What is a Should-Cost Model?

A should-cost model is a tool that enables supply chain organizations to determine the true price of goods and services. A should-cost modeling software results in improved visibility into cost drivers, enabling greater savings and better priced products. It enables organizations to understand all raw material and manufacturing cost drivers so that the final estimate of a product is closer to the target price. A data-driven, AI-powered should-cost model is usually multi-layered and is sensitive to the price movement of market indices and therefore provides greater negotiation power.