- Category: Country / Region, General, General Services & Supplies, Market Research, UAE
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Background:
The Should Cost Analysis presented here is for Intermediate Bulk Container (1000 Liters) with UN Code 31HA1. The specification of the Intermediate Bulk Container (IBC) that may be used may vary based on the type of goods to be transported. The other factors that may vary are manufacturing location and place where it is to be used; this template can be accordingly modified.
Objective:
Should Cost Analysis as a first step in the strategic sourcing process is very critical and helps in predicting the savings that can be achieved? This document can help with achieving the following objective:
1) In absence of other methods that can be adopted for negotiation, this analysis will help in negotiating with the incumbent without actually conducting an RFP; as otherwise, a formal RFP may disturb the delicate relationship with the incumbent
2) This analysis can help in convincing the stakeholders (both procurement as well as user department) to allow going ahead with the full strategic sourcing process
3) The insights gained with this analysis will help in the successful execution of the subsequent steps in the strategic sourcing process
Methodology Adopted:
We conducted primary and secondary research to calculate various cost components that are presented in our Should Cost Analysis. In most cases, we reached out to various vendors to collect prices for major raw materials and equipment. The high-level information is presented below:
| Cost Components | Primary & Secondary Data Source / Assumptions |
| Raw Material (HDPE / Steel) | HDPE Resin prices for blow mold and injection mold were taken from the plastic exchange |
| Capex (Interest) Cost | Interest cost evaluated based on the cost of funds from German bank lending rates (Trading Economics) |
| Depreciation Cost | The assumed service life of 15 years and the depreciation is quoted accordingly |
| Manpower Cost | Major leading suppliers from Europe have total employees in the range of 500-800 across 6-10 locations. |
| Facility Lease Cost | Based on the CBRE market report and Cushman & Wakefield rentals for Industrial property in the Hamburg area |
| Electricity Cost | Cost based on power rating from Mauser BM 2001 Datasheet and energy rates from Eurostat Data for Germany |
| Maintenance Cost | Based on MFGT 142 Polymer Processing Blow molding – California State University |
| SG & A | Collected from annual reports of Industry leaders – Scepter & Greif |
| Inbound Freight | Industry-standard – 5% of Raw Material Cost for Inbound, assuming all outbound deliveries on EXW/FOB terms |
| Margin % | Margin based on annual reports from Industry leaders – Mauser, Greif, Scepter & Sintex |
In case the specification of the IBC used at your location is different, please feel free to reach out to us and we will accordingly rework our model to serve your needs.
Next Steps:
As a next step to support your Strategic Sourcing project, we at EmpoweringCPO can also help you with the following:
1) Category Profile deck (Industry Snapshot / Porters Five Forces)
2) Identifying Leading Eligible Vendors / Participants
3) Data Collection & Cleaning
4) Baseline Preparation
5) RFP Package (Qualitative & Pricing Worksheet) preparation
6) Vendor Response Evaluation (Ranking on Qualitative / Pricing parameters)
7) Negotiation Strategy (Offline or Online Reverse Auction)
8) Vendor Shortlisting / Contract Preparation
EmpoweringCPO is a team of experienced sourcing and procurement professionals with hands on experience of having worked with many fortune 500 companies. The company was founded in 2011 and since then has executed multiple strategic sourcing projects and have achieved average savings of 10-12% so far. In addition to Strategic Sourcing their other offerings are Spend Analysis, Procurement Intelligence, Procurement Analytics, Best Cost Country Sourcing, Procurement Outsourcing, Built Operate Transfer, Supplier Diversity, Sustainable Procurement, Tail Spend Management, Item Master Optimization, Collective Buying, Compliance Tracking and Managed Procurement Services.
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These are quite recently the absolute most normal inquiries we get inquired.
At EmpoweringCPO, we’re not just a procurement service provider; we’re your strategic ally. With a suite of offerings—from strategic sourcing to procurement analytics—we prioritize your organization’s unique needs, ensuring every procurement decision is smart, strategic, and sustainable.
Your aspirations drive us. Each service, whether it’s spend analysis or supplier risk management, is molded to resonate with your specific goals. Our commitment is to provide bespoke solutions that align with your vision and challenges.
We share your commitment to a greener future. Our sustainable procurement practices ensure not just cost efficiency, but also ecological responsibility. Together, we’ll make choices that benefit your organization and our planet.
