a procedure to determine which conditions apply to a particular customer
order. This procedure, called the condition technique, consists of identify-
ing available condition types (gross price, customer-specifi c price, discounts,
freight, surcharges, etc.) and determining which ones apply to the particular
circumstances of the order.
Recall that in our example, RMB wishes to purchase 40 bikes and 100
t-shirts. The bikes do not qualify for a discount, so GBI will charge the stan-
dard price of $2,800 per bicycle. However, the t-shirts qualify for a 10% dis-
count, so the price will be $27 per shirt, reduced from the standard price of $30.

Demo 5.4: Review pricing conditions

OUTPUT CONDITIONS
A variety of outputs that are generated during the fulfi llment process, such as
quotations, confi rmations, and invoices, must be communicated to customers.
The data needed to perform this task are included in output conditions. The
condition technique used to determine pricing is also used to determine how
outputs from the process are communicated to the customer.
Output conditions are defi ned separately for the different output types
(quotations, invoices, etc.). Data in the condition master include the output
medium (e.g., print, fax, EDI), partner function (e.g., sold-to party, ship-to party),
and transmission time (e.g., immediately, or periodically using a program).
RMB prefers to receive order confi rmations via e-mail within 4 hours of
acceptance or shipment of an order. It also prefers to receive paper invoices.
GBI must maintain all of these output conditions in its ERP system.

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