How AI Should-Cost Modeling Improved Supplier Negotiation and Cost Visibility
How one client in the specialized Oil & Gas manufacturer, the lack of objective data translated directly into lost negotiation leverage and margin erosion.
Overcoming Strategic Constraints: Cost Opacity and Supplier Monopoly
The client faced a critical issue of Cost Opacity. Their supplier both designed and manufactured complex parts, maintaining a monopoly on data by providing no cost breakdown. Previously, the company was often limited by a reliance on suppliers to define where costs were originating. This lack of objective cost-truth threatened their target cost savings of 15-20%.
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Value delivered
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AI-Powered Transparency Creates Negotiation Leverage
True ValueHub delivered a rigorous, data-backed Should Costing Analysis from scratch. The crucial innovation was the AI's ability to generate cost-truth from minimal data: the analysis successfully costed complex processes (Fabrication, Extrusion, Machining, etc.) despite the challenge of working with only 1 PDF (non 3D) drawing/model with limited information. The platform allowed the company to go into supplier conversations armed with their own data, knowing exactly where cost was coming from across the entire product line, transforming data scarcity into a defensible, objective cost model and provide immediate negotiation leverage.
Validated Cost-Truth and ROI
The analysis provided the immediate cost transparency required to execute effective negotiations, leading to a profound shift in the supplier relationship, creating negotiation leverage in complex, specialized manufacturing. This enabled procurement to get in the room with key internal stakeholders by presenting defensible, data-backed savings projections.
The implementation of True ValueHub has catapulted the company's savings trajectory, allowing the team to project future wins with much higher confidence and negotiate below market value.
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The Old Way
Intensive configuration
Teams must configure labor rates, machines, overhead, etc
Rigid architecture
Low team adoption due to unintuitive design
Blind spots
Lack of visibility and ownership between various teams
Lengthy approval cycles
Averaging 6-12 months
Limited supplier intelligence
Reliant on supplier averages and legacy data
Reactive negotiation
7+ rounds of RFQ revisions
Fragmented workflows
Lacks integrations to directly sync with ERPs & suppliers
Native AI Solution
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Use 2D, 3D or sketches CAD file and certifications
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Cost benefit analysis
Agentic sourcing compares suppliers across cost, sustainability, shipping, carbon impact and tariffs in a single central view
Negotiate with confidence
Arrived with real-time data, costing against a global network
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20%+ in direct material savings?
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