Cost Driver Visibility
Understanding what drives cost in your supplier categories
- 1Not happening — This is not happening or rarely happens in our organisation
- 2Occasional — This happens occasionally but inconsistently
- 3Regular — This happens regularly but is not fully embedded or systematic
- 4Embedded — This happens consistently and is embedded in how we work
- 5Strength — A genuine strength. We do this exceptionally well and it drives measurable results
Our procurement team has a documented understanding of the primary cost drivers for each of our major supplier categories, not just the price we pay but the underlying factors that determine what our suppliers need to charge.
When a supplier presents a price increase, we are able to interrogate the specific cost drivers behind that increase rather than simply accepting or rejecting it based on market benchmarks or historical spend.
We use should-cost modelling or equivalent analytical tools to establish an independent view of what our key purchases should cost before entering supplier negotiations.
Our team's capability in should-cost modelling was developed through formal training and structured methodology, rather than being primarily self-taught, experience-based, or inconsistent across team members.
Our team understands the difference between factor-based, parametric, and bottom-up cost modelling approaches and applies the appropriate method based on the category and commercial context.
We actively update our cost driver knowledge as market conditions, input costs, and supplier operational models change, rather than relying on analysis completed during a previous sourcing cycle.