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Scenario for Special Pricing Authorization

This scenario gives one example of how SPAs may be used. You may use SPAs differently, depending on your business model.

A distributor purchased components from a supplier for a book price of $10 apiece with the expectation that they would be resold at $12 apiece and the distributor would realize $2 in margin.

Market prices for the components have come down to $11 apiece. The distributor now has an opportunity to sell the components at the current market price of $11 apiece. In order to still realize the expected $2 per piece margin, the distributor submits an SPA quote to the supplier, requesting a special pricing authorization. The supplier approves the request which generates a corresponding pricing agreement. The agreement defines the terms of the approved quote with a set duration.

The distributor then resells the components at $11 apiece. Using the Partner Portal of Siebel High Tech and Industrial Manufacturing, the distributor submits an SPA claim against the agreement, along with supporting point-of-sales (POS) or sales-out transaction data to the supplier as proof of sale. Once the claim is validated by the supplier, a refund or credit of $1 for each component sold is issued to the distributor.