This is a highly concentrated presentation that addresses the differences among price, cost, and TCO; what cost reduction strategies to focus on; and an overview of various techniques, as well as when and where to use them. Faced with excruciating competitive pressures, many senior C-Level executives require maximum effort from every part of their organization to survive. Today, purchasing, acquisition, procurement, contracting, and supply management professionals must be the most progressive cost reduction oriented group in the company.
For many organizations, senior C-Level executives set forth annual purchasing, acquisition, procurement, contracting, and supply management goals that mandate cost reductions. Regardless of the cost savings, avoidances, or containments achieved previously, you are faced with new cost reduction initiatives and objectives.
To make the goal of cost reduction a reality, we cannot focus solely on the price. We must examine the total cost of ownership to your organization, which means moving beyond the organizational environs to include suppliers, internal customers, other allied business functional entities, and external customers. By working both internally and externally with these stakeholders, cost reduction opportunities will become visible.
A typical purchasing, acquisition, procurement, contracting, or supply management professional will help reduce supplier prices and avoid incremental costs. A good purchasing, acquisition, procurement, contracting, or supply management professional will reduce costs by lowering both costs of acquisition and risks of supply. A great purchasing, acquisition, procurement, contracting, or supply management professional will reduce total costs across the board, increase service levels to the internal customer, make a significant contribution to the bottom line, seek value-added opportunities, and help to delight the organization’s customer. This type of professional also balances supply related costs and cycle time for the lowest overall cost, at the best value, while seeking risk optimization rather than risk minimization strategies.
Cost control and cost reduction are the two most viewed area in finance. Every corporate entity will have a specialized department to study on cost aspects. Apart from finance it is places a great role in micro economics.This presentation will helpful to university students in their study and enhance greater knowledge.
Cost control and cost reduction are the two most viewed area in finance. Every corporate entity will have a specialized department to study on cost aspects. Apart from finance it is places a great role in micro economics.This presentation will helpful to university students in their study and enhance greater knowledge.
Development of a procurement strategy and making the aquisition and purchasing choice by Derek Hendrikz. passive, independent, supportive and integrative strategies. Outsourcing vs. insourcing and bottle neck, critical, routine and leverage sourcing discussed.
www.derekhendrikz.com
Strategize your company’s cost reduction plan using Cost Reduction Plans PowerPoint Presentation Slides. Reduce cost of the production of the product and increase the profit by using cost reduction plans PPT templates. Apply various techniques and tools to reduce the costs such as budgetary control, standard costing, cost benefit analysis, value analysis, contribution analysis, and more. Go step by step to reduce expenditure and continuously analyse costs, functions, etc. This deck covers various topics to help you strategize your cost reduction plan such as key levers to cost management, levers to achieve successful cost optimization, levels of strategic cost optimization, detailed levels within strategic cost optimization framework, prioritizing IT cost optimization, IT cost optimization, cost optimization techniques, cost optimization planning, stages in cost reduction, cost design, comparison of stages, etc. You can use price optimization PowerPoint presentation templates for better cost reduction plan. Create more demand for the product, increase sales and revenue, increase competitive strength and more using cost reduction plan PPT presentation slideshow. Assess the fallout of emerging circumstances with our Cost Reduction Plans Powerpoint Presentation Slides. It helps decipher the implications. https://bit.ly/3hos7YG
Development of a procurement strategy and making the aquisition and purchasing choice by Derek Hendrikz. passive, independent, supportive and integrative strategies. Outsourcing vs. insourcing and bottle neck, critical, routine and leverage sourcing discussed.
www.derekhendrikz.com
Strategize your company’s cost reduction plan using Cost Reduction Plans PowerPoint Presentation Slides. Reduce cost of the production of the product and increase the profit by using cost reduction plans PPT templates. Apply various techniques and tools to reduce the costs such as budgetary control, standard costing, cost benefit analysis, value analysis, contribution analysis, and more. Go step by step to reduce expenditure and continuously analyse costs, functions, etc. This deck covers various topics to help you strategize your cost reduction plan such as key levers to cost management, levers to achieve successful cost optimization, levels of strategic cost optimization, detailed levels within strategic cost optimization framework, prioritizing IT cost optimization, IT cost optimization, cost optimization techniques, cost optimization planning, stages in cost reduction, cost design, comparison of stages, etc. You can use price optimization PowerPoint presentation templates for better cost reduction plan. Create more demand for the product, increase sales and revenue, increase competitive strength and more using cost reduction plan PPT presentation slideshow. Assess the fallout of emerging circumstances with our Cost Reduction Plans Powerpoint Presentation Slides. It helps decipher the implications. https://bit.ly/3hos7YG
You need to reduce cost in your organization significantly and in a sustainable manner?
