If you set out to buy an outcome in procurement – be it lower unit cost on a TCO basis for a given SKU or service or an increase in supplier diversity spend – it’s always possible to define the costs that go into the result. There could be internal labor costs, third-party services/contractor costs, software costs, switching costs, fixed costs (e.g., capital equipment, tooling), supplier development costs, material costs – and many others. Historically, within in procurement, we’ve considered some of these costs elements mid-stream in the sourcing process where we model and forecast supplier cost structures to help in negotiations.
New Procurement Metrics: Cost Per Outcome in the Private Sector (Part 2) [Plus+]
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