A should cost model is an all-important technique for deriving and forecasting the actual cost of a product/service over the forecasted period. It serves as a competitive edge for supplier negotiations by determining the actual price for the cost components. The outcome helps procurement leaders to understand detailed fact-based cost drivers for the category.
In the homecare contract manufacturing market procurement intelligence report, we have estimated and forecasted pricing for the key cost components while availing services from contract manufacturers. Raw material cost is the largest cost component of homecare contract manufacturing services. It accounted for more than 75% share in overall manufacturing cost. Among raw materials, chelating agents is the largest cost component with ~24% share followed by surfactants and buffer solution. The price of surfactants is majorly determined by crude oil prices. However, in 2018, surfactants’ prices declined, irrespective of higher crude oil prices. As the demand for personal care and home care products increases, the prices for buffer solutions and others are expected to stabilize over the forecasted period.
Every organization and its procurement team wants to negotiate the best deal while procuring a set of products or services. Rate benchmarking uses price/cost comparison of more than one set of products/services to analyze the most efficient combination that will help the procurement team to get the optimum rate.
As chelating agents are the most important cost component for cleaning product manufacturing, the type of chelating agents is one of the most important aspects while analyzing the rate benchmarking of homecare contract manufacturing services. In our research, we have analyzed the rates of citric acid, nitrilotriacetic acid (NTA), and phosphonates. These three are the most common types of chelating agents used to produce cleaning products. By using rate benchmarking analysis, we found that using NTA as chelating agents is 15%-20% cost-efficient than using citric acid and phosphonates as chelating agents. Moreover, due to their toxicity phosphonates are banned in the EU, Canada, and Australia. Hence, using NTS and citric acid is the most preferable chelating agent for homecare contract manufacturers.
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Labor is one of the key cost components incurred while offering a product or service. Understanding the pricing structure of salary is important for organizations in selecting the appropriate supplier and to build a good negotiation strategy. It is also an important factor in determining whether the category under focus should be outsourced or built in-house.
Our research indicates that Henkel production managers earn 25% higher salaries than production managers from other Key industry competitors like PCC Group and McBride. However, the YoY increment rate in such companies largely depends on KRAs.
It is cumbersome for any organization to continuously track the latest developments in their supplier landscape. Our newsletter service helps them remain updated, to avoid any supply chain disruption which they may face, and keep a track of the latest innovations from the suppliers. Outsourcing such activities help clients focus on their core offerings. Our research on the homecare cleaning product contract manufacturing market has identified the following developments:
In April 2021, Fareva announced major investments within its newly formed GTP Biologics division, one year after the acquisition of two facilities from fellow French firm Pierre Fabre. The firm started a monoclonal antibody (mAb) production facility in Saint-Julien-en-Genevois, equipped with single-use technologies up to the 2,000 L scale.
In December 2020, Church & Dwight Co., Inc. completed the acquisition of Matrixx Initiatives, Inc., the owner of the ZICAM brand for USD530 million. This acquisition enhances Church & Dwight’s existing VMS product portfolio.
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Component wise cost break down for better negotiation for the client, highlights the key cost drivers in the market with future price fluctuation for different materials (e.g.: steel, aluminum, etc.) used in the production process
Offering cost transparency for different products / services procured by the client. A typical report involves 2-3 case scenarios helping clients to select the best suited engagement with the supplier
Determining and forecasting salaries for specific skill set labor to make decision on outsourcing vs in-house.
A typical newsletter study by capturing latest information for specific suppliers related to: M&As, technological innovations, expansion, litigations, bankruptcy etc.
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