Cost and Price
Save money, save time, Better business
Achieving Higher Levels of Product and Service at a Lower Cost
- It is our aim to reduce the total cost of ownership (TCO) for our customers. This examines a much wider range of costs incurred by the business. In the above example, we looked at only a single budgeted area. But the business will incur costs elsewhere to process the good, either in operational costs (delivery and storage) or fixed overheads. Often these are hard to quantify and difficult to attribute to a single activity. But TCO aims to look at the cost sustained from the point of delivery to the final conversion into a saleable good. The ‘baseline’ in this case would look to accumulate all the costs related to a purchase, that is the invoiced cost, plus (potentially) costs relating to delivery, storage, security, internal movement, machine processing, processing time, waste parts, disposal, packaging and final delivery. Each of these elements is subject to change but by incorporating these into your cost calculations you have a more accurate picture of supplier cost performance. For instance, a TCO calculation may find that buying at a higher invoiced cost may be more cost-effective, once other business operations are incorporated.
- The cost savings and quality of service delivered by Venace were quite impressive. At the same time, the highly competitive global marketplace was forcing Venace’s managers to do more with less.
- The business environment was changing much faster and far less predictably than in the past and that managers and leaders were going to have to be more flexible
- This would allow Venace to create value more efficiently by focusing on their core competency—developing and commercializing products and managing system.
- Additionally, Venace were mindful that any support-service structure needed to be flexible and sufficiently nimble to react to acquisitions, expansions, and changes in corporate strategy.
- Competitive price
- Availability of cost breakdowns
- Productivity improvement/cost reduction programs
- Willingness to negotiate price
- Inventory cost
- Information cost
- Transportation cost
- Cost of special handling
- Additional supplier costs as the result of the buyer’s scheduling and shipment needs
- Cost of defects, rework and problem solving associated with purchases
- Actual cost compared to: historical (standard) cost, target cost, cost-reduction goal, benchmark cost
- Extent of cooperation leading to improved cost
- We believe that doing what is right for the business with integrity will lead to mutual success for both the Company and the individual. Our quest for mutual success ties us together.