Try our proven approach to reduce cost sustainably across the entire product lifecycle, the end to end value chain and including savings that consider planet and people as well.
This presentation is about Value Engineering and contains:
1.History of VE
2.Value Concept
3.What is Value Engineering?
4.Implementation of VE in our project
5.Principle and Purpose of VE
6.Case Study
7.Conclusion
AWS June Webinar Series - Getting Started: Lowering Total Cost of Ownership w...Amazon Web Services
The objective of this webinar is to help customers understand how AWS can help them save money and resources by reducing Total Cost to Ownership (TCO). Comparing cloud costs and economics to on premises and colocation solutions is not always easy and there are multiple factors to take into consideration. In this webinar we will focus on the components of cloud economics, what to measure and we will cover the fundamentals of cost optimization.
Learning Objectives: • Understand the components of TCO analysis • AWS Pricing Fundamentals • Comparing TCO for cloud services vs. on premises/colocation
Who Should Attend: • IT professionals, CIO, Financial Analysts, Consultants
ERP Pre-Implementation TCO Total Cost of Ownership Jyotindra Zaveri
Do your homework before embarking on to the ERP journey
TCO of ERP project is based on many things, and not only on the cost of the ERP software. Use the check-list given in this PowerPoint presentation to ensure that ERP implementation does not experience any hurdles. Prevent ERP failures during ERP implementation by allocating enough budget for the ERP project - Presentation by Jyotindra Zaveri, ERP Consultant with ten years of implementation experience with 50 successful ERP implementation
Total Cost of Ownership, what is it ? and why do we need to know more about it.Ashraf Osman
This is a brief presentation about TCO, a subject that should be addressed by all CIO's. A lot of savings can be realized when one gives TCO a careful look ..
Best Practices and Policies for Improving Total Cost of Ownership of your AWS...Amazon Web Services
Whether you’re just getting started or running a large and complex AWS environment with thousands of EC2 instances or petabytes of object storage, you need to have a rock solid cloud management strategy. As you scale your cloud environment, it’s critical to have an effective cost management process and implement policies that automate infrastructure schedules, rightsize workloads, and manage reservations.
Attend this session to learn the top best practices from some of the industry’s cloud leaders achieving the greatest success with AWS and CloudHealth Technologies.
This session is designed for anyone interested in improving the total cost of ownership through ongoing optimization strategies and automated policies.
Speaker: Joe Kinsella, Chief Technology Officer & Founder, CloudHealth
Different techniques of costing in strategic management accounting discussed.
Marginal costing,budgetary control, standard costing,Activity based costing,responsibility costing.
Cost Accounting-
-Meaning of Cost Accounting
-Scope of Cost Accounting
-Nature of Cost Accounting
-Relationship b/w Financial Accounting & Cost Accounting
-Cost Accounting v/s Management Accounting
-Objectives of cost accounting
-Function of cost accountant
-Essentials of cost accounting
-Advantages of cost accounting
-Limitations of cost accounting
-Role of cost in cost accounting
-Cost Unit & Cost Centre
-Cost Techniques
-Costing Systems
-Costing Methods
-Cost Classification
-Components of total cost
-Cost Sheet.
Adapt, overcome, and improvise words to live by for the supply chain--e parce...Thomas Tanel
In the movie Heartbreak Ridge, Clint Eastwood as Gunny Highway says, “You're Marines now. You adapt. You overcome. You improvise.”
With more than 40 plus years of seasoned and practical supply chain experience, I would like to share with you a military perspective on what Gunny Sergeant Thomas Highway meant and its application to the supply chain.
The Art of Planning and Writing Specs and Requirements--ISM 2010 TanelThomas Tanel
One of the most difficult tasks that purchasers face is converting user or internal
customer needs to new specifications and requirements. For most, it’s easier said than done,
while others simply dread the thought of constructing a Statement of Work. Failure to develop
a properly defined scope of work, specification, or requirement may mean the solicitation will
need to be abandoned and repeated with corrections. Purchasers who are involved in putting
together specifications, requirements, or SOWs need to be aware that it is worth the
investment, time, and effort to create a high quality outcome. Thus, it is important that
purchasers understand the importance of good specifications and requirements, as well as
their contractual and practical significance. This proceeding will offer you practical techniques,
tools, and process methods for constructing effective specifications, requirements, and SOWs.
