Lifting the Veil Over Pricing Secrecy

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Jacob
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Re: Quote vs Benchmarking
Jacob   2/5/2013 6:47:32 AM
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Bolaji, thanks for the clarification. One more thing is it possible to get the quote for outside US, how they may calculate the component price across different countries.

PG
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Re: Aren't we all forgetting something ???
PG   2/1/2013 10:33:15 AM
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 Sites like OEMSecrets do provide a snapshot in time of what franchise distribution has in stock, but I am surprised to hear you would use such a site for any real cost comparisons. OEMSecrets scrapes franchise distribution websites and re-posts the data, this is why it's free.

 If you want to know what a distributors current inventory position is, then these types of sites are great for letting you know that. If you're looking to get the best price, you need call your favorite distributor and use solid information to help leverage your position. CCE does just that. It helps me understand where pricing should fall (especially if I have no historical data to rely on!) and it also provides me with a possible second source option which can also save time and money!

Saving money is high on everyone's list for 2013 and CCE is proving to be the tool needed to help buyers and supply chain managers reach their cost reduction goals faster than ever before!

FLYINGSCOT
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stock market
FLYINGSCOT   1/30/2013 12:55:03 PM
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Sounds like we are creating a market system akin to Nasdaq for stocks.  It might lead to some good things in future if it is made transparent.  I will take a look at that company's website to find out more.

Bolaji Ojo
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Re: Pricing Intelligence
Bolaji Ojo   1/30/2013 12:37:53 PM
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Outstanding analysis. I particularly like the final point about "buyer beware." If, as you noted, companies use pricing as a competitive tool, it's because it creates an advantage for sellers and buyers but as some folks I've spoken with in the past have commented, you never really know whether you got the advantage or the victim.

And, by the way, I believe Ken Bradley knew after he left Nortel that his company wasn't getting the best pricing, hence the decision to set up freebenchmarking.com and Lytica :)

MikeRR
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Pricing Intelligence
MikeRR   1/30/2013 10:24:48 AM
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Obscurity of price at a component level is driven by profit motive alone. Whether you are talking about Manufacturer to OEM or Distributor to OEM/CEM. I've set strategic pricing for large accounts ( sorry Nortel - you didn't get the best price ), and we all have experienced the regional price inequalities found around the world. All pricing is not created equally.

Clearly a tool that delivered pricing transparency would make sellers very uncomfortable in justifying pricing differentials. But as we know, especially in this market, there are some vendors which are aggressively pricing to win business and there are others that seem to collectively hold or push prices up.

My concern is three fold, can a tool like this actually effect change when end user buyer information is removed? The fact that a website says someone bought 1000 units at a lower price raises many questions? Who bought, What were the conditions / business reasons for the discount, Where were they sold?

My second concern or observation how reliable the data can be? Negotiating pricing is one part of the competitive cards that OEMs hold close to their chest. Why would someone show their hand? - for the greater good?

My third concern is how much drag will this put on the supply chain as all parties try to put up roadblocks to rebuff the demands for lower pricing. The reason that a tier pricing structure is in place is because it makes more money.

As a representative for a chip manufacturer, a buyer for OEM supply chain, or in my current roll at a CEM, pricing is based on industry knowledge, organizational credibility on making your numbers and finally asking the person that has the real power to get you the price you need to give it to you.

It's great to have more industry pricing intelligence at hand, especially at the design stage, but in the end " buyer be aware " .

 

 

 

 

Ken Bradley
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Re: Quote vs Benchmarking
Ken Bradley   1/30/2013 8:36:48 AM
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Bolaji, we have had a great response from designers attending Design Con 2013 and EMS exhibitors to our Component Cost Estimator product. Designers see the value in independent component cost benchmarking and alternate source identification as enabled by this low cost pay per use application. EMS companies like it as they can quickly identify components where their costs are out of line to achieve savings for themselves and their customers.

The comments at the show echo the feedback we get from our CCE subscription customers. These are some of the largest, most prestigious EMS, OEM and distribution companies in the world.

Examples of how these companies are using the application are the same as the insights of the Design Con participants.

•·         Understand market price targets before awarding design sockets to suppliers

•·         Setting shared cost targets between design and operations

•·         Testing new quotations from suppliers for acceptability

•·         Reducing the amount of quoting activity by validating that market prices haven't changed since last quote was received

•·         Assessing the competitive position (materials cost) of a product  against what competitors might be able to achieve

•·         Teardown price assessments (Materials) of a competitor's product

•·         Providing assurance to Boards and shareholders that a company's materials costs are competitive

I am seeing increasing interest from corporate Boards and investors in how companies know that they are competitive. Lytica knowledge power tools are being used to provide evidence that these stakeholders appreciate. Imagine two possible answers that a CEO could give; one using CCE and one not. Which one stands up?

•1.       We take our data from distribution websites to gauge our competitiveness, or

•2.       We use independent component price benchmarking base on the world's largest independent database of current electronic component pricing.

Which one wins?

Bolaji Ojo
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Re: Aren't we all forgetting something ???
Bolaji Ojo   1/30/2013 5:31:13 AM
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One possible difference is that CCE does not directly sell components.

Bolaji Ojo
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Re: Quote vs Benchmarking
Bolaji Ojo   1/30/2013 5:30:25 AM
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The list of components is expanding but I think it's possible to email the company and request additional information if items you are looking for are not on the site.

SP
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Supply Network Guru
Lifting the Veil Over Pricing Secrecy
SP   1/30/2013 5:24:31 AM
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wow if therez a tool for component cost estimator it would be so handy for the designers as wells as buyers. would explore Lytica.

Jacob
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Supply Network Guru
Re: Quote vs Benchmarking
Jacob   1/29/2013 11:11:56 PM
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Bolaji, I had gone through the tool, but it seems that only limited components from some specific vendors are listed with the tools. There is no doubt that it will help the manufacturers/assembling unit for estimating the approximate cost. On the go, hope it will update with more component from different vendors too.

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