This chapter covers the following topics:
The Oracle Channel Revenue Management suite of products supports the iterative selling model for companies that regularly sell goods to more or less the same customers such as companies operating in consumer goods or life sciences.
Large manufacturing companies that operate in Business-to-Business (B2B), Business-to-Customer (B2C), or Business-to-Business-to Customer (B2B2C), modes can use Oracle Channel Revenue Management to efficiently plan, promote, execute, and manage the order to cash process for improved sales and return on investment (ROI), and reduced loss in revenue.
Products in the Oracle Channel Revenue Management suite support features that enable:.
Suppliers to manage trade funds, maximize trade promotion profitability, and successfully execute and track trade promotion activities through direct and point-of-sale channels.
Distributors to sell products at a lower price and claim loss of value on on-hand inventory or profits.
The protection of distributors and retailers against loss of value on on-hand inventory when suppliers lower prices.
Suppliers to minimize claim and deduction costs.
Channel Rebate and Point of Sales Management enables large manufacturing organizations with sales activities that span many territories and regions and that use a widespread sales channel comprising distributors, retailers, and partners plan, manage, and track their sales and distribution activities more efficiently. Before planning for sales activities, they can analyze and set targets for the current year, as well as plan the products and territories to target.
Channel Rebate and Point of Sales Management uses the following tools to maximize sales and profitability.
Quota Allocation: Manufacturing companies use this and the sales figures of previous years to create and allocate quotas. Sales Management defines markets and products that sales teams must focus on.
Budget Management: This provides access to historical sales and pricing information, which you can use to plan for efficient and cohesive budgeting and financial processing. It eliminates wasteful spending and ensures trade funding is allocated and utilized as intended. You can plan and track fund usage, and ensure that resources are deployed effectively. It can source funds from budgets in Channel Rebate and Point of Sales Management to support special pricing, soft funds, and referral compensation requests that are created in Oracle Partner Management.
Trade Planning and Offers: This helps promote trade by encouraging customers to buy more while simultaneously generating more revenue. Through discounts and offers, organizations can achieve sales targets and gain competitive advantages. You can create different kinds of offers depending on the requirements and the results you want to achieve. You can associate offers with products or campaigns, predict the performance of new offers, create adjustments on active offers, and track and monitor costs and revenues for active offers.
Account Manager Dashboard: This serves as a starting point for sales activities, and a central point of access for real-time information on reports, and statistics. It includes customer reports and statistics that you can use to organize resources and help them reach their targets.
Point-of-Sale Management: This enables organizations to validate payment requests and manage and track funds when trade promotion activities are executed indirectly through retailers and wholesalers. This includes:
Chargebacks: These are claims that distributors submit to suppliers to recover the loss of value on on-hand inventory that they incur as a result of honoring price agreements that manufacturers have with customers or retailers.
Third Party Accruals: These are claims that retailers or end customers submit to suppliers when they must buy from distributors at a price higher than that of the price agreement between them and the supplier.
Special Pricing Requests: These are funds that the distributor or partner requests from the supplier to help promote sales such as a special price or discount for disposing existing inventory, meeting a competitor's price, or winning a deal for an existing customer.
Soft Funds: These are funds that the supplier gives retailers and distributors for the trade promotions that they execute for the supplier organization.
Referral Management: These are incentives that suppliers pay retailers or distributors who refer business prospects, leads, or opportunities.
Supplier Ship and Debit enables distributors to sell products to specific customers at a price that is below the distributor acquisition costs or the expected margin on the product and claim loss of value on their inventory from the supplier. A distributor may lower prices to help meet competitor bids, gain a foothold into new accounts, or move excess or unsold inventory.
The key components of this product are as follows.
Supplier Trade Profile: This trade profile captures supplier preferences and attributes for the approval and claim settlement processes. For example, your supplier may prefer you to auto debit instead of submitting a batch and seeking approval for claimed amounts. Your supplier may also have preferences on frequency of batch creation, the quantity and amount limits on an offer, and claim computation and approval communication methods.
Supplier Ship and Debit Request: This is a request that the distributor raises for the new lower price. If the supplier approves the request, an accrual offer is created between supplier and distributor and sales made against this offer.