Supply chain performance reporting and metrics -logistics digest 091112Thomas Tanel
Many managers see supply chain performance reporting and metrics as a huge time drain that results in a series of uncomfortable conversations and confrontations they would rather not endure. You cannot manage what you cannot measure, and your supply chain is one of the most important functions to manage. The good news is that you’re Logistics and Supply Chain Management people
are probably already doing a lot of measuring. The bad news is that they might not be measuring the right things. To measure your supply chain effectively, you must identify metrics that are appropriate for your organization and that will improve business performance.
Supplier financial stability and risk differentiation in turbulent times -sup...Thomas Tanel
There is a Darwinian effect occurring in the supply chain as Fortune 1000 companies cut weaker suppliers. The simple fact is that in today’s longer global supply chains, product
moves over greater distances and across more multinational borders than in the more localized supply chains of the past. In an era of wildly fluctuating commodity prices and security regulations, the coordination and execution required for international shipments has become
more of a challenge than in the past.
Spaced out are you making the most of your shrinking space--werc sheet (may-j...Thomas Tanel
Are you making the most of your (shrinking) space? Tanel says that most companies do consider adding space. “However,” he says, “it is sometimes necessary to review the presently occupied facilities to determine if one can increase productivity by changing the physical and spatial relationships between operations,” he explains. According to Thomas Tanel, president of CATTAN Services, before you can consider making any changes in your current mode of operation, you have to thoroughly understand how your warehouse runs.
Recriminations the need to reevaluate manufacturing offshoring and outsourcin...Thomas Tanel
It is increasingly popular now for companies to reevaluate offshoring and the outsourcing of manufacturing and other services. Now we hear about onshoring, near shoring and right shoring. Are you dazed and confused? Who’s right and who’s wrong? More importantly, organizations need to do the necessary due diligence as part of their sourcing decision. It has been my contention that in addition to the basic item’s purchase price; we need to seriously
consider the ultimate cost of delivering the goods to the buyer's facility.
Out with the old, in with the new intra-logistics--mmg news letter 2013Thomas Tanel
I would like to introduce the concept of Intra-logistics as the new mantra for Materials Management. Intra-logistics is a recent European term that describes the internal flow of materials between different logistics nodes within a company. Conceptually, Intra-logistics includes the set of logistical activities necessary to find, purchase, receive, store, process, issue, and deliver materials.
Nine ways warehousing adds value -logistic insight asia november-december 2012Thomas Tanel
With new trends and an 'e-volution' in moving and storing materials comes the inevitable need to reconceive how we operate our warehouses and distribution centers to stay competitive.
Mitigating supply chain risk in uncertain times murphy's law--mworld volume 1...Thomas Tanel
The simple fact is that in today’s longer global supply chains, product moves over greater distances and across
more multinational borders than in the more localized
supply chains of the past. This distance-based supply chain, whose links are forged by many supplier tiers in various countries, carries a risk dependent on its length and
diversity. The longer and more diverse it becomes, the
more it is susceptible to unforeseen circumstances.
Management by walking around is a good start here’s what to do while walking-...Thomas Tanel
‘Management by walking around’ is a good start; here’s what to do while walking. Getting out on the floor of the
DC is a crucial management tactic. But if you walk around only once in a while, you run the risk of what Tom Tanel calls the “lip-service presentation and eyewash tour.”
Identifying vulnerability is step one to mitigating supply chain risk -my pur...Thomas Tanel
Supply chains are becoming increasingly complex. Yet many procurement teams are not working to prevent and manage disruptions that could prove costly. In a recent webcast, “Preventing and Managing Supply Chain Disruptions,” Tanel describes costs of disruption to the supply chain and explains why it’s important for procurement to learn to identify vulnerabilities and develop a plan to mitigate risk.
How to make eoq relevant again -logistics & supply chain world july 2012Thomas Tanel
The concepts of Just-in-Time (JIT) and Lean have led many to question the continued relevance of Economic Order Quantity (EOQ), whose function is to identify the optimum order with the lowest cost parameter. In response, yes, it is still valid as a basic analytic tool, however, many supply chain industry executives perceive it as “old school” or don’t even know about it. My experience has shown that
many individuals and some companies cannot apply it—even if they wanted to—because they do not know their acquisition costs to place an order or their yearly inventory carrying cost rate.
