Cost Insights

Cost management is one of the key pillars in ensuring successful category strategies. Evaluating the suppliers' costs is important for budgeting as well as for negotiation, but looking the cost management beyond the suppliers' costs is crucial to attain a best-in-class sourcing organization.

SMEs Network

We have a established network with product engineers, factory managers, industry SMEs and suppliers to enable our teams to develop accurate cost models. Our team are particularly trained to convert all the technical aspects to easy to understand cost analysis for procurement professionals.

Proprietary Database

We take pride in our proprietary database of hundreds of cost models encompassing materials, components and services. This database is the key to our accurate and precise cost insights. It also enables us to validate the data points compiled from our network of SMEs.

Real-time Changes

Our cost insights depicts the real-world market dynamics to ensure that the clients are equipped with accurate data points. All of our cost models are reviewed quarterly to accommodate industry dynamics in real-time. Whether you manage a product or service based spend category, our insights will assist you in your negotiations.

Transparent Methodology

Our methodologies for cost calculations are transparent, in-fact, it is our one of the key traits to be transparent with our clients. All the facts, estimations and assumptions are shared with the clients which helps in increased confidence in the data points and insights offered by our team.

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Key Services

Cost Tracker

Key services under this offerings are

Category cost analysis
Cost trend and outlook
Supplier's cost monitoring

Cost Model

In-depth assessment of cost elements.

Should-cost model
Total Cost of Ownership (TCO) analysis
Value chain cost analysis

Low Cost Country Sourcing

Key activities under this offering.

Cost competitiveness analysis
Regional cost benchmarking
Countries' cost outlook

Actionable

Quick TAT

Relevant

Business Focus

Guaranteed Outcome

Low Cost Sourcing for Pharma Glass Containers

We at Argha Insights were approached by a Pharmaceutical client with following objectives.

Identify factors driving the vendors' cost for pharma glass containers
Shortlist the vendors with absolute and relative cost advantages

The objective of the client was to engage with the pharma glass container vendors with lower manufacturing costs. To attain this objective, our team conducted a detailed analysis as follows.

Key Factors Driving Vendor's Costs

Low-cost Country Advantage
Level of Vertical Integration
Economies of Scale

Once these three key factors were identified, we evaluated approximately 20 vendors against these three factors.

Low-cost Country Advantage: We categorized the geography into six regions - North America, South America, Europe, Asia-pacific, Middle-east and Africa and evaluated these regions for their cost advantages for materials (glass), labor, utilities and logistics. It was found that Asia-pacific and Africa were the regions with lowest overall manufacturing costs. We shortlisted these two regions and started assessing the vendors for the total % share of their manufacturing capacity located in these two regions. Based on this analysis, we shortlisted 4 vendors with a significant share of their manufacturing capacities located in Asia-Pacific and Africa.

Level of Vertical Integration: This was the second step where we evaluated all the 20 vendors to understand the level of vertical integration they have. We found that there were only few vendors with float glass manufacturing and glass tubing capacities. We added one vendor into our shortlist.

Economies of Scale: Basis industry analysis, we found that economies of scale plays a crucial role in pharma glass containers manufacturing and thus we evaluated the shortlisted 5 vendors for their total capacities and plant utilization rates. Based on this analysis, we narrowed down our shortlist to 3 vendors with cost advantages.

The client were very happy with the findings and proceeded for RFP with the 3 shortlisted vendors.

"The holistic solution provided by Argha Insights to assess the cost of an API through their detailed cost modelling has been well received. We have been able to assess different cost elements of our suppliers along with the potential cost impact because of technology differences and regional dynamics. This helped us to initiate discussions with our suppliers to bring the cost down.

Pharmaceutical Client

Talk to our experts

We maintain a balance between technical and commercial aspects in our cost insights to make it effective and actionable. We keep the methodologies transparent and accessible for the clients and encourage close collaboration. Please feel free to reach out to us for more details.

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