PO Purchase Price Variance

Description:

Imported Oracle standard Purchase Price Variance report Source: Purchase Price Variance Report (XML) Short Name: POXRCPPV_XML DB package: PO_POXRCPPV_XMLP_PKG

Parameters

Ledger, Operating Unit, Organization Code, Category, Transaction Dates From, Transaction Dates To, Item, Vendor Name, Sort By, Dynamic Precision Option

Used tables

hr_operating_units, gl_ledgers, fnd_currencies, financials_system_params_all, per_all_people_f, x, rcv_transactions, rcv_shipment_headers, po_headers_all, po_lines_all, po_line_locations_all, po_distributions_all, po_releases_all, ap_suppliers, mtl_system_items_vl, mtl_categories_v, mtl_parameters, papf, mtl_material_transactions, mtl_transaction_accounts, mtl_cst_actual_cost_details

Dependencies

If you would like to try one of these Oracle EBS SQLs without having Blitz Report installed, note that some of the reports require functions from utility package xxen_util.

Example Report

PO Purchase Price Variance 23-Aug-2024 063011.xlsx

Report SQL

www.enginatics.com/reports/po-purchase-price-variance/

Blitz Report™ import options

PO_Purchase_Price_Variance.xml

Case Study & Technical Analysis: PO Purchase Price Variance (PPV) Report

Executive Summary

The PO Purchase Price Variance (PPV) report is a crucial financial control and cost accounting analysis tool within Oracle E-Business Suite Purchasing. It is specifically designed to identify and quantify the monetary differences between the purchase order (PO) price of an item and its standard cost, recognized at the time the item is received into inventory. This report is indispensable for cost accountants, procurement managers, and finance teams to monitor procurement effectiveness, analyze cost deviations, ensure accurate inventory valuation, and safeguard overall profitability.

Business Challenge

For organizations using standard costing, differences between the agreed-upon PO price and the item’s standard cost are inevitable and can significantly impact financial performance. Manually tracking and analyzing these variances presents several challenges:

Hidden Cost Deviations: Without a dedicated report, it’s difficult to systematically identify when purchased items are acquired at prices higher or lower than their established standard costs, leading to hidden cost overruns or missed savings opportunities.
Impact on Inventory Valuation: PPV directly affects the accuracy of inventory valuation for standard-costed items, as the inventory is typically valued at standard cost while the actual purchase price variance is expensed.
Inefficient Cost Analysis: Analyzing PPV by item, supplier, or category is crucial for identifying root causes (e.g., ineffective negotiations, market price fluctuations). Manual analysis is time-consuming and often lacks the necessary granularity.
Financial Reporting Accuracy: Accurate recognition and reporting of PPV are vital for correct financial statements and profitability analysis, especially for manufacturing companies. Compliance requires transparent variance reporting.

The Solution

This report offers a focused and actionable solution for identifying and managing Purchase Price Variance, enhancing financial control and procurement performance analysis.

Automatic Variance Calculation: The report automatically calculates the Purchase Price Variance for each relevant receipt transaction, providing a clear monetary value of the discrepancy between PO price and standard cost.
Targeted Discrepancy Identification: It highlights specific receipts and POs that have PPV, allowing cost accountants and procurement teams to quickly focus their investigation on high-impact items, suppliers, or categories.
Streamlined Cost Analysis: By consolidating relevant PO, receipt, and item costing data, the report significantly accelerates the analysis of PPV, reducing manual effort and speeding up exception handling.
Enhanced Procurement Performance: Proactive identification and analysis of PPV enable procurement to improve negotiation strategies, evaluate supplier pricing performance, and reduce future cost deviations, thereby optimizing overall purchasing effectiveness.

Technical Architecture (High Level)

The report queries core Oracle Purchasing, Inventory (Receiving), and Cost Management tables to calculate and present PPV. Originally a BI Publisher report, its Blitz Report implementation offers improved performance.

