K3 focuses on delivering value for our customers quickly. To that end, a coil producer's sales process translates easily into the K3 Suite of applications. This example looks at how a standard coil can be represented in our tool. The product is a hot rolled steel coil with 6 different grades that are classified by their product type (200 to 205). The coil can be between 24 and 60 inches and a standard gauge from .0581 to .1601 inches. Also, the manufacturer sells direct and has 3 main customers that they are able to give customer specific discounts to. The example is reviewed through each application including the Product Center, Price Center, and Sales Center.

Walking through the Quote Process
Quoting is done through the Sales Center. With the quoting tool, sales people can make product selections, see full price builds, and then even receive assistance in negotiating. Then, managers have full visibility of commissions, margins, and other hidden price elements.

Let's take the example from above. To quote the coil, a sales person needs to make selections for grade (product type), thickness, width of the coil, and length. They also enter other information that affects pricing such as the customer and delivery date requested. This example is simplified so there are no selections for coating type or other extras. The sales person is presented a list of grades where they make a selection. This selection in turn affects the available thickness and widths. The sales person makes each of these selections, which are bounded by a minimum and maximum range, and finally enters the length.

The system then takes the specifications and prices the product. So, the calculation for the price is as follows:

ProductPrice = (BasePrice + SizeExtra) * (1 + CustomerDiscount) * Length

This simplified calculation requires a base price lookup from the grade table, then a size extra lookup for the width and a customer discount lookup for the contract discount percent. In many metals companies, there will be several other extras that need to be considered in the price. These are easily added in the through the maintenance tool. When all the values are found, the system calculates the price and presents the full price build in a spreadsheet like interface so the sales person can see how the price was derived.

Now, this price is typically negotiated. So, the system displays a list of concessions the customer can make. These concessions are completely customizable and can be trade-offs like length of contract, percentage of business, forecast accuracy, etc. The sales person is presented with a list of values for each concession. For example, length of contract may have 5 entries with corresponding ranges of discounts: 0 - 1 year, no discount; 1 - 2 years, up to $0.25; 3 - 4 years, up to $0.50; 4 - 5 years, up to $0.75; and 5+ years, up to $1.00. Say the sales person makes a selection of 4 - 5 years. Then, his range is $0.00 to $0.75 of which he enters $0.50.

This is one example of how the sales workflow might unfold. In the subsequent sections, we will investigate how the information for the above scenario is managed in an easy to use interface that business users can quickly tackle.

Managing Prices
Prices are managed through the Price Center. In the example, prices can be based on grade, length, thickness, gauge, or other attributes. The coil manufacturer is selling hot rolled steel and they price by grade, gauge, and width. Additionally, there is a customer discount that can be applied at the end of the process.

Using the above calculation:

ProductPrice = (BasePrice + SizeExtra) * (1 + CustomerDiscount) * Length

A price manager would enter this equation directly into the calculation sheet in the Price Center:

So, the price is calculated by first finding values from tables, then calculating the price, and finally, calculating the extended price. As indicated to find the base price, size extra, and discount, the system finds the factors in tables. In this example, the base price is dependent on grade which is encapsulated through the product type. So, the base price table looks like this:

Then, the size extra is determined by looking up the factor based on the coil thickness and width:

The system looks up these values exactly as presented and stores them in the cells of the calculation sheet when the sales person is quoting from the Sales Center.

Rebates and other tables are easily accommodated through the tables. For example, dimensions of tables can be any attribute in the system, so you can use customer categories, customer types, customer purchase quantities, quote information, sales person information, and virtually any element.

The Price Center utilizes product information such as the attributes described: grade, width, thickness, and length. The next section drills into how the product information is managed.

Managing Product Information
Products are defined in the Product Center as well as the entry forms that are used for adding line items in the Sales Center. To enter a line item, the sales person must enter the product type, width, gauge, and length. The product type can be 200, 201, 202, 203, 204, or 205. The width must be between 24 and 60 inches and the gauge must be between .0581 and .1601 inches.

These dimensions are represented in the Product Center. So, to start, a product schema is defined for the 'Coil Products'. As mentioned, the coils have type, width, gauge, and length, so each of these attributes are established for 'coil products'. Next, the available values for these attributes are defined:

The list type means that there are a list of values that must be selected. A range requires a value between the minimum and maximum values and a value is a free form entry of any value. Next, the user defines a product entry form by entering the question and product attribute.

The questions of the entry form are entered in multiple languages and then associated to an attribute. Finally the question has an entry type as shown above. The drop down list is a list of values that the sales person selects from. In this case, the values are 200 to 205. The next entries are fields with the width and gauge fields. These fields are validated to ensure that the value is in the range defined. The length field is then simply a value that is entered.

Analyzing the Results
The quotes from the Sales Center are collected into the central quote database. Then, sales managers have access to the information through standard reports or through traditional on-line analytical processing (OLAP) tools. All pricing, product, customer, and sales person data is collected and can be translated into these systems for further analysis.

Quick Time to Value
K3's software tools are easy to use. How easy? The example above was created and deployed in less than 30 minutes. More complex products and pricing is not much more difficult to establish in the system as we have geared the system to provide value quickly.

When working with customers, we first try to understand how much money you can save. If there's no business case, we leave you alone. Next, we enter the pricing and compatibility rules for one of your product lines on our secure servers. Then, you have real-time access to a fully functional price-quoting system over the Internet. Best thing is, your already tapped out IT people never have to get involved, so no infrastructure cost and no maintenance. Then, we can keep on hosting it or you can move it back to your own servers. After three months, we will come back and calculate how much money we saved you. The projects are always well managed and you pay for performance based on the project plan.