sap is oil formula and average pricing.docxl

8/18/2019 SAP IS Oil Formula and Average Pricing.docxl

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IS Oil F&A Pricing –Introductionto Configuration

Background

In Oil and Gas industry, the price of certain petrochemical products like Benzene, Ethylene et al may vary every

day. Since the shipping process for petrochemical products can take long, especially when the shipping method

is seamarine, it is common that the price is determined !y the average of these prices over a time range "a week

or month# plus a surcharge. $hird party providers like %rgus, &'%I, Opis pu!lish the market price of these

products on a daily !asis( these prices are commonly known as )uotes. In order to accommodate the !usiness

need to calculate the price of an order !ased on e*ternal )uotes over a period of time, S%+ introduced -%

pricing in IS Oil.

ow it works

Before formula pricing is introduced or implemented, !usinesses used to use spreadsheet for price calculation.

Simple ones can !e average of / week )uotes on Benzene, while comple* ones can !e like

0.1/Benzend20.3Ethylene2surcharge then average !y one month. Spreadsheet would work fine if you have ten

orders a day re)uiring spreadsheet calculation, !ut imagine when you need to refer to your spreadsheet

hundreds of times a day, finding the right spreadsheet, plugging num!ers, coming !ack to S%+... In IS oil -%

pricing, these special formulas can !e stored in the system and later used !y sales order or purchase orders for

automatic calculation. It is assumed that you have a good understanding in how standard pricing procedureworks, thus we will not go into condition techni)ue in this documentation. ormula pricing is differentiated at

condition type and condition record level. &omparing to regular pricing, -% pricing has a formula to !e

maintained for each formula pricing record, it ena!les varia!le dates for calculation, and further allows client to

define multiple rules and compare two calculation results and pick the desired final rate.

Introduction and &onfiguration

Formula Condition Type

ormula pricing is identified at the condition type configuration in 405. ormula pricing has the calculation type

as 6, commodity +rice, while regular condition types have the calculation type as percentage, )uantity, fi*ed

amount, weight, etc7

ormula pricing condition type8


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9egular pricing condition type8

Formula Pricing Condition Record

$he difference in the calculation type would affect your screen in 4://. Below there is a screenshot of how 4://

for formula pricing looks. ;ote a new icon for maintaining formulas showed up, while scales is no longer an

option, nor can you enter a num!er amount directly for this condition record.

4:// for formula pricing


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%fter you make an entry for your condition record like what you do with regular conditions, select the line and

click on maintain formula and it will take you to the screen where you can create a new formula. ;ote this is the

first method of creating a formula.


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9eference date could !e GI date, or +ricing date, after system decides a reference date, you can offset it to a

!ase date, e.g. /st of ne*t month, 'onday of ne*t week. $ime unit of measure and C of time units are applied to

this !ase date and form a time range. $here is also a check !o* for @E*cl !ase dateA. By selecting this field, you

determine that the )uotation on the reference date is to !e e*cluded during the calculation of the )uotation in the

defined time period.


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%fter clicking on the magnifying glass, it takes you into the formula details ust like what we see in O3I?

;ote % term has a status of @0/, evaluated successfully using final ruleA. e discussed this previously in

maintaining a formula.

rom here, you can further change the formula !y clicking on @maintain formulaA icon, you can save the changed

formula under a different name.


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Before we go into the configuration on -% pricing, letDs first do a )uick comparison on formula pricing and

regular pricing from a high level.

Regular pricing:

i* date only from pricing date, condition value maintained manually in documents or determined directly from

record in 4://

Formula Pricing:

Both fi*ed date and varia!le dates possi!le, condition value determined in directly through formula, while formula

can !e maintained in salespurchase documents or 4://. ependent on formula and e*ternal )uota feeds

F&A pricing Configuration

+re=re)uisites !efore you start -% pricing8

1. External quotations2. F&A condition records

3. Routine for date determination

4. Access sequence

5. Formula Condition t!es assi"ned to our !ricin" !rocedure

&onfiguration for -% pricing can !e found in under Industry solution Oil - Gas "ownstream# menu path in

S+9O.


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External Quotations

6uotations are !rought into sap either !y daily feeds through interface or program, or entered manually through

$ransaction code O3IH.


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ormula & A#era"e $ricin" in the %il & as'ndustr

In case you have noticed my other !logs then you must have already got an idea a!out the Jpstream

- ownstream Industry +rocess Overview - S%+ Solutions in the Oil - Gas Industry.

If you did not get a chance, for Jpstream refer8 htt!())scn.sa!.com)communit)oil*and*

"as)+lo")2,15),4)2-)u!stream*industr*!rocess*o#er#ie*sa!*solutions

or ownstream refer ( htt!())scn.sa!.com)communit)oil*and*

"as)+lo")2,15),4)2/)donstream*industr*!rocess*o#er#ie*sa!*solutions

0e ha#e alread discussed a+out the onstream 'ndustr alue Chain here ou ha#e

noticed that arketin" Accountin" & $ricin" com!onent !las quite a crucial role hile

e talk a+out %il & as 'ndustr. A$ com!onent is +asicall enhanced ith man

additional functions such as contract !ricin" cumulati#e contract call o6 !ricin"

customer !ricelist default !rice lists etc. required for the donstream oil +usiness.

