The Scope of Costs
As the procurement manager, you have to remain aware of how widely costs can vary among manufacturers. Some have high costs, and others are low. Quality is not always tied to cost, so you must do your research to find the right supplier.
- Some of the important factors that influence cost include:
- Management and leadership capacity
- Amount and quality of subcontracting (and whether the supplier can meet the targets you agree on)
- Plant capacity, sustainability, and efficiency
Because these factors change continually, you can have one supplier that requires a high cost on one item but can produce others at a low cost. These factors make it essential that you obtain competing bids, and when appropriate, that you leverage competition to keep your supplies at the lowest cost possible, while still getting the desired quality and meeting your timeframes.