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IHS Pricing and Purchasing Service
Timely insight for effective buying negotiations and strategic material purchases

R Wages and benefits
R Industry machinery and equipment
R Building materials
R Electricity and gas
R Transportation and logistics
R Electronic components
R Nonferrous metals
R Ferrous metals
R Petroleum products
R Paper and packaging
R Steel
R Chemicals and plastics
Enabling smarter purchasing decisions and supply chain cost savings
The IHS Pricing & Purchasing Service enables supply chain cost savings by providing timely, accurate cost and
price analysis. Armed with a better understanding of suppliers’ cost structures and market dynamics, organizations
can effectively negotiate prices, strategically time buys, and boost the bottom line.
With a database of more than 500,000 historic prices and thousands of price, wage and input cost forecasts, IHS
offers more coverage than any other provider in the market. IHS has been providing forecasts of key commodity, labor,
and input costs since 1970 -- helping define the purchasing advice industry.
Comprehensive Data and Analysis to Cover All Your Spend Categories
Detailed 10-year forecasts and analysis of prices, costs, demand, productivity, and margins
enable clients to:
Time Buys
• Identify the best time to purchase raw materials, locking in favorable prices today,
to avoid prices increases later.
Negotiate Contracts
• Receive valuable price breaks by understanding your supplier’s cost structure and market dynamics.
Benchmark Costs
• Evaluate costs, market conditions, regional price differences in order to take advantage
of tactical market opportunities.
Estimate Costs
• Gain valuable market intelligence to quantify key inputs, examine critical supply issues,
and more effectively estimate a project’s final cost.
Evaluate Pricing
• Negotiate forward pricing contracts for improved cost planning, analysis, and savings
over the life of a contract.
IHS brings clarity to difficult markets
by measuring prices and escalation
rates industry-wide, so you can see
where you fit in.

Our clients have reaped cost savings from applying insight from the IHS Pricing & Purchasing
service to their business processes
Proven Cost Modeling Framework Based on Input Cost Breakdowns
“I buy aluminum for my
manufacturing operations.
The Commodity Price Watch
provides monthly analysis
on price changes and the
fundamentals driving key
costs to help me get the best
deal on the items I buy.”
“I work in auto manufacturing
and lock into contracts for
steel and fabricated metal
buys. I use the written analysis
from the Supply Manager so I
know whether or not to accept
price increases, or to hold out
for a better offer.”
“I am a defense contractor looking
for price indices to be used in
escalator clauses. I use the Cost
Planner to evaluate ten-year
annual forecasts for prices and
wages, so I can choose the
best index.”
“Some of mining and energy
companies’ biggest costs are
labor, metals, chemicals, and
fuel costs. The IHS Capital
Cost Planner provides detailed
information on market drivers,
material prices and wage rates.”
Key Input CostsShare Historical and Forecast Data
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
labor 51.8%
Average Hourly Earnings,
Fabricated Metal Products
(US$/hour) 23.2% 16.17 16.53 17.00 17.49 17.94 18.13 18.25 18.62 19.07 19.53 20.04
% Change 2.3 2.2 2.8 2.9 2.6 1.1 0.7 2.0 2.4 2.4 2.6
Direct materials 48.2%
Merchant Bar Carbon Steel,
Spot Price (US$/Short Ton) 4.9% 572 650 920 772 791 885 848 725 775 802 782
% Change 12.3 13.7 41.5 -16.1 2.5 11.8 -4.1 -14.5 7.0 3.4 -2.4
Structural Shapes Carbon Steel,
Spot Price (US$/Short Ton) 4.4% 658 761 1,004 745 752 860 778 668 744 768 749
% Change 19.9 15.5 32.0 -25.8 1.0 14.4 -9.5 -14.2 11.4 3.3 -2.5
Price, Bolts Nuts Rivets
and Washers (2003=100.0) 3.9% 119.3 126.0 133.5 132.0 131.8 134.9 136.7 136.1 136.4 138.1 141.5
% Change 3.8 5.6 6.0 -1.2 -0.1 2.4 1.3 -0.4 0.2 1.3 2.4
Price, Fabricated Metal
Products (2003=100.0) 9.1% 117.1 122.1 131.2 131.8 132.8 137.5 139.6 141.0 142.9 146.0 148.6
% Change 4.1 4.3 7.4 0.5 0.8 3.5 1.5 1.0 1.3 2.2 1.7
Price, Iron Foundries
(2003=100.0) 11.8% 121.1 126.0 146.1 140.9 148.6 158.9 165.4 165.0 165.4 168.8 172.4
% Change 4.5 4.0 16.0 -3.5 5.4 6.9 4.1 -0.2 0.2 2.0 2.2
Price, Steel Foundries
Except Investment (2003=100.0) 4.0% 124.0 133.6 140.6 139.2 144.1 149.2 155.0 157.3 160.8 162.8 163.3
% Change 6.5 7.8 5.3 -1.0 3.5 3.5 3.9 1.5 2.2 1.2 0.3
Price, Copper Foundries
Except Die Castings (2003=100.0) 5.2% 159.4 178.5 189.2 177.9 204.5 224.7 217.8 220.3 215.6 206.2 210.7
% Change 33.0 12.0 6.0 -6.0 15.0 9.9 -3.1 1.2 -2.1 -4.4 2.2
Price, Supplies for Manufacturing
Industries (2003=100.0) 4.9% 110.0 111.2 116.4 114.7 117.5 123.2 124.9 125.5 127.0 129.0 130.8
% Change 3.4 1.1 4.7 -1.5 2.4 4.9 1.3 0.5 1.3 1.6 1.4
inDirect costs 28.6%
Compensation, Private,
Management, Business,
Financial (2003=100.0) 15.7% 108.4 111.7 115.4 116.3 118.5 121.3 123.8 126.6 129.8 133.7 137.8
% Change 2.7 3.1 3.3 0.8 1.9 2.4 2.1 2.2 2.6 3.0 3.1
Compensation, Private,
Professional, Scientific,
Technical (2003=100.0) 12.9% 110.2 115.2 120.2 122.2 124.2 127.4 129.6 132.7 136.6 140.9 145.6
% Change 3.4 4.6 4.3 1.7 1.6 2.6 1.8 2.4 2.9 3.1 3.3
INDUSTRIAL VALVES
IHS FOURTH-QUARTER 2012 FORECAST
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The IHS Pricing Purchasing Service delivers timely, accurate, cost and price forecast and analysis that helps buyers negotiate prices
effectively, strategically time purchases, and generate cost savings. The service provides a unique look at price benchmarks across the
entire supply chain, allowing you to quantify the primary cost determinants before your next supplier negotiation. This can mean millions of
dollars of savings each year for your organization. To learn more, please visit www.ihs.com/pricingandpurchasing.
Sample stainless steel forecast

