LONDON--(BUSINESS WIRE)--Small and medium manufacturing business units have started adopting cost modeling to cut down on product and service costs. This process requires analysis of the production costs, labor costs, material costs and profit margins. This helps organizations to understand supplier pricing strategy and determine the actual price to be incurred for buying a component or part.
Procurement market intelligence firm SpendEdge recently assessed the manufacturing industry and examined the advantages and challenges of cost modeling in its blog titled ‘Cost Modeling for Small and Medium Manufacturing Businesses’.
SpendEdge observes that, “The lack of technological infrastructure as well as expertise has made small organizations incapable of designing a complex strategy such as cost modelling. And to gain competitive advantage in the market, the suppliers need to construct a well-defined supply chain management along with product innovation.”
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However, “Small and medium manufacturing businesses (SMBs) can improve its trend forecasting ability by integrating predictive analytics. The various activities involved in a manufacturing firm includes procuring raw materials, processing them and then distributing the final product. The cost involved in each of these activities are inconsistent and they keep varying with time,” added SpendEdge procurement analysts.
SMBs produce intermediate products which are in-turn purchased by original equipment manufacturers (OEMs) such as an automotive company or a transportation company and turned into finished goods. Identification of the factors impacting the total cost is necessary for SMBs, for maintaining profit margin. This study will help organizations to fetch the best price, thereby improving cost effectiveness of the processes.
Read more: https://www.spendedge.com/blogs/cost-modeling-small-medium-manufacturing-businesses
SpendEdge Manufacturing Procurement Solutions
SpendEdge has over 13 years of experience helping organizations achieve procurement excellence in various industries including the manufacturing industry. Their expertise helps businesses identify opportunities to reduce supplier management costs and make better purchasing decisions.
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