What Are We Trying To Accomplish?
This new "Opportunity Cost" column will be available in the PO Exceptions Section, and will help you to understand the opportunity cost of accepting (or not accepting) an exception. Another way to think of opportunity cost is the amount of money a company expects to make or save through PO collaboration. If the Opportunity Cost value is 10%, a company expects to make 10% on each dollar invested. SourceDay does not highlight which exceptions you should and should not choose as the thresholds that make sense to act on can and should be based on your business' market, goals and priorities.
These values are set for a company by your SourceDay admin, we will go into this in more details in the "How Do I Do It?" section below. Admins can set the values for:
- Move Ins
- Move Outs
If you do not want to base your exceptions on any of these values, just toggle the setting to off, and it will not be taken into account for the calculation.
How Is It Calculated?
The Opportunity Cost column uses the percentages set by your admin for the move in, move out and cancellation costs, along with extended cost and the number of days moved out/in to calculate the Opportunity Cost. For cancellations, only the percentage and extended cost are used.
- Move Out Formula:
- ((Extended_cost * move_out_opportunity_cost_percent) / 365) * Days_changed
- For Example: For a move out of 20 days with an Extended Cost of 5000:
- Opp Cost = (($5000 * .1)/365) * 20 = $27.40
- Move In Formula:
- ((Extended_cost * move_in_opportunity_cost_percent) / 365) * Days_changed
- For Example: For a move in of 20 days with an Extended Cost of 5000:
- Opp Cost = (($5000 * .1)/365) * -20 = -$27.40, but the value will show as $27.40 in the column
- Note: Even though move-ins have a negative number of days changed, we will be taking the absolute value of days, so the calculated value is positive.
- Cancellation Formula:
- Extended_cost + (Extended_cost * Cancel_opportunity_cost_percent)
- For Example: For a cancellation with an Extended Cost of $15,000:
- $15,000 + ($15,000 *.1) = $16,500
How Do I See It?
You will be able to see the opportunity cost in two places:
- Within the PO Exceptions Section in the main table
- As a report generated from a export from the main table - this will appear under "Reports" once the report is finished running
Within the PO Exceptions Section in the main table
To target your largest opportunity costs, click on the little arrows next to the column heading to sort the column.
As a report generated from a export from the main table
Once you have clicked "export" as a csv, you will find your new report under "Performance Insights" then "Reports".
How Do I Do It?
To set your exceptions values, you must be an admin on the account.
1) You will need to click on the arrow next to your name, and then "Account Settings" in the top right corner.
2) Then Click on "PO Exceptions Settings" in the menu on the left hand side of the page.
3) Then enter percentage amounts for the items you would like to set and toggle off any values that you are not interested in using for the opportunity cost calculation
4) Click "Submit"
- Overview - Getting Started with PO Exceptions
- Understanding the Total Value of Move Ins, Move Outs, and Cancellations
- Understanding the Tabs and Statuses
- Understanding the Dashboard
- Understanding the Opportunity Cost
- Next Up → Updating the Exception Message
- Searching, Filtering, and Exporting PO Exceptions