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STRATEGIC USE OF PURCHASE PRICE VARIANCE (PPV) IN COST OPTIMIZATION
What is PPV?
Purchase Price Variance (PPV) serves as a critical metric in assessing cost reduction, calculated by comparing last year’s average rate to this year’s, then multiplying the delta by current year’s order volume.
Recent Market Movement in Containerized Freight Index:
📉 As of June 13, 2025, the Containerized Freight Index dropped to 2,088.24—down 6.79% from the previous day.
📈 Despite a 55.24% increase over the past month, rates remain 38.20% lower year-over-year, based on CFD benchmark tracking.
Applied Insight:
Utilizing PPV methodology, we can recognize a potential 38.20% savings on freight costs (computed as last year’s average rate vs this year’s average rate × YTD 2025 volume ordered).
This observed trend presents a timely opportunity to strategically accelerate shipments while rates remain favorable—factoring in holding costs, warehouse capacity, and inventory optimization thresholds.
Savings Recognition & Budget Governance:
To classify PPV as true savings:
* The variance must be documented and deducted from the approved budget; otherwise, it should be reallocated to meet forecasted volume increases.
* Alignment and approval by Procurement, Finance, and the C-suite are essential to ensure transparency and financial accountability.
At NC Consulting, we empower organizations with Digital Purchase Price Variance (PPV) Intelligence.
Our Digital PPV report provides a comprehensive view of all purchased goods and services—comparing unit rates from last year to this year to uncover effective rate reductions, cost increases, and net savings or overruns.
🔍 What sets this report apart?
It delivers actionable visibility across your spend portfolio, enabling Procurement teams to:
1. Lock in low-cost gains by identifying items with favorable rate trends.
2. Mitigate risk by proactively renegotiating purchases with cost upticks.
3. Prioritize value creation based on quantified, time-sensitive insights.
In our web, we monitor Commodity Price Trends and Forecasts. See related article: click this link
This enables not just cost visibility, but value-driven procurement strategy, aligned with budgeting decisions and broader operational goals.
See complete article on PPV: click this link
CORPORATE REPUTATION
WHY IS REPUTATIONAL INDEX IMPORTANT?
Reputational Index is extremely important for individuals, businesses, organizations, and even countries. It serves as a vital indicator of how a brand, entity, or person is perceived by various stakeholders, and this perception directly impacts success and stability.
● Trust and Loyalty: A positive reputation builds trust and confidence among customers, employees, investors, and the public. This translates to increased customer loyalty, repeat business, and a willingness to recommend.
● Competitive Advantage: A strong reputation differentiates an entity from its competitors. It can attract top talent, secure favorable partnerships, and even allow for premium pricing.
● Crisis Resilience: Organizations with a good reputation are better equipped to weather crises. Public goodwill and trust can provide a buffer during challenging times, making stakeholders more forgiving and supportive.
● Financial Performance: Research consistently shows a direct correlation between a strong reputation and better financial results, including higher share prices and increased market value.
● Talent Attraction and Retention: People want to work for reputable organizations. A good reputation helps attract and retain skilled employees, fostering a positive work environment.
● Investor Confidence: Investors are more likely to support companies with a solid reputation, as it indicates stability, good governance, and future growth potential.
● Risk Mitigation: Understanding and managing your reputational index helps identify potential risks and address them proactively, preventing significant damage.
● Influence and Advocacy: A positive reputation can lead to greater influence with regulators, media, and other key opinion leaders, facilitating positive outcomes.
Reputational Scores: Different dimensions and data sources may be assigned different weights based on their perceived importance to the overall reputation. Scores are then aggregated to produce a single index value, often on a scale (e.g., 0-100 or -100 to +100).
* Example (Media Reputation Index): (Good press - Bad press) / All press * 100.
Benchmarking: Comparing the company's score against competitors or industry averages to understand its relative standing.
Reputational Scores: Different dimensions and data sources may be assigned different weights based on their perceived importance to the overall reputation. Scores are then aggregated to produce a single index value, often on a scale (e.g., 0-100 or -100 to +100).
* Example (Media Reputation Index): (Good press - Bad press) / All press * 100.
Benchmarking: Comparing the company's score against competitors or industry averages to understand its relative standing.
ELIMINATING WASTE IN OPERATIONS: A STRATEGIC APPROACH
SUPPLIER RELATIONSHIP MANAGEMENT
SRM Process - teaser pages.pdfMEGA PROJECTS IN MANILA
Mega projects in Manila
At NC Consulting, from a supply chain finance and project procurement perspectives, we consider the following best practice approaches:
1. Establishing Team - RASCI, calculating FTE,
2. Scoping using the 40-40-20 Spend Principle,
3. Assessing existing supply and service agreements vs Market Benchmarking, Supplier Pre-Qualification,
4. Due diligence on Ethics, Health, Safety, Environmental, Local and Global Trade Compliances,
5. Risks, Mitigations and Opportunities,
6. Systems, Process Flow, Management of Change or Governance, and Cost Control
7. Gantt Chart with conservative, realistic, and optimistic estimates.
8. Total Cost of Ownership and Life Cycle Cost, Cost and Benefit Analysis, Net Present Value, Internal Rate of Return, and Payback Period, EPCM Standard Terms and Conditions,
9. Strategy, approach to market and stakeholders engagements,
10. Contracts, Supplier Performance, and Inventory Management; and can develop a Digital Vendor Flow Map showing all packages country of origin, PO Delivery Date details and PO value.
11. Data Management, handover from Project to Asset including maintenance programs, after sales warranties, list of suppliers, technical documents, standards and drawings, closeout certificates, and documented lessons learned, milestones and post project recognitions, and can offer a Digital Asset Integrity portal, among others,
Reference: 9 mega projects in Manila: Subway, airports, rail, bay bridge, reclamation
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