What should it cost?
July 8, 2024 - How much should you pay for a product or component? The supplier's quote tells us the price, which we hope is tied closely to the total cost of developing that item, manufacturing it, and delivering it to us. But is it? The short answer is: it depends.
If every decision and strategy in the development, sourcing, manufacturing and supply chain were optimal, theoretical and quoted costs would be the same. In reality, however, as soon as development begins, the actual cost starts to diverge from the theoretical minimum.
Almost everyone contributes to raising the quoted costs above the theoretical minimum.
Companies should look at the various contributors to the gap between what a product should cost and what suppliers quote and start use their understanding of those contributors during initial supplier negotiations; and how they can go on using that knowledge to drive further savings over time.
When we ask our new clients how they have dealt with cost pressures, they often refer to supplier partnerships. But partnerships have often focused on securing supply rather than capturing savings. By partnering with EPG, you gain access to the extensive capacity, capability and scalability of our business, meaning you can benefit from our expertise in procurement and supply chain who understand cost contributors and are strong negotiators, and relationship builders.
Almost everyone contributes to raising the quoted costs above the theoretical minimum.
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Procurement Outsourcing
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