Check out the graphs below to understand the importance of the whole cost structure of your purchase items without forgetting landed cost.
See below in pic 1 a cost structure of a simple sheet metal part (made of steel) costed in 3 different manufacturing bases.
Imagine that you source today the part from cost area 1 at a price of 11 euros. It is fundamental not to ignore the landed cost and focus only on best EXW cost.
As shown in pic 2, lowest manufacturing cost doesn’t always provide highest savings.
Pic 1
Landed cost breakdown
Pic 2
Planned spend and saving potential
