DEVELOPING COMPETENCIES IN COST REDUCTION AND NEGOTIATION FOR PURCHASING

INTRODUCTION FOR DEVELOPING COMPETENCIES IN COST REDUCTION AND NEGOTIATION FOR PURCHASING

In order to improve company profitability and ability to drive up market share, the demand for an effective and efficient procurement management is a pre requisite. Key competencies in area of cost control, applying strategic strategy to manage supplies and the negotiation of the most advantageous benefits to the company is extremely important.

This program promotes the key competencies in strategic procurement strategies, the technique of managing cost saving activities and handling effective negotiation in order for managing an efficient and effective  procurement system in the company plus understanding the required clauses for an effective procurement contract.

COURSE OBJECTIVES

By the end of the 14 hours by 4 session interactive online session or  to 2 FULL day classroom learning, the learning curve achieve will enable the following:-

• UNDERSTAND the strategic and tactical role of procurement and purchasing
• IDENTIFY The type of strategy to be in place to manage procurement
• DEVELOP problem solving methodology to solve procurement and purchasing issue
• MANAGING the negotiation process effectively with suppliers
• UNDERSTAND the technique of cost reduction using the ERRANT methodology
• DEVELOP competencies in handling cost saving and negotiation
• DEVELOP understanding on required clauses for a effective procurement contract

WHO MUST ATTEND

This training program is highly recommended for employees involve in the managing of the supply chain function in the company, for example, personnel from procurement, warehouse, logistics and planning department and finance.

METHODOLOGY

This training will involve the following area to enhance learning:

• Power point presentation
• Case studies & Brain storming session
• Discussion on subject of learning
• Facilitating by trainer to enhance understanding of subject matter
• Case study will be given to all participants on the 1^st day of the class for Negotiation and Cost Reduction. Cost reduction case study to be presented by end of day 1 and Negotiation case study by end of day 2.

COURSE CONTENT

Module 1 – Cost Reduction and Cost Avoidance (4 hours session including 1 hour for case study)

• Cost Reduction versus Cost Avoidance
• Area of Cost Reduction and Cost Avoidance
• Key Factors to consider in Cost Reduction
• Opportunity cost in cost reduction activities
• ERRANT cost reduction and avoidance strategy
• Team setting for cost reduction
• EXCEL spreadsheet reporting on cost avoidance and reduction
• Break out room discussion

Module 2 – Understanding Negotiation (2 hours)

• What is Negotiation?
• Harvard Key Element of Negotiation
• Harvard 5 key Principles of Negotiation
• Integrative Negotiation
• Distributive Negotiation
• Stages of Negotiation
• SWOT analysis
• Deciding red lines in negotiation
• Knowing your opponent traits
• Clear planning of objectives and goals
• Understand when to walk away
• Managing Reject and counter offer
• Dealing with difficult negotiators
• Understanding the Competitiveness Model
• Conducting SWOT analysis on your supplier for negotiation
• Will you use Integrative or Distributive negotiation strategies?

Module 3 – The Bluff game of negotiation (2 hours)

• The purpose of the game
• The rule of the game
• Play the game to understand negotiation

Module 4 – Harvard Principled Negotiation (1hour)

• 4 key principle of principled negotiation
• Generate Option for positive result
• How to use Objective Criteria to Present Argument
• Handling Challenges
• Getting a Yes in negotiation

Module 5 – Negotiator Profile and Traits (1 hour)

• The Soft Negotiator
• The Principled Negotiator
• The Hard Negotiator
• Traits of a good negotiator
• Bad Negotiator habits
• Mistakes made in Negotiation
• Body language in negotiation

Module 6 – Understanding your Alternatives (1 hour)

• Definition of WATNA and BATNA
• Steps to develop your alternatives

Module 7 – Dealing with Offer and Rejection (2 hours, including 1 hour for role play)

• Looking for ZOPA
• Deciding red lines in negotiation
• Understand when to walk away
• Managing Reject and counter offer
• Dealing with difficult negotiators
• Break out room discussion and role ply
• Quiz x 30 questions