# Should Cost Grocery

## What It Is

The Should Cost Grocery skill gives your assignments specialized knowledge for building bottom-up cost models of grocery products. It is designed for Category Managers who need to understand what a product should cost before entering supplier negotiations—or to verify whether a proposed price increase is justified.

Given an EAN barcode, product name, or ingredient list, the skill constructs a cost waterfall that breaks down raw materials, conversion (labor, energy, overhead), packaging, and logistics to estimate the fair manufacturing cost and implied supplier margin.

This is a default skill—ready to use immediately without any setup.

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## What It Can Do

### Cost Model Construction

* Build a bill of materials (BOM) for a product by resolving ingredients from Open Food Facts, web search, or CM-provided data
* Price each ingredient against current commodity market rates, using the EU Food Commodity Prices connection as the primary source for EU agricultural products, with fallback to CLAL.it, EU MMO price reports, Eurostat, USDA, and web search for commodities not covered
* Apply yield and waste factors specific to the product type and production process

### Supported Product Categories

* **Dairy**: Yogurt, cheese, butter, UHT milk, ice cream, cream cheese, infant formula
* **Bakery and Pastry**: Sliced bread, croissants, puff pastry, brioche, biscuits, cake
* **Snacks and Confectionery**: Chocolate, potato chips, candy, mixed nuts, wafer bars, extruded snacks
* **Frozen Foods**: Frozen vegetables, pizza, ready meals, fish fingers, french fries

### Cost Waterfall Output

* Calculate per-unit costs for each component: raw materials, conversion, packaging, logistics
* Apply a supplier margin range (typically 8–12%) to produce a should-cost range
* Compare the model against the supplier's quoted price to calculate the implied margin and identify where the gap sits

### Negotiation Insight

* Highlight the top three cost drivers so negotiation effort focuses where it matters most
* Flag key commodity sensitivities (e.g., butter price impact on croissants, cocoa volatility on chocolate)
* Surface key assumptions and note which data points are estimates vs. confirmed

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## When to Use It

Use the Should Cost Grocery skill when your assignment needs to:

* **Verify a price increase**: Assess whether a supplier's proposed increase is justified by actual commodity movements
* **Prepare for contract renewal**: Build an independent cost estimate before entering renegotiation
* **Evaluate a new listing**: Check whether a quoted price for a new product is competitive
* **Act on a cost alert**: Drill into the full cost structure when the Input Cost Monitor flags a potential price change
* **Answer "what should this cost?"**: Produce a structured teardown on demand

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## Example Tasks

* "Build a should-cost model for Hollandia Greek Yogurt 500g and compare it to our current purchase price"
* "The supplier wants to raise prices on our croissant range by 8%—is that justified by current butter prices?"
* "Do a cost teardown on this chocolate bar (EAN: 7622201122225) and tell me the implied margin"
* "What should a frozen pizza cost to produce? Our supplier quoted €2.10 per unit"

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## How to Use

1. Open the assignment you want to configure
2. In the assignment settings, find the Skills section
3. Select the Should Cost Grocery skill
4. In your assignment's SOP, describe the product to analyze—provide the EAN, product name, or ingredient breakdown
5. Optionally connect a data warehouse (Snowflake, BigQuery, Databricks) or SAP to provide actual purchase prices for comparison

Your assignment uses the skill's commodity benchmarks and cost calculation methodology automatically when running a should-cost analysis.

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## Things to Know

* This is a default skill available to all teams
* The skill requires at least 70% of the product's weight to be attributable to identified ingredients before proceeding—it will ask for clarification rather than produce numbers that look precise but aren't actionable
* Commodity prices are sourced from public market data; freshness depends on the source's update schedule
* Pairs with the Input Cost Monitor skill for ongoing commodity tracking after a one-time teardown, and with scheduling for periodic cost model refreshes ahead of contract renewals