Cost-Driven Pricing: An Innovative Approach for Managing Supply Chain Costs

An analysis of how to improve costs must include a discussion of how firms create and manage cross-organizational relationships. An important part of improved cost competitiveness may very well center on a firm’s ability to develop and manage inter-firm relationships that lead to the creation of new value within the supply chain. An earlier study by the Harvard Business School confirmed that a primary reason for the competitiveness of many non-U.S. firms resulted from a greater commitment in intangible investments such as supplier relationships. Executive managers must begin to endorse a non-traditional perspective toward those suppliers that affect a firm’s competitive position. While progressive firms are able to capture the value offered by their critical suppliers, others are failing to respond.