This article explains how vendor profit is entered in the Cost Submission, and how vendors can protect their Over Cost from fluctuating commodities.
The purpose of the entire Cost Submission process is to provide a fair and equitable way of trading for an Enterprise Retailer and their supply chain. The principle is of transparency building trust, ensuring a robust & durable partnership for both retailer & vendor.
⚠️ Warning
You will not be able to save a value in Over Cost until your Cost Submission does not contain any errors. this is because Cost needs to be calculated before you can enter Over Cost.
When you first open your Cost Submission, before you have entered any costs your Cost Analysis section will display in an error state, and Over Cost will not be visible on the pie-chart:
As you begin to declare your Costs, your pie-chart will update to reflect changes in Raw Materials or Labour Costs. Over Cost can be visualised at the bottom of your Cost Analysis accordion, represented in yellow:
After you have successfully declared all your costs, enter your Over Cost as a currency or percentage value at your convenience and we will automatically calculate the other value for you. Over Cost is now visible in your pie-chart:
💡 Over Cost Calculation
Over Cost is not a % mark-up on the Cost of the vendor of record.
Over Cost is calculated as the % vendor of record margin when selling the product to the Retailer at the Total Cost price quoted.
Protect Over Cost
This feature allows vendors to ensure their margin is always guaranteed regardless of variations in commodity costs. When Protect Over-Cost is turned on, your Over Cost percentage will always remain the same, regardless of increases in metal price or diamond prices. This respects the principle of equitable risk, ensuring a robust & durable partnership for both retailer & vendor.
Given your Cost Submission has Protect Over Cost = OFF and the relevant BoM Tier is tethered to grid, when you have pre-agreed Sourcing costs (eg metal loss %, stone prices, setting charges etc) with your Enterprise retailer, then each time you agree changes to commodity and/or labour charges, your percentage margin will change and Total Cost will persist:
If you leave Protect Over Cost ON, and you have pre-agreed Sourcing costs (eg metal loss %, stone prices, setting charges etc) with your Enterprise retailer, then each time you agree to changes to commodity and/or labour charges, your percentage margin will be guaranteed and the price will be subject to change, without re-approval necessary from the Sourcing team at your customer:
💡 Equitable Risk & Reward
The Protect Over Cost feature presents three key vendor benefits:
✔️ Retailers can no longer play commodity markets to their advantage✔️ Consistent & predictable profit margins
✔️ 100% Automation of Cost Submission administration when renegotiating commodity or component level costs
Relevant Documentation
After Submission - Tether to Grid
After Submission - Change in Cost
After Submission - Change in Bill of Materials