A big part of a buyer’s job is to gather information about the supplier’s costs. Sometimes the seller will provide this information directly but quite often buyers must make their own cost estimate. Learn how to integrate these two sources of cost information to better understand purchase prices.
- Wouldn't it be great if the next time you bought a car, … you knew exactly what it cost the company … to make that car and deliver it to the dealer? … Not the suggested retail price, not the invoice amount, … the exact cost of the car, … broken down into specific categories. … It would definitely help you to negotiate … the price for that car. … As a buyer for your company, that's the kind of information … you're looking for to determine a fair … and reasonable price to pay the supplier. … You can get that information in one of two ways: … By receiving a cost breakdown from your supplier … or by doing a should-cost analysis yourself. … Here's an example of how this works. … In an ideal world, your supplier will provide … every detail of their costs. … With this supplier cost breakdown, … you can do a little research and plan … your upcoming negotiation. … For example, you notice that their cost … for copper is about 10% more than the cost you find … on the producer price index, or PPI for copper. …
- Explain the purchasing process.
- Define purchase order.
- Describe the intent of a purchasing policy.
- Distinguish types of purchasing structures.
- List the steps of selecting a supplier.
- Identify enablers for success in worldwide sourcing.
- Perform price and cost analysis.
- Measure supply management performance.