Should-cost Model
Enabling Global Procurement Teams with Technology-driven Should-Cost Models: Unlocking Insights into Production Costs and Margins across Raw Materials, Intermediates, End-Products and Services.
Aranca delivers data-driven should-cost models to uncover cost-saving opportunities towards sourcing raw materials, intermediates, end-products, components, processes, technologies and services. Using AI-powered, technology-driven tools, we benchmark 100+ cost elements across each should-cost model, including material, labor, overheads, logistics, packaging, equipment, and infrastructure.
Our expertise spans SEA, LATAM, Eastern Europe, along with emerging and western markets, ensuring accurate cost benchmarking and strategic procurement insights. Our tailored solutions provide strategic insights for negotiation, budget optimization, and profitability. Delivered through traditional reports or automated dashboards, we customize updates (quarterly, semi-annual, and annual) to meet client needs, ensuring maximum value.
Our customized should-cost models help global sourcing leaders to drive effective negotiations, optimize budgets, and maximize profitability.
We integrate a deep understanding of the target category (parts/components/products/assemblies/materials), its manufacturing process, and rigorous analysis of CAPEX and OPEX factors to develop dynamic-cost models that support strategic decision-making.
Understanding the Target Category and Production Processes
Analyzing Factors Impacting the Manufacturing Cost
Development of a Detailed Dynamic-Cost Model
Delivering Forecasting Driven Models along with Regular Monitoring and Updates
Our dynamic should-cost modeling framework delivers precise production cost insights by analyzing input variables, process parameters, fixed and variable costs, and margins to optimize procurement strategies and drive cost transparency.
Our should-cost model, integrated with cost intelligence and forecasting solutions, has empowered procurement organizations to achieve key objectives:
Savings Potential through Cost Transparency - 10-50%
Accuracy in Spend Forecasting: 90-95%
Visibility on Cost Elements: 100%
Aranca developed a dynamic-cost model for aluminum aerosol cans, covering raw material, equipment, labor, and overhead costs across 10+ countries. The model provided the client with detailed cost insights, enabling 5% cost reduction opportunities and more informed pricing strategies.
Aranca developed a plug-n-play cost model for manufacturing Piroctone Olamine across multiple setups, capacities, and regions (China and India). The model considered key variables, price tracking, and feedstock strategies for raw materials, providing the client with 15% cost optimization opportunities and enhanced procurement planning.
Aranca developed a should-cost model for frame fabrication across the US, Mexico, China, Germany, and Brazil, considering variables such as raw materials, conversion costs, labor, and production site factors. The model provided the client with a clear understanding of cost drivers, enabling 18% cost savings and efficient supplier negotiations.
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Client Experiences
Do you offer cost models for emerging markets?
Can you include variations in the cost model by country and within regions of those countries?
Do you provide market intelligence along with the cost model, including supply-demand dynamics and price movement rationale?
Can you provide a detailed and region-specific CAPEX analysis?
What depth do you provide in an OPEX cost model?
Can you design a supplier or technology-specific should-cost model?
What parameters do you consider for conversion cost analysis?
Can you customize existing should-cost models and provide updates?
What is your client-engagement process during project execution?
What are the steps to get a proposal for a should-cost model study?
Recent Insights