In low-volume technical procurement, average prices are often misleading. This is especially true in industries such as aerospace and defense, where annual quantities per part can range from one to only a few dozen units, while the underlying technical requirements remain highly specific.
In one recent COVALYZE analysis, the customer faced exactly this challenge: a large and diverse portfolio of technical supplier parts, strong cost pressure, and very limited confidence that meaningful savings could still be achieved. The customer had more than 2,000 different parts in scope overall, with many items produced in very low volumes. A traditional category-level negotiation would not have worked. The only realistic path was a part-specific cost reduction approach: every part needed its own negotiation story, based on transparent cost logic.
The Challenge: Too Many Parts, Too Much Technical Variation
The analyzed supplier portfolio included 198 part numbers with a spend volume of more than €550,000. COVALYZE analyzed 180 parts, representing approximately 91% of the spend.
The material mix made the analysis particularly challenging:
- 45% GFRP parts — glass-fiber reinforced plastic, often used where lightweight strength is required
- 35% plastic / PVC parts
- Remaining share: steel parts
The parts were not highly complex in geometry, but they were highly diverse. Some weighed up to approximately 30 kg, and the manufacturing processes ranged from simple sawing out of GFRP plates to milling of GFRP, plastic, or steel blocks. For a conventional consulting team, this level of variation would normally require significant manual effort. Every part would need to be understood individually, with material, geometry, manufacturing process, and supplier pricing logic reviewed in detail.
Material mix
Diverse materials, diverse process economics
The portfolio combined glass-fiber reinforced plastic, plastic and PVC parts, and a remaining share of steel parts. Each material group carries its own cost structure, supplier base, and competitive dynamic.
Some parts weighed up to roughly 30 kg, with manufacturing routes ranging from simple sawing of GFRP plates to milling of GFRP, plastic, or steel blocks.
That diversity is exactly why average price-per-kilogram comparisons break down. The same average can sit on top of parts that are competitively priced and parts that are significantly overpriced.
Why Average Benchmarks Fail
The customer originally expected little or no savings potential. One reason was the fear of challenging suppliers in a volatile raw material environment. In categories such as GFRP, many companies hesitate to reopen supplier discussions because they are concerned that asking questions could trigger new price increase demands.
But the analysis showed a different picture. The issue was not that the supplier was uniformly expensive. Some parts were priced above should-cost. Others were already priced very competitively, in some cases even below calculated cost levels.
Supplier prices are not simply "high" or "low." They reflect competition, material category, supplier power, technical process logic, and historical pricing behavior.
For example, steel parts showed much more competitive pricing, likely because the supplier faced stronger market competition. GFRP parts, by contrast, showed higher price levels, reflecting a more specialized supplier base and weaker competitive pressure. This pattern would have remained invisible in a normal category review.
The COVALYZE Approach
COVALYZE created a part-level should-cost analysis for the analyzed portfolio. For each part, the calculation was broken down into:
- Material costs
- Machine time
- Labor share
- Processing steps
- Additional manufacturing requirements
- Greenfield and brownfield cost logic
- Supplier margin indications
This allowed the customer to understand not only where potential existed, but also why it existed. The analysis identified approximately 20% savings potential across the analyzed spend. Extrapolated to the full dataset, the potential would be even higher.
However, the real value was not only the savings number. The real value was that the savings could be explained part by part. That changed the negotiation dynamic. Instead of entering the supplier discussion with a generic target such as "reduce prices by 10%," the customer could now discuss individual components with a clear cost logic behind each one.
The Credibility Test: Conservative Savings Instead of Inflated Potential
A major reason the customer accepted the results was the transparency of the calculation. Every assumption could be reviewed:
- Which material price was used?
- Which machine time was assumed?
- Which labor share was calculated?
- Which manufacturing step drove the cost?
- Which parts were already competitively priced?
This was especially important because the initial savings potential looked surprisingly high. The customer challenged the numbers, and rightly so. A savings estimate of around 20% in a technically demanding low-volume portfolio needs to be defendable. COVALYZE could defend it because the analysis was not based on averages. It was based on individual part calculations.
The Hidden Data Issue: Incorrect GFRP Weight Logic
During the analysis, COVALYZE also performed a sanity check between the 2D drawing data and the 3D geometry. This revealed a likely systematic issue in the customer's PLM or master data logic for GFRP parts.
The 2D drawings showed weight values that were roughly half of what the 3D geometry indicated. After manual checks, the likely explanation was a default density value of 1.0 for GFRP in the PLM system, while a more realistic density assumption for the analyzed GFRP material was around 1.9.
Data-quality check
The team did not exploit the lower weight to inflate savings
The important point: COVALYZE did not simply use the lower 2D weight value to make the savings potential look larger.
Instead, the team validated the 3D geometry, checked the volume and weight logic, and used the corrected higher weight for the cost calculation. That made the result more conservative and more credible.
With the lower 2D weight values, the calculated savings potential would have been significantly higher — but that would also have overstated the supplier-side cost gap.
Why This Matters Beyond Procurement
The likely PLM issue was not only a costing problem. Incorrect weight values can affect multiple operational processes:
- Logistics planning
- Transport cost assumptions
- Warehouse capacity planning
- Load calculations
- Supplier discussions
- Material cost evaluation
If a company works for years with incorrect weight assumptions for a material group, the commercial impact can spread far beyond purchasing. This is where technical cost analysis becomes more than a negotiation tool. It becomes a data-quality instrument for the entire organization.
What Procurement Teams Can Learn
This case shows why low-volume technical procurement needs a different approach. For highly diverse parts with annual volumes between one and a few dozen units, procurement cannot rely on broad benchmarks or average price-per-kilogram comparisons. Instead, teams need:
1. Part-level should-cost logic
Each part needs its own cost story.
2. Material-specific interpretation
GFRP, plastic, and steel follow different supplier and process economics.
3. 2D and 3D validation
Drawing data and 3D geometry should be challenged against each other.
4. Transparent calculation assumptions
Negotiation arguments only work if material prices, machine times, and labor assumptions are explainable.
5. A conservative view of savings
The most valuable number is not the highest number. It is the number that survives supplier scrutiny.
Conclusion
The project demonstrates that technical procurement cannot be managed effectively with averages when parts are diverse, volumes are low, and materials are specialized. By analyzing 180 low-volume technical parts at part level, COVALYZE created a transparent negotiation basis, identified around 20% savings potential, and uncovered a likely PLM data-quality issue in the GFRP weight logic.
In complex technical procurement, the strongest negotiation position comes from knowing the cost logic of every individual part.
For procurement teams in aerospace, defense, and other low-volume technical environments, the path forward is clear: see COVALYZE Analytics and PartIQ turn diverse, low-volume portfolios into part-by-part negotiation leverage.
