Are you Living in a Flat Data World?
Most buyers who ask and receive detailed cost breakdowns use them to support the sourcing decision that is facing them and then instead of creating a data pool they put the breakdowns to the side. They are living in a flat data world. What is the alternative?
Leading companies do not live with flat data. Instead they employ a systematic approach to identify the right data to collect on commodity specific cost breakdowns. What is the right data? It’s the data that enables not only the analysis of quotes, but the building of AI should-be cost models capable of showing the competitiveness of the quotes versus industry wide cost models and actual supplier costs.
They pool the data where it is cleansed to standardize and to remove outliers and noise. It is analyzed to identify dependencies and co-dependencies. And finally, it is kept fresh with an ongoing influx of new, quality data.
This clean data pool can then be used to create fast, reliable should-be cost models that can be used to evaluate supplier quotes. Instead of comparing a few supplier quotes against each other their buyers are comparing quotes against reliable should-be cost models.
The next step would be to compare supplier quotes against cost models created using an industry wide data pool or against actual costs from supplier shop floors. But is this possible?