Component Price Benchmark enables customers to understand how competitively they are purchasing components; benchmarked against other real customers.
Often times customers need to know if their pricing is competitive; immediately. A negotiation is around the corner and the customer is not sure if their price is fair or if there is additional room to negotiate. Using Component Price Benchmark enables customers to understand their competitiveness level overall by commodity, identify price outliers, and determine price targets appropriate for the customer.
How Does it Work?
Step 1) Collect your bucket of unlimited parts that you need urgently competitively price benchmarked.
Step 2) Anonymously upload your part numbers, annual volume, and price paid into a single upload file. The word "single" means (1) Component Price Benchmark report will be created from (1) Customer Upload (the customer can merge as many parts lists as they like into the single Customer Upload file).
Step 3) Wait about a week while the Component Price Benchmark analysis (powered by Lytica) matches your parts in the Component Price Benchmark database and determines your competitiveness level (Overall and in each commodity). Competitiveness is a statistically derived parameter obtained by comparing your prices at your volumes to the actual prices being paid by others buying the same components as you. Higher scores are better. A 70%-tile competitiveness ranking means 30% of companies are getting better pricing than you.
Savings opportunities arise from Component Price Benchmark identifying components that are priced outside your Component Price Benchmark analyzed competitiveness ranking. Target prices are calculated for the worst priced components and set to customer's commodity competitiveness level. Target prices for your worst priced components are presented in an excel appendix to the report. Using a Target Price appropriate for that Client for that Commodity greatly increases the chance of Cost Reduction success.
- Component Price Benchmark does NOT provide a target price for every component in a customers parts list; only for those matched in the Component Price Benchmark database.
- "Worst Priced Components" are NOT the "lowest priced components" in a customers parts list. Example: If a customer is paying $25 for a Memory part number and Component Price Benchmark has peer customer pricing that is $14, then that part would probably be flagged as a worse priced component and a target price close to $14 determined based on the customers competitiveness level.
Step 4) Receive your confidential benchmark analysis (reported in your terminology/taxonomy) so that you can quickly focus on the "outliers" that offer immediate best chance for cost reduction success. Outliers typically equate to 1/5th to 1/4th of matched parts.
Competitiveness Level by Commodity
Component Price Outliers and Target Prices
BOM Benchmark Demographics
Component Price Benchmark is one of a group of IHS benchmarking tools that can provide valuable insight into component selection, status, and pricing to help find future cost optimization.