Original Source:  Supply and Demand Chain Executive

“Tool provides clear understanding of the specific economics behind manufacturing a particular product or service. 

Over the last 20 to 30 years, the procurement and supply chain space has substantially evolved and the executives running procurement organizations have, in turn, adopted far more progressive and sophisticated tools and approaches for the execution of their strategies. Also, with the increased recognition of procurement’s direct impact on the bottom line – and ultimately shareholder value—it’s no surprise that executives have had to look for more sophisticated ways to reduce total costs, improve quality and obtain value out of every phase of the process.

These changes have driven the need for not only more sophisticated procurement intelligence, but also technical tools that deliver insights that allow for tangible decisions. Should-Cost Modeling is one such tool, providing a clear understanding of the specific economics behind manufacturing a particular product or service. This helps the executive achieve a range of benefits – from improving efficiencies and delivering substantial costs savings, to improved supplier relationships.

Successful Should-Cost Modeling, whether done internally or through a specialist third party, requires the right mix of skills – from a thorough understanding of the industry, sector and commodities involved, to an expertise in financial analysis and cost accounting, to a solid grasp of market variables such as taxation, regulation, tariffs, rebates, and beyond…”

Contributors: Open Source
Categories: Industry Articles, SIG U Resource
SRC Type: Procurement Operations