Procurement Fundamentals – Total Cost Analysis & Supplier Relationship Management



Often procurement decisions are still made on piece costs ignoring supply chain and other indirect costs. In the world of global sourcing such decisions can end up being very expensive mistakes. In this course, the focus is on developing the skills to correctly evaluate total landed costs (TLC) and estimate total costs of ownership (TCO) if applicable.
Participants will learn how to apply TLC and TCO to make improved sourcing decisions through hands-on team exercises and discussions.

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Program Content

Session Topic Description
Session 1 What is TLC, TCO, and Present Value? This session will define the fundamental concepts of TLC and TCO as well as the basics of net present value analysis. Examples will be presented to illustrate common sourcing errors from incorrect cost analysis and how to avoid them
Session 2 Methods of Cost Analysis This session will discuss how to obtain the data required for cost analysis from stakeholders. It will also review techniques such as product segmentation and ABC analysis.
Session 3 Team exercises Teams will be asked to analyze and apply TLC and TCO to specific sourcing situations involving cross-border shipments and present their solutions for critical evaluation by faculty and peers
Session 4 Cost Drivers and Volatility Cost driver models can be used to improve continuous procurement of material. This session will illustrate how cost driver models can be developed for significant commodities. The impact of price and demand volatility on multi-period sourcing decisions as well as risk mitigation for volatility will be discussed.



Prof. Dr. David Gonsalvez
CEO & Rector

Dr. Gonsalvez is the CEO & Rector at MIT Global SCALE Network’s Malaysian Institute of Supply Chain Innovation.