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Quotation & Costing Workflow (QTN)

Module Purpose: Automate the quotation lifecycle by calculating dynamic landed costs (import vs domestic), enforcing margin governance, and managing supplier/transporter RFQs to ensure profitability.

[!TIP] Core Concept: "Price is a Science, not a Guess." This module ensures every quote is backed by a breakdown of Basic Price + Incidentals + Freight + Margin, preventing sales below cost.

Use Case Quick Reference

ID Title Priority
US-QTN-001 Dynamic Pricing & Lifecycle P1
US-QTN-002 Import vs Domestic Analytics P1
US-QTN-003 Transporter RFQ Automation P1
US-QTN-004 Margin & Approval Gates P1
US-QTN-005 Formulation Recipe Costing P2
US-QTN-006 Approved Supplier Law P1
US-QTN-007 Broker Flow & KYC P2
US-QTN-008 Multi-Entity Quotation Formats P2
US-QTN-009 Win/Loss Analytics P2
US-QTN-010 Negotiation Audit Trail P1
US-QTN-011 Predictive Target Pricing P2

US-QTN-001: Dynamic Pricing & Landed Cost

What It Does

Generates real-time quotation prices by stacking up all cost components (Basic, Incidentals, Freight, Insurance, Margin). It prevents "blind quoting" by showing the Sales Rep exactly what the Landing Cost is before they add their margin.

Who: Sales Rep, Costing Team
When: Creating any new quotation
Why: To ensure positive unit economics on every deal.

How It Works

The Cost Stack Calculation

  1. Formula: Total Cost = Supplier Rate + Transportation Cost + Margin + Labour Cost
  2. User Input: Selects Product + Quantity + Customer Location.
  3. System Retrieval:
  4. Fetches Base Price from Price Master.
  5. Calculates Landed Cost using the formula above.
  6. Margin Addition:
  7. Set margin on a per-customer basis.
  8. System reverse-calculates final Sale Price.

Cost Breakdown Components

A. Transporter Costing

  • Door Delivery Charges: Direct-to-site incidental costs.
  • Price per Location: Zone-based freight calculation.
  • Transporter Charges: Base freight rate.
  • Per Quantity Charges: Weight-based handling fees.

B. Import Costing

  • Calculated as: Foreign Rate + CHA Charges + Shipping + Clearance + Holding Charges
  • CHA Charges: Custom House Agent fees.
  • Holding Charges: Port storage/demurrage estimates.

Price Life-Cycle Logic

  • Spot Price: Valid for 1 day. Mandatory for products tagged as "Highly Fluctuating" in Master Data.
  • Active Price: Valid based on specific validity dates from Cost Master.
  • Inactive Price: Validity expired OR quotation source > 15 days old. Blocking Logic: System prevents generation of costing sheets if price is Inactive.
  • Dormant Price: Data from 2-3 years ago. Used for reference only; blocked for costing.

Direct Negotiation provision

  • Bypass Costing: authorized users can skip formal costing sheets to provide "Direct Rates" for rapid turnaround.
  • Broker Visibility: Broker rates displayed on-screen for instant net-realization calculation.

Edge Cases

What if Freight is unknown?
System uses "Notional Freight" from last 5 shipments to same pincode zone, flags as "Estimated".

What if Sale Price < Landed Cost?
System flags "Negative Margin". Requires US-WFL-002 Manager Approval to print/send.

Success Signals

✅ Landed cost calculates in < 500ms
✅ Negative margin triggers approval block
✅ Expired costs prevent quote generation

US-QTN-002: Import vs Domestic Analytics

What It Does

Automatically compares the cost of sourcing a product locally vs importing it, alerting the team if importing adds significant margin (arbitrage opportunity).

Who: Procurement Manager, Costing Team
When: During quote generation for high-volume items
Why: Markets fluctuate. Sometimes importing is 20% cheaper than local buying.

How It Works

The Comparison Engine

  1. Trigger: User selects a product tagged "Dual Sourced" (Import + Domestic).
  2. Domestic Path: Calculates cost based on local supplier rates (INR).
  3. Import Path:
  4. Fetches Global Index Price (USD).
  5. Adds Customs Duty, Clearing Charges, Sea Freight, Hedging Cost.
  6. Converts to INR Landed Cost.
  7. Analysis:
  8. Calculates Delta = Domestic Cost - Import Cost
  9. If Import Cost < Domestic Cost:
    • System auto-generates a "Request for Import sourcing" task for the Procurement team.
    • Alerts Sales: "💡 Import Sourcing Advantage detected."

