University of Twente Student Theses


Providing insight into the price deviations between purchase orders and invoices at Company X

Cate, M.H.W. ten (2021) Providing insight into the price deviations between purchase orders and invoices at Company X.

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Abstract:Company X is a company that supplies printed matter to professionals. Company X's ambition is to further internationalise. However, this is not possible due to the action problem: At Company X, the process of treating incoming printed matter invoices is not scalable for handling more printed matter invoices. Company X has a WebApp which receives a huge number of orders every day. There are suppliers who produce the orders for Company X and Company X receives the invoices from them. However, these invoices do not always correspond to the expected cost price that Company X has calculated per purchase order. Because of the money and work involved in these deviations, the process of treating incoming printed matter invoices cannot be scaled up, which is holding back internationalisation. Because there are more invoices coming in and therefore more deviations when Company X gets more customers. And Company X cannot handle those extra invoices with deviations. Using a problem cluster by Heerkens et al. (2017), we came to the conclusion that the core problem of Company X is: At Company X, it is not clear which and how many invoices differ nor what the origin and financial impact of the deviations are. This led to the following research question: How can Company X monitor the price deviations between Company X’s purchase orders and the suppliers’ invoices? We have answered this research question with the help of six knowledge questions that have shaped this study. We created an appropriate conceptual dashboard that should give Company X insight into the deviations between the purchase orders and the invoices. This was done by mapping the order and invoicing process, a literature study on the visual design of a dashboard, a literature study on the creation of KPIs, and brainstorming on the design of a dashboard. It has become a conceptual dashboard, because during the research the implementation of a new module in the financial package of Company X was delayed. Therefore, the link between that module and the data warehouse, which the dashboard uses, has not yet been realised. The Product Guide of engineering from Company X can use the conceptual dashboard created in this study in the future in our recommended way to monitor the deviating invoices against the purchase orders. So, on a weekly and monthly basis with the monthly analysis using the Plan Do Check Act cycle. When the conceptual dashboard is put into use in the way we recommend. Then the core problem is solved and so is, in part, the action problem. The norm of the action problem is that there should be a proactive solution that will lead to almost no deviations. In addition, Company X wants an efficient and effective way to solve the deviations that still come in. The dashboard will then easily provide insight into the deviations so that targeted action can be taken, and proactive solutions can be devised. This is not possible without insight into the deviations. In addition, Company X could solve the deviations efficiently if the dashboard is implemented in the process flow as recommended. Because the time-consuming information transfer between the product guide and finance has been eliminated. The deviations can also be resolved more effectively because the Product Guide can then prioritise, based on the dashboard, which deviations he will resolve first However, no attention has been paid in this research to making price agreements between Company X and the suppliers. The price agreements obviously have a major impact on the price differences between the prices applied by company X and the prices charged by suppliers. We therefore recommend not putting all the focus on the dashboard to find the causes of the price deviations, but to also investigate the process of making price agreements.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Programme:Industrial Engineering and Management BSc (56994)
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