Supplier Cost Analysis Definition

A supplier cost analysis is a process used by businesses to evaluate the costs associated with their suppliers. The goal of this analysis is to understand where cost savings can be achieved so that the company can negotiate better terms with their suppliers.

There are several methods that can be used to conduct a supplier cost analysis. One common method is to analyze the supplier’s invoices. This will give the company an understanding of the direct costs associated with the supplier. Other methods include conducting interviews with the supplier’s employees, analyzing the supplier’s financial statements, and observing the supplier’s operations.

Once the company has a good understanding of the costs associated with their suppliers, they can then begin to negotiate better terms. This may include asking for lower prices, longer payment terms, or other concessions.