Analysis of Order Values Reporting in Purchasing MM

Use

This section describes analysis options available in the system.

• Totals analysis
• ABC analysis
• Analysis using comparison periods
• Frequency analysis

You can choose one of the four options, combine several of the analyses, or use all the options in one analysis.

Features

Running an Analysis of Order Values

You invoke all four of the above analyses as follows:

1. Choose Purchase order
® Reporting ® Order value analysis.
2. Enter your selection criteria and press ENTER.

The screen is subdivided into four parts. The first is the totals analysis part. However, it also contains the fields for the sort and output sequence to which the other three analyses refer.

To run voluminous analyses in the background, you must create a variant. In this variant, you must delete the Interactive analysis indicator. All results of the analysis are then printed successively in a list.

In the left part of the screen you can specify the totaling (summary) levels:

• Purchasing organization
• Purchasing group
• Vendor
• Plant
• Material group
• Material

In the part of the screen to the right, you specify which values (e.g. net order value) you wish to have, and the sequence in which they are to be displayed in the list.

Totals Analysis

Totals analysis affords you an overview of the value and number of POs.

Procedure

To run a totals analysis, proceed as follows:

1. Choose Purchase order
® Reporting ® Order value analysis. The initial screen for order value analysis appears. Maintain the data.
2. Choose Edit
® Selection options
3. Specify the sort sequence. For example:

– Purchasing organization 1

– Plant 2

– Material 3

4. In the part of the screen on the right, enter the values you wish to have for the specified criteria. For example:

– Net order value 1

– Average value per PO 2

5. Run the analysis.

You will obtain a list of all materials ordered for a plant, the net order value, and the average value per PO. Below this, the following data is displayed for each plant and purchasing organization:

• Total net order value
• Total average value per PO

ABC Analysis

The ABC analysis is used for classifying vendors or materials by order value. The ABC indicator has the following characteristics:

A Percentage with a high order value.

B Percentage with a medium order value.

C Percentage with a low order value.

The ABC analysis allows you, for example, to determine the relative importance of the individual vendors in your vendor base. It provides you with an overview of any changes that may occur in your relationships with vendors.

Procedure

To run an ABC analysis, proceed as follows:

1. Choose Purchase order
® Analyses ® Order value analysis to display the initial screen of the order value analysis. Maintain the data.
2. Choose Edit
® Selection options.
3. The ABC analysis pertains to the organizational level that you have marked in the upper left part of the screen with
1.

For example, select the Vendor field by entering 1 in the uppermost left-hand part of the screen.

4. In the right-hand part of the screen for the ABC analysis, select the value according to which the analysis is to be carried out. You can select one of the following values:

– Net order value

– Average value per purchase order

– Number of purchase orders

On the right, select the Net order value field, for example.

5. Run the analysis. It will provide you with the totals list of the vendors.
6. Choose Goto
® ABC analysis to display the ABC analysis.

The default value distribution for ABC analyses is 70-20-10 percent. The system adds the net order values of the vendors in descending order until 70 percent of the total order value is exceeded. This group of vendors is classified in the MM Purchasing component as "A" vendors.

The addition is continued until a further 20% of the total order value has been exceeded. This group is classified as "B" vendors.

The vendors accounting for the remaining 10 percent of total order value are the "C" vendors.

The % shr. column shows the vendors’ share of the total order value. These shares are added together in the Cum. % shr. column.

Analysis Using Comparison Periods

This analysis allows you to easily detect changes in purchasing activities. For example, you can determine how much was ordered from which vendor by which purchasing organization or purchasing group, and by how much the total order value of one period differs from that of a comparison period

In this analysis, you can display all the data that you previously displayed in the totals analysis.

Procedure

To compare two periods, proceed as follows:

1. Choose Purchase order
® Analyses ® Order value analysis to display the initial screen of the order value analysis. Maintain the data.
2. Choose Edit
® Selection options.
3. Enter the two periods you wish to compare in the Order date 1 from - to and Order date 2 from - to fields.

Fast entry:

You can enter the dates for the following comparisons particularly quickly because the system sets the missing dates on the basis of one date specification:

– Comparison of years

– Comparison of the first half of a year with the second half

You can overwrite the dates set by the system.

If you enter one date in the Order date 1 to or Order date 2 from fields, the system sets the remaining dates automatically.

4. Enter the date 06.30.98 in the field Order date 1 to, for example. The system then sets the dates for a half-year comparison:

– 01.01.98 - 06.30.98

– 07.01.98 - 12.31.98

5. Choose Program
® Execute® Goto ® Comparison of periods. The system will generate an overview of the relevant purchase orders.

You can also compare overlapping periods (for example, 01.01. - 03.31. : 03.01 - 05.31).

Frequency Analysis

Use this analysis to determine which net order values most frequently occur for which purchasing organizations.

The frequency analysis can be used as a basis for negotiations with vendors. For example, you may find that you have issued many individual purchase orders with a value greater than $2000 to vendor X, and an individual percentage quantity discount would be more favorable than the existing period-end rebate based on total business volume over a period.

Procedure

To run a frequency analysis, proceed as follows:

1. Choose Purchase order
® Reporting ® Order value analysis to display the initial screen of the order value analysis. Maintain the data.
2. Choose Edit
® Selection options.
3. For example, enter the following intervals in the fields Net value 1 to 4:

– Net value 1 to 500

– Net value 2 to 1000

– Net value 3 to 2000

– Net value 4 to 5000

4. Run the analysis. The totals list appears.
5. Choose Goto
® Frequencies to have the system calculate how often these PO values occur.