Supplier evaluation and total cost of ownership
Compare suppliers that aren't alike on one number, the True Price: credits and charges for every difference, whole-life cost in today's money, and a change price list that stops cost creep.
About this course
Suppliers are never alike. One is cheaper but slower, another better but heavier, a third refuses your terms. Scoring them out of 100 hides the trade-offs; this course shows how to turn every difference into money, so suppliers compete on one number: the True Price.
You will price differences as credits and charges, choose the right benchmark, work out whole-life cost with net present value, and agree a change price list that stops cost creep after the award. The capstone is a sandbox where you bring a supplier under a £45m target in several ways.
Who it's for: Procurement teams, engineers, quality and finance people who have to agree on which supplier is really cheapest.
What you'll be able to do
- Turn every difference between suppliers into credits and charges, so they compete on one True Price
- Classify a criterion as absolute or relative, fixed or variable, go or no-go
- Build a whole-life True Price with net present value and find several routes to a target
- Stop cost creep after the award with a change price list agreed before it
Syllabus: 10 lessons
One number to compete on
Module 1Unequal suppliers and why scores fail
Real suppliers are never alike. One has better quality, another makes a lighter part, a third won't accept your terms.
True Price
True Price = quoted price + charges - credits. A charge pushes a supplier's price up for comparison, because something about it costs you.
Pricing the difference: four steps
Building the credits and charges is called pricing the difference. It has four steps: list, separate, price, publish.
Putting a price on it
Module 2Classifying criteria
Absolute or relative? An absolute criterion is a sum of money: a quality band worth £80k a year.
Pricing criteria in practice
Standard rules save arguments. Three typical ones. Terms (buying): the estimated cost of the clauses refused, capped at 1.5% of the quoted price.
Credit or charge: does it matter?
You can give the better supplier a credit, or give the worse one a charge. On paper it makes no difference.
Whole-life cost
Module 3Whole-life cost and NPV
Whole-life cost is everything a supplier choice costs you over the contract's life, in today's money, not just the piece price. It's what should drive the decision.
The £45m challenge
An appliance maker is launching a new range of washing machines: a compact model and a family-size one. It has offered the whole motor contract, both models, for a True Price of £45m.
After the award
Module 4Stopping cost creep: the change price list
You often pick a supplier before the specification is final. Then changes come, under time pressure, and you negotiate them with a supplier you can no longer replace. Costs creep.
Winning over sceptical stakeholders
"I don't agree with the total." The total is your company's willingness to pay for the differences between suppliers, criterion by criterion. Which one do you think is wrong?
Final assessment and certificate
Ten questions on fresh scenarios. Score 7 or more and your certificate is issued straight away.
Questions
How long does the course take?
About 2 hours: 10 lessons totalling 113 minutes, plus a 10-minute final assessment. It's self-paced, so you can stop after any lesson and pick up where you left off.
Do I get a certificate?
Yes. Pass the 10-question final assessment (7 out of 10) and you get a certificate of completion with your name and a verification ID. You can retake the assessment as often as you like.
How much does it cost?
£9.89, a one-off payment with lifetime access. Signing up is free, and the first lesson, "Unequal suppliers and why scores fail", is free to play before you buy.
Do I need to know any maths?
No. Everything is explained in plain English with small, worked numbers. If you can compare two prices, you can do this course.
How is it taught?
Every lesson is interactive: you play a game, make a choice or move a slider first, then the idea behind it is explained. There are no videos to sit through.