Count the ways distribution centers add value 2nd--supply chain digital septe...Thomas Tanel
N RESPONSE TO THE “NEW Normal”, the business
landscape has changed fundamentally; tomorrow’s
distribution environment will be different, but no less
rich in possibilities for those who are looking for ways
to add value. With new trends and an “e-volution” in
moving and storing materials comes the inevitable need
to reconceive how we operate our distribution centers
to stay competitive. Outdated philosophies not based
on the “New Normal” may prevent us from recognizing
and integrating some of the new ways the distribution
facility or DC can add real value to our operations.
Count the ways distribution centers add value 1st--supply chain digital augus...Thomas Tanel
IN RESPONSE TO THE “NEW Normal”, the business
landscape has changed fundamentally; tomorrow’s
distribution environment will be different, but no less
rich in possibilities for those who are looking for ways
to add value. With new trends and an “e-volution” in
moving and storing materials comes the inevitable need
to reconceive how we operate our distribution centers
to stay competitive. Outdated philosophies not based
on the “New Normal” may prevent us from recognizing
and integrating some of the new ways the distribution
facility or DC can add real value to our operations.
Assurance in uncertainty -logistics insight asia september 2012Thomas Tanel
For purchasers and suppliers who increasingly share vital information and resources, their relationship has evolved from mere transactions into a working business relationship.
A shift in sourcing strategies by mary seigfried -inside supply management ma...Thomas Tanel
Low-cost-country sourcing became popular decades
ago, but many supply managers found it to be a shortterm
strategy, says Thomas L. Tanel, C.P.M., president
and CEO of CATTAN Services Group, Inc. in College
Station, Texas. Now supply management professionals
are turning to best sourcing, which Tanel says also is
referred to as best-country sourcing or value-country
sourcing.
Where's my stuff -logistic insight asia october 2012Thomas Tanel
Trading partners need the capabilities to track, trace, and control the progress of the entire logistics transaction. All partners need access to real-time information for collaboration to work. Supply chain celerity is necessity as today's supply chains move at a higher velocity than in the past.
Help employees meet great expectations -mh&l august 2012Thomas Tanel
Warehouse workers don’t do the same task the same way each and every time. Observing what really happens on the floor is key to developing good performance standards. Every warehouse manager has likely heard “What
gets measured gets done.” Measuring and
monitoring operations are key to managing an
efficient, productive facility. Therefore, developing and
implementing an employee performance expectations
program shouldn't be taken lightly.
The 4 s how do you bring purchasing skills to the process of 3pl selection--m...Thomas Tanel
The 3PL contract cycle can be managed just like any other outsourced services
procurement, and has four distinct segments that we will call the four S: Source,
Solicit, Select, and Secure. Proper execution of each segment is essential to developing and maintaining successful 3PL relationships.
Improving profitability for small businessBen Wann
In this comprehensive presentation, we will explore strategies and practical tips for enhancing profitability in small businesses. Tailored to meet the unique challenges faced by small enterprises, this session covers various aspects that directly impact the bottom line. Attendees will learn how to optimize operational efficiency, manage expenses, and increase revenue through innovative marketing and customer engagement techniques.
"𝑩𝑬𝑮𝑼𝑵 𝑾𝑰𝑻𝑯 𝑻𝑱 𝑰𝑺 𝑯𝑨𝑳𝑭 𝑫𝑶𝑵𝑬"
𝐓𝐉 𝐂𝐨𝐦𝐬 (𝐓𝐉 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬) is a professional event agency that includes experts in the event-organizing market in Vietnam, Korea, and ASEAN countries. We provide unlimited types of events from Music concerts, Fan meetings, and Culture festivals to Corporate events, Internal company events, Golf tournaments, MICE events, and Exhibitions.
𝐓𝐉 𝐂𝐨𝐦𝐬 provides unlimited package services including such as Event organizing, Event planning, Event production, Manpower, PR marketing, Design 2D/3D, VIP protocols, Interpreter agency, etc.
