Pretty good article. It is something that I need to teach all my incoming purchasing folks. Seems like most universities focus only on logistics. Of course, you've only scratched the surface.

As a supply chain management major at the McCombs School of Business I found this article extremely relevant as it mirrors much of what I have learned over the past year in my Procurement course. I especially liked that it portrays a true view of how cost models are created and used in industry. However, I found it interesting that intangible costs such as risk, were not included in this cost model breakdown (especially due to the fact that the assumption of some of these risks by the buyer could be a strong negotiating point).