.

    Situation

    • FIFO currently results in rebasing PY spend to align with Control recognition which could have a positive or negative impact on CY NCI/Productivity. 

    Complication

    • When Procurement can negotiate away charges that result in PY FIFO income it hurts their CY NCI/Productivity (lapping a lower spend)
    • FIFO could have both upsides or downsides.

    Question

    • Should FIFO be impacting Productivity?
    • What about procurement negotiating away prior year expenses after year end?
    • Is there a Productivity angle in FIFO given it's an absolute dollar amount and varies substantially every year.

    Recommendation

    • FIFO is not productivity.
    • Shift all FIFO impact to "Business Investment/Other" to not impact Productivity either positively or negatively. 
    • This recommendation aligns with SCF practice and treatment of FIFO to keep productivity task consistent in year (i.e. one-timer treatment)