Should-Cost Modeling

Indorama Ventures uses should-cost modeling in procurement to identify savings in direct and indirect purchases.

Business impact

• Cost savings — Indorama Ventures uses should-cost modeling, cost breakdowns, and what-if scenario modeling to identify cost savings in both indirect and direct purchases.

Data requirements

• Spend data (tabular) — Spend analytics and cost breakdowns depend on procurement data.
• Supplier data (tabular) — Supplier management and category analysis rely on supplier-related information.
• Procurement and contract data (tabular) — The process spans sourcing and contract management data in procurement.

AI methods and techniques

• Should-cost modeling — Category managers use it to estimate what a purchase should cost.
• Cost breakdown analysis — It is used to break down cost components for purchases.
• What-if scenario modeling — It is used to test alternative procurement scenarios before decisions are made.

Industries

Real-world evidence

1 documented case study on record.

Companies using this: Indorama Ventures Public Company Limited.