In a highly competitive retail environment, brand managers strive for more frequent change. This is to satisfy the need for year-on-year cost savings and develop new innovative products, such that they can leverage a competitive advantage. Managing this change commercially is becoming increasingly more complex, not only do procurement professionals need to validate the cost change, they also need to balance this with more extreme fluctuations in the cost drivers which affect price.
This complexity often results in the frequency of tender events increasing, which can be very time consuming for global brands and stifle investment/innovation at the supplier due to the uncertainty of volume retention. The net result, margins are squeezed at the supplier, leading to unsustainable prices in the long term.
The team at Benchmark Consulting use Should-Cost-Modelling in order to protect procurement professionals prices during the inevitable changes to their portfolio, in conjunction with highlighting where estimated margin levels have reached unsustainable levels. As a result, tender events are not required as frequently and suppliers have the stability required to invest in the latest technology, which will ultimately drive cost down further.
Should-Cost-Modelling is a process of profiling your suppliers based on their cost and operational performance, taking in to consideration their assets and geographical location. The output of which is a full SKU level cost breakdown, highlighting areas where mutually beneficial cost savings can be achieved between yourself and your supplier.
Should-Cost-Modelling allows the commercial relationship to move from being tactical and price focused, to strategic and more mutually beneficial.
The team at Benchmark Consulting will guide you through the entire process, either by completing the analysis on your behalf, or training a 'procurement centre of excellence' team, to manage this via our web based platform.
Our web based cost model can be used to analyse large data sets in one operation, alternatively an easy to use 'estimating page' is available for simple cost modelling of a single SKU. Single code level modelling has proven particularly valuable for development technologists, they are able access a guide price instantaneously for a new specification or product, rather than adding to the multitude of requests the procurement team need to manage.
Please contact the team at Benchmark Consulting for an online demonstration.