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  • Supply Chain Management: - Real Vendor Cost Management

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    This document discusses supply chain management and real vendor cost management. It outlines that supply chain management can help reduce costs by lowering a company's real vendor costs, which are the combination of direct costs, indirect costs, and hidden costs associated with a vendor. Direct costs include material and transportation costs, while indirect costs include inventory holding costs and unused material costs. Hidden costs refer to productivity and procurement costs. The document recommends identifying key cost drivers, collecting data on those drivers, and calculating the real total cost for each vendor to identify the most cost-effective options.

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    Scm Vendor

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    This document discusses supply chain management and real vendor cost management. It outlines that supply chain management can help reduce costs by lowering a company's real vendor costs, which are the combination of direct costs, indirect costs, and hidden costs associated with a vendor. Direct costs include material and transportation costs, while indirect costs include inventory holding costs and unused material costs. Hidden costs refer to productivity and procurement costs. The document recommends identifying key cost drivers, collecting data on those drivers, and calculating the real total cost for each vendor to identify the most cost-effective options.

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    16 views9 pages

    Supply Chain Management: - Real Vendor Cost Management

    Uploaded by

    naveenfree2rhyme
    This document discusses supply chain management and real vendor cost management. It outlines that supply chain management can help reduce costs by lowering a company's real vendor costs, which are the combination of direct costs, indirect costs, and hidden costs associated with a vendor. Direct costs include material and transportation costs, while indirect costs include inventory holding costs and unused material costs. Hidden costs refer to productivity and procurement costs. The document recommends identifying key cost drivers, collecting data on those drivers, and calculating the real total cost for each vendor to identify the most cost-effective options.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
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    of 9

    Supply Chain

    Management
    -Real Vendor Cost Management

    Presented To:
    Presented By:
    Dr. S. K. Dubey
    Naveen Pandey
    BM-09113
    Introduction
    • Supply Chain Management is one of the tool for cost
    reduction.
    • The goal is to boost profits by lowering cost.

    • Cost analysis can be done in two ways:


    – simply compare the unit cost of procurement of specific
    items.
    – analyze the net value creation from specific source of raw
    material.

    • Value creation can be done through management of key


    factors.
    Supply Chain Management Cost

    Cost are classified into three categories:

    Direct Cost

    Indirect Cost

    Hidden Cost
    Direct Cost
    It is the cost that is directly attributable to the
    manufacturer. Direct cost consists of:
    Basic supply rate of the material
    Packing and forwarding charges
    Freight charges
    Excise duty
    Sales tax etc.
    Indirect Cost
    • It may vary form vendor to vendor. These cost arise as a
    result of various decisions taken while fixing a supply
    source & also as a result of a behavior specific to a
    particular vendor source. Indirect cost are:
    – Inventory carrying cost
    – Holding cost
    – Cost of unused material
    – Finished product yield cost
    Hidden Cost
    Hidden cost are:
    Productivity Cost
    Procurement lot size cost
    Seasonal rate variance
    Real Vendor Cost
    It is the combination of direct cost, indirect cost and
    hidden cost.

    Real vendor cost is calculated for the key factor.


    Measurement of Vendor Cost
    Identification of Cost drivers

    Select major cost drivers

    Collect data for major cost drivers selected

    Get feedback from actual users

    Identify key factors

    Calculate real cost for each vendor for the particular key factor
    THANK YOU

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