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Cost Management

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Bhupesh Shah
Bhupesh Shah

Class lecture notes on Cost Management (Purchasing)

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LOGI200 Purchasing Week 10 Chapter 9
Cost Management ,[object Object],[object Object]
Total Cost of Ownership (TCO) ,[object Object],[object Object]
Major Categories for the Components of Total Cost of Ownership Follow-up and correction Return of parts Cost of maintenance and repairs Inspection     Cost of repair part Billing/payment ,[object Object],[object Object],[object Object],Customer goodwill/reputation of firm Tariffs/duties Adding supplier to internal systems Field failures Repair/replacement in field Delivery/transportation Qualifying sources Defective finished goods rejected before sale Order placement/preparation Investigating sources Line fallout (damaged during assembly or failed components) Price Identifying need Post-transaction Components Transaction Components Pre-transaction Components
Target Pricing ,[object Object],[object Object]
Discounts ,[object Object]
Cash Discounts ,[object Object],[object Object],[object Object]
Trade Discounts ,[object Object],[object Object]
Multiple Discounts ,[object Object],[object Object],[object Object],[object Object],[object Object],$90 $90 $90 $90 $9 $9 $81 $8.1
Quantity Discounts ,[object Object],[object Object],[object Object],[object Object]
Quantity Discounts and Source Selection ,[object Object],[object Object],[object Object]
Cumulative or Volume Discounts ,[object Object],[object Object],[object Object],[object Object],[object Object]
Negotiation ,[object Object],[object Object],[object Object]
Any Aspect of the Purchase Agreement is Subject to Negotiation Quality Specification compliance Performance compliance Test criteria Rejection procedures Liability Reliability Design changes Support Technical assistance Product research, development, and/or design Warranty Spare parts Training Tooling Packaging Data sharing, including technical data MIS Supply Lead times Delivery schedule Consignment stocks Expansion options Supplier inventories Cancellation options Transportation FOB terms Carrier Commodity classification Freight allowance/ equalization Multiple delivery points Price Purchase order price Discounts (cash, quantity and trade) Escalation provisions Exchange terms Import duties Payment of taxes Counter trade credits

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Cost Management

  • 1. LOGI200 Purchasing Week 10 Chapter 9
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  • 14. Any Aspect of the Purchase Agreement is Subject to Negotiation Quality Specification compliance Performance compliance Test criteria Rejection procedures Liability Reliability Design changes Support Technical assistance Product research, development, and/or design Warranty Spare parts Training Tooling Packaging Data sharing, including technical data MIS Supply Lead times Delivery schedule Consignment stocks Expansion options Supplier inventories Cancellation options Transportation FOB terms Carrier Commodity classification Freight allowance/ equalization Multiple delivery points Price Purchase order price Discounts (cash, quantity and trade) Escalation provisions Exchange terms Import duties Payment of taxes Counter trade credits