Now let’s focus about Pricing portion in te !ownstream "n#ustr$%

ifferent +ricing methods and strategies can !e followed !y the ownstream !usiness to cater

different needs 8

• &ontract +ricing

• &umulative &ontract call=off +ricing

• Gross - ;et 4olume +ricing

• ormula - %verage +ricing etc.

A"ain from the transfer !ricin" methods !oint of #ie the frequentl used !ricin"

methods are(

• arket +ased !ricin"• Cost +ased !ricin"• 7e"otiated !ricin"• Free market !rices for +oth in!uts and out!ut• Cost !lus mar"in for #alue of ser#ices rendered etc.

8iddin" is done + the Commodit traders for oil futures contract and ultimatel the are

res!onsi+le for the %il !rices. 9hese kind of contracts are +asicall a"reements to +u or

sell oil at a s!eci:c date in the future for an a"reed*u!on !rice. For exam!le( External

quotations of %il !rices are !ro#ided + $latts Reuters etc

http://scn.sap.com/community/oil-and-gas/blog/2015/04/30/formula-average-pricing-in-the-oil-gas-industryhttp://scn.sap.com/community/oil-and-gas/blog/2015/04/30/formula-average-pricing-in-the-oil-gas-industryhttp://scn.sap.com/community/oil-and-gas/blog/2015/04/27/upstream-industry-process-overview-sap-solutionshttp://scn.sap.com/community/oil-and-gas/blog/2015/04/27/upstream-industry-process-overview-sap-solutionshttp://scn.sap.com/community/oil-and-gas/blog/2015/04/27/upstream-industry-process-overview-sap-solutionshttp://scn.sap.com/community/oil-and-gas/blog/2015/04/28/downstream-industry-process-overview-sap-solutionshttp://scn.sap.com/community/oil-and-gas/blog/2015/04/28/downstream-industry-process-overview-sap-solutionshttp://scn.sap.com/community/oil-and-gas/blog/2015/04/30/formula-average-pricing-in-the-oil-gas-industryhttp://scn.sap.com/community/oil-and-gas/blog/2015/04/30/formula-average-pricing-in-the-oil-gas-industryhttp://scn.sap.com/community/oil-and-gas/blog/2015/04/27/upstream-industry-process-overview-sap-solutionshttp://scn.sap.com/community/oil-and-gas/blog/2015/04/27/upstream-industry-process-overview-sap-solutionshttp://scn.sap.com/community/oil-and-gas/blog/2015/04/28/downstream-industry-process-overview-sap-solutionshttp://scn.sap.com/community/oil-and-gas/blog/2015/04/28/downstream-industry-process-overview-sap-solutions


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et’s un#erstan# wat is Formula & Average Pricing & w$ it is useful

• 'n %il and as industr the !rice of certain !etrochemical !roducts like 8en;eneEthlene et al ma #ar e#er da. Now its time to *now about Formula & Average Pricing in +AP

F & A $ricin" in


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The prerequisite or the F & A Pricing Conguration will be as ollows:

• 9he .roup ,on#itions :eld should not +e acti#ated in customisin"(

• 9he corres!ondin" condition t!es =for exam!le FA,, and the access sequences must +ede:ned and included in the !ricin" !rocedure in Customi;in".

• 9he !rice quotations used + F&A !ricin" are de:ned in the quotation ta+le.

• 0e can either use ta+le %'CD$ !ro#ided in


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• Automatic Pricing for "nvoice /eri-cation is important to set:


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• 0e can enter data as required + the $r9=!ricin" t!e for in#oices :eld. 9he !ricin" t!e

for in#oices controls ho the sstem carries out re!ricin" durin" in#oice #eri:cation.

• 9he settin"s for controllin" in#oice #eri:cation and !rice date control +ased on the "oods

recei!t can +e made in the 'nfo record and the endor master data record.

• 9he settin"s made there are automaticall co!ied to su+sequent !urchase documents.

• 9o access the info record choose En#ironment 'nfo record. 'n the info recor# choose

oto $urch. %r". data 1=$urchase %r"ani;ation 1 then make the folloin" settin"s(

• For "oods recei!t*+ased in#oice #eri:cation select .R0base# "/ in the Control area of the

screen


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• For price #ate control enter data as required in the Pricing #ate cat% -el# in theConditions area of the screen

Purcasing !ata 1 /en#or:

• %n the initial screen of the #endor master record choose !oto Purchasing org%data Purchasing data then ma'e the ollo(ing settings)

o For "oods recei!t*+ased in#oice #eri:cation select !R#based in% eri% inthe Control data area of the screen.

o For !rice date control enter data as required in the Pricing date cat% :eld inthe Conditions area of the screen


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!i2erential "nvoice:

• 'n the oil industr arran"ements are often made ith customers to calculate in#oices +asedon the a#era"e !rice of a !roduct o#er a certain !eriod of time.

