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Purchasing – Should Cost Modeling

I had a nice conversation with Bryan Dickinson and he has some interesting view points about Should Cost modeling, cost estimating and data mining related to Wire Harnesses.

Bryan is an excellent source of information as he has a Purchasing and cost savings background and recently shifted over to Cost Estimating and Should cost modeling.

He found that Cost estimating pulled him into the new business acquisition stage working directly with Senior Managers in sales, operations, purchasing, and quality.

This was very high visibility!

In purchasing roles he never got involved with as many cross-functional areas of the company.

He found that companies must have accurate Standard Costing Rules and policies in order to guarantee the most up to date pricing – material costs have a huge impact on total selling price.

Bryan found that in some cases, having too high of a standard cost of Purchased components was having a negative impact on EBIT on the total selling price and having real time standard costs helps improve profitability.

He found his company was buying the same connector from the same supplier from 2 different regions of the world and the pricing was 50% different!  

This is a great opportunity for Purchasing to step in and normalize pricing globally and re-negotiate pricing retro-actively.

Data mining and detailed BOM analysis of Purchased components could be mining for GOLD!

#SCNrecruiting  #purchasing  #shouldcostmodel  #datamining

Fred Heegan

Author Info

Fred Heegan

Fred Heegan joined SCN as a Search Consultant in 2015. Fred is also the Practice Leader of the SCN Purchasing and Supply Chain Group. Fred’s primary focus is consulting with clients and placing candidates within the Purchasing and Supply Chain spa...

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