Understanding Supplier Price-Cost Management in Sourcing

from scdigest.com

Supply Chain Digest: What is the concept of Supplier Price-Cost Management all about?

Well, there are three things in that title. First “suppliers” – companies responsible for keeping buyers in the supply of products when needed at the right cost. Second “Price-Cost” – the two terms go together. There are several aspects of price, of course, but the key concept has to do with looking holistically at the buyer’s side of costs, not just the supplier’s price. It’s obviously not only purchase and delivery price that matters, but your internal costs for acquiring, managing and using that product or service.

Finally, there’s “management”: that means really understanding these price-cost trade-offs, and dedicating the resources to do so effectively. It’s not just sending your buyers out to get the best price, it’s also giving them the training and support they need to go out and get a better understanding of cost.

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