Today’s episode of the Art of Procurement is the second in a two-part series with Jimmy Anklesaria focusing on the strategic management of cost.
Back in episode 102, Jimmy shared his tips for understanding cost and cost drivers to enable fact based sourcing negotiations. Today, we shift focus, and discuss eight key steps that procurement professionals can take to manage and optimize costs once the contract has been signed.
“Once you have agreed a competitive price with your supplier and have a contract in place, many companies don’t reengage until the contract ends. But the pedigree companies do not stop there. They switch gears and now the focus is to get into demand and specification management.”
In this episode, you will learn:
Should we have clauses in contracts that enable flexible pricing as major cost drivers change? If so, how should those be structured?
Why a consumer price index (CPI) is the worst possible mechanism by which to adjust prices.
The eight steps that procurement professionals can use to manage cost post contracting including:
Building a cost-management culture with your supplier.
Identifying the factors which have the biggest impact on the cost of a product or service.
How to reduce, change or eliminate activities that create costs.
The importance of inherent capabilities in building a cost management culture across your procurement organization.
