Cost benchmarking is the measurement, refinement and analysis of ones

Cost of Goods Sold Cost of goods sold (COGS) is the carrying value of goods sold during a particular period. Costs are associated with particular goods using one of the several formulas, including specific identification, first-in first-out (FIFO), or average cost. ...

(COGS) when compared to market peers. Cost benchmarking identifies

competitiveness In economics, competition is a scenario where different economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the same (legal) firm ...

of pricing in industry terms, highlighting best in class pricing and subsequently showing areas for competitive pricing improvement. Cost benchmarking is a valuable tool for Supply Chain Managers when creating a

negotiation strategy Negotiation is a dialogue between two or more people or parties to reach the desired outcome regarding one or more issues of conflict. It is an interaction between entities who aspire to agree on matters of mutual interest. The agreement c ...

to drive down overall COGS. The objectives of

benchmarking Benchmarking is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies. Dimensions typically measured are quality, time and cost. Benchmarking is used to measure performanc ...

are to determine what and where improvements are called for, to analyze how other organizations achieve their high performance levels, and to use this information to improve performance. Cost benchmarking is a growing factor in Cost Analysis, where there is a systematic breakdown of existing cost data to allow for closer examination. However,

Procurement Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or s ...

Professionals often face immense difficulty in identifying their market peers' pricing due to the

confidentiality Confidentiality involves a set of rules or a promise usually executed through confidentiality agreements that limits the access or places restrictions on certain types of information. Legal confidentiality By law, lawyers are often required ...

tied to competitive advantage.

References

{{Reflist Pricing