Cost Reduction Techniques & Negotiation Skills

Denny HaRTANTO

2 days’ workshop

INTRODUCTION

In this seminar, you will learn to formulate cost reduction strategies and position your organization to negotiate from strength. Risk modelling skills to reduce procurement, labour & overhead cost will be analyzed and scenario solutions will be provided under the guidance of Dr. Steven Liew.

Course Objectives                                                                                                                                   
By the end of this course you will be able to:

  1. Managing Materials, Labor & overheads Costs 

  2. Understand when to enhance your Negotiating Power

  3. Identify Capex & Operational Expenditure for Saving

  4. Apply Risk Modelling Skills for Procurement

  5. Appreciate the Success story of IBM

  6. Applying Risk Modelling for Cost Reduction in Manufacturing Sector

  7. Formulating the Cost Reduction Strategies for Your Organization Costs

METHODOLOGY
Case Study & Group Discussion. Real-current problematic business cases will be analyzed and scenario solutions will be discussed within the workshop.

WHO SHOULD ATTEND

Entrepreneurs, Bankers, Accountants, Business Managers, Marketing Managers & Supervisors 

Special Feature: NOTE: Please bring laptop along

PROGRAMME OUTLINE

Day 1

Module 1: Key Performance Indicators (KPI) for manufacturing

    • CEO KPI (Profitability, Debt Management, Return on Equity, Efficiency, Revenue management, etc)

    • Individual/Department KPI: (Credit management, Budget Management, Fund management, etc)

Module 2: Managing Material Costs

  • Procurement/Purchasing: (eg. sourcing intelligence; negotiation skills, leverage with suppliers, etc)

  • Inventory (eg. material planning, Holding costs, Storage cost, Obsolete stock)

  • Design errors (eg. Wrong Information, Lack of communication, Lack of skills, etc)

  • Technical errors (eg, Lack of skills, Current Plant & Machinery unable to support etc.) 

  • Reject output (eg, Human error, Noncompliance to production procedures, Poor/Substandard raw material, etc) 

Module 3: Managing Labor Costs

  • Inefficient Work Processes (eg, Vague job responsibility, Poor production planning, etc)

  • Absenteeism ( eg, Lack of commitment, Lack of supervision, etc)

  • Staff quality (eg, Insufficient trainings, Lack of integrity, etc)

  • Manpower management (eg, Lack recruitment policy, Lack of empowerment, etc)

  • Staff turnover (eg, Lack of motivation- fringe benefits not attractive, Dislike the job function)

  • Complex process (eg, Job done manually, Complex work flow, etc)

Module 4: Managing Overhead Costs

  • Assets Management (eg, Under-utilization of assets, Idle/excessive assets, etc)

  • Customers (eg, Overdue account, Higher debts collection expenses, etc)

  • Financial resources (eg, High financing cost, sole financing source, etc)

  • Human resources (eg, Excessive training programmers, Excessive of overtime claims, etc)

  • Expenditures (eg, High utilities of telephone, fax, electricity; High rental cost, etc)

Module 5: Case Study (Turn-around the Company)

  • Asset conversion (conversion of assets to cash or profit)

  • Collection (Focus on collection & debt recovery) 

  • Cost reduction (review all aspects of costs drivers)

  • Revenues (review all aspect of revenue drivers)

  • Purchasing policy (focus on top 5 key suppliers; focus on fast moving items, etc)

Day2

Module 6: Negotiation Techniques 

    • Soft Negotiation

    • Hard Negotiation

    • Principles Negotiation

    • Successful Negotiation 

Module 7: Enhance your Negotiating Power

  • A strong alternative to a negotiated agreement, or BATNA

    • Listing alternatives

    • Evaluating options

    • Establishing the course, you should pursue if the negotiation fails

    • Calculating your reservation value – the lowest value deal you are willing to accept

  • Role power

  • Psychological power

Module 8: Strategy in Purchasing Management- Sourcing 

    • Steps in Cost Reduction

    • Identify Operational Expenditure for Saving

    • Identify Capex Expenditure for Saving

    • CFO Initiatives 

Module 9: Cost Reduction Success Story

Areas of opportunity 

  • Processes (eg, Planning & Forecasting, Cash Management)

  • Technology (eg, Integration IT operation & application, etc) 

  • Operating model (eg, Share services, Combination into one area, Centre of excellence, etc)

Decision Making

  • Cut costs 

  • Leave it 

  • Invest 

Module 10: Risk Modelling for Cost Reduction in Manufacturing Sector

  • Analyzing the potential risks facing an organization

  • Mitigating controls 

  • Weight the financial impact 

  • Cost/benefit decision analysis

  • Risk Model softwar

Practical Budgeting, Cost Control & Planning

Procurement Cost Reduction (Manufacturing Sector)
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