Primary Tables Involved:
- rcv_transactions (the central table for receipt transactions, which triggers PPV recognition).
- po_headers_all, po_lines_all, and po_line_locations_all (for Purchase Order details, including unit price).
- mtl_system_items_vl (for item master details, including standard cost information).
- mtl_parameters (for organization-specific inventory parameters).
- cst_item_costs (stores the standard cost of items).
- ap_suppliers (for supplier information).
Logical Relationships: The report links receipt transactions (rcv_transactions) to the corresponding Purchase Order lines (po_line_locations_all) to retrieve the PO price. It then compares this PO price to the item’s standard_cost (obtained from cst_item_costs for the receiving organization) at the time of receipt. The difference, multiplied by the received quantity, yields the PPV. This variance is often posted to a specific GL account through Oracle Cost Management processes.

Parameters & Filtering

The report offers an extensive set of parameters for precise filtering and detailed analysis of PPV:

Financial Context: Ledger and Operating Unit define the financial scope.
Organizational Context: Organization Code allows for filtering by specific inventory organizations.
Transaction Date Range: Transaction Dates From/To are critical for analyzing PPV recognized within specific periods.
Item and Supplier Filters: Item, Category, and Vendor Name enable granular targeting of PPV by specific products, product lines, or suppliers.
Sort By: Provides flexibility in organizing the report output.
Dynamic Precision Option: (If applicable) Allows control over the number of decimal places displayed for monetary values.

Performance & Optimization

As a transactional financial report, it is optimized by period-driven filtering and leveraging Oracle’s pre-built costing mechanisms.

Transaction Date-Driven Efficiency: The Transaction Dates From/To parameters are crucial for performance, allowing the database to efficiently narrow down the large volume of rcv_transactions to the relevant timeframe using existing indexes.
Cost Management Integration: The report relies on Oracle’s Cost Management processes to calculate and store standard costs, ensuring that the PPV calculation is based on reliable data.
Indexed Joins: Queries leverage standard Oracle indexes on organization_id, item_id, transaction_date, po_header_id, po_line_id, and vendor_id for efficient data retrieval across modules.

FAQ

1. What is the fundamental difference between Purchase Price Variance (PPV) and Invoice Price Variance (IPV)? Purchase Price Variance (PPV) is the difference between the PO price and the standard cost of an item, recognized upon receipt into inventory. Invoice Price Variance (IPV) is the difference between the PO price and the invoiced price, recognized upon matching the invoice to the PO. Both are critical variances, but they occur at different stages of the procure-to-pay cycle and measure different pricing discrepancies.

2. How does PPV impact inventory valuation for standard-costed items? For standard-costed items, inventory is always valued at its standard cost. Any difference between the PO price and the standard cost (PPV) is immediately recognized as an expense or revenue in a designated PPV account in the General Ledger at the time of receipt, rather than adjusting the inventory value.

3. How can this report be used to identify cost savings opportunities? By analyzing recurring negative (unfavorable) PPV for specific Items or Vendor Names, procurement managers can identify areas where negotiation strategies need to be improved or alternative, lower-cost suppliers should be sought. Conversely, consistently positive (favorable) PPV indicates effective purchasing.

