Struggling to negotiate better pricing due to poor visibility into cost drivers and production processes? With should-cost analysis, you get actionable insights and evidence to negotiate effectively, bringing final costs closer to your target price.
GEP combines unmatched industry expertise with advanced technology to deliver highly insightful should-cost analysis services. Our cost engineers help leading enterprises pinpoint changes to procurement cost structures and product designs, unlocking significant savings through optimized pricing strategies.
GEP’s Four-Step Approach to Should-Cost Analysis
Should cost analysis, also commonly known as cost breakdown analysis, is the process of building and understanding the elements that make up the cost of a product or service.
Data Collection
Our cost cleansheet consultants start with identifying product or service data for analysis by obtaining information from sources such as Enterprise Resource Platform (ERP), Bill of Materials (BOM), spend/purchasing data and invoices.
Systematic Expansion
The next step in the process is to expand upon all components of the following six key cost drivers: materials, labor, conversion costs, overheads, logistics and profit.
Determining Cost Drivers
We now scour various internal and external sources including MRP/ERP/PLM systems, item masters, BOMs, primary and secondary research, open data sources, third-party databases and professional associations to determine the underlying cost drivers.
Developing Cost Insights
By analyzing the information obtained from the mentioned sources using our own proprietary tools and models, we develop crucial cost insights that help improve business value for our clients.
Closing the “Should-Cost” to “Will-Cost” Gap
GEP’s should-cost analysts and consultants help manufacturing teams reverse engineer product costs to estimate component pricing accurately. Knowing what raw materials should cost versus what they do cost strengthens your negotiation position and helps determine final pricing. Boost your price negotiation strategy and market competitiveness — contact GEP today.
