- September 5, 2018
Alleviating Retail Supply Chain Risk Through “What if & Should” Costing Analysis
Writing by Yiping Hao, September 5th, 2018
The Balancing Act of Sourcing New Suppliers – Comparing Cost and Quality
Today’s retailers understand that the consumer landscape is no longer as straightforward as it once was, instead, it is full of uncertainty driven by long-tail factors of constantly and quickly changing consumer trends. Retailers work tirelessly on coming up with unique private label product ideas to meet these fast moving consumer trends, followed by the daunting tasks of sourcing, vetting new suppliers and issuing request for quotes (RFQ). Obtaining quotes from multiple suppliers is another daunting task when comparing costs, bill of materials (BOM), factory inspection/compliance documentation, order quantities and factory capacity for hundreds of products. The BOM helps buying and sourcing teams better understand the cost elements of a product but, selecting the best possible supplier, with the highest quality at the lowest cost for hundreds of products can be near impossible, ultimately leading to many mistakes when analyzing potential suppliers and product costs.
Understanding “What if and Should” Costing Analysis
“What if and Should” Costing analysis tools help retail buying and sourcing teams better manage risk factors and lead to faster final decisions on whether to pursue new private label products based on comparing quotes, quantities and the pros/cons of working with a particular supplier. Retailers who consistently use “What-if and Should” costing tools, gain overwhelming advantages over their competitors, who often use antiquated costing analysis methods such as spreadsheets or outdated home grown solutions. The benefits of using the latest tools in costing analysis are:
- The ability to harness the power of sophisticated algorithms to compute all related costs and generate a list of supplier costs in ascending/descending order.
- Costing tools are able to accurately assign a monetary value to the benefits (capacity, compliance grade, location etc.) of working with a particular supplier.
- The latest tools also take the costs of physical resources needed and compute them into the final “should” output.
- Calculating both total costs and total benefits, in comparison with all requested quotes to make the final strategic decision – “which supplier should I choose”.
- Costing analysis software predicts price fluctuations and environmental situations so retailers will have the ability to avoid risks and make accurate strategic decision.
- Retailers are able to quickly access updated information on geopolitical and economic changes.
- Retailers could not only boost profit margin, but also have a list of the best possible back-up suppliers, in case a need arises to find a quick replacement.
The Latest in Retail Sourcing, Supplier Selection Costing Tools
CBX Software solves the complicated process of product development, retail sourcing, comparing multiple supplier RFQ’s and benefits while ultimately leading to supplier selection. The end-to-end innovative CBX Cloud consist of Product Lifecycle Management (Retail PLM), Sourcing, What if Costing, and Supply Chain Management solutions. CBX has been consistently investing in technology & resources to enhance the efficiency of their solutions at all retail operational levels. As a result, in the last decade, their efforts have resulted in enhancement of the many features of The CBX Cloud “What if Costing” solution. The CBX “What if Costing” solution” calculates new private label product costs and provides more visibility into risk and uncertainty, while boosting margin and accelerating the expansion of the retail supplier base. To learn more about today’s extended quality sourcing solutions, product lifecycle management (retail PLM) and supply chain management (SCM) tools or for more information about CBX Software please Contact Us and if you like what you read, please follow CBX on LinkedIn.