Benchmarking Follow

Benchmarking shows the Benchmark cost from our community data for your Manufacturer Part Numbers (MPNs). We make exact matches for those MPNs in the LevaData community data and provide you with pricing recommendations. For any MPN that your company decides not to share with the community, there will be no beneficial benchmark pricing provided from the community for that part. LevaData Platform has a precision algorithm which includes benchmark opportunities as high as 500% if there is sufficient statistical confidence in the data.

Benchmarking Methodology

Cost to Benchmark Insight

Manufacturer Part Numbers (MPNs) have similar parts which create options in a sourcing strategy. Each MPN has layers of attributes that define a profile of source-ability and performance:

Understanding as many costs as possible helps establish baseline benchmark pricing. With the right level of data insight, these benchmarks can be tracked over time to produce the most accurate representation of cost trends. Armed with this combination of alternate parts, cost benchmarks, and manufacturer prices, a buyer can enter into informed negotiations with their suppliers.

Benchmark Creation

LevaData clusters all matched parts, removes outliers, and calculates pricing percentiles at the 50th, 70th, and 90th percentile benchmark level. Opportunities are calculated out for future quarters.

Benchmarking Overview

Landing in the Benchmarking Tab, users will be able to see their top Benchmarking opportunities for parts listed automatically in the table.  As noted, Benchmark cost will only be available for Benchmark Flag enabled parts. The formula to calculate Benchmarking Opportunity is as follows:

$$(\text{MPN Cost} - \text{Benchmark Cost}) * \text{Demand} * \text{Split}$$

1. Users can select or search for specific part numbers or upload their own parts to check for benchmarking opportunities.
2. The table contains headers for the following information:
   1. MPN: Manufacturing Part Number
   2. Normalized Manufacturer: Name of the Manufacturer - Normalized for Our Platform
   3. MPN Cost ($): Your current cost for the MPN.
   4. Avg. Benchmark: The average price paid for this part in the community data.
   5. 90th% Benchmark: As explained above and below, this is the price point at which 90% of the community buyers have the same or higher price.
   6. Avg Lead Time: Listed in Weeks by average duration for the part in question using customer-provided lead time.
   7. Last Refresh Date: How recently this data has been updated by LevaData Platform.
3. Users can download the template to upload their own parts (top option) or export the data in the Benchmarking table for analysis elsewhere (bottom option).

Key Terms

Benchmark Example

• Customer MPN # is in grey box = ABC123
• Customer data points considered are in the "Anonymization" row.
• Customer data is aggregated in sequence in "Aggregation row" and plotted on the chart to include ABC123's price of $1.00.
• If there are any Outliers, such as very low or very high data points, they are not considered as part of the analysis.
• The Interpolated Statistical Insights (illustrated in Red Boxes above) are examples of a distribution with 50th, 70th, and 90th percentile.
  • LevaData Platform by default displays the 90th Percentile Benchmark Cost which is an estimate of the most aggressive cost savings based on community data of the price point where 90% of the community has the same or higher price.
  • In Review Opportunities (See: Opportunity Type: Benchmark) there are 50th, 70th, and 90th Percentiles.
• There needs to be at least 5 Data Points from the community to qualify for a Benchmark Opportunity
• The relevant benchmark is often not an exact price that any customer is paying.
  • Many factors influence the negotiation for the buyer's attempt to gain this price with their supplier, such as volume and/or geography.
  • LevaData can offer a target with statistically accurate benchmark data to give the buyer an achievable goal and/or a good starting point for a negotiation.

Conclusion and Further Training

At this point, you should have a solid understanding of the basic concepts behind Benchmarking part costs using community data in the LevaData Platform. If you would like to learn more, we recommend the following training:

• Benchmarking (Video)
• Opportunity Type: Benchmark
• Custom Part Benchmarking (Video)