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PROCUREMENT COST CONTROL IN THE SUPPLY CHAIN ENVIRONMENT

Facing the global economic recession: subordinated debt crisis in America, the depression of the European economy, the appreciation of RMB, the increases on material price and the continuously rising cost of labor …… surviving being first and foremost and development being secondary is becoming the first selected strategic guideline of many multi-national corporations. The competitive advantage of cost is obviously very important!

Procurement cost accounts for 70% of your total costs, professional and effective procurement cost management can help you achieve a strategic competitive advantage.

But procurement cost control does not mean to simply cut cost, it actually is a systematic project. To simply cut procurement cost may bring a lot of risks to the company, such as quality risk, supply-in-time risk and technology risk, etc. Thus procurement cost management should consider company strategy and the development of long term sustainable core competence……

Training Objectives

To gain a good command of the contents, characteristics and basic management concepts of procurement cost
Understand the effects of strategic purchasing decision on costs
Know the professional method and skill of reducing procurement cost
Sharing the procurement cost control experience of fortune 500 companies

Training Attendees

General manager, factory manager, operation manager and related middle-and top level managers
Purchasing controller, purchasing manager, cost control staff and related staff in charge of supply chain management


	Training Outline

	Modern purchasing pattern
	Purchasing and purchasing function positioning
	Challenges of competitive environment
	Relationship between procurement and other functions
	Impacts of procurement cost on operating performance
	Analysis on procurement cost
	What is procurement cost?
	What is total procurement cost TCO?
	The three-dimensional procurement cost
	Purchasing function and effects on procurement cost
	Three methods of procurement cost control: operation method, technology method and management method
	Analysis on strategic procurement cost
	Company strategy and procurement cost target
	Selection on key procurement cost
	Impacts of supplier relationship on procurement cost
	Impacts of supply chain on procurement cost strategy
	Method of procurement cost control
	Impacts of design activity on procurement cost
	Commonly used method of reducing procurement cost during design
	Target costing
	Application of VA/VA in demand analysis
	How to reduce purchasing process cost
	Purchasing amount and risk matrix analysis, reducing the total procurement cost
	- The purchasing strategy of low purchasing volume/low risk material
	- The purchasing strategy of low purchasing volume/high risk material
	- The purchasing strategy of high purchasing volume/low risk material

	- The purchasing strategy of high purchasing volume/high risk material
	Purchasing process optimization
	Technology of reverse auction purchase
	Electronic purchasing skill (case)
	TCO method of procurement cost control
	Total cost structure and modal build up
	The case and calculating of SCOTT company’s MRO total procurement cost
	The case and calculating of equipment purchasing total cost
	The case and calculating of material purchasing total cost
	Analysis of supplier cost price
	Accounting base of procurement cost analysis:
	- The concept and calculating of discount
	- Equipment selection based on return rate analysis
	- The characteristics of variable/fixed and mix costs
	Calculate supplier’s cost break-even point and pricing by cost model
	Simple price analysis model and purchasing price calculation
	Analysis and calculation on discount amount
	The thirty-six back hole in supplier quotation (exercise)
	Learning curve and calculation of supplier cost pricing
	Continuously reducing procurement cost
	Operation method of procurement cost control
	Principle of continuously reducing procurement cost
	Application of procurement cost control method within production cycle
	Case of analysis of company procurement cost annual target
	Q&A