Knowledge is the compass for strategic procurement. Leveraging procurement analytics, intelligence, and custom dashboards, we bring clarity and foresight into your procurement processes. With us, you’re not just making decisions; you’re crafting a vision.
Diversity is strength. Our supplier diversity program is designed to widen your horizons, connecting you with a rich tapestry of suppliers from varied backgrounds. It’s about procuring with inclusivity and purpose.
Our name speaks for our mission – empowering Chief Procurement Officers and their teams. We stand out through our personalized solutions, industry insights, and a relentless pursuit to optimize your procurement, ensuring it adds value beyond savings.
From ambitious startups to global frontrunners, our clientele spans various industries. They all share a vision: procuring with purpose and efficiency. They choose us because we don’t just offer services; we craft bespoke procurement experiences.
Savings matter, but not at the expense of value. Our strategy is rooted in understanding the intricacies of your business. Through keen analysis and leveraging our vast industry know-how, we identify avenues for savings that elevate, not diminish, your procurement’s quality.
Your trust is sacred. We harness state-of-the-art security protocols to ensure that your data isn’t just safe; it’s treated with the reverence it deserves. With EmpoweringCPO, your data is in trusted hands.
Beginning with us is straightforward, but the impact is transformative. Reach out through our Contact page or at sales@empoweringcpo.com, and let’s pave a path to procurement excellence together.
Every saving forecasted should translate into reality. Our savings compliance tracking closely monitors and validates realized savings against projections, ensuring transparency, accountability, and confidence in your procurement strategies.
Absolutely. We believe in the unique potential of each organization. Share your aspirations, and we’ll craft a procurement narrative that’s exclusively yours, resonating with your goals and ethos.
We’re with you. Beyond strategies, we impart knowledge. Dive into our workshops and training modules designed to kindle the procurement genius within your team.
Data is a goldmine when understood. With our procurement analytics, we turn your raw data into actionable insights, highlighting opportunities for cost savings, efficiency improvements, and strategic decision-making.
In a global marketplace, knowing where to source is as crucial as what to source. Our best cost country sourcing identifies optimal sourcing locations based on quality, cost, and risk, ensuring your global operations remain competitive and resilient.
Uncertainties demand vigilance. Our supplier risk management actively monitors, evaluates, and strategizes against potential supplier risks. From geopolitical changes to supply chain disruptions, we help you stay a step ahead, ensuring continuity and stability.
An optimized item master is foundational for efficient inventory management. We refine and standardize your item data, leading to accurate tracking, reduced redundancies, and a smoother procurement lifecycle.
Procurement intelligence goes beyond traditional market research. It offers tailored insights specific to procurement activities—supplier landscapes, pricing models, and risk assessments. With EmpoweringCPO, you get actionable intelligence designed to optimize and elevate your procurement decisions.
Our custom dashboards and tools offer a holistic view of your procurement operations at a glance. By integrating real-time data, performance metrics, and analytical insights, they empower your team to make informed, agile decisions, driving efficiency and value.
Consider us an extension of your team. Our managed procurement service handles the intricacies of your procurement processes, from sourcing to payment. By leveraging our expertise, you gain the freedom to focus on core business functions while enjoying enhanced procurement efficiency.
Supplier diversity enriches your supply chain by integrating businesses from varied backgrounds, ensuring inclusivity. This not only promotes innovation and resilience but also positions your organization as a forward-thinking, socially-responsible entity.
Savings projected after strategic sourcing project should mirror savings achieved and reaslized. Our savings compliance tracking ensures this by validating and monitoring realized savings against set benchmarks and projected savings, infusing transparency and confidence into your cost-saving endeavors.
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You can reach us if you need a customized version of this report. We can also help you with category specific RFP template or with executing end to end Strategic Sourcing project.
Compliance management is very critical as otherwise the procurement organization may run into a scenario where there is a huge gap between realized savings and reported savings. Many procurement functions estimate large savings numbers when contracts are signed. They also invest significant time and effort in negotiating contracts for necessary goods and services, only to have a third or more of their purchasing dollars flow outside those deals. Some of the obvious fall-outs of non-compliance and maverick purchases are:
As compared to the current contract that was finalized after the sourcing process, the tool helps in tracking:
The objective of this tool is to ensure that the orders are placed only with the vendors that were shortlisted after the sourcing process and at the same price that was agreed upon and negotiated during and after the strategic sourcing process.
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