Advanced cost modelling

Of all the procurement skills, quite possibly my favourite is cost modelling. Here’s why: Imagine a material costing USD 1,000/T. Negotiation might help you get the price to USD 970/T. It works, but it’s kinda crude. Cost modelling provides the insights and rationale to achieve USD 920/T.

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And cost modelling has got it all: mapping of end-to-end supply chains, deep rooted analytics, financial acumen and the need for the very finest detective work. So, when one of my huge multi-national clients asked me to train all their global business units I jumped at the opportunity!

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The adventure covered some USD 4BN of direct spend including vast amounts of cereals and oil seeds (as per this piccy of me on the North American prairies), flavours and colours, a plethora of vegetables & fruit, herbs & spices, all manner of meats, nuts and sweeteners, and packaging such as corrugated, rigid plastics, flexibles and glass.

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I trained nearly 200 employees, in person where feasible, and virtually when there were multiple regions involved simultaneously. My skills to engage teams over video conference, landing concepts and techniques and running case studies became razor sharp.

The result?

It goes without saying we unearthed many millions of savings. But even more encouraging is that we over came multiple unfavourable paradigms where we were told others had tried before but not succeeded.