RFQ Excess Cost is is available in an RFQ for all of its quantity breaks. It allows you to assess any additional costs when you have to order more than the needed quantity due to Mins and Mults. The "Excess Cost" is displayed on Responses and Review & Implement tabs. This feature ensures that you have the tools to make better decisions about order quantities, costs, inventory management and potential savings across different sourcing scenarios.
The system calculates "Excess Cost" at the line item level for all quantity breaks based on your supplier responses.
This calculation is done using the formula:
(Orderable Qty - Requested Qty) * Unit Cost * Quota / 100.
Where:
- Orderable Qty: The minimum orderable quantity from supplier as calculated by the system (similar calculation per BOM Insight).
- Requested Qty: The quantity the user requests.
- Unit Cost: The cost per unit provided by the supplier (Unit Price * Markup).
- Quota: The percentage of allocation to the supplier.
"Excess Cost" is populated during the scenario visualization or when a scenario is applied. This ensures real-time feedback on the financial impact. If a supplier's pricing or a "Quota" changes, then the Refresh Savings should be triggered to update the "Excess Cost" calculation.
"Excess Cost" uses each corresponding Min, when Min is set to multiply with Qty breaks. Otherwise, "Excess Cost" will use Min 1, if only Min 1 exists. If the Min is missing, then "Excess Cost" will assume that the requested quantity passes the min and there is no excess for that line item.
"Excess Cost" is integrated into the Savings calculation and appears in the Scenarios tab, right after the "Actual Spend" metric. For the scenarios section, "Excess Cost" will be calculated for Qty 1.
"Excess Cost" is not a System Column, but is dynamically part of the cost breakdown in the RFQ interface and scenarios functionality.