Total Cost Management

How is TCM different?

Traditional purchasing techniques concentrate mainly on reducing the ‘price’ of the goods by attacking supplier margins. More sophisticated purchasing models extend this only as far as the whole life cost of the product.

In TCM, all of the cost drivers throughout the whole supply chain are examined and opportunities for improvement are identified. Delivery is aided by taking a collaborative approach with suppliers to identify cost drivers and then act to reduce their effect. Acceptable supplier margins are maintained to encourage co-operation. Step change, sustainable cost reductions can be achieved which would never have been delivered through more traditional methods.

TCM Benefits

TCM delivers competitive advantages through lower costs and/or better products and services. This allows you to win market share and/or raise margins and to better manage and influence your market place.

Focus on cost, rather than price, allows us to identify the main cost drivers. Once identified opportunities such as outsourcing become more apparent, ultimately leading to an optimised supply chain. This benefits all the members throughout that chain.

Suppliers are assets with expert knowledge second to none. Working with suppliers on product development and production to make smart choices and drive out costs delivers real sustainable value.

Working closely with one or two key supplier partners per category gives insight into their processes and cost drivers which can then be applied across all suppliers in that category.

Visibility across the entire supply network allows us to identify where processes are sub-optimal and where we can change and improve the process to drive out cost or add value.

Stakeholder identification and management is critical to the success of TCM. These may be internal stakeholders across differing functions in the business or within different regions/business units or they can be external stakeholders such as suppliers and customers. Linking interested parties in an informed and engaged manner through transparency and collaboration delivers the right product/service to the right place at the right price and the right time.

What gets measured gets done and so a set of Key Performance Indicators (KPI’s) are applied within TCM to measure benefits delivered such as cost savings, working capital reductions, supplier and customer perceptions and compliance.

Training

TCM utilises standard templates and processes to build on existing skills and processes and align all procurement staff and other stakeholders in the common process. Prestige endorse and train our proprietary 7-step process (shown below) which is specifically designed to support a best-in-class approach to procurement activity.

Why use Prestige Purchasing for TCM?

• We have extensive experience and expertise in the delivery of benefits using TCM
• We are completely transparent in our communications with our clients
• We agree our fees and the deliverables up-front
• We give you the opportunity to achieve step change cost reductions and product improvement leading to sustainable competitive advantage

Case Study

Read how Richard Small has developed TCM for a variety of clients to reduce their overall costs.