Sports events - Golf competitions/billiards competitions/company sports events: dynamic and challenging
⭐ 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐝 𝐩𝐫𝐨𝐣𝐞𝐜𝐭𝐬:
➢ 2024 BAEKHYUN [Lonsdaleite] IN HO CHI MINH
➢ SUPER JUNIOR-L.S.S. THE SHOW : Th3ee Guys in HO CHI MINH
➢FreenBecky 1st Fan Meeting in Vietnam
➢CHILDREN ART EXHIBITION 2024: BEYOND BARRIERS
➢ WOW K-Music Festival 2023
➢ Winner [CROSS] Tour in HCM
➢ Super Show 9 in HCM with Super Junior
➢ HCMC - Gyeongsangbuk-do Culture and Tourism Festival
➢ Korean Vietnam Partnership - Fair with LG
➢ Korean President visits Samsung Electronics R&D Center
➢ Vietnam Food Expo with Lotte Wellfood
"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
What is the TDS Return Filing Due Date for FY 2024-25.pdfseoforlegalpillers
It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
As a business owner in Delaware, staying on top of your tax obligations is paramount, especially with the annual deadline for Delaware Franchise Tax looming on March 1. One such obligation is the annual Delaware Franchise Tax, which serves as a crucial requirement for maintaining your company’s legal standing within the state. While the prospect of handling tax matters may seem daunting, rest assured that the process can be straightforward with the right guidance. In this comprehensive guide, we’ll walk you through the steps of filing your Delaware Franchise Tax and provide insights to help you navigate the process effectively.
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
India Orthopedic Devices Market: Unlocking Growth Secrets, Trends and Develop...Kumar Satyam
According to TechSci Research report, “India Orthopedic Devices Market -Industry Size, Share, Trends, Competition Forecast & Opportunities, 2030”, the India Orthopedic Devices Market stood at USD 1,280.54 Million in 2024 and is anticipated to grow with a CAGR of 7.84% in the forecast period, 2026-2030F. The India Orthopedic Devices Market is being driven by several factors. The most prominent ones include an increase in the elderly population, who are more prone to orthopedic conditions such as osteoporosis and arthritis. Moreover, the rise in sports injuries and road accidents are also contributing to the demand for orthopedic devices. Advances in technology and the introduction of innovative implants and prosthetics have further propelled the market growth. Additionally, government initiatives aimed at improving healthcare infrastructure and the increasing prevalence of lifestyle diseases have led to an upward trend in orthopedic surgeries, thereby fueling the market demand for these devices.
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
Taurus Zodiac Sign_ Personality Traits and Sign Dates.pptxmy Pandit
Explore the world of the Taurus zodiac sign. Learn about their stability, determination, and appreciation for beauty. Discover how Taureans' grounded nature and hardworking mindset define their unique personality.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
2. Agenda Topics
Cost Reduction Strategies and Ideas
Price and Cost Analysis--Applied
Total Cost of Ownership and Total System Cost
Use of “Should” Cost Models
Innovative Thought and Ideas Solicitation
Value Analysis and Engineering
Target Cost Analysis and Target Pricing
Low (Best) Cost Country Sourcing
Summary
4. Cost Reduction Terminology
Product cost savings
Defined as obtaining and realizing a lower unit
price on the same item than the unit price was in
the last contract period.
A cost saving is valid for as long as the
comparative that generated the saving is; but
it is not to exceed the end of the contract period
in which the saving was produced. On the first
day of the next contract period the old price
becomes the baseline against which any future
cost savings are measured.
5. Cost Reduction Terminology
Revenue generation
New financial sources that can be used to leverage or
increase monies/resources available to an activity.
Revenue generation is a quantifiable monetary
benefit.
Non-monetary benefit
A benefit that cannot be measured in terms of finances
or resources, such as better quality of services;
improved health, safety or quality of life; enhanced
security; enterprise-wide consistency; or contribution to
achieving supplier diversity goals.
Return on investment
Monetary benefit from an investment as a ratio or
percentage of the amount invested.
6. Cost Savings
Cost Savings—definition
A cost reduction that can be specifically identified
and will be made to a budget or program,
resulting from implementing a specific alternative
in lieu of continuing the present system.
The result of a planned or deliberate action
taken by Purchasing
Savings are a quantifiable monetary benefit
There must be a direct activity reduction for a
savings to occur; thus, benefits are considered as
savings only if the estimate identifies benefits that
start accruing during the budget/activity’s fiscal
year.
7. Cost Avoidance
Cost avoidance—definition
Financial or economic benefits that result from
an initiative but do not permit a monetary
reduction to a funded activity or budget.
Is a quantifiable monetary benefit
Usually addresses the reduction or elimination
of a future cost
Does not lower the cost of materials purchased
when measured against historical results, but it
does minimize or avoid entirely the negative
impact on net income that a price increase
would have.
8. Cost Containment
Cost containment—definition
The process of maintaining organizational
costs within a specified budget; restraining
expenditures to meet organizational or
project financial targets.
Measures taken to reduce expenditure or
the rate of growth of expenditure, or the unit
cost of goods/materials/supplies/services.
When an organization keeps costs low, or
within a limit that has been planned.
