Last week we blogged about the reasons why buyers should use should-be cost models. In summary, effective should-be deployment needs to be designed with the following objectives to maximize success: Reduce buyer workload Make cost negotiations easier Help achieve lower cost designs Improve career prospects for buyers Even when the application of should-be cost models…
In a recent round table we conducted with Chief Purchasing Officers, CPO’s were lamenting about the difficulty they encounter in getting buyers to develop and use should-be cost models. They were looking for the magic dust that would make buyers as enthusiastic about should-be models as they were.
Buyers rely on cost breakdown analysis to reduce material costs and ensure competitive pricing on purchased components. However, the ability to impact costs is directly correlated with the usefulness of the data collected from suppliers. A well-designed detailed cost breakdown is the foundation of highly effective cost breakdown analysis. Well-designed detailed cost breakdowns reflect the…