Purchasing professionals only really earn their salary and become indispensable when they transition from tactical buying to Strategic Supply Management utilising effective Cost Modeling techniques. Prior to the fall of two great U.S. giants, MCI (telecommunications) and Arthur Anderson (accounting and consulting), Arthur Anderson was a supplier to MCI. Based on the Arthur Anderson philosophy of “billing your brains out,” Arthur Anderson was charging MCI over US$400 per hour for their young consultants to do nothing more than make copies of files for a period of several months. Why didn’t MCI catch this? The answer is simple. In the context of a multi-million dollar consulting arrangement, Arthur Anderson was simply the lowest bidder when MCI initially went out with its Request for Proposal and they won the deal based on the lowest price. Also, within the context of a major consulting gig, with multiple high cost consultants on board and numerous activities to be performed, the basic copying tasks did not even show up on MCI’s “radar screen! In effect, nobody at MCI knew until it was too late” This true example, emphases the point of our course, that Cost Modeling is more crucial and powerful than simply price analysis. Computer software can easily take three or four quotes and pick the lowest one but what it cannot do, without human interaction, is identify the true Cost to the organization. Understanding supplier and product costs can help the Supply Management professional, such as yourself; develop an appreciation of important cost drivers, which provides a starting point for cooperative relationships to reduce total supply chain costs and show your executive that Supplier cost modelling is an essential tool for corporate survival In this MasterClass, we will focus on the four key areas of Cost Modeling: 1.Cost Modeling Elements 2.Should Cost vs. Target Cost, 3.TCO-Total Cost of Ownership models, and 4.Rolling out best-in-class practices to your supplier(s).