Cost Analysis is an advanced but core Purchasing skills for Senior Buyers, Strategic Sourcing and Category Managers. Following the analysis there are a range of specific tactic that can be used during negotiation.

1. Post Cost Analysis
Purchasing Negotiation Tactics
Discussion of Types of Negotiation Points After Cost Analysis
Notes For Cost Analysis Training Discussion Session
Bill Kohnen
March 2015 Clark Philippines

2. Materials Raw Materials Inventory already?
Direct Components Inventory?
Shared Common Parts?
Sub Assemblies
MRO/Indirect
Actual Cost of Sub Assembly
Relevance of allocation
Material Acquisition Cost Get Other Customers to Pay
Consider Supplying directly
Process Set Up Continuous process may be little real
added cost
Process Time Actual vs Standard
Review actual product time
Labor Direct cost if single order but if
shared with other customers can be
less.
Learning Curve Analysis
Overhead Other customers or subsidized by
Supplier
Packaging/Shipping If standard then others pay
Use your own account and/or
purchase and dropship special
packaging
Margin Business conditions and volume

3. Summary
• All tactics/asks must be considered in context
of
– Economic Conditions
– Supply Base Market Competition
– Tradeoff between short term gain and long term
relationship
– Deep understanding of suppliers process
capabilities
– Consideration of total cost impact