This book provides the business professional a concise guide to the creation and effective use of both internal and external cost models. Development of internal cost models is discussed with illustrations showing how they can be deployed to assist in new product development, pricing decisions, make-or-buy decisions and the identification of opportunities for internal process improvement projects.
The creation and use of external cost models are discussed providing insight into how their use can drive collaborative improvement efforts among supply chain partners, better prepare for price negotiations, and keep negotiations focused on facts rather than emotions—all while allowing for future discussions with preferred suppliers to focus on more strategic and operational improvement initiatives, and less on pricing. A number of detailed cost model examples are provided to educate on both how cost models are constructed, and to demonstrate how they have been effectively deployed.