Cost Management

Cost management can be an intimidating competency to procurement professionals who strongly associate cost with accounting – the measurement of financial information for external or internal reporting.

However, it is a process procurement professional are strongly involved with and so they should also be at the centre of the cost management process. It is simply another extension of the procurement discipline.

By mastering Cost Management tools and techniques procurement professionals can help their organization achieve global competitiveness, not only in cost but also in preparing them to anticipate and proactively serve the needs of the customer through increased innovation.

The cost management competence includes: How to apply a total cost focus instead of a price focus. How to estimate the TCO figure for purchased goods and services. How to calculate a Cost Breakdown. How to estimate the Should Cost for purchased goods and services. Understand how to execute Value Analysis/Value Engineering.

Cost Management eLearning Courses

Following are the eLearning courses for Cost Management –

Introduction to Strategic Cost Management for Buyers

Price versus cost.
Cost management methodologies for cost reduction: cost modelling, TCO and Value Analysis.
Cost Management and role of buyer.
Cost management approaches per category.

Cost Calculation

Detailed cost model.
Supplier specific cost model.
Complete breakdown on costs.

Cost Estimation, Should Cost

Build a basic Industry Cost Model.
Learn to work with industry averages.
Starting point for cost negotiations.

Total cost of ownership (TCO)

Definition and positioning.
TCO analysis.
TCO cost model for supplier selection.
TCO cost model for supplier evaluation.

Value analysis, Value Engineering

Introduction and Definition.
Functional analysis and cost matrix.
The process, ‘Job Plan’.
VA tear down.


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