Purchase Price Variance (Ppv)
Ppv is the difference between the actual price paid for an item and the expected price of that item. Ppv can be caused by a number of factors, including changes in market conditions, supplier pricing, and negotiating strategies.
Ppv is a key metric for procurement professionals, as it can help to identify opportunities for cost savings. For example, if a procurement team is able to negotiate a lower price for an item than what was originally budgeted, this will result in a positive ppv. Conversely, if the team pays more for an item than what was expected, this will result in a negative ppv.
Ppv can also be helpful in assessing supplier performance. If a supplier consistently provides goods or services at a lower price than what was expected, this may indicate that the supplier is offering competitive prices. On the other hand, if a supplier frequently incurs ppv costs, this may suggest that the supplier is not providing value for money.