Price indexing is the process of monitoring the prices that's paid for certain items against a standard set price. These standard price's are set on the inventory item. If a 0 is set no monitoring will occur.

Variance percentages are setup and allows us to invoke a custom workflow if a standard price is exceeded be certain percentage. Different percentage brackets with different workflows can be defined.

We can also create a warning in case of a price being exceeded by a certain percentage but NOT invoking a custom workflow. (in this case a report is sent to a nominated person)

The violating line item will also be marked with a red border

Take note of the percentage in brackets behind the unit price, that indicates the variance against the standard price.

To view more info click the "Price Indexing" tab. This will display a breakdown of the variance and the user has the option to load the last 6 requisitions on which the same item was bought.