eng
About   |   Newsletter
Demand & Supply Chain Management Evolution


Supply Chain Glossary

Glossary  >  S  >  Should-Cost Analysis  


 

Should-Cost Analysis


Source: Procurement Glossary
Author: Paul Rogers
Institute: CIPS - UK

Courtesy of


 

The development of an internal cost model to allow for comparison with externally provided offers. Cost estimators may use appropriate insight into the processes around design, procurement, manufacture, or assembly and installation to allow the client to develop a realistic estimate of what the project ‘should’ cost.  ‘Should-cost’ estimates are useful when dealing with markets with high levels of transparency regarding processes, rates and timescales.  For example, a team involved in profit, price and cost analysis might commission a ‘should-cost’ estimate on a piece of capital equipment by ‘reverse engineering’ the supplier’s solution into a bill of materials, and then pricing each component. The estimate will be wrong, but it will give the buyer an ‘order of magnitude’ of what the actual manufacturing cost may be.  This can be valuable in negotiations where the supplier’s pricing strategy is value based rather than cost based.  The supplier is pricing on the basis of the value their solution will create for the buyer, rather than the cost of manufacture, and the ‘should-cost’ estimate allows the buyer to use logical persuasion to change the pricing basis.  See also Logic, Pricing Strategy and Profit, Price and Cost Analysis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




Job Opportunities
 
Procurement Manager
     
     Wood Dale  -  PERM  -  Michael Page

Strategic Sourcing Manager, Packaging and Chemicals
     
     Boston  -  PERM  -  Michael Page

Master Scheduler
     
     Torrance  -  PERM  -  Michael Page

Senior Buyer
     
     Chicago Heights  -  PERM  -  Michael Page

Procurement Manager
     
     New York  -  PERM  -  Michael Page

Warehouse Operations Manager
     
     Redondo Beach  -  PERM  -  Michael Page

Senior Manager- Indirect Procurement (P2P)
     
     New York  -  PERM  -  Michael Page

IT Strategic Sourcing Analyst
     
     Boston  -  PERM  -  Michael Page

IT Procurement Category Manager
     
     Oak Brook  -  PERM  -  Michael Page

Senior Buyer
     
     Crete  -  PERM  -  Michael Page

Buyer
     
     Crete  -  PERM  -  Michael Page

Senior Category Manager - Facility Services
     
     Chicago  -  PERM  -  Michael Page

Senior Procurement Manager - Facility Services
     
     Chicago  -  PERM  -  Michael Page

Material Handler I - B Shift
     
     Saint Charles, Missouri  -  PERM  -  Nike Inc.

Production Supervisor - Air MI
     
     Missouri  -  PERM  -  Nike Inc.



 
           Circular Economy     Industry 4.0     Blockchain 

     Internet of Things     Omni Channel 


Join us on


News & Trends
 

Last update 4 Jan 2019
PMI slips to 15-month low in December
   Source: Markit US Manufacturing PMI   -  IHS Markit
United States 


Retail

The retail sector is always on the move. Whether this involves shopping centres, shops in inner city locations or at airports – trends change very quickly and the goods change just as rapidly too. To keep up with these developments, highly complex and process driven supply chains are needed. With our...


Industry 4.0: Obstacles and opportunities

Digital manufacturing. Industry 4.0. You’re probably familiar with these terms, and maybe you’ve even successfully piloted these concepts. But how do you roll out such an initiative more broadly, beyond a ...


Education
 

Local & Regional Agenda
 


Resources
 
FLORIM CERAMICHE SPA: On the road to Industry 4.0: advanced planning & finite capacity scheduling

Florim Ceramiche SpA has been worldly recognised as a leader in ceramics industry for more than 50 years, thanks to its committment to research, innovation and social responsibility. Florim business style can be summa...

AXIT Study: Cloud Usage supports Digitalization in Logistics

Supply chain management is the biggest driver of this development Cloud computing is being used in logistics more and more. This is the result of a comparative study which was conducted by the Frankenthal-based I...


International Agenda