Purchasing Cost Analysis

Managers, Supervisors, Professionals for; Purchasing, Supply Chain, Materials
Management, Operations, Finance and other persons who have a vested interest in
formulating

As a result of this training, attendees will have a heightened professional level of
evaluating supplier financial status and conducting cost analysis. They will learn how
to use lessons taught in their day to day activities as a prerequisite to effective
negotiating maximize lowest value added price. Participants will do cost analysis using
real life case studies that emphasize the key elements of analyzing proposals.

Certification for;"Purchasing Cost Analysis"

Day 1
a) Total Cost of Ownership (TCO)
Purpose: To familiarize the student with the various types of costs related to the purchasing
function and to experience financial analysis with in-class simulations.
Topics:
? Definition of Cost Analysis
? Purchase Price: But One Component of Cost
? The Importance of Total Cost of Ownership in SCM
? Three Components of Total Cost
? TCO, Net Present Value Analysis (NPV), Estimated Costs
? Supply Management Action
b) Pricing
Purpose: To help the student better understand the law of supply and demand and the impact
on pricing considerations.
Topics:
? General Economic Considerations
? Price Analysis
? Purchasing Design Work
? Documenting a Price Analysis
? Discounts
2
c) Cost Analysis
Purpose: To introduce and give an overall understanding of financial tools used to calculate
and manage cost.
Topics:
? Cost Analysis
? Sources of Cost Data
? Direct Costs
? Learning Curves
? Application of Learning Curves
? Tooling Costs
? Indirect Costs
? Activity-Based Costing
? Target Costing
? Profit
Day 2
d) Cost Measurements
Purpose: To introduce and give an overall understanding of financial tools used to measure
and report cost.
Topics:
? Standard Cost
? Purchase Price Variance (PPV)
? Cost Savings
? Cost Avoidance
? Cost Containment
e) Financial Measurement Formulas
Purpose: To present various ways to measure the financial status of a supplier.
Topics:
? Return on Assets Employed
? Return on Total Assets
? Net Operation Margins
? Current Ratio
? Quick or Acid Test Ratio
? Gross Margin
? Rate of Return of Sales
? Rate of Return Net Worth
? Earnings per Share
? Debt to Equity
? Debt to Net Full Assets
? Assets Turn Over
? Inventory Turn Over
f) Cost definitions
Purpose: To introduce and gain a better understanding of financial costs and how they
are used.
Topics:
? Total cost
? Standard costs
? Purchase price variance (PPV)
3
? Direct costs
? Indirect costs
? Fixed costs
? Variable costs
? Semi-variable costs
? Relevant vs. Irrelevant costs
? Life cycle costs
? Opportunity cost
? Activity based costing

J. Kelley

Summary of Experience

? President, Inter-Conn
? Vice President, NSI
? Vice President, Simmons
? Director of Procurement, Covad Communications
? Director of Materials, NEC
? Director of Materials, Avis Industries
? Director of Materials & Far East Procurement, TRW
? Senior Advisor, Supply Chain, Unisys

Mr. Kelley has over 30 years of key leadership roles with multi-national companies. His responsibilities covered Sourcing, Purchasing, Supply Chain, Operations, Materials, Finance, Customer Service, Strategic Planning, Logistics, Quality Assurance and Information Systems. International business experience spans nine countries in the Far East, five countries in Europe, as well as Mexico and Canada.

China experience
? Leading C.P.M. instructor in China
? First C.P.M. to actually work & live in China
? Over 20 years working with Chinese suppliers
? Managed Chinese Sourcing/Purchasing staff

Professional Attainment / Education Background
? Lifetime Certified Purchasing Manager (C.P.M.)
? Certified Production and Inventory Manager (CPIM).
? President of a NAPM Chapter
? Vice President of an APICS Chapter
? Founder/President of IPMA-Taipei
? Bachelor of Science degree in Business
? participated in over 25 accredited professional/international business courses

Accomplishments
His accomplishments are recognized in national publications. He has taught professional development courses while affiliated with the National Association of Purchasing Management (NAPM), the American Production Inventory Control Society (APICS) and the University of Virginia. He is recognized as a subject matter expert in eProcurement and multi-cultural business transactions. His commentaries have been highlighted in Fortune 200 company articles..