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.
opics:
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..