Debbie Wilson Digs Into Should Cost Analysis

To me, Debbie Wilson has always been a bit hard to figure out. Her newsletter has always shown an eye to both industry and quantitative analysis, but she clearly also brings an informed practitioner perspective to her coverage of the market. In some ways, her written analysis is the best of both worlds -- fun to read, but also informative (even though she's not exactly writing a blog today as she calls it, I would say that her style has earned her the right as the first "blogger" in the sector, even before the term was created). Why? When Debbie digs into a subject like "should cost" modeling, she goes far deeper than most traditional journalists would, and the resulting effort often becomes a must-read for practitioners, vendors, and consultants alike. And I'm not the only one that appreciates her gossipy, first person tone.

Consider the case she makes for undertaking a should-cost program on direct material spend: "When price negotiations are conducted with accurate cost models in hand, I firmly believe that they yield superior results. That's because fact-based discussions support joint problem-solving and relationship building with key suppliers far better than just using a heavier hammer or an alternative supplier's hard luck (and consequent willingness to do business at a lower margin) to drive savings. Furthermore, cost modeling provides the basis for continuous cost reduction and waste elimination. It puts RFPs and sourcing projects back in their appropriate place, which is assessing potential suppliers in the marketplace only the winner has not already been anointed." I won't give away the other details of her latest report, but Debbie makes a very strong case for why companies should take a new type of approach to analyzing direct materials spend, often from a top-down basis.

Jason Busch

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