Trade Agreements are the product of negotiations between two or more business units. It dictates the terms of the acceptable exchange of goods and services between the parties. In Supply Chain Management (SCM) when designing trade agreements its focus is to increase incentives for investment and scope.
In Dynamics 365 Finance & Supply Chain, Trade agreements are the primary means by which pricing and discounts are set up and applied. With trade agreements, you register a new product price that you’ve agreed with a specific customer or supplier. and this price takes precedence over the product base price.
Trade agreements are used to represent a discounted price or discount percent for one vendor/customer, a group of vendors/customers, or all vendors/customers for one item, a group of items, or all items. The most common use for a trade agreement is just a simple unit price for a product or service.
Company A carries out business with a vendor supplying office equipment and wants to set up a trade agreement for notebooks based on the different colour variants.
Step 1 – Enable dimensions for price set-up
- Enable colour product dimension for purchase price. This indicates whether you should be able to set up a specific price based on the selected dimension. That means you will have the ability to create and post a trade agreement journal for notebooks of a particular colour.
Step 2 – Set up a trade agreement using a trade agreement journal
Specify vendor, item, dimensions and price;
Vendor – Acme Supplies
Product – notebook
Colour – yellow
Price – 2,50 (ea)
Step 3 – Create a purchase order for vendor Acme Supplies with the item ‘notebook’ to validate the purchase Trade Agreement made.
- Create a new PO
- Enter line details using details specified in the trade agreement
In Dynamics 365
Before trade agreements are set up, all of the applicable trade agreement types must be activated.
For sales trade agreements navigate to Sales and marketing > Setup > Price and discount > Activate price/discount. For purchase trade agreements navigate to Procurement and sourcing > Setup > Activate price/discount.
It is important to make sure that all account–item combinations you would like to use are enabled – this can be done on the Activate price/discount page.
Next, create a Trade Agreement journal. The “Price (purch)” option indicates that we are entering a simple purchase price in our journal.
Next click the “Lines” button which opens the journal.
Enter the required details. The party code type field has 3 options available to select; Table, Group, All. If party code type is set to ‘Table’ this means the trade agreement applies to a specific vendor or customer. The same applies to the product type code field, letting you select a specific product.
Dimension specifications like product and storage can also be applied. In the “From” and “To” fields specify the quantity range that the price applies to. In the “Amount in currency” field enter the unit price.
Validate the journal and post