Purchasing teams are swamped. Purchasing leaders know their buyers should devote more time to strategic tasks that will lead to more productive supplier relationships, competitive materials costs, and reduced supply chain risks. But buyers are overwhelmed by the operations tasks of quoting and firefighting.
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It’s interesting that much of the quoting and firefighting is related to new business pursuit. Many buyers today spend more time answering “how much will it cost” questions and managing purchased material BOMs for program launches than they do sourcing business and managing supplier relationships.
There’s a simple and straightforward alternative for buyers when they have to answer the “how much will it cost”” question. Rather than RFQ’ing the supply base, they can use should-be cost models to estimate what a new part, design change, or material price change will cost. With the right data, purchased material costs can be estimated in minutes rather than days.
Some companies use complex clean sheet cost estimating software. Other companies have sophisticated cost models developed from detailed cost breakdowns from supplier quotes. What can you do if neither of these are in your team’s toolbox?
Three simple approaches are described below. These are a great starting point for a purchasing team to reduce their workload and response time to answer the “how much will it cost” question.
Want to Learn More?
Watch the On-Demand Webinar “What to Do if Your Purchasing Practices Are Not Providing Should be Costs (Part 1)”.