Success Signals

✅ accurately converts FX rates real-time
✅ Alerts trigger only when delta > 5%

US-QTN-003: Transporter RFQ Automation

What It Does

Automates the request for freight rates. Instead of calling 5 transporters, the system blasts an RFQ (Request for Quote) to registered transporters for the specific route and locks the best rate into the quotation.

Who: Logistics Coordinator
When: Quantities > 1 Truck Load (FTL)
Why: Freight can eat 50% of margin on low-value chemicals.

How It Works

  1. Route Detection: From Factory (Gujarat) to Customer (Bangalore).
  2. Transporter Selection: System selects transporters servicing "South Zone".
  3. Broadcast: Sends WhatsApp/SMS/Email: "Need rate: Gujarat->Blr, 20MT Zinc, Dispatch Tomorrow."
  4. Response Capture:
  5. Transporter replies "₹4500/MT".
  6. System parses reply, populates "Freight Options" table.
  7. Best rate auto-selected for Costing calculation.

Edge Cases

No response in 2 hours?
System applies "Standard Route Rate" from history + 10% buffer.

Success Signals

✅ RFQ sent to multiple transporters instantly
✅ Parsing logic correctly extracts price from SMS replies

US-QTN-004: Margin Configuration & Alerts

What It Does

The governance layer. Defines minimum margin thresholds per product category and role, preventing sales reps from eroding value.

Who: Sales Head, System Admin
When: Setup & Ongoing

How It Works

  1. Rule Setup:
  2. "Bulk Chemicals": Min Margin 2%
  3. "Specialty Additives": Min Margin 15%
  4. "Sales Rep": Max Discount 5%
  5. "Manager": Max Discount 10%
  6. Enforcement:
  7. If User enters price violating rule → Input turns Red.
  8. "Submit" button becomes "Request Approval".
  9. Approval Tiers:
  10. Tier 1: Below Cost: Selling Price < Landed Cost. Requires Sales Head Approval.
  11. Tier 2: Low Margin: Margin % < Minimum Threshold for Category. Requires Regional Manager Approval.
  12. Tier 3: Below Target: Negotiated Price < Computer-Generated Target Price. Requires Profitability Lead Approval.

Success Signals

✅ Blocks negative margin without approval
✅ Correctly applies different thresholds per product group

US-QTN-005: Formulation Recipe Costing

What It Does

For manufactured blends (e.g., Paint Additive X), it calculates cost by summing up the weighted cost of all ingredients + processing overhead.

Who: Production Manager, R&D
When: Quoting manufactured products

How It Works

  1. Recipe Lookup: Fetch BOM (Bill of Materials) for 1000kg batch.
  2. 500kg Resin @ ₹100
  3. 200kg Solvent @ ₹50
  4. 10kg Additive @ ₹500
  5. Dynamic Rate: Updates ingredient costs based on current market price (not purchase price).
  6. Overhead Add: Adds Processing Cost (Electricity + Labor) per hour.
  7. Total Yield: Adjusts for process loss (e.g., 2% evaporation). Final Cost = (Material Cost + Overhead) / (1 - Loss%)

Edge Cases

What if an ingredient has no active price?
System flags "Missing Component Cost" – Quote blocked until Procurement updates rate.

Success Signals

✅ Accurately sums weighted BOM costs
✅ Adjusts correctly for process loss yield

US-QTN-006: Approved Supplier RFQ Locking

What It Does

"The Law". Prevents purchasing from unapproved vendors for critical customer orders. If a quote is for a sensitive customer (Pharma), system forces sourcing only from "Approved Suppliers".

Who: Quality Manager, Procurement
When: Sourcing for "Grade A" customers

How It Works

  1. Constraint Check:
  2. Quote context: Customer = "Pharma Giant Inc" (Requires Approved Source).
  3. Sourcing Restriction:
  4. Procurement User searches for "Zinc Oxide".
  5. System HIDES all suppliers except those with "Approved" tag.
  6. Shows "Grade B" suppliers as grayed out: "Restricted for this Customer".
  7. Unlock Workflow:
  8. If Rep wants to use new supplier: Must trigger US-QLT-002 (Vendor Qualification) first.

