Pricing Tool Uses Predictive and AI Methods for Optimal Results
FACTUREE Shows: Should Costing in Procurement Is Not Cost-Effective
Berlin, November 27, 2024 – The "Should Costing" method is often promoted as a promising approach to minimizing procurement costs for custom parts. However, in reality, this method proves to be impractical and even counterproductive. FACTUREE (www.facturee.de), a specialist in digital procurement, demonstrates why "Should Costing" does not meet the demands of modern procurement and how "Best Costing," using predictive methods and AI, enables precise cost calculations and average savings of 37%.
With "Should Costing," the goal is to estimate the optimal manufacturing costs of a part through theoretical calculations. However, this approach often reaches its limits, especially for custom parts, which are frequently complex and individually produced. "Cost calculations here are based on assumptions that often do not align with reality. Instead of actual market prices, idealized prices are estimated. This leads companies to make decisions on uncertain foundations and, in the worst case, incur higher costs instead of saving. Many providers in our industry rely on instant pricing, which is based on Should Costing. However, these and similar approaches do not prove effective in practice," explains Niklas Oertel, Vice President of Growth at FACTUREE.
Over 90% Accuracy in Price Forecasts Through Geometry Analysis
FACTUREE takes a different approach: Using an innovative pricing tool, the digital procurement specialist combines predictive methods and artificial intelligence to determine realistic and market-aligned prices. In the "Best Costing" model, numerous parameters such as quality, delivery time, logistics, manufacturer capabilities, production capacities, compliance, and auditing are factored into the calculations. "A key advantage of our tool is the analysis of part geometry. With a high accuracy of over 90%, we can predict which manufacturer will quote what price for a specific part. Our data-driven approach replaces speculative assumptions with well-founded analyses. Over 600,000 data points per supplier ensure realistic and reliable market prices. This precision is unique and enables our customers to save an average of 37% while significantly improving their procurement efficiency," says Niklas Oertel. FACTUREE relies on a network of over 2,000 manufacturing partners, spanning nearly all areas, including CNC machining, sheet metal processing, 3D printing, casting and forging processes, as well as surface finishing and hardening techniques. For each of the more than 60 possible manufacturing methods, FACTUREE provides engineering experts who support clients throughout the entire process – from consultation to delivery.
Central Interface for Simplified Supplier Sourcing
FACTUREE offers a comprehensive digital procurement model that digitizes and automates all procurement processes. This provides significant relief, especially as customers no longer need to undertake the otherwise time-consuming task of supplier sourcing. At FACTUREE, buyers and engineers requiring a custom part get everything from a single source. They benefit from a centralized interface that coordinates supplier selection, manufacturing, post-processing, and surface finishing. This enables companies to not only streamline their procurement but also reduce their time-to-market. Security is also a top priority: Thanks to predictive technology, drawings are not distributed to countless manufacturers and are processed anonymously. "By working with us, customers can respond flexibly and quickly to market changes and specific requirements. They develop resilience to supply chain risks. This is a direct result of our extensive network and digitalized processes, combined with significant cost advantages due to our data-driven approach," says Niklas Oertel.
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