Fourth Analytics Adaco: Vendor Price Analysis

Overview

This article details the information displayed in the Vendor Price Analysis dashboard, and a guide on using this functionality in order to understand the ‘opportunity cost/gain’ of purchasing products from different Vendors within a specific date range, where product prices are not fixed.

The Vendor Price Analysis tab compares the receiving price of a product in base units (per kg/litre/gal/lb), against the median price paid for that product within a specific date range. For example, if apples were purchased as per following Purchase Orders

PO_001: 10kg @ $3/kg

PO_002 3kg @ $4/kg       

PO_003 5kg @$5/kg

The median price per unit is $4/kg (middle price).

This means that when the same apples were purchased at $3/kg, a saving of $3*10kg = $30 was made.  Similarly, when they were purchased at $5, an overspend of $5*5 = $25 was made. 

In this example, overall, a net saving of $5 was made in the month as the total value of product bought below the median price exceeds the total value of product bought above the median price.

Paid +/- Median Base Price Trend

Shown in the top-left of the page, this graph is pre-set with monthly data for the last 24 months. It shows the net (overall) difference for each month in terms of product prices paid against the median for that month.

Small variations to 0 indicate little opportunity between various purchase options, whilst large variations indicate potential savings (black label, below zero) / over-spends (red label, above zero) between various purchase options.

Fig.1 – Paid +/- Median Base Price Trend

The graphic shown in Fig.2 is displayed on the top right of the page (KPI panel). It indicates the lower total (in green) against the median price paid, and the higher total (red) against the median price paid, along with the total net (orange box) for the chosen time period.

In the example in Fig.2, savings made were greater than costs incurred, producing a net overall saving for the month of 5,286, where overall volumes of products were purchased for less than the median price for the period.

Fig.2 – Savings and Overspend Graphic

Total Savings / Overspend Trend

These graphs show the breakdown of the net result in the Median Base Price Trend graph (shown on the top left of the page) between less paid (left) and more paid (right).

From the Median Base Price Trend graph (see Fig.1), the net saving for Jan 2016 was 354. The Total Savings Trend graph shows that in Jan 2016, 4,163 was saved (left), and from the Overspend graph in Jan 2016, 3,809 was overspent (right).

Fig.3 - Total Savings / Overspend Trend

Top 10 Savings / Overspend by Vendor & Property

These graphs show Vendors and Properties with the highest variances between receiving/paid price, and the Median price for the chosen time period.

Fig.4 - Top 10 Savings / Overspend by Vendor & Property

Top 10 Savings / Overspend by Product

This shows the 10 products with the largest net variance to the median base price.

The size of the circle indicates the amount saved/overspent – a large circle indicates the highest overspend, and a small circle the highest saving.  

The graph also shows the volume received (horizontal axis) and net receiving value (vertical axis).

• Hover over each circle to see the relevant figures – the example in Fig.5 shows that a saving was made of £120 on 18.15 litres of Rapeseed Oil

Fig.5 - Top 10 Savings / Overspend by Product

Vendor Price Comparison

This table breaks down the savings/overspend by subcategory, showing individual products purchased.

Fig.7 - Vendor Price Comparison

Using the Dashboard

In order to identify the opportunity for overspend or saving within the example category of dairy products for the last 3 months:

• First choose the required time period using the Date Dimension (Business day) filter under Property Details

• Within the Product details filters, set the Category filter as required

• The Paid +/-Median Base Price graphic (shown in the top right of the page) will show if there is a significant difference in pricing being made, and the trend graph will indicate if this has also been the case historically

• Small values in each of these graphics indicate there is little opportunity either due to minor price fluctuations or low volume of purchases, while high values indicate greater opportunity

• The Total Savings Trend and Total Overspend Trend graphs will indicate if net movements are both positive and negative swings

• The Top 10 Savings / Overspend by Vendor will show which Vendors are driving this, and the Top 10 Savings / Overspend by Property will indicate which properties have the most opportunity

• Refer to the Top 10 Overspend / Savings by Product to determine which products have had the largest variations

• Then reference these products on the Vendor Price Comparison table to see if the price variation was because products were purchased from a different Vendor. If so, it may be preferable to restrict purchasing to a certain Vendor to prevent overspend or facilitate savings

• If Vendor has remained the same, it will indicate a price change by the Vendor