Cost Analysis in Procurement

What is the main goal of cost analysis in procurement?

• To spend as much money as possible

• To understand and control expenses when buying goods or services

• To make purchases without comparing prices

• To only focus on the cheapest option

What are direct costs?

• Costs that are easy to see, like the price of a product

• Hidden expenses that appear later

• Costs related to advertising and marketing

• Costs that have no impact on purchasing decisions

Which of the following is an example of an indirect cost?

• The cost of raw materials

• The wages of factory workers making the product

• The cost of shipping and warehouse storage

• The price tag on a product

Why is it important to calculate the Total Cost of Ownership (TCO)?

• To only look at the initial purchase price

• To understand the full cost of an item, including maintenance and additional expenses

• To ignore extra costs and only focus on discounts

• To ensure products are bought as quickly as possible.

Draw a Car

What is an example of a hidden cost?

• The cost of the product itself

• Extra fees, such as maintenance or required accessories

• The price written on the price tag

• The cost of marketing the product

How can procurement teams reduce costs?

• By choosing suppliers randomly

• By negotiating better deals and reducing unnecessary expenses

• By ignoring shipping fees

• By always buying the cheapest product, no matter the quality

Why should businesses compare multiple suppliers before making a purchase?

• To waste time

• To find the best balance between cost, quality, and reliability

• To ensure they always buy from the same supplier

• To avoid getting discounts

What happens if a company only focuses on the lowest price?

• They may end up with poor-quality products or hidden costs

• They always get the best possible deal

• They save money without any risks

• They automatically get the best service

What does a good procurement strategy include?

• Only looking at the price

• Considering cost, quality, delivery time, and reliability

• Buying from the most popular supplier without comparing

• Purchasing without reviewing contracts