Oracle E-Business Suite Reporting Library

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Alert	CRM Foundation
ALR Alerts	JTF Grid Datasources
Contracts Core	Lease and Finance Management
OKC Contract Lines Summary	OKL Termination Quotes
Payments	Process Manufacturing Inventory
IBY Payment Process Request Details	GMI Cycle Count Forms
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Order Management	Work in Process
ONT Cancelled Orders ONT Order Holds ONT Orders ONT Orders and Lines ONT Recurring Billing Plan ONT System Parameters ONT Transaction Types Listing ONT Transaction Types and Line WF Processes	WIP Account Distribution WIP Discrete Job Shortage WIP Entities WIP Entities Summary WIP Outside Processing WIP Required Components WIP Value WIP Value Summary
Cash Management	Cost Management
CE Bank Account Balances CE Bank Branches CE Bank Statement Import Execution CE Bank Statement and Reconciliation CE Bank Transaction Codes Listing CE Cash in Transit CE Cleared Transactions CE General Ledger Cash Account Usage CE General Ledger Reconciliation CE Transactions Available for Reconciliation	CST AP and PO Accrual Reconciliation CST COGS Revenue Matching CST Cost Groups CST Detailed Item Cost CST Inventory Value - Multi-Organization (Element Costs) 11i CST Inventory Value - Multi-Organization (Item Costs) CST Inventory Value Report - by Subinventory (Item Cost) CST Item Cost Reports CST Miscellaneous Accrual Reconciliation CST Period Close Subinventory Value CST Period Close Subinventory Value Summary CST Periodic Inventory Value CST Supply Chain Indented Bills of Material Cost CST Uninvoiced Receipts
Purchasing	Discoverer
PO Approval Assignments PO Approval Groups PO Approved Supplier List PO Cancelled Purchase Orders PO Cancelled Requisitions PO Document Types PO Headers PO Headers 11i PO Headers and Lines PO Headers and Lines 11i PO Internal Requisitions and Sales Orders PO Internal Requisitions/Deliveries Discrepancy PO Invoice Price Variance PO Purchase Price Variance PO Purchase Requisitions with PO Details	DIS Access Privileges DIS Business Areas DIS Discoverer and Blitz Report Users DIS End User Layers DIS Folders, Business Areas, Items and LOVs DIS Import Performance DIS Items, Folders and Formulas DIS Migration identify missing EulConditions DIS Users DIS Workbook Export Script DIS Workbook Import Validation DIS Workbook Owner Export Script DIS Workbooks, Folders, Items and LOVs DIS Worksheet Execution History DIS Worksheet Execution Summary DIS Worksheet SQLs
Assets	Payables
FA Additions By Source FA Asset Additions FA Asset Book Details FA Asset Book Details 11i FA Asset Cost FA Asset Impairments FA Asset Inventory FA Asset Inventory Report FA Asset Reclassification FA Asset Register FA Asset Retirements FA Asset Summary (Germany) FA CIP Cost FA Cost Adjustments FA Depreciation Projection FA Depreciation Reserve FA Journal Entry Reserve Ledger FA Revaluation Reserve FA Tax Reserve Ledger	AP 1099 Payments AP Accounted Invoice Aging AP Cash Requirement AP DPIVA Export LSNA AP Expenses AP Final Payment Register 11i AP Intercompany Invoice Details AP Invoice Approval Status AP Invoice Audit Listing AP Invoice Payments AP Invoice Payments 11i AP Invoice on Hold AP Invoice on Hold 11i AP Invoices and Lines AP Invoices and Lines 11i AP Invoices with PO, Intercompany and SLA Details AP Matched and Modified Receipts AP Negative Supplier Balance AP Open Balances Revaluation AP Open Items Revaluation AP Posted Invoice Register AP Posted Payment Register AP Preliminary Payment Register 11i AP Supplier Statement AP Suppliers AP Suppliers 11i AP Suppliers Revenue Summary AP Suppliers Revenue Summary 11i AP Trial Balance AP Trial Balance Report Definitions
Receivables	General Ledger
