Cost Modeling/Should Cost Analysis
SpendEdge’s cost modeling and should-cost-analysis enables informed and optimal supplier, pricing, risks and budget related decision-making.
Overview
Cost Modeling
Cost modeling empowers an organization to make strategic decisions based on accurate insights. An advanced cost modeling tool promises precision and high-quality decisions as it takes into consideration all the key cost components such as material costs, labor costs, facility and maintenance costs, production costs, and profit margin to manufacture a product or service. It accounts for differences in process, utilization, capacity, geographical location, and all the other factors related to manufacturing or production. Cost modeling enables decision makers to make strategic choices driven by data and insights.
Should-cost-analysis
Should-cost-analysis is leveraged as a cost estimation strategy to obtain visibility into the true cost of materials and services required to produce a product or deliver a service. The benefits of should-cost-analysis are numerous, but so are the challenges to creating a reliable and accurate analysis to be leveraged as a tool to accurately estimate the real price of the product or service you are buying. Our clients have found that cost modelling has made them better equipped in price negotiations with suppliers. For certain clients, should-costs analysis (also known as cleansheet costing, price breakdown analysis, or open book costing) has led to buyer-supplier cost-modelling collaborations where cost structures have evolved and transformed to pave the way to higher mutual profitability. For other clients this has been a necessary analysis to lay the foundation for budget forecasting and planning, as well as managing the risks of price volatility.
At SpendEdge we have specialized in cost-modeling services for the past 16 years and have delivered value to our clients across industries. Our team of should-cost-analysis experts combines industry knowledge and sector expertise, along with geo-specific knowledge on regulations, taxes, tariffs, and rebates. All this complex and in-depth knowledge is applied to each client requirement depending on the needs and available information we acquire as a result of our assessment.
COST MODELING AND SHOULD-COST ANALYSIS
Typical Coverage Areas and Key Questions Answered
Typical Coverage Areas
- Identification of cost elements
- Assessment of the impact of each cost driver on overall cost
- Supply market pricing data collection
- Quantitative cost modeling
- Scenario based cost modeling
- Recommendations on lowest cost mix
- Negotiation levers adopted by suppliers to ensure low cost raw material sourcing
- Cost movement forecasts for all cost elements (for the next 6/12 months)
- TCO analysis
Key Questions Answered
- What are the key cost elements?
- Which cost elements are the drivers of cost?
- How do we achieve lowest cost mix?
- What is the Total Cost of Ownership and what are the best negotiation levers?
Results & Testimonials
SpendEdge Reports provide every piece of information we look for. Cost Saving Opportunities, Procurement Best Practices, Details on Key Suppliers etc. Very useful for our decision making.
Thank you, your team and everybody for what I think is a very comprehensive report which has come together here and quite a wealth of information.
The SpendEdge reports are very well structured and help us gain quick insights into leading suppliers, pricing models and negotiation strategies. Our team always wanted quick access to such insights, and now is made possible with subscription to the SpendEdge platform.
Case Studies
Fortune 500 Global Pharmaceutical Company Develops Commodity Procurement Strategy to Ensure Cost Containment
SpendEdge’s Cost Analysis Strategies Helps Gourmet Food Store Improve Business Efficiency By 20%
Cost Modeling Helps a Leading Molten Salt Tank Manufacturer Identify Potential Cost-Saving Opportunities
Featured Blog:
Should Cost Modelling: Building Relationships and Driving Profitability
Featured Press Release:
Procurement Market Analysis and Identification of Cost Categories of Molten Salt Tanks Through Cost Modeling
Featured Blog:
The Present and Future of Should Cost Analysis
Featured Press Release:
Building Cost-Effective Temporary Staffing Services by Leveraging Cost Modeling Techniques
Our Expertise
Category Market Intelligence
Transitioning your category procurement strategy beyond cost-saving and into a strategic function of the organization.
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Supply Market Analysis
Enabling companies to achieve procurement maturity, enhanced savings and reduced risks through supply market intelligence.
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Low-Cost Country Sourcing/Best Cost Country Sourcing
Empowering you to select the most optimal cost sourcing locations, by understanding prime cost advantages and the associated risks.
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Benchmarking
Developing a competitive edge and winning strategy through supplier, price and procurement best practice benchmarking.
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Spend Analysis
Optimizing an organization’s spend, by effectively identifying, categorizing, visualizing and evaluating in to order identify savings across the supply chain.
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Cost Modeling and Should-Cost Analysis
Obtaining visibility of costs across the value chain to make informed suppliers, pricing, risks and budget-related decisions.
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Total Cost of Ownership (TCO) Analysis
Estimating the true cost of doing business, including all direct and indirect costs as the foundation for price negotiations.
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Supplier Risk Analysis
Leaning on timely proprietary and secondary market research to evaluate the supplier risk profile in order to mitigate risks.
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Supply Chain Risk Assessment
Future-proofing operations and profitability against predictable and unpredictable surprises across the supply chain.
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Sustainability Practices Assessment
Transforming businesses and procurement practices with a focus on the triple bottom line value generation: financial, environmental and social.
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Commodity Price Forecasting
Activating data-driven procurement planning, assessing pricing-related risks, and supply chain disruptions due to price volatility.
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Category Management
Transitioning your category procurement strategy beyond cost-saving and into a strategic function of the organization.
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Supplier Negotiations
Positioning sourcing and procurement teams for winning negotiations with current and prospective suppliers.
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Contract Management
Increasing confidence and efficiency in contract negotiation and execution, through analysis, insights and best practices.
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