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PROCUREMENT

Microsoft offers a few interesting sample datasets. These datasets, provided by obvience.com, are based on real business data that has been anonymized. They are useful to understand how a given analytical approach helps understand what is going on.

THE MICROSOFT DATASET

One is the Procurement Analysis sample. Its comes with a PowerBI dashboard you can download. The dashboard analyzes a manufacturing company's spending on vendors by category and location.

Dashboard for the Procurement Analysis sample

To run the dataset in the app, type "procurement analysis" in the "choose a sample dataset" widget.

ANSWER FIRST

If you can't wait, here is a quick preview of the findings.

Purchase costs went significantly up due to price increases by vendors. Discounts remained stable.

The issue was tied to increased spending in the first semester, by Platinum Tier Vendors, based both in Mexico and in the USA. It impacted both Direct and Indirect purchases.

The spending growth seems tied to specific Vendors and items that show strong increases in prices. One example is Greenelectronics, that had an increase of 14M, starting practically from zero, driven by substantial like-for-like price hikes, accompanied, in this case, also with increases in purchased volumes.

OVERVIEW

Expenditures are increasing substantially, both before and after Vendor discounts.

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The 56% increase in spend before discounts is due to higher pricing. Negative volume variance.

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Volume variance is negative (less buy in volume) even though units bought have gone up substantially. This is explained by a mix effect.

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Discounts have increased less than purchases...

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...and are non-relevant to this analysis.

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Platinum Tier Vendors represent most of the spend and most of the change.

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All the top Vendors increased spend. Greenelectronics grew exponentially from almost nothing.

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Spend increase across both US and foreign vendors.

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Spending increased both in Direct and Indirect materials...

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...mainly in Indirect Goods & Services and Hardware.

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Maintenance & Repair increased substantially.

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Interestingly, all metrics seem to be improving in the second part of the year.

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In fact there seems to have been a very significant cost jump in the first semester of the year. In a real setting, it would make sense to investigate whether there is some issue with the data.

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WHAT CHANGED

57M out of 61M of increase are tied to Platinum Vendors (the largest Tier by far), mostly in US and Mexico (the largest Regions by far).

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Indirect Maintenance & Repair purchases increased substantially (+120%), along with Direct costs of all types.

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A certain number of items had very high increases, and explain about half of the growth in spend. In a real setting it would be prudent to investigate whether the price increases are tied to some error in the data.

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Mexico Maintenance & Repair is definitively an issue.

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The purchases from Platinum Mexican Vendors increased by 51M (73%) in price at constant volumes.

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The average price per unit charged by Platinum Vendors from Mexico grew from 9 to 50$ leading to a significant cost increase, even though volumes shrank.

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Mexican Platinum Vendors hiked prices especially in Indirect Goods.

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Greenelectronics had a specially difficult-to-believe spike in prices...

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...with growing volumes...

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Greenelectronics products that increased in price often also increased in volumes...

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...leading to impressive increases in purchase value.

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