> ## Documentation Index > Fetch the complete documentation index at: https://docs.vortexiq.ai/llms.txt > Use this file to discover all available pages before exploring further. # Margin Erosion Alerts, SAP > Top finding for the Finance Controller. SKUs whose unit margin has materially eroded in the last quarter. How to read it, why it matters, and how to act on... **Metrics type:** [Key Metrics](/nerve-centre/overview#metrics-types-explained) • **Category:** [Ecommerce Platform](/nerve-centre/connectors#connectors-by-type) > Top finding for the Finance Controller. SKUs whose unit margin has materially eroded in the last quarter. ## At a glance > Top finding for the Finance Manager / SAP Functional Analyst working on margin protection. Materials whose unit margin has materially eroded in the last 90 days vs the prior 90 days, ranked by absolute margin-dollar impact. Each row is a material that used to make money and now makes less, with the magnitude and direction of the erosion. Alert table, not a single number. | | | | ------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | **What it counts** | Per material, compare unit margin in the trailing 90 days to unit margin in the prior 90 days. Unit margin = (average net selling price minus average COGS basis) / average net selling price. Materials with `>20% margin drop` AND `>$5K period-over-period gross-profit impact` flag. The card shows top 50 by absolute dollar impact. | | **Tax treatment** | Net of tax on both sides. | | **Shipping** | Revenue side includes freight if mapped to revenue. COGS side includes inbound freight loaded onto valuation. | | **Discounts** | Net selling price (post-discount) used for revenue. | | **Refunds** | Returns reduce volume but do not affect unit margin directly. | | **Cancelled / voided orders** | Excluded. | | **Currency** | Group Currency for consolidated views. | | **Plant / Company Code scope** | Respects dashboard filter. | | **Time window** | `90D vsP` | | **Alert trigger** | `any SKU dropped >20% margin AND >$5K period impact` | | **Roles** | owner, finance | ## Calculation Calculated automatically from your SAP data. See the At a glance summary above for what the metric tracks and the worked example below for a typical reading. ## Worked example A US enterprise B2B distributor on S/4HANA Cloud. 90-day window 03 Feb 26 to 03 May 26 vs prior 90 days 05 Nov 25 to 02 Feb 26. **Headline:** 14 materials flagged with margin erosion. Total period gross-profit impact: -\$680,000. **Top 6 erosion cases:** | Material | Description | Prior 90D unit margin | Current 90D unit margin | Drop | Volume sold | Period GP impact | | -------- | ------------------------ | --------------------- | ----------------------- | ----- | ----------- | ---------------- | | MAT-A23 | Industrial pump assembly | 28% | 18% | -10pp | 1,420 units | -\$184,000 | | MAT-B41 | Steel framework | 32% | 22% | -10pp | 840 units | -\$148,000 | | MAT-C18 | Electrical fitting | 24% | 14% | -10pp | 3,140 units | -\$92,000 | | MAT-D62 | Bearing assembly | 18% | 11% | -7pp | 2,210 units | -\$78,000 | | MAT-E55 | Hydraulic seal | 30% | 20% | -10pp | 1,180 units | -\$72,000 | | MAT-F09 | Custom valve | 26% | 17% | -9pp | 640 units | -\$58,000 | **Investigation walkthrough:** 1. **MAT-A23 dropped 10pp on a high-volume material.** Drilling into [Margin by SKU](/nerve-centre/kpi-cards/sap/margin-by-sku) and the Sales Document history shows: standard cost increased $32 per unit (procurement-side, supplier price increase) but the SD selling price was not updated in the pricing condition record (VK11). Result: margin on every unit sold was $32 lower than it should have been. Across 1,420 units, \$45K of pure margin loss. 2. **The fix is a price update.** SD analyst raises the customer-specific or base condition by \$32 (or whatever the cost increase was, plus the merchant's standard margin uplift). T-code VK12 (change condition record). 3. **MAT-C18 is a different problem.** Standard cost did not move; selling price dropped. This is volume-discount creep: a key customer renegotiated terms and the new pricing applies even to small orders. The fix is segmenting the discount: keep it for large orders, restore the base price for small. 4. **Pareto applies.** The top 6 materials drive 78% of the total margin erosion ($632K of $680K). Action those 6 first; the rest are smaller fish. 5. **Multi-Company-Code investigation.** If a material's margin dropped only in CC 2000 but not CC 1000, the issue is local (regional pricing or local-supplier cost). If it dropped across all CCs, it is a global supplier-price issue. The card shows per-CC breakdown on hover. **Action playbook:** * **For each flagged material, classify the cause.