Imagine negotiating with a supplier, only to find that raw material prices have jumped overnight. Your carefully planned cost estimates are now obsolete, and your margins are shrinking. Sound familiar?
Supply chains are more volatile than ever, forcing cost engineers and procurement specialists to rethink supplier cost strategies. In the first half of 2024 alone, reported disruptions increased by 30% year-over-year, with factory fires, labor disputes, extreme weather events and cyberattacks among the top causes. These incidents cost organizations an estimated $184 billion annually, according to the 2025 J.S. Held Global Risk Report.
Despite these challenges, many cost engineering teams still rely on outdated cost estimation methods. A 2024 study found that procurement teams use only 5-10% of available technology, leading to inefficiencies and poor decision-making.
Using AI to Anticipate Supplier Price Shifts
For a long time, cost engineering and procurement teams have relied on historical data and spreadsheets to estimate supplier costs. But in today’s volatile market, that’s no longer enough.
Why? Because AI can detect pricing trends before they happen. By analyzing real-time industry benchmarks, supplier cost structures, and historical fluctuations, AI-driven procurement tools can:
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Predict supplier cost increases before they occur
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Compare supplier quotes with live market data to expose unjustified markups
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Run scenario-based cost simulations to identify alternative sourcing strategies
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Minimize risks tied to sudden commodity price volatility
With AI-driven should-costing, procurement teams no longer have to react to price hikes. Instead, they can anticipate them and negotiate proactively.
Why Automated Should-Costing is Essential for Procurement Teams
Predicting supplier pricing is only part of the equation. The real advantage comes from automation, which turns insights into action without relying on manual data processing. Automating cost analysis transforms procurement operations by:
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Eliminating manual errors and inefficiencies in cost calculations
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Providing real-time cost tracking, rather than relying on static estimates
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Enabling collaboration between cost engineers, procurement managers, and finance teams
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Integrating predictive analytics to anticipate supplier price changes before they happen
With automated costing, manufacturers no longer need to wait and react to supplier price increases - they can anticipate them and take measures proactively.
Discover how automated cost engineering software not only improves procurement efficiency but also helps manufacturers achieve sustainability goals. Read more in our blog
Tset’s Automated Product Costing
Tset’s automated product costing software enables procurement teams to stay ahead of supplier price shifts by:
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Analyzing historical supplier data to detect trends and cost deviations
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Identifying hidden cost drivers in supplier quotes to strengthen negotiation positions
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Running scenario-based cost simulations to explore alternative sourcing strategies
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Providing up-to-date industry cost data to avoid pricing surprises
Tset’s algorithm-driven calculation modules create a bottom-up cost structure for individual parts, detailing required materials, machines, setup times, and labor. This ensures that every cost element is fully transparent, allowing cost engineers to adjust parameters and evaluate alternative sourcing strategies. Tset’s pre-built industry data sets and real-time updates ensure that cost models remain accurate and up to date. This gives procurement teams the insights they need to make smarter, faster decisions.
With Tset, procurement teams can validate cost data in real time, ensuring pricing accuracy and reducing negotiation risks.
Conclusion
Manufacturers cannot afford to rely on outdated methods in today’s increasingly uncertain market. Algorithm-driven should-costing provides the transparency and foresight needed to manage supplier pricing effectively. With Tset’s automated cost analysis software, cost engineers can gain a competitive advantage by making data-backed decisions before supplier price changes take effect.