Internal Ship and Debit Request: This is a request that follows an original supplier ship and debit request for the new lower price that the supplier declined to approve. If the distributor nevertheless decides to go ahead wth the new lower price, the distributor raises this request to track the accrual or claim amount from the sales against the accrual offer that the distributor must absorb and account for.
Supplier Ship and Debit Batch: This is a batch of ship and debit requests approved by the supplier that the distributor generates after shipping products to customers at the new prices and calculating accruals. The purpose of this ship and debit batch is to obtain supplier approval on claim amounts before debiting the supplier for these amounts.
Supplier Debit Claim: This claim is created for accrual lines in a batch that the supplier approves. For rejected accrual lines, an internal ship and debit claim is created. The supplier claim is closed out on posting of a debit memo in Oracle Payables for the supplier for the total of all approved lines. Internal requests have no supplier debits; accruals are settled by relieving liability and booking the expense to the appropriate distributor GL account.
Price protection agreements between distributors and retailers and between distributors and suppliers allow distributors and retailers to claim loss of value on on-hand inventory when the supplier decides to drop the price on a product. The distributor claims price protection refund from the supplier whereas the retailer claims the refund from the distributor.
The key components of this product are as follows.
Trade Profiles: If distributors and retailers are covered for losses on inventory by a price protection agreement, the retailer submits a credit claim to the distributor and the distributor submits a debit claim to the supplier. To capture preferences and attributes for the processing and settlement of price protection claims, you define trade profiles for the customer in the case of a credit claim and for the supplier in the case of a debit claim.
Default Price Protection Claim Accounts: These accounts are used for cost adjustment, accrual, and contra-liability when performing accounting for price protection claims. These default accounts are part of system parameter defaults that you set for Price Protection.
Price Protection Transactions: These are transactions that the distributor creates using the Price Protection Dashboard to obtain supplier approval for updates to price lists and purchase orders. These transactions provide inventory details, price changes, and adjustments.
Supplier Claims: These are debit claims on distributor inventory that are generated when the effective date of the price protection transaction is equal to or prior to the system date. The claim includes covered distributor on-hand and in-transit inventory information for the supplier by product and by price drop. If the last refresh of the concurrent job for the inventory calculation has not occurred on the effective date, then you receive a warning and the application triggers the calculate process.
Customer Claims: These are credit claims that end customers submit on their on-hand inventory to the distributor and the distributor in turn, submits a debit clam to the supplier or a supplier claim. All such customer claims are consolidated and passed on to the supplier with basic details that include customer, product, covered inventory, and claimed amounts. Settlement of such claims result in the issue of a credit memo to the retailer and a debit memo to the supplier.
Customers raise claims or take deductions for many reasons, for example, claiming compensation for damaged goods, shipping delays, invoice errors, or for promotional accruals for which they are eligible. Distributors raise supplier ship and debit claims to compensate for the loss incurred on sales to end customers when compelled to drop prices. Distributors and retailers raise price protection claims to compensate for the loss in on-hand inventory value or loss incurred on inbound price lists and outstanding purchase orders when vendors decide to reduce the price of their products.
The key components of this product are as follows.
System Parameter Defaults: You can set defaults for accounting, claim source, settlement methods, payment frequencies, pay over earning thresholds, write-off thresholds for deductions and overpayments, and preferences for channel rebate and point of sales and price protection.
Trade Profiles: You use the customer trade profile to define customer preferences on each bill-to site for payments on accrual reimbursements, unearned offer accruals, batch and line tolerances, and code conversion. Similarly, you use the supplier trade profile to define supplier preferences on accrual reimbursements such as payment frequency, offer limits, communication methods, batch and line tolerances, and code conversion.
Claim Transactions: These are records created by other Oracle applications in Channel Revenue Management for deductions or overpayments that a customer makes. For example, a claim transaction can be a chargeback transaction created by Oracle Receivables or an RMA transaction for return of materials created by Order Management. Once created, you can view, investigate and settle these claims.
Earnings Association: These are earnings accrued in the checkbook on an offer that you associate with a promotional claim line. You can set thresholds for earnings and approval rules that check against these thresholds.