** Cost-up (procurement-side), Price-down (sales-side), or Mix-shift (within the material, smaller-margin variants now dominate). Vortex IQ surfaces the classification automatically. * **Cost-up materials** -> price update via VK11 / VK12 in SAP, plus procurement renegotiation if possible. * **Price-down materials** -> review discount records (VK33), tighten approval thresholds. * **Mix-shift materials** -> usually requires SKU-level pricing strategy review (e.g. raise low-margin variant prices). ## Sibling cards merchants should reference together | Card | Why pair it with Margin Erosion Alerts | | ------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------- | | [Gross Margin Percentage](/nerve-centre/kpi-cards/sap/gross-margin-percentage) | The headline. This card explains the per-SKU drivers of any change. | | [Margin by SKU](/nerve-centre/kpi-cards/sap/margin-by-sku) | The full table sorted by margin contribution. | | [Average Landed Cost per Unit](/nerve-centre/kpi-cards/sap/average-landed-cost-per-unit) | Cost-side trend that drives the cost-up cause. | | [Landed Cost Variance vs Standard](/nerve-centre/kpi-cards/sap/landed-cost-variance-vs-standard) | When actual cost diverges from standard, margin compresses. | | [Top SKUs by Inventory Value](/nerve-centre/kpi-cards/sap/sap-top-skus-value) | Which materials matter most. | | [Margin Compression](/nerve-centre/kpi-cards/sap/margin-compression) | Trend-watch alert variant. | | [Dead Stock with Active Ad Spend](/nerve-centre/kpi-cards/sap/dead-stock-with-active-ad-spend) | Forced markdowns to clear dead stock erode margin and trigger this alert. | ## Reconciling against the vendor's own dashboard **Where to look in S/4HANA Cloud:** > **Margin Analysis** Fiori app, drill by material > **CO-PA Margin Reporting** transaction KE30 / KE31 > **Material Price Analysis** transaction CKM3N (price history per material) > **Embedded Analytics**: CDS view `I_MaterialMarginContribution` Direct deep-link: `https://my{tenant}.s4hana.cloud.sap/sap/bc/ui2/flp#MarginAnalysis-display` **Why our list may legitimately differ from a manual SAP CO-PA query:** | Reason | Direction | Why | | ---------------------- | --------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | | **Erosion threshold** | Either | Default 20% drop AND >\$5K period impact. Tunable. | | **Cost basis** | Small | Card uses material price control (S or V). CO-PA may use planned cost or activity-based cost. | | **Mix-shift handling** | Either | Card flags material-level erosion only. Mix shift across materials shows on [Gross Margin Percentage](/nerve-centre/kpi-cards/sap/gross-margin-percentage). | | **CC scope** | Either | Card respects dashboard. | **Cross-connector reconciliation:** This is the SAP-side answer; commerce platforms cannot show true margin erosion because they do not own COGS. The cross-platform finding is "[Dead Stock with Active Ad Spend](/nerve-centre/kpi-cards/sap/dead-stock-with-active-ad-spend)" where forced markdowns to clear advertised dead stock cause some of the erosion this card detects. ## Known limitations / merchant FAQs **Why 90 days vs 90 days?** Quarterly comparison aligns with how Finance reviews margin. Tunable to 30 vs 30 (monthly), 180 vs 180 (semi-annual). **My standard prices are stale, will the card flag false positives?** Possibly. If a material has price control S (standard) and the standard cost has not been updated in 6 months while procurement cost has risen, the card detects margin erosion via Material Ledger / Actual Costing if active. Without Actual Costing, the standard-cost lag hides the erosion. Recommendation: run periodic standard-cost updates (Fiori app `Update Standard Prices`). **Materials with very low volume, do they show up?** Filtered by the \$5K period impact threshold by default. A material that sold 3 units with 30% margin drop has small dollar impact and is filtered out. Tunable. **New product launches: their margin profile is unstable, false flag?** Configurable warmup (default 90 days from first sale). New materials within warmup are excluded. **Multi-Company-Code: a material's margin can differ across CCs, how does the card handle it?** Computed per material per CC. A material flagging in CC 1000 but stable in CC 2000 shows only the CC 1000 row. Pivot to consolidated view rolls up per material. **SAP CO-PA shows different numbers, why?** CO-PA Margin Analysis can include cost components (allocated overhead, freight-out, marketing) beyond direct COGS. The card is gross margin only (revenue minus direct COGS). Reconcile by stripping cost components from CO-PA. **Discounts via condition records, how detected?** The card uses actual selling price net of discounts (the SD pricing-procedure end result). If a key customer renegotiated a discount that now applies, the card sees the lower net price and flags the erosion. Drilling into the Sales Document history shows which orders / which condition records moved. **T-codes for drilling in?** KE30 (CO-PA), VK13 (display condition record), CKM3N (price history), MR21 (price change), VBRK / VBRP (Billing Document detail). *** ### Tracked live in Vortex IQ Nerve Centre *Margin Erosion Alerts* is one of hundreds of KPI pulses Vortex IQ tracks across SAP and 70+ other ecommerce connectors. Nerve Centre runs the detection layer; Vortex Mind investigates the cause when something moves; Ask Viq lets you interrogate any number in plain English. [Start for free](https://app.vortexiq.ai/login) or [book a demo](https://www.vortexiq.ai/contact-us) to see this metric running on your own data.