“Should-cost analysis is just a tool. Even if you have a clear breakdown, if you do not have a good relationship with the suppliers, it doesn’t make any sense for any result. Should-cost analysis is a starting point for the conversation.”
According to research conducted by CADDi, 28.1 percent of procurement professionals know what should-cost analysis is, but only 4.6 percent use it. Given the critical importance of efficient direct material sourcing to manufacturing companies, these numbers justify further investigation.
In this episode, Kelly Barner is joined by Yushiro Kato, Co-Founder and CEO of CADDi. He is an advocate for should-cost analysis based on his first hand experience leveraging it as an effective cost reduction strategy and also for its potential to serve as a catalyst for collaboration with key suppliers.
Yushiro and Kelly take this opportunity to discuss:
- Why there is an understanding gap around should-cost analysis
- How accurate should-cost analysis needs to be in order to be actionable
- What it looks like to conduct a collaborative should-cost analysis exercise with suppliers, and what results such an effort can deliver