Costing Frameworks Benchmark Profitable Sourcing

Developing a costing framework that is transparent and works across the global sourcing organisation to capture total cost of ownership is key to enabling supplier price benchmarking, mitigating margin risk across the supply chain and delivering profitable sourcing.

Costing breakdowns maximise margin through key levers such as material specification,cost and consumption, labor cost and ancillaries.  A well defined costing framework will allow key cost contributors to be benchmarked at a style, category / brand  and purchasing regional level.

Transparent costing breakdown enables materials re-engineering and negotaition with suppliers at multiple levels within the development process, ensuring cost optimization through a fair and transparent process, profit attainment and a brand fit for market product.

Solid costing frameworks build supplier competitiveness and mitigate risk by reporting purchase price variance to ensure margin objectives have been achieved or surpassed.  Facilitating drill down within the costing enviroment to systematic benchmark pricing performance, assess non compliance and analyise longer term price movement risk at a material or labour level.

The costing framework is a structure of data that must be cross relational to anylasis and benchmark cost drivers from the highest level to the lowest level.  Governance of the structure and data is critical, ensuring standards and processes are aligned and consistently applied throughout the global costing organization and supply base.

A solid costing framework facilitates delivery of total cost of ownership objectives, margin improvement and benchmarking price trends enabling tactical and strategic decision making.

Costing frameworks deliver benchmarks to scorecarding that deliver sourcing strategy improvement and the supplier matrix.

Read more about Supplier Matrix; http://wp.me/p7z4o2-GV

Read more about Score Carding; http://wp.me/p7z4o2-H8

Read more about strategic sourcing and TCO influencers; http://wp.me/p7z4o2-Gr

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