Engagement Overview:

A leading player in the auto industry wanted to build a comprehensive list of all cost factors and their associated benefits across the supply chain network. To do so, and identify the lowest cost mix, the auto industry client approached SpendEdge to devise a comprehensive approach that would help them develop an appropriate cost model. A detailed quantitative analysis of various spend categories within the supply chain was carried out to identify the lowest cost mix would help them improve spend efficiency.

About the Client:

The client is a leading player in the auto industry, specializing in the manufacturing of auto parts.request proposal

Business Challenge:

The auto industry firm was facing several financial challenges as a result of which they were looking at leveraging cost model analysis to identify the lowest cost mix and develop a model that reflects their organizational structure.


How did SpendEdge Help the Client?

  • Step 1: Gathered and filtered raw data into distinct categories

The first step revolved around the process of gathering raw spend data from across the supply network. As the objective was to devise a suitable cost model, the collected data was segmented into various spend categories to distinguish its source.

  • Step 2: Identification of cost drivers for each of the spend categories

Once the data is segmented into categories, it is essential to gain a detailed understanding of the driver behind each category. A detailed correlation analysis helped the client to determine the relationship between input factors and cost drivers, which further assisted them by offering an intuition on the best suitable cost model.

  • Step 3: Identification of price forecasting trends in the auto industry that need to be integrated into the final cost modeling approach

To devise an effective pricing model, it is essential to differentiate variable cost factors from the ones that more or less remain constant over a certain period. Also, the implementation of price forecasting trends into the final model helps auto manufacturers to develop a robust cost model that keeps track of the fluctuations in prices of raw materials.


Key questions answered in this cost model analysis engagement include:

Auto industry


Benefits of the Engagement:

The cost model analysis experts at SpendEdge recommended the lowest cost mix that helped the auto manufacturer to develop a robust cost model. The developed model enabled the auto industry player to effectively map the financial relationship between their spend categories and other factors within the organization. This relationship further helped them reveal the entities that drove the cost of other entities and those to which cost was passed.

Why incorporate cost model analysis?

Cost model analysis is a key factor that promotes cost control and cost containment. It enables organizations to stay well-informed via precise cost reporting, forecasting of future costs, and enhancement of pricing strategies.

Cost model analysis also enables auto manufacturers to develop winning sourcing strategies for current spend and helps determine when and where to seek alternative supply options and materials. It is equally important to the planning and development stages of new product portfolios.

Our Findings:

The auto industry is an ever-evolving sector where cutting-edge cost models are introduced to the market on a regular basis. Although the industry is currently experiencing accelerated growth, the auto manufacturers are facing a continuous challenge owing to the adoption of incessant innovation in order to excel in the market. Therefore, devising an effective cost model can help them drive category growth across the supply network by analyzing historic spend data to identify key cost factors and develop a forecasting model to predict future costs. 


To know more about our spend analysis solutions for food and beverage industry players

request proposal

Related Posts:

COVID-19

Featured

Overview

Buyers

Diagnostic Test Kit

Additional Resources
Contact

A LOOK INTO THE FUTURE OF THE FOOD AND BEVERAGE INDUSTRY AFTER THE COVID-19 PANDEMIC

Identifying the Top 100 Coronavirus (COVID-19) Test Kit Manufacturers Across Regions

Sourcing and Procurement Market Intelligence Services

Products and Tools

Featured

Services Overview

Category Market Intelligence

Supply Market Analysis

Low-Cost/Best-Cost Country Sourcing

Benchmarking

Spend Analysis

Cost Modeling and Should-Cost Analysis

Total Cost of Ownership (TCO) Analysis

Supplier Risk Analysis

Supply Chain Risk Assessment

Supplier Sustainability Assessment

Commodity Price Forecasting

Category Management

Supplier Negotiations

Contract Management

Procurement Store

Purchase Ready-to-use Reports

SEinsightsTM

Our Robust Procurement Platform

BizVibeTM

Suppliers and Buyers Marketplace

SUPPLY MARKET ANALYSIS FOR A METAL MANUFACTURING COMPANY HELPS ACHIEVE ANNUAL SAVINGS OF $15 MILLION

Industries

Industries Overview

Automotive and Tire

Banking, Financial Services and Insurance

Biotechnology, Pharmaceutical and Life Sciences

Chemicals

Energy

Food and Beverage

Industrial and Manufacturing

ICT, Media and Entertainment

Mining, Metals and Minerals

Retail and CPG

Transportation

INCREASING LOCAL PROCUREMENT BY 28% FOR A COMPANY IN THE METALS AND MINING INDUSTRY – A CASE STUDY BY SPENDEDGE

Resources

Featured

Resources Overview

COVID-19 Resources

Blogs

Case Studies

Whitepapers

Webinars

Press Releases and Media Mentions

5 KEY CORONAVIRUS RISK ASSESSMENT STRATEGIES TO OVERCOME HEALTHCARE SUPPLY CHAIN CHALLENGES

IDENTIFYING STRATEGIC PURCHASING PRACTICES FOR A COMPANY IN THE US FOOD SERVICE INDUSTRY | SPENDEDGE’S LATEST SUCCESS STORY

Clients

Featured

Clients Overview

Who We Serve

Case Studies

SUPPLY CHAIN MANAGEMENT HELPS AN IMPORT AND EXPORT INDUSTRY CLIENT ENHANCE SUPPLY CHAIN VISIBILITY

REALIZING SAVINGS OF $15 MILLION IN PACKAGING SPEND FOR AN FMCG CLIENT – PACKAGING SOURCING STRATEGY

About Us

News

About SpendEdge
Why SpendEdge?
Vision, Mission and Values
Clients
Social Impact
Global Offices

Press Releases and Media Mentions

Upcoming Events & Webinars