Procurement and Cost Reduction Management

Course Introduction

This program is designed to explore the practices generally viewed as leading to World-Class performance in purchasing so that participants can determine where they are now and begin immediate implementation of the steps needed to create maximum total value for their organization

Purchasing commands a significant position in most organizations since purchased parts, components, and supplies typically represent 30 to 60 percent of the total cost of sales. A small cost reductions gained in the acquisition of materials can have a greater impact on profits than equal improvements in other cost-sales areas of the organization.

• Purchasing Managers, Professional Buyers, Purchasing Officers, Purchasing Executives, Administrative Managers, Secretaries, Entrepreneurs and People involved in Company Purchasing.

• How to be on the “Road to World class” in savings initiatives.
• How to reduce cost of purchased material and services
• 6 steps to resist Price Increase for purchased goods and services
• Understand processes for data mining
• Have the knowledge to do Spend Analysis
• Understand the fundamental of ABC analysis in Purchasing
• Develop strategies for cost saving using Spend Analysis and ABC Analysis
• 8 ways Procurement has been reducing cost
• 6 step process for developing a purchase price index for your organization
• Understand the professional Negotiating processes that bring positive outcome every time

This program will combine a variety of instructional methods including lecture by an experienced practitioner and consultant, exercises, and group discussions covering current practices and their relationship to the implementation of new concepts.

Developing & Profiling Category Strategies
• 4 Stages to World Class Supply Management
• 7 Areas Critical to Future Procurement Success
• Change and Becoming More Strategic
• Developing the Targeting Model Matrix
• Creating Time to Be Strategic
• Material/Services Purchasing Code Development
• Segmentation/Category Management

Qualifying Suppliers That Meet Company Objectives
• Quality objectives of company
• Supplier quality capabilities
• Sourcing activities – how to source locally and globally
• Sourcing for goods and services
• Selection and qualifying suppliers to meet stringent company objectives
• Rating and evaluating suppliers’ performance
• Strategic alliance and supplier collaboration

Understanding Demand Situation
• Customer demand variables – stringent specifications and its effects
• Forecast and firm orders – types of forecast, accuracy
• Types of requisition and the purchasing phases
• Understanding the Product Life Cycle and the phase of demand
• Stocking needs and customer demand based on PLC

Purchasing Savings Impact on the Bottom Line
• The Need for Change
• Resisting Price Increases
• Purchasing Savings Model
• Essential Issues in Cost Reduction Initiatives
• Best Practices for Cost Reduction Initiatives

Purchasing Data Mining & Opportunity Assessment
• Spend Profile and methods of analysis.
• Sources of Spend Data
• Developing the Spend Profile
• Purchasing Hierarchical Coding Method
• Developing the ABC Analysis.
• Analysing The Spend Profile

Cost Improvement Methods
• Total Cost of Ownership
• Understanding Of Supply Marketplace
• Price & Cost Analysis
• Elements of Price that make up Price
• How much Profit does Your Supplier Make
• Developing “Should Cost”

The Value of the Purchase Price Index
• What Are Producer Price Indexes?
• Where Can We Find Them?
• The Steps of How to Develop an Organization Purchase Price Index
and Comparing to External Indexes

Strategic Purchasing Negotiations
• Overview of the Negotiations Process
• The Negotiation Goal – Enlarging the Pie – Price, Cost, TCO & Other Items to Negotiate
• Negotiation Strategies and Methods
• What to Prepare Before Negotiations
• Negotiation Tools