✅For most manufacturing companies, raw material is the largest component of Cost-of-Goods-Sold (COGS) and the largest use of cash. Even small decreases in the amount of money spent on raw materials (and purchased components) can disproportionately improve the P&L, the Balance Sheet and enterprise valuation. Outside of raising product prices, reducing purchase spend is one of the fastest ways to improve the average manufacturing enterprise’s economic value.
The purpose of this program is to demonstrate how to more effectively measure performance of your Procurement function and how to shape purchase-spend reduction behaviors.
In order to bring meaning to Procurement performance metrics, we will first discuss necessary organization structure and work-content changes that Purchasing functions need to embrace in a global supply-chain world. Once we complete our discussions around Procurement organization alternatives, we will then turn our attention to metrics that can be deployed by Operations Management to measure Purchasing performance and shape appropriate purchasing behaviors.
Specific performance measurement issues will be addressed in this program, including:
+ What is the best way to organize the procurement function when so many items are sourced globally?
+ How to define purchasing behaviors to better leverage global supply chain opportunities.
+ Ideas for building a Global Procurement metrics dashboard that provides visibility to what is really important.
+ Components of Total Cost that must be addressed to properly compare supply alternatives.
+ Inputs necessary to properly calculate a cost reduction curve that can be used to predict total material costs.
+ Methods for determining how a 1% reduction in purchase-spend translates into changes in enhanced profits, reduced gross assets and improved enterprise valuation.
+ How should procurement function metrics be aligned with other metrics in a global sourcing manufacturing company and how do you get your critical Suppliers to align their performance metrics with yours?
Participants in this presentation are sure to receive ideas, that when implemented, will lead to a more effective Procurement organization.
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international purchasing organization