Quantity Contracts

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“There is always a balance between saving money and losing control. The critical issue is often the extent to which a contract can account for unexpected challenges.”

―Prof. Dr. Oliver Hart, Winner Nobel in Economics for Work on Contracts 2016

Do you want to:

• Enable a flexible contract design based on individual customer business needs?


• Keep your contract cost risk within an acceptable limit?


• Offer an easy and intuitive contract set up without operating errors?


• Be informed about contract usage details?

If you answered ‘yes’ to any of questions above, SAP Hybris Cloud for Service provides is the solution for your business.

Quantity Contract

A quantity contract is an agreement within service contracts processing. This business option allows you to administer contract determination for defined products which should be restricted in a period to a specific target quantity.

By selecting this option, the customer can release products in the system from a work ticket and keep track of the contract targets and fulfillments that have been performed.


(Screenshot 1)

In addition, you can establish a rule to allow `Release Control´, the release of products in contracts that either exceed the target quantity (without limits) or exceed the target quantity for the first time.

As of release 1608, Quantity Contracts is a new feature in SAP Hybris Cloud for Customer.

A key part of a quantity contract is to specify its contract determination limits, besides the standard contract determination parameters which are based on:

• An account


• Covered Objects (~Reference Object of ticket) such as Product, Product Category Serial ID, Installed base, Installation Point)


• Entitled/Excluded Services & Parts

As of release 1608, it is possible to define products with a quantity limited call-off (release) in tickets.

Example
There is a contract with an entitlement ´3 year’s Remote support´ and its related products ´Remote Calibration´ and ´Remote Diagnostics’ are limited each with a ´Target Quantity of 80 Hours´. This means, for example, the `Remote Calibration´ can be determined within the given 3 year contract period in work tickets for a maximum of 80 hours.

Creation

If a product needs to be defined/defaulted as ´limited´ in (quantity) contract determination, this can be configured by assigning a Contract item Type/Determination Rule in Business Configuration to the product.


(Screenshot 2)

Furthermore, an additional option is possible through ´Release Control´. This option allows you to assign different rules determining whether a limited product in a contract should be determined. This option will prompt users with a warning message, stating whether the related target quantity has been already exceeded or not. It is allowed to:

• Exceed the defined target quantity one time only in the contract.


• Determine this contract for this product although its target quantity was exceeded.

(Screenshot 3)

Contract Item Types

The solution offers three different (base item) types for a contract item:

• Entitlement – Contract Item
  Definition: An entitlement is a contract item which represents a right or customer claim which requires an occurrence of a certain incident or condition. Example: Customer needs Maintenance for a defined product.Usually, customers have to pay a regular fee for this. Example: 3 year’s Maintenance Support, 1000, 00 USD/ per year.Often these entitlements are related to products and/or products categories listed in the tab ‘Entitled/Excluded Services & Parts’ for which the customer receives a discount (=coverage) if the products are entered in a work ticket with contract determination.


• Entitled Product – Contract Item
  Definition: It describes a product or service the customer receives in case of contract determination discount. Example: Filter X was entered as work ticket item due to needed maintenance, contract-related discount (=coverage): 50%.Moreover, if this entitled product should be limited (~ used for Quantity Contract purposes) you can also set a target quantity. Example: max. 500 filters (in total) can be consumed between 01-01.2016 - 12-31-2016 which is equal to the contract duration.


• Text – Contract Item
  Definition: It describes content for information or structuring purposes.

Determination Relevance Rules


(Screenshot 4)

The Determination Relevance Rules are directly associated to the contract item types and influence which product(s) of a contract item are relevant for contract determination in work ticket items.

• Limited to Entitled Services and Parts: This contract item will be determined if at least one of the products/product categories in the tab ‘Entitled/Excluded Services & Parts’ is used in the work ticket item. Example: You have entered the Entitlement- Contract Item ´3 year’s Maintenance Support´ in tab Entitled/Excluded Services & Parts’, the Screw X and Repair Service Y will be assigned to this.
  If you enter Service Y in the ticket, the item determined will be ´3 year’s Maintenance Support´.

• Limited to item: This contract item will be determined only if this line item product is used in the ticket item.
  Example: You have entered ´Filter Z´ as Entitled Product - Contract item with a 50 each quantity limit.
  Only if you enter ‘Filter Z’ in the ticket this item will be determined and, only as long as you have not exceeded with your call-offs the set the target quantity.

• Items and Entitled Services and Parts: This contract item will be determined if the line item product or one of its assigned products/product categories in the tab ‘Entitled/Excluded Services & Parts’ is used.
  Example: You have entered Entitled Product - Contract Item ´Gasket X´ with a 100 each quantity limit and in tab ‘Entitled Services and Parts’ [the identical in construction] Gaskets X* and X** were assigned to this.
  No matter if you enter Gasket X*, Gasket X** or Gasket X in the ticket, the item determined will be an Entitled Product - contract item ´Gasket X´.Note: If you have reached the target quantity for Gasket X , the Entitled Product - Contract Item ´Gasket X´ won´t be determined, but the item would be further determined if you enter  Gasket X* or Gasket** in the ticket since there is no limit.

• None: This contract line item should never be determined in the ticket item.
  Example: Text - Contract Items such as ´Consolidation done May 15th 2016´or ´Special Maintenance Package based on Promotion July 2016´ or even an Entitlement- Contract Item without tab ‘Entitled Services & Parts’ (see screenshot 1).

So go ahead and try out the different scenarios that are possible with this new feature!

Regards,

Volker Kampen & Sharon Holton-Schmitt