How to Optimize Pricing with Linear Models

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?…

Expectations are that hard hit manufacturing sectors will see improving revenues in 2021, although how quickly improvements will come is greatly dependent on the world’s ability to rebound from the ongoing covid surge.  With little control over revenue growth amid a global pandemic, company leaders are looking to their purchasing teams to aggressively drive cost…

Our blog “If Value Matters, Why Am I Measured on Cost?” always gets a lot of interaction from purchasing managers who believe that performance metrics that focus on PO to PO price reductions do not show the value that purchasing is providing their companies. Here is a thought.  Instead of waiting on the CEO’s and…

Recently, I was quoted in an Automotive News article on GM’s move to open book costing, which they call One Cost. The article prompted a number of conversations with CEOs and sales executives not only about GM and their move to open book costing but also about the use of cost models and cost breakdowns…

For the past three years, buyers have been inundated with negotiating and settling supplier requests for price increases. The combined breadth (cost areas impacted) and percentage increases are higher than I can remember in my almost 40 years in purchasing. You must go back to the 1970’s to see inflationary pressures that buyers have been…

A 2013 IBM study found that companies with high performing purchasing organizations achieve 22% higher margins.  This figure is especially significant for manufacturer’s whose material as a percentage of sales most often falls between 50 and 70%. But what sets the high performing purchasing organizations apart and enables the margin improvement?