Complex Assembly Service Contract

Complex Assembly Service Contracts are used to define pricing rules and conditions that are applied when invoicing MRO customers. The advantage that an complex assembly service contract has over a normal customer agreement is that the pricing rules and conditions can be defined to individual positions of a product structure within the same service contract whereas in a normal customer agreement the rules and conditions apply to all the objects in a structure (if chosen to do so), i.e., individual pricing definitions are not possible.

A service contract is defined per customer, per site and per product structure. A product structure is a result of a template structure being transferred from IFS/Vehicle Information Management (IFS/VIM) to IFS Manufacturing. While a contract can be valid to a certain period of time it also contains an Effective Date. This date is used to determine the valid price to be used from the price list defined in Complex Assembly Service Contract/Cost Types. This date will also ensure that the same price from the price list will be used throughout the work until it is finished, irrespective of whether the price list is updated during the work period.

In addition the contract can include quality parameters such as:

• TAT - Is the Turn Around Time which is the duration in days the repair is to take. The number of days should be agreed upon with the customer. Any delays in the repair can imply penalties for each day the repair is overdue.
• EGT Margins -  Is the Exhaust Gas Temperature. The EGT determines the criteria as to how tests should be carried out, for example a specific temperature that must be fulfilled during the test. Tests that do not conform to this criteria could imply penalties.

Pricing Definitions

The pricing definitions within a complex assembly service contract consist of the following:

Labor Rates - Is the sales rate at which a particular labor is sold. The cost of the labor class is defined in IFS Manufacturing. If the sales rate is not defined on the contract the cost will be taken as the sales rate by default. You can define different currency rates and payers (useful for multi-invoicing) for the labor classes.

Cost Types - As the name implies cost types identifies and categorizes the type of the cost incurred on the complex assembly work order. A cost type can be of one of the MRO cost category: Material, Labor, Machine, Overhead, Purchase, Other.

Structure Pricing - Under structure pricing, you can define how the services performed for each part in the structure should be priced. Structure pricing is in turn divided into 4 more pricing types:

• Special Price - If you have defined a special price for a maintenance level, the special price will be applied regardless of any other pricing definitions. Only applicable to costs of type Material.
• Fixed Price - Defines the fixed price that will be applied in place of the costs that belong to the associated cost type.
• Fee Cap - Defines the total fee amount that can be charged from the customer. Any excess amounts will be disregarded
• Price Cap - Defines the total sales price that can be charged from the customer. If the actual total sales price exceeds this amount individual sales lines will be adjusted (with a negative (-) amount) to reflect the price cap.

All of the above pricing types require a sales part that has been defined exclusively for the structure pricing. In addition Fixed Price, Fee Cap and Price Cap require relevant cost types to be defined as well.

Statuses of Contract

A complex assembly service contract has the following 3 statuses:

Planned - When a contract is created it receives the Planned status initially.

Active - Once the contract has been prepared with the relevant information, the status should be set to Active. An Active contract can be applied to a complex assembly work order.

Negotiated - The status of the contract is set to Negotiated when you need to edit an active contract. Once the necessary changes have been completed you can set the status back to active and re-apply the contract to the complex assembly work order.

Obsolete - A contract is set to obsolete when it is no longer used, i.e., the validity of the contract has expired.