What would be the buyer’s initial objective from the cost modeling activity?

The executive board of a manufacturing company is requesting support from the procurement team because the company needs to improve its levels of profitability. After segmenting the overall spend by value and risk of supply, the senior buyer for the company is planning to undertake a cost modeling activity. This will be undertaken with a cross-organizational team of internal stakeholders and key strategic suppliers.

What would be the buyer’s initial objective from the cost modeling activity?
A . To understand the supplier’s competitive threats
B . To understand the supplier’s financial status
C . To understand the supplier’s pricing strategy
D . To understand the supplier’s investment plans

View Answer

Answer: C

Explanation:

Cost modeling helps in understanding supplier pricing strategies, identifying cost drivers, and opportunities for negotiation or cost reduction, which supports profitability improvements.