9. Value Enhancement
Value enhancement—definition
Value which affects the whole-life costs or whole-life
income and its required functionality.
Value
For any service or offering to have financial value, the
organization must have been willing to pay for it out of
pocket or must have already been paying for it in a way
that can be measured on the organization’s income
statement. This definition is a requirement for any
discussion of legitimate cost avoidances.
For example, in practicing sustainable environmental
management, we may reduce the environmental impact;
while at the same time achieve cost reduction and create
environmental friendly conservation added value.
10. The Difference between
Price and Cost
“Price” . . .
is a sales and purchasing concept.
“Cost” . . .
is an accounting concept.
11. The Difference between
Price and Cost
Price =Cost of Material + Labor + Overhead
Price =Cost of Material + Labor + Overhead
+ General & Administrative Expenses
+ General & Administrative Expenses
+ Selling Expense + Profit
+ Selling Expense + Profit
Cost =Cost of Material + Labor + Overhead
Cost =Cost of Material + Labor + Overhead
+ General & Administrative Expenses
+ General & Administrative Expenses
+ Sales Expense
+ Sales Expense
12. Comparability Factors for Prices
Comparative price analysis involves the comparison of the current
proposed price with quotes or prices for the same or similar items.
13. Total Cost of Ownership
(TCO)
TCO
=
Purchase
Cost
+
Logistics
•Inland Freight
•Ocean/Air Freight
•Transfer charges
+
Taxes
•VAT
•Incentives
+
Customs
Duties &
Fees
+
TCO – the sum of all costs
associated with any given
supply stream
Source: The Executive Guide to Supply Chain Management, David Riggs/Sharon Robbins
Other Costs
•Quality
•Safety Stock
•Supplier
Development
•Currency
14. Cost Reduction and Negotiation
ACQUISITION COST
Typical Negotiation Focus
TRAINING COSTS
MAINTENANCE
COSTS
WAREHOUSING
COSTS
ENVIRONMENTAL
COSTS
SALVAGE VALUE
Cost Reduction
Opportunities
Traditional Supplier Cost and Price Structure
Traditional Supplier Cost and Price Structure
OPERATING COSTS
15. Total System Cost (TSC)
Total System Cost (TSC) –
the sum of the buyer’s costs,
supplier’s costs and
interaction cost between the two
16. Total System Cost
Buyer
Costs
TSC Savings
Buyer
Costs
Interaction
Costs
Profit
Price
Savings
Interaction Costs
Profit
Supplier
Costs
Traditional
Focus
Supplier
Costs
Strategic
18. Drive Out Costs Creatively
Considering alternative products, designs, concepts,
and services, or looking at different or alternative
solutions to existing services, processes or applications,
requires a multi-disciplined approach, making use of
internal customers or subject matter experts as well as
first-tier suppliers or prime contractors.
Remember to create an arena that is friendly and open
to suggestion, change, and innovation.
When defining the elements of cost, focus on cost
reduction opportunities.
19. The Creativity Formula
Remember: Most of the opportunities to reduce costs occur during the
design, SOW, or conceptual stage for products and services—not after.
20. Should Cost Technique
“Should Cost” as a price challenge
technique:
Provides cost analysis to buyers to be used
for negotiations and determining price
reasonableness
Provides cost analysis in responding to price
challenges and pricing issues from your
internal customers and management
Should costs are independent analytical
estimates to determine the cost for
manufacturing an item.
21. Building a Total Cost Model
Total Price of Contract
Total Cost of Contract
Costs to Meet Contract Requirements
Product Costs
Direct
Costs
Indirect
Costs
Direct
Labor
Plus
Direct
Material
(Allocation
of
Overhead
to Labor
and
Material)
Other
Direct
Costs
(Other
Allocable
Costs Plus
Overhead)
G&A
Expenses
Profit
/Fee
22. Should Cost—Supplier Cost
Decomposition
What is in a typical “Should Cost” report:
A detailed description of the item.
A list of references used in the analysis.
A break down of cost and labor burden rates.
Estimated unit prices for specified quantities.
A break down of the material and associated
cost and minimum economic buys.
