SAP Process

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In the last post in this series I covered the general business process for contract pricing and chargeback processing using SAP Compensation Management instead of Vistex.  This time I’ll explain how the contract pricing and chargeback process is handled within Compensation Management.

1. The process begins with the creation of a pricing contract in the Compensation Management module. The contract is sent from the manufacturer to the wholesaler by EDI 845, email or fax, and a Compensation Management contract is created in SAP.  The contract lists all of the customers and products that are eligible for contract pricing. Each contract is assigned to a manufacturer. The manufacturer is represented as a vendor in SAP. If a GPO was involved in the contract negotiation then it is also assigned to the contract. The GPO may be stored just for reference, or to drive special pricing or special contract prioritization.
2. When a sales order is created in the SD module the system determines for each product whether the customer is eligible for a pricing contract. If so, the contract is assigned to that order line and it is given a contract price. The determination logic may be simple, such as assigning the lowest contract price from a group of contracts, or it can be more complex, such as prioritizing certain contract types or GPOs over others.
3. Normal SD processing then continues and the order is delivered.
4. Normal SD processing continues and the customer billing document is created.  For contracted products the customer is invoiced at the contract price. The billing document also includes several other pricing conditions that are necessary for chargeback processing, including WAC price and expected chargeback revenue.  When the billing document is saved and released to the FI module, the expected chargeback revenue is posted as an accrual.
5. A chargeback request document is created. This chargeback is linked to the billing document and to the pricing contract. It contains all of the data needed to submit a chargeback to the manufacturer.
6. Individual chargeback request documents can be combined into a "collective chargeback request" to reduce chargeback volume with the manufacturer. The individual or collective requests are submitted via EDI 844, email, or fax.
7. The manufacturer reviews the submitted chargebacks and responds with a chargeback reconciliation document via EDI 849, email, or fax. The reconciliation includes the paid amount and any rejection reasons for each chargeback line item.  
8. Once the chargeback document has been reconciled, it is released to FI. The accrual for the chargeback amount is reversed and the actual chargeback amount is posted as a vendor credit.