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Sourcing high-quality products with hard budget constraints

21 June

Sourcing high-quality products with hard budget constraints

Combining TWS's expertise in designing game theory based negotiation processes with their experiences in creating incentive schemes to motivate suppliers to share their know-how, TWS's consulting team developed a new sourcing approach: Target Costing.

In a nutshell, Target Costing uses competition between suppliers to optimise the technical concept under a fixed target price. In a Target Costing approach, technical specifications and requirements are limited to necessary minimum requirements to give suppliers a high degree of freedom in developing their own concept within the pre-defined budget.

Ultimately, TWS's client gave all suppliers the commitment that the supplier to offer the best concept while meeting the target price would be awarded the business.

Read the report now.

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