Improve Procurement Effectiveness
cost management
A Strategic Approach to Managing Costs
Rethinking Cost Management
Successful procurement teams have excelled in cost management, but they may have reached their limit. And that’s both good news and bad news. It’s positive as they operate extremely lean, yet challenging as substantial savings may become harder to achieve.
Overview and Benefits
what is cost management?
Cost management in manufacturing involves planning, controlling, and optimizing expenses throughout production. It includes budgeting, process optimization, efficient inventory and labor management, technology adoption, and a focus on quality to enhance competitiveness and profitability.
benefits
Cost management programs provide substantial savings, mitigate inflationary risks, enhance operational efficiency, enable accurate budgeting, optimizes innovation, empower strategic decision-making, and fosters continuous improvement.
5 Proven Strategies
next generation cost management
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1. from tco to tcs
Shift thinking beyond “total cost of ownership” to “total cost to serve” involving a framework used to assess the true cost in meeting customer requirements.
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2. drive supplier innovation
Strengthen relationships for collaborative cost reduction and innovative solutions with key suppliers.
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3. provide predictive insights
World-class organizations offer analytics, market intelligence, and benchmarking during operational planning, enhancing decision-making.
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4. develop agile staffing
Attract talent from various business areas internally and externally (e.g. consulting), fostering diverse skills, and promoting fresh thinking.
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5. Strategic and sustainable
Adopt organization-wide cost-containment strategies aligned with long-term business goals. Adjust based on evolving market conditions.
Our Services
what we do
cost management
Implement cost management tools for savings initiatives, workshops, payment terms, business reviews, supply agreements, TCS review process, price increase push-back
supplier rationalization
Perform RFI/RFQ quoting process, NDA, sustainability audit, code of conduct (CoC) questionnaire, financial review (FSA), sourcing board process. (Performance)
market analysis
Conduct market analysis to include commodity price trends, general economic trends, potential supplier pooling, Kraljic matrix, finalize sourcing plan.
category management
Develop category plan for specific crucial products and materials, followed by a category strategy with key sourcing objectives that align with organizational goals.
negotiations
Conduct Total cost to serve (TCS) review, Should Cost model, supplier visit process, sourcing board price comparison (SBPC), quality audit (SQA)
supplier innovation
Drive supplier savings via collaborative workshops with suppliers (i.e. VA/VE, Innovation Workshops on materials and processes), utilize E-Savings tools for reporting.
Quality Process
Implement quality tools such as Quality Audits, Claims Process, DPPM KPIs, COPQ KPIs, SCAR/8D process, and more.
compliance programs
Develop requirements to key suppliers for sustainability audits, SBT initiatives, code of conduct requirements, business ethics, labor/human rights, environmental, and health/safety standards.