The process of designing a product with a trusted supplier in order to eliminate costs that may appear at the delivery stage is known as which cost…

The correct term is Cost Out, a proactive cost management approach where the buyer collaborates

with the supplier during the design phase to eliminate unnecessary costs before they arise. This

ensures efficiency and value creation throughout the product lifecycle. For example, designing

packaging to minimise waste or using standardised components to avoid expensive customisation.

This differs from:

Cost acceptance, where the buyer accepts the supplier’s price without analysis.

Cost engineering, a broader process of optimising costs through design and process evaluation.

Cost down, which typically involves reducing costs after production by analysing processes,

renegotiating contracts, or improving efficiency.

Cost Out is especially relevant for strategic or high-value categories where innovation and

collaboration with suppliers can generate long-term savings. It is consistent with category

management’s emphasis on strategic supplier partnerships.

[Ref: CIPS L5M6 Study Guide, p.80 – Cost Out vs Cost Down strategies]