MANAGING POTENTIAL PRICE AND COST INCREASES

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PROGRAM OUTLINE

 

INTRODUCTION & PURCHASING ANALYTICS

• Type "O" versus Type "P" Purchasing Department
• Purchasing Savings—Impact on the Bottom Line
• Improve Profitability through Better Purchasing Decisions
  
• Purchasing Opportunity Assessment & Spend Profile
  
• Power through Informed Negotiation
  
• Forecasting & Understanding the Marketplace

PRICE ANALYSIS

• Definition of Price Analysis
  
• Importance of Price-Cost Analysis
  
• Price Analysis Processes & Techniques
  
• Market Resources & Price Indexes
  
• Difference between Cost Reduction & Cost Avoidance

SOLICITATION PACKAGES & THEIR USE

• Types of Solicitation Packages & RFIs
  
• RFQ/RFB/RFP Methods of Solicitation
  
• Preparing & Evaluating RFQs/RFBs/RFPs
  
• Solicitation Do’s & Don’ts

BEST-BUY INVESTIGATION & TECHNIQUES

• The Difference between Price & Cost
  
• Application of Discounts to Price
  
• Equivalent Unit Costs
  
• Market Basket Pricing Review
  
• Fixed Margin Pricing, Rate of Return Pricing, & Breakeven Analysis
  
• Price Escalators, Alternative Pricing Mechanisms, & Sample Language
  
• Service—Major Cost Elements
  
• International Landed Cost Optimization

PURCHASE QUANTITY ANALYSIS & APPLICATION

• Purchasing Manager's Decisions
  
• Inventory Decision Costs
  
• Replenishment Lead Time Components
  
• Economic Order & Purchase Quantities
  
• Order Point Systems
  
• MAD Formula & Service Levels
  
• Service Levels, Costs, & Safety Stock

COST ANALYSIS & BREAKDOWN RATIONALE

• Major Cost Elements
  
• Analysis of Costs
  
• Elements of Cost—Key Factors
  
• Supplier Cost Breakdown
  
• When to Perform Cost Analysis
  
• Input for a Cost Buildup & Internal Estimate
  
• Six Basic Elements that Affect Cost

IMPROVEMENT & EXPERIENCE CURVES

• The Learning Curve
  
• The Use of the Learning Curve in Purchasing
  
• When to Use the Learning Curve
  
• Using Learning Curve Coefficients

TOTAL COST OF OWNERSHIP (TCO) PROCESS RATIONALE

• Priceberg & TCO
  
• Typical Supplier Cost & Price Structure
  
• TCO versus Total System Cost
  
• TCOP Report
  
• Supply Base Management Costs
  
• Supplier Cost of Ownership—Assessment
  
• Activity Based Costing—TCO Impact

EXAMINATION OF TARGET COSTING & TARGET PRICING

• Target Costing Process
  
• Target Cost Breakdown & Impact
  
• Target Costing Techniques & Tools
  
• Identification of Areas to Improve
  
• Target Pricing & Cost Model Example
  
• Open Book Costing

BREAK-EVEN ANALYSIS & USAGE

• Why Do Break-Even Analysis
  
• Cost Volume Profit Analysis
  
• Constructing a Break-Even Chart
  
• Computing Sales Value Only
  
• More Reasons for Using Break-Even Analysis
  
• Break-Even Analysis Tips

MAKE-OR-BUY ANALYSIS & OUTSOURCING DECISIONS

• How Make-or-Buy Investigations Originate
  
• Make versus Buy Analysis
  
• Cost & Resource Analysis in Make-or-Buy Decisions
  
• Reasons for Outsourcing
  
• Types of Unit Rate Structures
  
• Financial Terminology Applicable to Outsourcing

FIXED ASSET ACQUISITION & CAPITAL EQUIPMENT BUYING

• Life Cycle Cost & TCO Calculations
  
• Capital Equipment Total Cost Analysis Procedure
  
• Buy, Rent, or Lease—Comparative Analysis
  
• Payback Analysis & Rate of Return
  
• The Present Value Concept
  
• Recommended Reading