Reference no: EM133526724

ASSIGNMENT DESCRIPTION

This two-part assignment will give you the skills to conduct a spend analysis on a category of goods, and develop strategies that focus on cost reductions. In this case, the category is household expenditures that include groceries, transportation and entertainment that your family purchases on an annual basis. In a manufacturing environment, the category could include any group such as MRO, steel, or any other significant group of purchased items. This assignment will provide you with hands-on experience conducting a Pareto analysis. The successful completion of this assignment will provide you with the skills to describe how you would begin a cost reduction process for your employer. You will then summarize your findings and create a cost-reduction strategy based on your spend analysis.

Part 1 Steps
Estimate weekly or monthly usage of each household expenditure. A minimum of 40 items is required from various areas of spending including groceries, transportation and entertainment. (E.g. "eggs", "gas for car", "bottled water", etc.)
Estimate the annual usage per item in dollars.
Sort annual expenditure by item from the highest dollar amount to lowest dollar amount (see Exhibit 6.4 on page 203).
Using the Excel template provided, create a column showing the total accumulated dollar amount.
Identify, by highlighting in yellow, the 20% of the items that represent 80% of the total dollars spent.

Parts 2
Identify who your main suppliers are, and whether or not any changes should be considered.

Create a plan that outlines each step you would take to find opportunities to save money and estimate how much money you could save.
Write a paragraph about your thoughts and conclusions re: the amount spent vs. what was purchased for the 80% of your dollars, and your thoughts and conclusions about the analysis as a whole.