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Business Consultation

Effective Cost Modeling for Supply Managers : ECMSM™

Empowering Supply Managers for Maximum Impact.

Masterclass Summary

We offer two options for your convenience: a 2.5 day classroom event or an online course consisting of 6 sessions, each lasting 3 hours. Choose the option that suits you best and get ready to enhance your skills and knowledge! This Effective Cost Modeling for Supply Managers Masterclass explores how to understand supplier and product costs as well as to develop an appreciation of cost drivers which will provide you with a starting point for cooperative relationships to reduce total supply chain costs. The presenter will give you the best of his experience in presenting this Masterclass, not only in the formal subjects, but through networking and discussions, before, during and after the program. His presentation style is a blend of facilitation (where you and your colleagues will be drawn into the discussions), practical examples based on his thirty plus years of experience with a blend of respectful humor (he calls “EDUTAINMENT”).
Two men sit in front of each other
This ECMSM™ masterclass is certified by the Missouri State University International Leadership and Training Center (ILTC) who provide customized, non-credit training and vocational programs for international students and professionals. ECMSM™ has been analyzed by Missouri State University ILTC and it had the proper content and quality to get the university’s quality seal, that means that you’re going to get a top of the line course. Delegates attending all modules and passing an online examination will receive their digital NIMSC™ certificate endorsed by the International Leadersip and Training Center of Missouri State University

Benefits of Attending

  • Understand the four-fold purpose of a budget

  • Apply the five principles of cost modeling

  • Understand the five-step model of spend analysis

  • Understand the cost driver framework

  • Build a robust TCO model

  • Prepare a Should Cost prior to negotiations with suppliers

  • Mutually determine Target Cost to have a win-win price

  • Apply supplier profitability ratios

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Computer Learning

Learning Outcomes

  • Understand the distinction between price analysis and cost modeling in procurement.

  • Perform a comprehensive drill-down of real acquisition costs across four key areas: elements, Should Cost vs. Target Cost, TCO-Total Cost of Ownership.

  • Apply best practices in cost modeling to identify cost drivers and opportunities for optimization.

  • Develop skills to effectively communicate cost insights with suppliers and foster cooperative relationships.

  • Translate cost modeling concepts into actionable strategies for reducing total supply chain costs.

  • Demonstrate proficiency in transitioning from conceptual understanding to practical implementation of cost modeling techniques.

  • Gain confidence in utilizing cost modeling as a strategic tool for supply chain efficiency and cost reduction.

Who should attend this ECMSM™ masterclass?

Corporate Directors Directors, Heads and Managers, Officers & other Senior Executives from: :

  • Supply Chain

  • Procurement/Purchasing

  • Sourcing

  • Logistics

  • Inventory Management

  • Risk Management

  • Contracts

  • Finance

  • Sales &Marketing


Course Contents

Module 1: Introduction and Principles of Budgeting

  • Program purpose, objectives & why these best practices were  selected

  • Participant objectives

  • Icebreaker: what are the top five challenges that your firm faces with regards to Cost Modeling?

  • What goes where, cost types vs. cost behaviors vs. cost decisions

  • The four-fold purpose of a budget

  • Understanding the eight types of  budgets

  • Creating the annual budget

  • Team Exercise: Develop both a Material and a Non-Materials Budget

  • Case Study: This Type of Business Makes Me Hot!

Module 2: Negotiate Away Proposed Increases

  • Differentiating avoidances, reductions and containments

  • Cost control Issues

  • Are your savings believable?

  • Key governance factors

  • Team Exercise: Participate in a mock negotiation of a proposed increase

Module 3: :Understanding VA & VE

  • The VA/VE overview

  • Which is before & which is after?

  • Understanding NPD and NSD

  • Utilizing Concurrent Engineering

  • Listening to VOC & then QFD

  • Incorporating the House of Quality

  • Understanding ESI - Five Levels

  • Case Study: ESI Research at an Aerospace Supplier

Module 4: The Key Cost Modeling Principles

  • Five progressive steps

  • Team Exercise: Compare the cost structure of a semi-conductor vs. a wiring harness supplier and determine the cost drivers.

  • Evaluate the cost of quality  

  • Case Study: What Lessons Can We  Learn From Toyota 

  • Contrast the cost factors of inventory

  • Analyze inventory carrying cost 

Module 5: Building a Robust TCO Model

  • The three TCO categories

  • Understanding the Learning Curve

  • Team Exercise: All Dolled Up – The  LC Calculation

  • Case Study: Analyze TCO Models which include Shell and Texas Instruments

  • Team Exercise: Build  your own TCO model


Module 6: What Goes Where

  • Revisiting cost: types, behaviors and decisions

  • Principles of cost behaviors

  • Additional categories: design, facility,  geography and operations

  • Additional techniques:  Life Cycle Costing & Activity Based Costing

Module 7: Should Cost as a Prelude to Negotiation

  • Case Study: "Apriori" Guide to Should Cost Analysis

  • Team Exercise: calculate the Should Cost for a metal stamping


Module 8: Target Cost During the  Negotiation

  • The two key definitions

  • Understanding the “Spectrum of  Competition”

  • Case Study: The Japanese Open Book Negotiation

  • Are your cost savings believable?

  • Team Exercise: Do Figures Lie and Liars Figure?

  • Cost Breakdowns – how to accurately determine overhead

Module  9: Is Your Supplier Financially Viable?

  • Why Financial is the first factor that you should evaluate

  • How to evaluate Financial status – Balance Sheet/Income Statement

  • How to evaluate Financial status – cost control history

  • How to evaluate Financial status – Credit Ratings /10K reports

  • How to evaluate Financial status – Financial Advisory reports

  • How to evaluate Financial status –calculating & interpreting the key Ratios

  • Case Study: It Ain’t None of Your Business! Understanding D&B tools

Module 10: Selling All of This to Top Management.

  • Engaging in Reverse Marketing

  • Case Study: Review the Customer Supplier Symposium used at: 

  • How to communicate with management. vs.  internal customers

  • The 7 steps to effective presentations

  • Team Exercise: Take all that you have  learned from “concept to reality”

Remember the four take-a-ways from attending ECMSM:

  • You learn more

  • You apply more

  • You have fun

  • You make all this work in your organization!

Program Close

  • Masterclass summary

  • Q&A

  • Each participant will have access to their Online Assessment in the BMTG e-Learning Academy.

  • Course evaluation

  • MSU Certificate to follow.


ECMSM™ Assessment and Certification

Only those who successfully complete the examination and participate effectively in the course case studies will receive the certificate in Effective Cost Modeling for Supply Managers: ECMSM™.

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