Cost management techniques. Part II.

Reducing the cost of purchased products and services is of continuing importance to hospital purchasing and materials managers. In the first of three articles, the authors addressed the life cycle costing approach applied to purchasing as a means of evaluating total costs over the life of a product rather than only evaluating quoted prices. Life cycle costing is most appropriate for longer lived products, those with maintenance, repair, and disposal considerations. This article continues the discussion of cost management techniques focusing on ways to identify and manage total costs of purchasing and acquisition. The third article will present integrated cost and value management techniques.