23. Material—Terms & Definitions
Term
Definition
• Raw materials
Materials in a form or state requiring further processing
before they can be used
• Parts
Items that, when joined with other items, are not subject
to disassembly without destruction or impairment of
use
• Subassemblies
Self-contained units of an assembly that can be
removed, replaced, and repaired separately
• Components
Relatively simple hardware items which are listed in the
specifications for an assembly, subassembly, or end
item
• Manufacturing
Items that are required by or in support of the
manufacturing process
supplies
• Inbound
Freight, express, cartage, insurance, and postage for
goods purchased, in process, or delivered, which
transportation and
can be added to the cost of an item or as an Other
in-transit insurance
Direct Cost (ODC)
24. Direct Labor—Terms & Definitions
Term
Definition
•
Direct Labor
Work performed by individuals which is directly related to a specific
cost objective. This work is readily identifiable with a particular
product or service.
•
Indirect Labor
Work performed by individuals which is not identifiable with a single
final cost objective but is identified with two or more final cost
objectives or an intermediate cost objective. One example of
indirect labor is the work expended by the Controller of a
company. The Controller’s work is not directly identifiable in the
production of a specific product or service, since his or her work
includes several projects or tasks.
•
•
Labor Hour
The unit of time by which direct labor activity is measured.
Labor Rate
The dollar amount paid to an individual per a given amount of time
in consideration of work accomplished.
•
Labor Cost
The product (i.e., result) of multiplying labor hours by appropriate
labor rates.
•
Labor Category
A grouping of workers with similar skills or expertise or trade
classification.
•
Labor Mix
The combination of functional skills and levels of worker experience
required to accomplish a given task.
•
Basis of Estimate (BOE)
A statement of the rationale used by a supplier/contractor to
generate a cost estimate for a specific task or item to be
produced.
25. Indirect Costs—Terms & Definitions
Term
Definition
• Indirect Costs
Any cost that cannot be directly identified with a single final cost objective
but can be identified with two or more final cost objectives or an
intermediate cost objective
• Overhead
Indirect costs related to specific operations, such as general product
lines, organizational groups, and groups of contracts. Overhead is a
type of indirect cost pool that is related to the specific operations of
the firm. The three major types of overhead are material, labor, and
fringe benefit (if not included in labor overhead). The three
overheads differ in regard to which costs they include and how they
are allocated.
• General &
Administrative
Any management, financial, and/or other expense incurred by or
allocated to a business unit for the general management and
administration of the business unit as a whole
• Business Unit
Any segment of an organization, or an entire business not further divided
into segments
• Home Office Expense
The expenses of an office responsible for directing or managing two or
more, but not necessarily all, segments of an organization
• Indirect Cost Pool
A logical grouping of incurred costs identified with two or more objectives
but not specifically with any final cost objective
• Cost Objective
A function, organizational subdivision, contract, or other work unit for
which cost data are desired and for which provision is made to
accumulate and measure the cost of processes, products, jobs,
capitalized projects, etc.
26. Profit—Terms & Definitions
Term
Definition
• Profit
Represents the
performance
contracts
• Fee
Represents a flat charge paid as compensation for services or
supplies provided and is associated with cost
reimbursement contracts
• Risk
The level of uncertainty associated with specific factors
regarding contract performance
excess of revenue over applicable costs of
and is associated with fixed-price type
27. SUPPLIER PART COST BREAKDOWN WORKSHEET—Part A
SUPPLIER NAME:
CONTACT:
E-MAIL:
PART NUMBER:
VOLUME QUOTED:
QUOTE NO:
DESCRIPTION:
EST. TOOL LIFE:
DATE:
DRAWING ISSUE:
TOOLING CAPACITY
@ Hrs/day:
@ Days/Week:
EXCHANGE RATE:
RAW MATERIALS & PURCHASED COMPONENTS
#
Item Descriptions (1)
Item ID (2)
CURRENCY:
Unit of Measure (3)
Unit Cost (4)
1
2
3
4
5
6
7
Total Material Cost
Total Cost (5)
28. SUPPLIER PART COST BREAKDOWN WORKSHEET—Part B
LABOR AND OVERHEAD
Labor Details
#
Operations Process Descriptions (6)
Labor
Rate
(7)
Std
Hrs
(8)
Labor
Cost (9)
Machine Data
Op.
(10)
Mach.
Size (11)
Mach. Type
(12)
Overhead Detail
Var. Cost
(13)
Fixed Cost
(14)
1
2
3
4
Total Labor
Cost
Total Overhead Cost
Total Manufacturing Cost (material + labor + burden) (16)
Selling, General and Administration Expenses (17)
Selling Price
FROM TOOLING COST BREAKDOWN—TOTAL TOOLING COST QUOTED
Total Cost (15)
30. Meeting the Cost Reduction Mandate
through Innovative Thought and
Supplier Ideas Solicitation
EPI and Concurrent
Change procurement
engineering
method/instrument
Volume and forecasts
VMI/SMI/SOMI/ISM
Inbound freight and
Cycle or lead time
reduction
packaging
Addition or elimination Relaxed specification,
of value-added
material substitution,
services
or service level
improvements
Standardization
31. Competitive Bidding—
Use Ceteris Paribus
Buyers normally look at the price (total cost) as stated
on each bid to determine which supplier should be
awarded the PO or contract.
