Tier II Goal Methodology – Percent of APV / Payments Received is a type of goal calculation that determines the percent of Diverse Spend attributed to a Tier I Prime Supplier within a Supplier Diversity Tier II Report.  Percent of APV / Payments Received refers to the sales that have been received from a customer by the reporting Tier I Prime Supplier.

To correctly calculate a Tier I Prime Supplier’s Percent of APV, a Prime Supplier must report the following information:

  • Total North American Payments Received
  • Corporate D Payments Received
  • Diverse Spend (can include Indirect and / or Direct Spend)

For this Tier II Report, Customers require Tier I Prime Suppliers report their Customer’s APV along with Diverse Spend.  Once revealed, Total Customer Allocated Diverse Spend  divided by a Tier I Prime Supplier’s Customer Payments Received dictates the Tier I Prime Supplier’s percent of Diverse Spend for the Customer.

Below is an example of the work

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When looking at the example above the following data points are entered by the Tier I Prime Supplier to start (with Corporate D representing the Customer).

  • Total North American Payments Received
  • Total North American Purchases
  • Corporate D Payments Received
  • Corporate D Purchases

As we move forward the Indirect Spend % displayed is calculated based on Corporate D Payments Received ($25 million) divided by Total North American Payments Received ($100 million).  This gives us the 25% shown above.

Corporate D Payments Received
                                           ————————————–     =  Indirect Spend %
Total North American Payments Received

Next, the Tier I Prime Supplier enters the following:

  • Total Diverse Indirect Spend
  • Corporate D Direct Diverse Spend

Once entered, the Total Allocated Diverse Spend is displayed based on the Total Diverse Indirect Spend ($10 million) multiplied by the Indirect Spend % (25%).  This gives the Tier I Prime Supplier $2.5 million in Customer Allocated Indirect Spend.   The $2.5 million is then added with the Direct Spend to give the Tier I Prime Supplier $3 million in Total Allocated Diverse Spend.

Total Diverse Indirect Spend  X  Indirect Spend %   =  Corporate D Allocated Indirect Spend

Corporate D Allocated Indirect Spend + Corporate D Direct Spend =  Total Corporate D Allocated Diverse Spend

Once calculated, the Percent of APV / Payments Received for the Tier I Prime Supplier is determined by taking the Total Corporate D Allocated Diverse Spend ($3 million) and dividing it by the Corporate D Payments Received ($25 million).

Total Corporate A Allocated Diverse Spend
                                    —————————————————-     = Percent of Spend
Corporate D Payments Received

In the end, the report tells us that 15% of the Tier I Prime Supplier’s Customer Payments Received is attributed to Diverse Suppliers.

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