Philosophy of cost management

Abstract

The thesis objective is to explore the Cost Management and its philosophies, and the engagement with the supplier who understands the reality to produce the part. Cost Management is the buzzword in many industries. Traditional approach to send request for quote (RFQ) to suppliers and the quotation received would ask, "Is this a fair price to pay?" The supplier needs to be profitable to enable a supply chain to continue supply with good parts. The win-win approach is proposed, so that the supplier would have profits and develop good business partnership. The partnership is to develop possibilities to reduce cost and waste management philosophies like lean production. The proposal is to incorporate Cost Management philosophy, with tools like Cost Model, to predict the Should Cost.