TCS adds distribution to its stable of industry cost indexes. (Thinking Cap Solutions)

Purchasing, October, 1997

Researching supplier cost structures can be like putting together a jigsaw puzzle with no edge pieces and no picture. Each industry has a basic structure of costs for raw materials, electricity, direct labor, indirect,labor, inbound freight, and distribution. And each company working in a particular industry will deviate--either positively or negatively--from the industry norm, according to its own structure and management skill.

Making the frame It will always be the buyer's job to fill in the picture, to determine how his or her individual suppliers may differ from the industry average. But there are several ways to create some edge pieces. One is to go solo. Uncle Sam spends a big chunk of taxpayer dollars to produce some of the best...