Cost Reduction Approaches in Purchasing

1. Introduction 00:
   
2. Outline 00:01:50
3. Objective 00:02:38
4. Section 1 00:04:14
5. Today 00:04:33
6. What is Change? 00:06:52
7. How To Make The Needed Change Happen 00:07:34
8. Paradigms 00:08:14
9. The Challenge 00:09:47
10. Clarification 00:10:25
11. Clarification Cont’d 00:11:12
12. Section 2 00:13:04 
13. Definition of Lead Time 00:13:33
14. Areas Impacted 00:14:19
15. Purchasing Lead Time 00:16:05
16. Elements of Manufacturing Lead Time 00:17:55
17. TQM - A Working Definition 00:23:51
18. Cost of Quality a TQM Measure 00:25:42
19. Example 00:28:39
20. Supplier/Vendor Managed Inventory 00:32:03
21. What is Supplier/Vendor Managed Inventory? 00:32:38
22. SMI/VMI 00:34:41
23. Objectives 00:37:34
24. Working Cases 00:39:53
25. What’s In It For Me? 00:45:20
26. Facilitating The Planned Change 00:45:57
27. Supplier Development 00:47:52
28. Key Point To Reduce Costs 00:52:33
29. Stage1-4 00:54:30
30. Why Do This? 00:57:17
31. Results 00:58:19
32. Results Continued 01:00:13
33. Impact of Suppliers on Total Company Costs 01:02:26
34. The Impact of Suppliers on Total Company Costs 01:02:51
35. Simplified Income Statement 01:03:26
36. Modified Statement - Sales Increase 01:04:07
37. Modified Statement - Reduced Purchase Cost 01:04:42
38. Steps to Supplier Development 01:05:23
39. Corporate Policy 01:05:52
40. Areas Requiring Action 01:08:19
41. Creating a Development Board 01:09:19
42. Understanding “Total Cost” 01:10:49
43. Procurement Process Cost Factors 01:12:46
44. Commodity Process Cost Factors 01:14:00
45. Procurement Operational Performance Costs 01:16:09
46. Seven Steps of Supplier Development 01:20:39
47. Steps 3-5 Continued 01:21:56
48. Steps 6-7 Continued 01:23:12
49. Successful Applications 01:23:55
50. Injection Molder 01:28:35
51. How Do Suppliers View Their Customers? 01:30:12
52. What is an “A” Customer? 01:31:55
53. Lifetime Customer 01:33:03
54. Collaborative Relationships 01:38:42
55. Increasing Supplier Involvement 01:40:50
56. Transforming The Relationship 01:41:18
57. Supplier Certification 01:42:31
58. Seven Phases of Supplier Certification 01:44:19
59. Phases 3-5 Continued 01:45:12
60. Phases 6-7 Continued 01:46:59
61. Section 3 01:50:08
62. A-B-C Purchasing Classification of Value 01:50:22
63. Targeting Model 01:52:10
64. Selecting Commodities 01:52:39
65. Supply Risk and Profit Impact Model 01:53:06
66. Recap 01:55:21
67. Q&A 01:57:44
68. Closing Thoughts 01:58:02
69. Challenges 01:58:09
70. Presentation Closing 02:00:41

• Acquisition 01:12:46
• Commodity 01:08:44, 01:14:03, 01:52:24
• Cost 00:57:34, 01:14:04, 01:16:17, 01:43:30
• Cost of Quality (COQ) 00:25:51
• Forecast 01:16:20
• Income Statement 01:03:29
• Inventory 00:33:57, 00:37:55
• Lead Time 00:13:47, 00:16:08, 00:48:20, 01:16:19
• Paradigm 00:08:23
• Procurement 01:08:32, 01:12:50
• Revenue 01:03:14
• Supplier 00:02:25, 00:15:22, 00:22:32, 00:33:53, 00:37:02, 00:51:39, 00:57:41, 01:05:28, 01:16:50, 01:20:45, 01:29:17
• Supplier Development 00:47:52
• Supply Chain 00:57:02, 01:09:31
• Supply Chain Management 00:14:45, 00:17:54
• Systems Contracts 00:36:52
• Total Cost 01:02:43, 01:10:56
• Total Quality Management (TQM) 00:24:01, 00:46:17
• Vendor 00:37:16, 01:39:33

Acquisition: An acquisition is referred to as a business transaction in which one firm buys all or part of another company's stock or assets. The acquisition commonly happens to gain control of and expand on the target company's strengths while also capturing energies. This can also be accountable for an acquisition definition.

Commodity: A basic good used in commerce that is interchangeable with other goods of the same type.

Cost: The sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location

Cost of Quality (COQ): Cost of quality (COQ) is defined as a methodology that allows an organization to determine the extent to which its resources are used for activities that prevent poor quality, that appraise the quality of the organization’s products or services, and that result from internal and external failures. Having such information allows an organization to determine the potential savings to be gained by implementing process improvements.

Forecast: A method used to predict inventory levels for a future time period.

Income Statement: One of the three primary financial statements used to assess a company's performance and financial position (the two others being the balance sheet and the cash flow statement). The income statement summarizes the revenues and expenses generated by the company over the entire reporting period. (investinganswers.com)

Inventory: A company's inventory typically involves goods in three stages of production: raw goods, in-progress goods, and finished goods that are ready for sale. Inventory or stock refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilization.

Lead Time: The number of days from when a company places an order for supplies, to when those items arrive.

Paradigm: A set of ideas that people have learned through experience and it defines the “conventional wisdom” about the rules of nature and life.

Procurement: Procurement is the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process. Procurement is used to ensure the buyer receives goods, services, or works at the best possible price when aspects such as quality, quantity, time, and location are compared.

Revenue: In accounting, revenue is the income that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. Some companies receive revenue from interest, royalties, or other fees.

Supplier: A supplier is an entity that supplies goods and services to another organization. A supplier is usually a manufacturer or a distributor. A distributor buys goods from multiple manufacturers and sells them to its customers. Similar Terms. A supplier is also known as a vendor.

Supplier Development: A business strategy that involves working with your diverse suppliers to boost their performance and drive continued business growth.

Supply Chain: A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. The supply chain also represents the steps it takes to get the product or service from its original state to the customer.

Supply Chain Management: In commerce, supply chain management, the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfillment from point of origin to point of consumption.

Systems Contracts: Systems Contracts are exclusive contracts with designated suppliers for specific commodities of goods or services, with pricing and other terms negotiated University wide.

Total Cost: Total cost is the total expenditure incurred to produce some type of output. From an accounting perspective, the total cost concept is more applicable to financial reporting, where overhead costs must be assigned to certain assets.

Total Quality Management (TQM): Total quality management consists of organization-wide efforts to "install and make permanent climate where employees continuously improve their ability to provide on-demand products and services that customers will find of particular value."

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.