Assignment and Approval: Claim transactions are assigned to an owner, automatically using the Auto Assign Owner feature whenever a claim is created, by claim territory, manually using the Assignment API or by the defined system parameter default. Claim owners are responsible for settling claims and resolving disputes, if any. After a claim is created, you submit it for approval. Claim approval rules that you define determine the approval flow. You can set approval rules for earnings or sales on an offer, for offer performance requirement such as value or quantity ordered, and for claim amounts.
Research: You can use various claim reports to view claims and claim details, view them by age and by customer, and investigate their settlement history. These reports help you validate claims that are genuine, mark those that are duplicate and those eligible for write-off, and make decisions based on their origin on splitting a claim into separate ones for easier settlement.
Settlement: Settlement methods are determined by the claim type, transaction type, claimant and payee, and payment type, if promotional, non-promotional, overpayment, or overcharged. If you specify payout methods for an offer during offer creation, then you can use Autopay to automatically settle claims on these offers. You can also use Mass Settlement to settle overpayments, net multiple deductions, and specify multiple settlement methods per claim. Additionally, customer loyalty, customer relationship, and volume of trade determine various settlement options such as Pay Over Earnings and Automatic Write-off for which you can specify threshold rules. For claim exceptions, you can revert GL entries, if required, and reset a claim to Open status.
During the process of mapping out business processes and needs, it is essential to identify redundant processes in the existing system. It is important at the beginning stages of implementation to identify gaps between existing practices and the actual business requirements.
Some questions to ask are:
How do you track budget balances? Is it by sales territory, geography, customer grouping, product or brand, or budget category?
Are promotions discount-based or accrual-based? If they are accrual-based, are their liability and impact on sales accounted on a timely and accurate basis?
When customers remit payments, do they short pay? If they do, are there any current systems to expedite their resolution?
Do customers submit point-of-sale data? If so, for what business purposes?
Identify users based on the observations that you make when mapping out order to cash processes and business needs. For example, if budget balances are tracked by brand, a budget user could be a brand manager. If budget balances are tracked by sales territory, a budget user could be a sales representative or a sales manager.
Business needs and implementation scope can be used to determine users who create promotions in the system. Business needs may require that the person who determines promotions is the same person who creates the promotion and that person must be set up as an Oracle Channel Revenue Management user. The scope of the implementation may also involve mapping certain job activities to certain job titles. For example, if a sales administrator in an organization is responsible for creating trade promotions, then the actual Oracle Channel Revenue Management user is the sales administrator.
Depending on the requirements of a company, you can set up different groups to access Oracle Channel Revenue Management for different purposes.
Some examples are as follows:
Finance or Accounting Users can be set up as users to account for trade promotions.
Customer Service Representatives can be set up as users if the company's business practices indicate that customer service representatives are the ones who efficiently resolve claims.
Along with identifying users, a company should also identify an internal implementation owner, who is familiar with multiple departments and business functions.
Because Oracle Channel Revenue Management affects multiple areas of the company, it is important at this stage to form a cross-functional team of representatives from different departments that will be impacted by the implementation. This process provides a valuable opportunity to identify better ways of managing integration points, modeling customer and product data to support processes in different departments, and to effectively plan for division of labor.
Based on your observations during the process of mapping out order to cash processes and identifying the users involved, the company should have a good idea on whether to:
Implement all of the products of Oracle Channel Revenue Management application to integrate with the company's Order to Cash process.
Implement the entire Oracle Channel Revenue Management application not just to streamline the back-end processes but also to provide a Sales Force Automation tool to the sales teams.
Implement only the Accounts Receivable Deductions Settlement product because that is where the company currently is spending the most money.
Focus on the Channel Rebate and Point-of-Sale Management product to manage distributor or wholesaler chargeback claims, track POS data and channel inventory, and create third party accruals.
Complete the basic setups. For example, if the implementation scope includes the entire Oracle Channel Revenue Management application, then test a basic business flow that spans across the whole Order to Cash process:
Create a budget
Create sales quotas/targets
Analyze past promotional ROI
Create account plans and promotions
Book and ship sales orders
Track promotional expenses and accruals in the budget
Pass accounting entries to the accounting system
Create claims or deductions
Associate claims or deductions to promotional accruals
Resolve claims or deductions