Interpreting Statistics

To correctly interpret the statistics reports, the user should understand how statistics are calculated in the Purchasing application.  The price index, overall performance, and quantity/amount statistics option are explained below.

Price Index

he price index is the ratio of the volume at unit cost to the volume at standard cost, multiplied by 100.  (The volume at unit cost is the total monetary amount of receipts valued at purchase order unit cost.  The volume at standard unit cost is the total monetary amount of receipts valued at standard unit cost.)

·     If the price index is 100, the buyers are negotiating the purchases at standard cost.

·     If the price index is greater than 100, the buyers are negotiating the purchases above standard cost.

·     If the price index is less than 100, the buyers are negotiating the purchases below standard cost.

Overall Performance

Overall performance is a generalized performance indicator calculated using user-defined performance weights.  The user may assign weighted percentages to the following indicators:  on-time delivery, price, quality acceptance, and quality perfection.  The reporting programs then multiply the actual performance percentages by these performance weights to calculate the weighted performance; the sum of the four weighted performance values is the overall performance.

The example below illustrates these calculations for one item/vendor relationship.  The Actual column contains the values calculated from actual receipts.  The Weight column contains the performance weights the user has assigned to this part.  The Weighted column is the product of the first two columns.

The user-defined performance weights are defined on the Reference File (category 472).  They are assigned by purchasing group.  This allows performance weights to be assigned according to part characteristics.  For example, seldom-used parts with critical tolerance may be weighted heavily on quality and lightly on price.  If a performance weight record does not exist for a purchasing group, a user-defined default performance weight record is used.  If this default record does not exist, each performance weight defaults to 25.

The use of the overall performance indicator is not intended as a substitute for individually evaluating the indicators of delivery, price, and quality.  This indicator can be used, however, to highlight problem areas that deserve more thorough statistical analysis.

Quantity/Amount Statistics Option

The Quantity/Amount Statistics Option allows the user to specify whether physical quantities or monetary amounts will be used as the basis for quality performance reporting.  This option is defined on the Purchasing System Defaults 2 record (category 492) on the Reference File.

If the quantity option is selected, quantities recorded during quality control will be printed on the statistical performance reports.  Quantity totals are not printed for level breaks, since the sum of quantities in different units of measure would give meaningless results.  Performance indicators are summed and averaged by the number of parts processed.

If the amount option is selected, monetary amounts will be printed on statistical performance reports.  The amounts are based on the quantities recorded during quality control multiplied by the standard unit cost.  Amount totals are printed at level breaks on the reports.  Performance indicators are calculated based on amount totals.

The quantity option might be used in a just-in-time manufacturing environment, where the on-time delivery of low-cost items is important.  In a traditional manufacturing environment, the amount option would probably be preferred.

The Quantity/Amount Statistics Option may be changed at any time to produce reports in either of the two versions.