Pro-D Supply Management (Procurement) Track
Module 4
Applications in Cost Modeling (CM)
Module Summary
The definition of Cost Modeling is: “a technique used by purchasers to better understand the logic behind a supplier’s pricing, especially as it pertains materials, direct labor and overhead expenses. It is typically used to support pricing, and lead to a better understanding of the process that culminates in a make or buy decision.”
In this course, we focus on four key areas,
-
Cost Modeling Elements (including types, behaviors and decisions,
-
Should Cost (an internal assessment before going into the negotiation) vs. Target Cost (knowing both price and profit up front and backing into the cost),
-
TCO-Total Cost of Ownership models (knowing the Pre-Acquisition, Main-Acquisition and Post-Acquisition costs), and
-
Rolling out best-in-class practices to your supplier(s).
Also included in the course is an understanding of budgeting as a pre-cursor to good Cost Modeling and being able to differentiate between cost Avoidance, cost Reduction and cost Containment.
To round out this course, you will have the opportunity to complete a 50-question quiz to test your knowledge and apply what you learned. Successfully pass this module and the other 5 modules to earn your Certificate of Achievement from Missouri State University.
Benefits of Attending
Upon completion of the Applications In Cost Modeling course, the participant will:
-
understand the four-fold purpose of a budget which is to get pre-approved funding, set standards, monitor and most importantly, control
-
compare and contrast the various types of budgets including Zero-Based, Line-Item, Capital and Flexible
-
differentiate between a cost Avoidance (part of the increase), Reduction (the cost goes down) or Containment (you don’t spend more than the previous period)
-
understand how Cost Modeling relates to Value Analysis and Value Engineering
-
describe the five principles of Cost Modeling
-
review both the costs of quality as well as the costs associated with inventory
-
define a Spend Analysis and engage in a five-step model
-
define Total Cost of Ownership-TCO and its three categories of Pre-Acquisition (getting ready to make the buy), Main-Acquisition (making the buy) and Post-Acquisition (after the product or service is shipped or received)
-
review the factors that make up the Cost Driver Framework
-
differentiate between cost Types vs. Behaviors vs. Decisions
-
compare and contrast principles of Direct, Fixed, Variable and Mixed costs
-
review and apply both Life-Cycle and Activity Based costing
-
define Should Cost including a mathematical calculation
-
define Target Cost including the three types: Price, Cost, Value
-
review and apply three Overhead Allocation formulas
-
compare and contrast key supplier Profitability ratios
-
understand how to roll out these great techniques to your supplier including the use of Reverse Marketing and the Customer/Supplier Symposium.
Self-Paced Learning
You will be provided with access to the BMTG e-Learning Academy which will guide you through Module 1: Fundamentals of Supplier Relationship Management.
​
To ensure a smooth learning experience, each Module is presented as a comprehensive "Course Book" within the user-friendly BMTG e-Learning Academy.
The Course Book is divided into four chapters, providing you with in-depth study materials and practical insights.
Here's what you can expect in each Course Book:
-
Chapter 1: Learning Objectives: Three downloadable PDFs serves as your study materials offering detailed information on the course topic comprising of a set of learning objectives that you can refer to it at your own pace, allowing you to absorb the content effectively.
-
Chapter 2: PowerPoint Slide Deck with Audio: As an additional learning resource, the PowerPoint Slide Deck is accompanied by audio narration to guide you through the study materials. This audio-led approach ensures a dynamic learning experience.
-
Chapter 3: Review Points: A summary PDF of the key learning outcomes to be studied prior to attempting your online assessment.
-
Chapter 4: 50 Question Multiple Choice Assessment: To assess your understanding of the course content, each Course Book includes a 50-question multiple choice assessment. The passing score for the assessment is 65%, thereby ensuring you have grasped the core concepts effectively. You will be able to take and retake the assessment until you pass.
​​