Success Signals

✅ Hides unapproved vendors for restricted customers
✅ Prevents finalization if source is invalid

US-QTN-007: Broker Flow & KYC

What It Does

Manages deals involving middlemen (Brokers). Tracks both the "Buy Rate" (from Supplier) and "Sell Rate" (to Broker), managing the spread and Brokerage payout.

Who: Trade Desk
When: High-volume commodity trading

How It Works

  1. Broker Identification: User flags Quote as "Broker Deal". Selects Broker Name.
  2. Brokerage Calc:
  3. Input: "Rate to Customer"
  4. Input: "Brokerage" (e.g., ₹1/kg or 1%)
  5. Net Realization = Rate - Brokerage
  6. KYC Check:
  7. Before confirming deal, system checks: "Does User have Broker KYC?"
  8. If No: Triggers email "Please upload KYC docs" to Broker.
  9. Blocks Order Confirmation until KYC is "Verified".

Success Signals

✅ Calculates Net Realization correctly (deducts brokerage)
✅ Blocks deal if KYC missing

US-QTN-008: Multi-Entity Quotation Formats

What It Does

One system, multiple faces. Allows generating PDF quotes on different letterheads (Entity A, Entity B, Entity C) based on the GST number selected, supporting group companies.

Who: Sales Coordinator
When: Generating PDF Output

How It Works

  1. Entity Selection: User selects "Billing Entity" (e.g., Parent Corp vs Subsidiary LLP).
  2. Template Switch: System loads the corresponding Header/Footer/Bank Details.
  3. Sequence Number: Generates quote ID from the specific entity's series (e.g., CORP/25-26/001 vs SUB/25-26/001).
  4. PDF Gen: Renders PDF with correct legal disclaimer for that entity.

Success Signals

✅ Correct Bank Details and GST header appear per entity
✅ Sequence numbers increment separately per entity

US-QTN-009: Win/Loss Analytics

What It Does

The feedback loop. Forces users to record why a quote failed or succeeded. This data feeds back into the Pricing Engine (QTN-001) to optimize future target prices.

Who: Sales Rep, Management
When: Closing a Quote (Won/Lost)

How It Works

  1. Trigger: User clicks "Close Quote".
  2. Outcome Selection:
  3. Won: Enter "Final Sale Price", "PO Number".
  4. Lost: Enter "Lost To Competitor X", "Winning Price" (if known), "Reason" (Price, Lead Time, Quality).
  5. Feedback Loop:
  6. If Lost due to Price: System updates "Market Price" index.
  7. Competitive Memory: Captures the specific Price and Competitor Name disclosed by customer.
  8. Historical Overlay: During future quotes for the same entity, system displays: "Last lost to [Competitor Name] at ₹[Price]".

US-QTN-010: Negotiation Audit Trail

What It Does

Captures both external customer negotiations and internal cross-departmental clarifications in a structured, searchable timeline.

Who: Sales Rep, Procurement, Management
When: During active lead lifecycle

How It Works

  1. External Log:provision to add text/notes from phone/meeting conversations.
  2. Internal Categorization: Internal requests are tagged:
  3. Type: Rates Request (To Procurement)
  4. Type: Clarification (To Technical/Lab)
  5. Type: Feasibility Check (To Logistics)
  6. Inbox Management: Reviewers receive requests in categorized buckets for faster processing.

US-QTN-011: Predictive Target Pricing

What It Does

Generates a "Smart Target Price" using AI to help sales reps stay competitive while maximizing profit.

Who: System AI
When: Costing Sheet Generation

How It Works

  1. Inputs:
  2. Current Market Value (API/Index).
  3. Last Quoted Price (Historical).
  4. Competitor Price (Intelligence from US-QTN-009).
  5. Customer Behavior (Loyalty, Volume, Frequency).
  6. Predictive Logic: System suggests a "Recommended Sale Price" with a confidence score.
  7. Company Context: Adjusts targets based on the Customer Company's specific purchasing profile.

Success Signals

✅ Captures Loss Reason before allowing closure
✅ "Winning Price" data updates system benchmarks

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