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Distributor Scenario 1 - Ship-from-Stock and Debit (SSD), Version 1.0 
Status:  Balloted and Ratified by Membership, August 2002

Business Overview

Special Notes:

The purpose of this documentation is to describe the activities in the Ship-from-Stock and Debit (SSD) business process, including the flow of documents and high level data requirements.

Any implementation method should be agreed upon by trading partners. It is the intent of this documentation to make interpretation of the models used for Ship-from-Stock and Debit more consistent, so that implementations are based upon common practices.

The Ship-from-Stock and Debit process occurs when a distributor's margin (profit on a resale) for a product drops below a desirable level, due to the fact that the distributor is holding stock for a component supplier, purchased from that supplier at a cost based on a resale price that no longer reflects actual market price.  The distributor requests an after-the-fact price reduction from component supplier in order that the resale of the product will meet competitors' pricing with an acceptable profit margin.  The component supplier may approve the request and establish an effective date and expiration date for the authorization.  When the distributor resells stock that was purchased from the component supplier at the original "book" price, the distributor submits a Debit Claim to the component supplier to claim the difference between the original book price and the current quote price; some component suppliers automatically grant the debit based on sales reports and do not require a claim to be submitted.  If the product is returned to the distributor, the component supplier may send a Credit Claim (a/k/a "Bill up to book") to the distributor to back-out the discount.

See also Assumptions.

Scope:  This scenario includes the "routine" components of the Ship-from-Stock and Debit scenario.  Models are created for "common" exceptions that are good candidates for automation.  Not every possible exception situation is modeled, because there are events that are too rare to justify the cost of automation, or too complex to be automated - they require the intelligence of human beings for resolution.

All business processes touch, or are adjacent to other business processes.  Ship-from-Stock and Debit has the potential for connecting to the complex processes involved in product returns and financial adjustments.  In order to keep focused on the "normal" Ship-from-Stock and Debit events, only the "routine" case of a simple product return to the distributor's stock is in scope for modeling this scenario.  

Other processes involving product returns, quality, and financial adjustments have been or will be modeled separately.  For example, the "Credit and Re-bill" exception is out of scope at this time.


Overview (Use Case) Diagram    Narration


Narration   Overview (Use Case) Diagram
 
Step Description
1. Pre-Order Model 4: The distributor sends a "Meet Competition" quote to the component supplier. The supplier’s response may authorize a discount for inventories that the distributor will purchase for a specified time period and/or for a specified quantity limit, and may include authorization for SSD debits applicable to all or part of the distributor's inventories already purchased from the supplier.

Pre-Order Model 6: The distributor sends a request for a discrete Ship-from-Stock and Debit (SSD) Authorization for inventories already purchased from the component supplier.  The response may approve or deny a product for SSD, and authorization may cover only a certain time period and specify effective and expiration dates.

Pre-Order Model 7 - The component supplier sends a blanket Ship-from-Stock and Debit authorization applying to multiple products.

2. (Optional). Pre-Order Model 8:  At any time, the distributor may request for status of some or all open SSD debit authorizations.  The component supplier sends the report back in response.  The component supplier may also send the report unsolicited, as agreed with the distributor, when status changes are made or per a pre-agreed schedule .
3. (Optional).  The distributor sends Point-of-Sales data to the component supplier per the appropriate Sales Reporting Scenario.  This data may be used to validate SSD debit claims, and to advise of product returns.  This step is optional because the timing of SSD claims and POS reporting are often different; for example, SSD claims may be sent weekly and the POS report monthly, or the POS reporting could be daily and the SSD claims done monthly.
4. Debits and Credits Model 5:  When the distributor ships a product that has an SSD authorization, the distributor submits a debit claim to the component supplier, and the component supplier sends back a response; the response may approve or deny a debit claim.

Debits and Credits Model 6:  Alternatively, though it is not a common practice, the component supplier may use the sales data instead of a debit claim to automatically notify the distributor that a debit is approved.

5. Debits and Credits Model 7:  If the distributor's customer returns product for which the distributor took an SSD debit the component supplier may send a credit claim to the distributor, asking them to back-out the debit.  This process is also known as "bill up to book."  The distributor may send a response if there was a problem with the component supplier's credit claim - either a business issue such as a disagreement with the claim, or a technical issue, such as invalid part number.  This should be an exception case, and if such issues occur, EIDX recommends that the problems be resolved manually through the normal chain of command.

Debits and Credits Model 8:  If the distributor's customer returns product for which the component supplier had approved a debit claim, the distributor may back-out the SSD debit by automatically giving a credit to the supplier.

 

Last updated 24 February 2003