Lesson 3.4 — Supplier Identification & Cost Analysis
About this lesson
This lesson covers how to identify and classify potential suppliers, assess market dynamics, and evaluate the full cost of a solution using Total Cost of Ownership (TCO).
Supplier identification
Key data sources: TED database (past procurement winners), CORDIS (EU project participants), industry associations, trade show exhibitor lists, company registers.
Supplier types relevant to BSO contexts:
- Large system integrators (e.g. Siemens, Thales) — end-to-end solutions
- Specialised technology SMEs — focused technologies (sensors, AI algorithms)
- Deep-tech startups — higher risk, potentially breakthrough solutions
- Research institutions/universities — R&D capability, especially relevant for PCP
- Engineering consultancies — custom solution design and implementation
Market dynamics to assess
- Concentration: A market dominated by one player risks vendor lock-in. PCP can diversify the supplier base.
- Barriers to entry: High barriers (patents, certifications) limit SME participation. Low barriers (open standards, software) enable broader competition.
- Supply chain dependencies: Watch for single-source components or geographic concentration.
Always use Total Cost of Ownership (TCO)
Never evaluate on purchase price alone.
Buyer’s lifecycle cost (TCO) includes:
- Development investment — cost of developing the solution (relevant in PCP)
- CAPEX — deployment and build costs
- OPEX — licences, energy, maintenance, spare parts, training, and ongoing services
Understanding the supplier’s cost structure (unit cost + production + selling costs + profit) gives a stronger starting point for negotiation.
