Cost/Price Analysis and Total Cost Concepts in Supply Management - SC-64

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Managing and reducing cost continues to be one of the primary focal points of business and governments today. In many organizations, more than half of the total revenue is spent on goods and services everything from raw material to overnight mail. Maintaining a competitive position and even survival will depend on the organization's ability to use all of the continuous improvement strategies which have been developed to reduce cost across the entire supply chain for the life of the product or service. Fundamental to developing and implementing these strategies is knowledge of Cost/Price Analysis, Value Analysis and Total Cost of Ownership concepts. This course provides the concepts of Cost/Price/Value Analysis and Total Cost of Ownership that are essential skill sets in developing and implementing the strategies required to achieve the high levels of cost reductions possible from the supply chain.

Managers and professionals in purchasing, procurement, and contracts and those involved in operations, engineering, maintenance, quality, projects, and other company activities that expose them to suppliers and buying activities for production, maintenance, equipment, MRO, services, and other outside purchased requirements.

You will Learn:

  • The importance of price/cost analysis in continuous improvement programs
  • Types of continuous improvement programs
  • The difference between price and cost analysis
  • Criteria for selecting the analysis type
  • Methods of price analysis
  • Knowledge of supplier strategic alliances
  • Analytical tools for cost drivers
  • Methods of cost analysis
  • Development of "Should Cost"
  • Types of TCO models

Course Content:

  • Use of Price Indexes
  • Negotiation
  • Terms & Conditions
  • Cost/Price Analysis
  • Resisting price Increases
  • Supplier qualification
  • Currency and progress payments
  • Total Cost of Ownership
  • Tenders
  • Purchasing savings impact on the bottom line
  • Developing the Spend Profile
  • How to perform the ABC analysis
  • Examples of using pivot tables in Excel for data mining
  • Continuous improvement skill sets
  • Supplier pricing models
  • Difference between cost and price analysis
  • Selection tool
  • Methods of price analysis
  • Historical analysis
  • Developing company Purchase Price Index
  • Methods of cost analysis
  • Major elements of cost
  • Determining cost drivers
  • Requesting supplier cost info
  • Sources of cost information
  • What and how important are supplier overheads
  • Developing "Should Costs"
  • How much profit should the supplier make
  • Reviewing the weighed guidelines
  • Economic price adjustment clauses
  • Industry analysis
  • Global industrial labor rates
  • Working with currency exchange rates
  • Total Costs Of Ownership models
  • Cost Volume Profit Analysis
  • Defining value analysis
  • The Test For Value List
  • The Supplier Value Check List
  • What is Activity Based Costing
  • Defining strategic alliances
  • Characteristics of successful alliances
  • Strategic supplier continuous improvement focus
  • Early supplier involvement
  • Reducing waste in the supply chain

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