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A cost breakdown analysis is a four-step process comprising data collection, systematic expansion of the cost elements, determination of the cost drivers and the development
A cost breakdown analysis is a four-step process comprising data collection, systematic expansion of the cost elements, determination of the cost drivers and the development of insights. Why is this analysis critical to supplier development? o The conclusion is found in the facts and information considered and analyzed by the buyer. o The knowledge gathered during the process enables companies to identify a supplier's strengths and weaknesses. o Where an item has an established market price, verification of an equal or lower price also establishes the price to be fair and reasonable. o The reasonableness of the cost can be checked against other purchases
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