Reduce Customer Claims by Automating Your Price Protection Process

  • by Vamsee Mopuru, Sr. SAP SD Consultant, Quality Systems & Software (October 2009)
  • October 8, 2009
Learn how to automate the price protection process by using SAP user exits and VOFM routines and requirements in SAP R/3 through SAP ERP Central Component 6.0. Having an automated solution helps both the buyer and seller save significant time because it effectively manages the price protection process.
Key Concept

Price protection is an agreement in which a buyer and seller fix the price of specified merchandise for the duration of a contract or a certain period. This marketing feature helps insulate buyers against imminent price reductions so they can feel comfortable deciding to go ahead with a purchase rather than waiting indefinitely for the next price drop. In some agreements, price fluctuations (as indicated by an agreed upon price index) beyond a certain range are taken into account.

Because prices of electronic goods and gadgets go up and down so rapidly, many companies are now offering price protection to prospective customers. This useful agreement benefits both the buyer and seller from market fluctuations. However, many companies let buyers use price protection only once. They don't want their customer support lines to be bogged down by people calling every day asking if the price of their systems went down or raising a claim against a price drop. Companies want to cut down on the number of calls as well as the number of claims.

Therefore, you want to automate your price protection process. Automation of this process facilitates reducing customer claims, effectively managing disputes, and closely monitoring the orders under price protection. You can automate your price protection process either manually or automatically. For the manual process, you need to create a variant and process it every day to check for orders within or outside the price protection period. Later, all the orders are re-priced accordingly. Alternatively, if you choose to create an automatic process, you can have the system monitor the updates for you. I discuss both manual and automatic processes, as well as their limitations and ways to overcome them.

Vamsee Mopuru

Vamsee M. R. Mopuru is a senior SAP SD consultant working with Quality Systems & Software ( Vamsee specializes in order management, pricing, disputes management, and credit management with commendable integration knowledge of other SAP modules such as MM, LE, and FI.

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