Purchasing Management & Cost Reduction

Course information:

Managing the purchasing department of the 21st Century is not an easy task. Today’s global economy makes the purchasing function increasingly complicated. In this course, we will explore how to manage the various suppliers that may be located thousands of kilometres from your plant while achieving real cost savings. Furthermore, we will discover how the purchasing department fits in the overall function of the supply chain operation and the organization strategy & linking to mission.  Lastly, we will cover how the purchasing department should be managed properly to achieve all its Key Performance Indicators (KPIs).

Course Methodology:

This course uses a mixture of interactive learning tools such as round table discussions, role playing, case studies, and individual and team exercises.

Course objectives:

At the end of this course, the candidates will be able to:

  • Define the strategic role of the purchasing department
  • Perform accurate supplier evaluation
  • Develop effective negotiation strategies with all suppliers
  • Explain the importance of value analysis to purchasing
  • Evaluate the performance of the department using proper Key Performance Indicators (KPIs)
  • Improve the efficiency of the purchasing department

Course outlines:

The strategic function of purchasing

  • The link between the purchasing function and organizational strategy
  • Creating a purchasing mission statement
  • Matching the purchasing mission with the company’s mission
  • Writing the department’s objectives
  • Balancing quality, service and price
  • Type O purchasing manager
  • Type S purchasing manager

Supplier evaluation and negotiation

  • Negotiating with suppliers
  • Power in negotiation
  • Planning for negotiation
  • The 13 powers of negotiation
  • Achieving the right agreements with suppliers
  • Factors used to evaluate suppliers on total performance
  • Ways of promoting good supplier relations
  • Creating suppliers as good partners
  • Choosing the right suppliers

 Value analysis

  • 16 key strategic questions to ask
  • Applying the 16 strategic questions
  • How these 16 questions will reduce total cost
  • Optimizing purchasing productivity
  • Adding value as a purchasing manager
  • The 21st century purchasing manager
  • From pushing papers to strategic thinking

Managing and evaluating the department performance

  • Centralization versus decentralization
  • Reasons for departmental performance appraisal
  • Managing other buyers
  • Management by objectives
  • Continuous development for the buyers
  • Key Performance Indicators for purchasing
  • Choosing the right KPIs for purchasing
  • The right number of departmental KPIs

Improving purchasing efficiency

  • Evaluating service to end users
  • Setting minimum order quantities
  • Deciding base stock, minimum and maximum orders
  • Role of cash discounts and scale of economies
  • Conducting the right surveys
  • Communicating better with end users
  • Ethical behaviour with suppliers and end users
  • Purchasing policies and procedures
  • Training the staff

Cost Benefit analysis

  • Purchasing budget objectives
  • Cost classification – fixed and variable costs
  • Preparing purchase budget
  • Periodic review of budget
  • Variance analysis
  • Causes of variances and fixing



September, November
October, December
Other Qualification
Business Courses, Finance
With Certification

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