• 'f the !roduct is deli#ered +efore the a#era"in" !eriod has ela!sed it is necessar to create

a !ro#isional in#oice.

• 0hen the a#era"in" !eriod has ended and the :nal !rice is knon the !ricedi6erence is

in#oiced + creatin" a di6erential in#oice.

Formula ,on#ition 3$pe

• ormula pricing is identified at the con#ition t$pe configuration in $ransaction &ode 405.


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• ormula pricing has the calculation type as 6, commodity +rice, while regular condition types have the

calculation type as percentage, )uantity, fi*ed amount, weight, etc.

• 9egular +ricing &ondition $ype

Formula Pricing ,on#ition

• $he difference in the calculation type would affect our screen in 4://. ;ote a new icon for maintaining

formulas showed up, while scales is no longer an option, nor can we enter a num!er amount directly for thiscondition


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record.

• %fter we make an entry for our condition record like what we do with regular conditions, select the line

and click on maintain formula and it will take us to the screen where we can create a new formula.

•;ote this is the first method of creating a formula. e can also choose a pre created formula repository

in the system.

• $ransaction &ode L O3/> - O3/? can !e used in order to create ormula 9epository.

• Once we give a name for the formula, system take us into the !elow screen for formula maintenance.

;ote we can copy and modify from an e*isting formula !y clicking on the 9epository +roposal icon


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1-5- ies


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I am working on a pricing procedure and i have difficulties to understand how )uotations and formulas fit in the

pricing procedure.

$o get pu!lication averages prices into pricing, you need to have three things in place.

/. ailyeekly pu!lication prices prices in OI&6+ $a!le

H. &ondition record maintenance with or without suita!le ormula repository

3. ;ecessary configuration !ehind it.

$a!le OI&6+ re)uires configuration of Industry solution O-G =M '%+ =M -% +ricing =M 6uotation Source, $ype

- ata.

ormula repository is a template and re)uire num!er ranges config.


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/. ailyeekly pu!lication prices prices in OI&6+ $a!le

H. &ondition record maintenance with or without suita!le ormula repository

3. ;ecessary configuration !ehind it.

$a!le OI&6+ re)uires configuration of Industry solution O-G =M '%+ =M -% +ricing =M 6uotation Source, $ype

- ata.

ormula repository is a template and re)uire num!er ranges config.


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Formula & A#era"e $ricin"

ormula and %verage pricing is functionality availa!le in S%+ IS=Oil.

$he prices in Oil industry fluctuates daily. +rice )uotes for material gets picked up daily !ased on availa!ility of

)uotes !y different oil E*changes "$hird party )uotation provider#. Oil distri!ution and marketing companies need

to use this price for sales.

S%+ IS=Oil provides the functionality of ormula and %verage pricing to meet this re)uirement. Everyday +rice

)uotes from different oil e*changes like +latts, Opis, ;yme* comes to S%+ through interface - saved in Standard

or &ustomized @A ta!le. Each 'aterial is linked to a particular +rice )uote uni)uely in -% pricing.

$he purpose of formula - average pricing is to ena!le the calculation of product price with the help of e*ternal

)uotations over a set period of time. $he price can !e further modified with company defined calculation rule

!efore it is used. $he system also takes into account currency fluctuation within the time period.

• Duotations can +e s!eci:c for a da or can +e a#era"ed o#er a !eriod of time a"reed

+eteen %il Com!an and customer.

• 9he a#era"ed time !eriod are set out in !ricin" and !ament term !olicies.

• 9he handlin" of eekends and !u+lic holidas must +e s!eci:ed ithin formula.

• 9he quotations can +e con#erted into local currenc usin" an a"reed exchan"e rate t!e.

$here are two ways in which the )uotation can !e converted into local currency.

• Con#ertin" the dail quotation usin" dail exchan"e rate.

• 9akin" the a#era"e of the quotations and con#ertin" usin" an a#era"e of exchan"e rates.

S%+ has two sets of rules for defining the averaging period L +rovisional and final rules.

+rovisional 9ule L $his calculation rule is used !y S%+ when data re)uired like e*ternal )uotations to perform the

final calculation is not known.

+rovisional rules are used at the time of creation of Sales order, where there is a possi!ility that at the time of

creation of SO, the price )uotes are not availa!le. ence, still the order needs to !e saved.

inal 9ule L inal calculation rule is used to determine the final price of the product.

inal rules are used at the time of creation of Invoice, where in, a re=pricing happens, looking out for all availa!le

prices in the price ta!le, and finally, saving the document.

$here are some situations "like e*ternal )uotations are not posted !y third party or Batch o!s which update

ta!les are failed# when e*ternal )uotations for re)uired time period are not availa!le in the system. In this

situation final price of material is not known so invoice is created with the help of provisional rule. Once inal

price is availa!le in the system ifferential invoice or &redite!it note can !e raised against original invoice as

per !usiness process.
http://scn.sap.com/people/gopal.sharma6/blog/2011/11/18/formula-average-pricinghttp://scn.sap.com/people/gopal.sharma6/blog/2011/11/18/formula-average-pricing

sap is oil formula and average pricing.docxl

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