Procurement has always been a bottom-line motivated process, yet the tools to do proper cost evaluation and optimization remain lacking. Efforts to apply activity-based costing proved to be too time consuming, so averages and standards remain. This means that individual decisions may not be ideal; or specific selections optimize a part of the non-product cost at the expense of the whole.
Goals and Objectives
Provide procurement with the objective, timely and relevant tools they need to make informed and ‘total system’ non-product cost (indirect procurement) decisions.
Cloud, advanced analytics and blockchain are all enablers here.
Use Case Summary
Automated non-product cost optimization is an automated tool that monitors cost reductions of ECNs, innovation tradeoffs (Make vs. Buy) as well as all costs that make up indirect. Would also address network/regional differences. The tool would enable true optimization on all inputs and offer a forecast of future spending.