Collecting Pricing through Line Items and Lots

A line item is the smallest entity that suppliers (participants) can submit pricing for or bid on. Line items have these special characteristics:

• Can be awarded individually or in groups.
• A line item is the smallest entity on which a participant can bid. It has a unique identifier, such as a manufacturer's part number or SKU. When you add a line item to your auction, enter the quantity associated with the item that you want to buy.
• When you list items separately, instead of grouping them into a lot, suppliers might give you better prices, because they can bid at a more granular level than if they bid on a lot (or group) of items.
• By adding content as a line item (whenever possible), you can take advantage of supplier's ability to give you a price break on selected items.

To collect and calculate the actual price of a specific item we use terms. Terms are line item elements to which you assign a numerical or string value. Line items can contain various numerical terms that roll up to a line item price as well as string values, or string values that map to numbers.

Terms have specialized functions including:

• Collecting participants’ pricing information: price or extended price, index percentage or amount.
• Collecting other information from participants: shipping terms, or any other term that you define.
• Containing owner defined information about the line item: quantity, index name.
• Displaying calculated information about line item: total and unit cost, savings or earnings, discount amount and percentage.
• Containing cost information. The cost terms used to calculate total cost are specialized item terms.
• Adding a matrix dimension to a term.

Line items come with the following default item terms:

Each realm comes with a series of preloaded terms. When creating an event, owners can choose from the list of terms imported from the event template or, if allowed by template rules, to add new ones from the Library.

You can select from available terms such as Shipping Terms, Total Cost, and Discount Percentage.

You can also create your own custom item terms, such as a transportation cost. Entering a new term is similar to entering a question, with these additional fields:

• Can participants see this term?
• Has Historic Value
• Has Reserve Value

Lots are usually composed of one or more line items. Lots have the following characteristics:

• The price of a lot is the combined total of all the items in the lot.
• Lots are optional elements, so you do not need to place line items into lots.
• Lots always count toward the maximum number of elements in your event.
• Bids for lots are always on the extended price or the total cost.
• A lot is awarded in its entirety; you cannot award line items in a lot to different participants.
• A lot is a group of items, and the price of a lot is the combined total of those items.
• You might be able to get a better price from suppliers if they can give discounts when they get business across all lines in the lot.

Depending on the type of event, commodity, price complexity or event strategy, event organizers can use different lot configurations.

Choose this type to collect line item pricing information during competitive bidding. Suppliers see rank based on the lot level. You, the buyer, control if suppliers can see rank at the item level too.

As the buyer, you will always see ranking at both the lot and item levels. By letting suppliers see rank at the line item level, you encourage competition at the line item level instead of just at the lot level. For example, even if bidder is ranked #1 at the lot level, they can see if they are trailing on any item within the lot. Note that the rank on the line item is informational only, no bid improvement rules or constraints based upon line item rank.

During competitive bidding suppliers will bid at the lot level (a group of lines) and see competitor pricing at the lot level. When the bidding ends, suppliers can provide detailed line item pricing online. Use this lot type if you have many line items in a lot. It saves suppliers’ time and makes bidding easier to manage. The bids are always on the extended price or total cost.

Choose this if you do not want to collect line item pricing. When you choose this, the application does not allow you to create line items within the lots. Suppliers bid based on the lot description or on information you provided to them outside of SAP Ariba Sourcing.

For a video demonstration on creating items and events, watch this video.