What do we look at?

Total Acquisition Cost Model

Cross-Functional collaboration is essential for reducing Total Acquisition Costs

z Lower cost specification

z Contract consolidation
z Optimal service level
z Partnerships
z Design for manufacturing
z Supplier development
z Design for assembly
z Long-term agreements

Re tions
Re
Value analysis

n
z

ific e
tio

str
v

la
Value Engineering

Sp pro
z

uc
tur
Im
ec

hip
e
nt

s
me
z Cooperative purchasing/ alliances z Bid-based renegotiations

Su
ge
Common specification Reverse Auctions

Sp idate

pp
z z

na

Co
Inc etit
ly
z Leverage z Price/performance benchmarking

Ma
d
ol

mp
Ba

rea ion
en
Model “should-costs”

ns
Cost z

nd

se

se
Co
Cash

ma

Ma
Quality

De

na
Service

ge
z Eliminate need se Innovation z Volume redistribution

me
ha

Re ly B
Su
on
um ce

Policy / Budget changes Global Procurement

rc

z z

nt

str ase
pp
pti
u

Pu
Co Red

uc
z Extend Life z Make / Buy

tur
ns

Total cost management

e
Optimize Total Reduce Total Life cycle Reduce/Eliminate
Supply Chain Costs /Ownership Costs Transactions
z Optimize physical material flow z Lease / Buy z E-Procurement
z Integrate logistics z Tooling / Prototypes z Trading exchanges
z Reduce Inventory z Maintenance / Spares z Rationalize part count and suppliers
z Taxation / Duties / Customs z Warranty / Life z ERP/ P-Card
z Transport
z Non recurring
z Packaging