INTRODUCTION FOR HOW TO MANAGE PROCUREMENT INTO A KEY PROFIT CENTRE

Procurement function in most company traditional view has always been a cost centre where it incurred the most expenditure from the cost of procuring raw material, packaging materials and other services. It is view as a centre that is responsible for incurring cost and not profit.

However, with the growing competition among companies in various industry, this concept of procurement or purchasing as a cost centre is outdated because, in actual fact, they do able to generate profit for the company. If managed effectively and pro actively, procurement will able to drive cost down and generate profit for the company. By attending this program, participants will learn how to turn procurement from a cost centre into a profit centre.

COURSE OBJECTIVES

By the end of the 12 hours session, the learning curve achieve will enable the following:-

• UNDERSTAND the key role of procurement
• DIFFERENTIATE the difference between cost centre and profit centre
• IDENTIFY all the key steps to be in place to turn procurement into a profit centre
• DEVELOP all the key knowledge’s required to prevent purchasing or procurement to be a cost centre but an effective profit centre
• DEVELOP effective reporting on procurement performances

WHO MUST ATTEND

This training program is highly recommended for employees involve directly or indirectly in handling purchasing function in the company.

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
• Exercise to evaluate participants understanding

COURSE CONTENT

Module 1 Basics of Procurement and Purchasing

• Definition of Purchasing versus Procurement
• Role of Purchasing in Operational and Business challenges
• Key Fundamental to Effective and Efficient Procurement
• The Ps , Qs and Rs of Procurement

Module 2 Understanding the concept Cost Centre versus Profit Centre

• The definition of Cost Centre
• The definition of Profit Centre
• Evolution of Procurement from Cost Centre to Profit Centre

Module 3 Cost Reductions and Avoidance

• Impact of Cost Reduction to organization bottom profit
• Cost Saving strategies
• Process of Cost Saving
• Understand ERRANT technique
• Reporting for Cost Saving

Module 4 Procurement Role in Inventory Management

• Type of Inventory Cost
• Inventory forecasting
• Impact of Excess Inventory
• Implementing Pull Kanban system
• Inventory turnover ratio
• Reorder and Safety stock
• Demand Planning
• Consignment stock
• Vendor Management Inventory
• Measuring Inventory cost performance

Module 5 Managing Suppliers Risk

• Managing 2^nd and 3^rd tier suppliers
• 3^rd party risk management
• Auditing
• Pre emptive techniques
• Operational risk management
• Performance and Relationship management
• Expediting process

Module 6 Sourcing for Profit

• Strategic sourcing and tendering
• Effective selection technique to optimize result
• Setting cost objective in sourcing material and products

Module 7 Cost Optimization Technique

• Suppliers and vendors optimization
• Consolidation strategies
• Maverick spending
• Budgeting and control
• Psychological comfort zone
• Category management
• Centralization and Decentralization
• Process mapping to maximize efficiency

Module 8 Measuring Procurement Performance

• Procurement cycle time optimization and measurement
• Supplier Quality & Performance management
• Spent analysis
• Cost saving
• Variance reporting

Module 9 – Measuring Procurement Revenue

• Understand the Profit and Loss reporting of Procurement
• ROI calculation

Module 10 – Problem solving skills

• Understand competiveness model
• Problem solving method with 3 why and 1How
• SWOT analysis

Module 11 – Building Negotiation Skills

• Integrative Negotiation
• Distributive Negotiation
• Stages of Negotiation
• Deciding red lines in negotiation
• Knowing your opponent traits
• Traits of a good negotiator
• Bad Negotiator habits
• Mistakes made in Negotiation
• Body language in negotiation
• Clear planning of objectives and goals
• Understand when to walk away
• Managing Reject and counter offer
• Dealing with difficult negotiators
• WATNA strategies
• BATNA strategies
• Break out room discussion and role ply

Module 12 – Sourcing and Suppliers Selection Skills

• Type of sourcing
• Tendering process
• The Cs of Supplier selection
• Method of Cost Evaluation

Module 13 – Cost Saving and Prices Detailing Skills

• 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 14 – Supplier and Supplies Management techniques

• The principle of supplier management
• Supplier segmentation
• Supplies management key principles
• Proactive versus Reactive Management
• Understand key suppliers traits

Module 15 – 3^rd Party Risk Management

• Definition of 3^rd party risk management
• Cycle of 3^rd party risk management
• Strategic Risk Assessment
• Operational Risk Assessment
• Case study

Module 16 – Conducting Audit and Type of Audits

• Key steps to effective audit
• Operational Audit
• Ethical Audit
• Environment and Safety Audit
• Effective Auditing

Module 17 – Inventory Management system

• Understand lead time and reorder level
• What is Safety stock
• Method of determining Safe stock level for inventory
• Kanban system

Module 18 –Understand Rule of Delivery and Contract

• Incoterms , purchasing people must know
• Sales of Good Act
• Contract principles
• Key component of a Contract
• Type of Procurement contract
• Key Information in Purchase Order
• Flow of a Purchase order

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