AR Adjustment Register AR Aging AR Aging Buckets and Interest Tiers Setup AR Applied Receipts AR Autoinvoice Interface Summary AR Customer Credit Limits AR Customer Credit Snapshot AR Customer Open Balances Period Lookback AR Customer Statement AR Customers and Sites AR Disputed Invoice AR European Sales Listing AR Incomplete Transactions AR Miscellaneous Receipts AR Miscellaneous Receipts 11i AR Open Balances Revaluation AR Open Items Revaluation AR Past Due Invoice AR Payment Terms AR Receipt Register AR Sales Journal By Customer AR Transaction Register AR Transaction Types AR Transactions and Lines AR Transactions and Lines 11i AR Transactions and Payments AR Transactions and Payments 11i AR Unaccounted Transaction Sweep AR Unapplied Receipts Register AR to GL Reconciliation	GL Account Analysis GL Account Analysis (Distributions) GL Account Analysis (Distributions) 11g GL Account Analysis (Drilldown) GL Account Analysis (Drilldown) (with inventory and WIP) GL Account Analysis 11g GL Account Analysis 11i GL Balance GL Balance (pivot) GL Balance by Account Hierarchy GL Code Combinations GL Daily Rates GL Data Access Sets GL FSG Reports GL FSG Row Orders GL Financial Statement and Drilldown (FSG) GL Header Categories Summary GL Journals GL Journals (Drilldown) GL Journals (Drilldown) 11g GL Journals 11i GL Ledger Sets GL Ledgers and Legal Entities GL Ledgers and Organizations GL Oracle FSG Converter GL Oracle FSG Converter 11g GL Period Status GL Periods GL Summary Templates GL Trial Balance - Detail GL effective vs accounting vs period start and end date comparison
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Application Object Library	Database Administration
FND Application Context File FND Applications FND Attached Documents FND Attachment Functions FND Audit Setup FND Audit Table Changes by Column FND Audit Table Changes by Record FND Concurrent Managers FND Concurrent Program Incompatibilities FND Concurrent Programs and Executables FND Concurrent Programs and Executables 11i FND Concurrent Request Conflicts FND Concurrent Requests FND Concurrent Requests 11i FND Concurrent Requests Summary FND Data Groups FND Descriptive Flexfield Table Columns FND Descriptive Flexfields FND Document Categories FND Document Sequence Assignments FND Document Sequences FND FNDLOAD Object Transfer FND Flex Hierarchies (Rollup Groups) FND Flex Value Hierarchy FND Flex Value Security Rules FND Flex Value Sets, Usages and Values FND Flex Values FND Form Functions FND Forms Personalizations FND Help Documents and Targets FND Histogram Columns FND Key Flexfields FND Languages FND Lobs FND Log Messages FND Lookup Search FND Lookup Values FND Lookup Values Comparison between environments FND Menu Entries FND Messages FND Nodes FND Profile Option Values FND Profile Options FND Request Groups FND Responsibilities FND Responsibility Access FND Responsibility Access 11i FND Responsibility Menu Exclusions FND Role Hierarchy FND Roles FND Rollup Groups FND SOA Runtime Error FND Tables and Columns FND User Login History FND User Login Page Favorites FND User Login Summary FND User Responsibilities FND User Roles FND User Roles 11i FND Users	DBA AWR Active Session History DBA AWR Blocking Session Summary DBA AWR CPU Load (active session history) DBA AWR CPU vs Wait Time Summary DBA AWR Interconnect Traffic DBA AWR Latch Summary DBA AWR Latch by Time DBA AWR PGA History DBA AWR SQL Execution Plan History DBA AWR SQL Performance Summary DBA AWR Settings DBA AWR System Metrics Summary DBA AWR System Time Percentages DBA AWR System Time Summary DBA AWR Tablespace Usage DBA AWR Wait Class by Time DBA AWR Wait Event Summary DBA AWR Wait Event Summary (active session history) DBA Alert Log DBA Archive / Redo Log Rate DBA Automated Maintenance Tasks DBA Blocking Sessions DBA CPU Benchmark1 DBA CPU Benchmark2 DBA CPU Benchmark3 DBA Dependencies (used by) DBA Dependencies (uses) DBA Editioned Object Summary DBA Editions DBA External Table Creation DBA Feature Usage Statistics DBA Hierarchical Profiler Data DBA Index Columns DBA Jobs DBA Log Switches DBA Objects DBA Parameters DBA Profiler Data DBA Redo Log Files DBA Registry SQL Patch DBA Result Cache Objects and Dependencies DBA Result Cache Statistics DBA SGA Active Session History DBA SGA Blocking Session Summary DBA SGA Buffer Cache Object Usage DBA SGA CPU Load (active session history) DBA SGA Memory Allocation DBA SGA SQL Execution Plan History DBA SGA SQL Performance Summary DBA SGA Target Advice DBA SGA Wait Event Summary (active session history) DBA SGA+PGA Memory Configuration DBA Scheduler Jobs DBA Segments DBA Session Longops DBA Table Columns DBA Table Modifications DBA Tablespace Usage DBA Text Search DBA Trace File Contents