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Posted on: Mei 18, 2013

COST MANAGEMENT, Discounts, AND NEGOTIATION

COST MANAGEMENT

            Many supply managers believe they are not allowed to go too far in cost supplier. They take the position for several reasons, namely: In many cases, suppliers do not know their costs, and would not be useful to ask them about it; Interpretation of cost calls for an exercise in determination, and differences of opinion will be increased if all the figures had been available; Many suppliers will not divulge confidential information costs; Cost sellers will not determine the market price; Buyers will not be drawn into another supplier costs. Total Cost of Ownership
Buyers should estimate the total cost of ownership (TCO) before choosing a supplier. Widespread sense, the TCO for the acquisition of non-capital goods include all relevant costs, such as administration, follow-up, expenditing, inbound transportation, inspection and testing, rework, storage, scrap, warranty, service, downtime, customer returns, and lost sales. Acquisition price plus all associated costs into the total cost of ownership. TCO can be used for a number of possible reasons, namely: to mark the occasion of cost reduction; to assist the selection and evaluation of suppliers; to provide data for the negotiation suppliers to focus on cost reduction opportunities; to mark the advantage of expensiveness, high-quality items to clarify and define the expectations of supplier performance; to create a long-term supply perspective, an  to predict future performance.

Target Pricing

Target pricing focus on all the people in the organization in charge of product design rather than in eliminating the cost after production occurs. Target pricing resulted in a reduction boarding company widely, in (1) designing for cost, the design engineering section, (2) manufacturers to cost, in the part of the production, and (3) the purchase for a fee, in the part of the supply. The Learning Curve or Manufacturing Progress Function The learning curve provides an analytical framework for quantifying the general recognition principle that a person will be more proficient with experience.

Activity-Based Costing

Traditional cost calculation showed disruption in the financing of the product because of the way it allocates overhead on the basis of direct labor. In the past, when labor costs are often the biggest expense category, the allocation is made to estimate. However, the cost of materials has overcome labor costs as the single biggest cost factor, the accountant can look at other ways to overhead. Basically, activity-based costing (ABC) attempts to change the indirect costs to direct cost to undergo the cost drivers behind indirect costs.

DISCOUNT

Cash Discount Cash discounts granted by each virtual buyer of industrial goods, although the actual discount rate to be issues of custom and modify individual trading once from one industry to another. The purpose of the discount is to secure immediate cash payment of an account.

Trade Discount Trade discounts given by manufacturers to the buyer because the buyer company is a distributor or user type. Generally, they aim to protect the distributors make it more profitable on a buyer to buy from a distributor rather than directly from the manufactures.
Multiple Discounts In many industry and sales, price discounts dikuota in multiple base. For example, 10, 10, and 10 means that, for an item listed at $ 100, the actual price to be paid buyer is ($ 100-10%) – 10% ($ 100 – 10%) – 10% ($ 100-10%) = $ 72.90.
Quantity Discounts Quantity discounts are given on the purchase of a certain quantity and proportion forcibly change the amount purchased.Quantity Discounts and Source Selection
Quantity discount is a question of interest to many buyers to the second reason: all quantity discounts, and especially the cumulative type, limiting the number of suppliers, thereby impacting on the choice of source. Cumulative or Volume Discounts
Another type of quantity discount is cumulative and varies in proportion to the quantity of purchase; but, instead of computing the size of a placed order at one time, is based on the quantity of purchases through periods waktu.Diskon usually given as an incentive from the ongoing protection.

NEGOTIATION

Negotiation is the meaning of the longest and most expensive of the pricing. Negotiation requires buyers and suppliers, through discussions, which brought general agreement in the contract to buy / sell that important, such as delivery, specifications, warranty, price, and approval. Negotiation Strategy and Practicem Negotiation is a reasonable expectation of buyers and sellers. This is a reasonable limit of negotiations to declare unequivocally that the supplier:
Operate in an efficient behavior. Keeping the price balanced with the cost. Not taking advantage of the privileged position. Make proper and reasonable adjustment of the claim. Being a provider to respond to the special needs of the buyer organization.

References:
Leenders, Johnson, Flynn and Fearon, Purchasing and Supply Management, 13rd Edition, McGraw-Hill Inc.., 2006

 

This article is retrieved from :

http://kumpulan-artikel-ekonomi.blogspot.com/2010/06/cost-management-discounts-and.html

note : colored above sentence is the verb phrase

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