If there are any differences, for a fair evaluation, then
allowances must be made for the differences in
performance and pricing.
When comparing performance
or prices the buyer should use
Ceteris Paribus assumptions
(everything else held constant)
so you compare “an apple to an
apple, not an apple to an orange.”
33. What Is Value?—Four Distinct Kinds
Exchange Value
Cost Value
Esteem Value
Use Value
34. Value Analysis and
Engineering (VA/VE)
1. An organized creative
approach to cost reduction
2. Emphasis on function or use
3. Identifies areas of excessive
or unnecessary costs
4. Eliminates non-value added
activities
37. How To Get Started in VA/VE
Identify what is it and what
does it do?
Obtain and review all available
cost information
Try to anticipate roadblocks
Promote cooperation with
VA/VE effort
Seek guidance from those in
management that assigned
study
38. VA Is the Way—Ten Ways to
Reduce Co$t
1. Use it to reduce cost in
design, concept, or SOW
2. Use cross-functional teams to
approve product or service
offering changes
3. Consolidate supplier base
using full service partners
4. Reduce paperwork with
supply base by using more
EDI/E-Com
5. Bundle any engineering
changes or project scope
changes quarterly
6. Move towards common, simple
methods and standard items or
services used at multiple sites
or facilities
7. Use returnable dunnage or
containers instead of nonreturnable
8. Identify and eliminate
unnecessary testing, measuring
and diagnostics
9. Reduce the number of
prototypes or models
10.Consolidate “A” type purchases
with suppliers’ if possible
39. Process of Determining
Target Costs
Cost
Costs not
subject to
subject to
Target =
+
cost
cost
Costs
reduction
reduction
activities
activities
43. Target Pricing
A reduction in the direct
costs of a supplier’s cost
profile has more impact on
your bottom line than a
major percentage discount
in the supplier’s price.
Negotiation based on cost
allows you to challenge the
logic of each element of the
price.
44. Vendor
Preferred Supplier
Marketing, Purchase Orders,
Proposals, Variations in Quality
Partner/Alliance
Redundant Capabilities in Systems,
Activities that Add No Value,
Approval Processes, Contracts,
Excessive Communications and
Controls, etc.
Cost to Serve
Cost to Serve
Cost to Serve
Profit
Profit
Profit
Competitive Bidding
Based upon Variable Profit
Redefined (Streamlined) Process
Reduces Cost and Yields
Acceptable Profit
Reengineered Process through
Close Relationship; Maintains
Profit and Greater Cost
Reduction
45. Target Pricing Perspective—
An Example
For a service contract, the
total
quoted
price
was
$260,565.
A 1% reduction on the price is
one thing, but reducing each
of the cost elements by 1%
yields
an
actual
price
reduction of more than 2.5%.
Individual cost elements are more vulnerable to argument than the price as a whole
46. Elements of Cost-Services
Profit and Margin
COSP
Other Services/Overhead
Service Labor
Materials and Supplies
Occupancy
Equipment and Technology
47. Opportunity Knocks
The ultimate objective is to maximize
the value of each purchase spend
dollar.
Sometimes the buyer has a chance to gain the upper hand.
This occurs when the supplying industry’s margins are healthy
because selling prices rose faster than their costs escalated.
48. Low (Best) Cost Country Sourcing
(LCCS)
Near Sourcing
Domestically
Outsourcing
Overseas
Indigenous
Localization
Transfer business
to provide materials
or services by
swapping out
overseas suppliers
for closer proximity
to home country
Transfer internal
dept,activity or
process to more
capable suppliers or
contractors to lower
cost of ownership
Find and develop
local indigenous
sources to support
country markets for
low cost country
plants and
distribution facilities
Adapted in part from Ariba’s Executive Overview on this subject
49. LCCS and Supply Chain Risk
Although significant cost savings
opportunities exist , the risk may
be greater when dealing with unfamiliar
suppliers, different business protocols,
language barriers and new cultures.
50. Landed Cost
LC = TSC ÷ SU
Note: Total Selling Cost (TSC)
and Selling Unit (SU)