Hands-on Web-based data wizards allow clients to analyze a single buy or evaluate the
performance of an entire supply chain
Powerful Tools for Category Managers, Buyers and Cost Estimators
The IHS Cost Analyzer: provides access to thousands of global prices and wages. Allows users to construct and save
composite reports that track product and input cost escalation
Key features include:
• Quarterly forecasts for detailed spot market prices, producer and consumer price indexes,
and industry and occupational wages
• Ability to easily create custom workbooks, including composite forecasts
• Two separate modules deliver forecasts based on functional application
Cost Analyzer Modules
The Cost Analyzer gives you two separate modules that deliver our forecasts in unique ways, based on your
functional application:
The Cost Analyzer platform allows clients to perform customized cost analysis with access to over 3,000 global
prices and wages. Clients can construct and save composite reports that track product and input cost escalation.
These reports are automatically updated with each new forecast.
The Purchasing Analyzer module is designed to help improve supplier negotiations. This tool allows users to
compare prices to input costs and analyze productivity trends and demand conditions, providing the total market
perspective for over 250 sectors. Most importantly, the Purchasing Analyzer delivers the commodities’ underlying
cost structure, along with price movements of their key input costs, to help clients better understand suppliers’
cost structures.
The IHS Cost Analyzer provides access to thousands of global prices and wages. Allows
users to construct and save composite reports that track product and input cost escalation.

CASE STUDIES - TIMING WHEN TO BUY
Building Materials Manufacturer Saves 10-15%
on Aluminum
Client Need:
A European building materials manufacturer wanted to secure
an optimal aluminum contract price.
IHS Solution:
IHS expert, John Mothersole, accurately predicted a significant
unwinding of aluminum prices. The client, armed with that forecast,
floated aluminum purchases on the spot market for a few months
before locking in a contract price at a 10-15% lower rate.
The Result:
A building materials manufacturer in Europe saved 10-15% on
aluminum purchases.
Major Oil Gas Company Saves $10 Million on
Steel Buy
Client Need:
A major oil and gas company was concerned about the rapid rise
in steel prices and was considering locking prices for the following
year after a 100% run-up. Their supplier implied more hikes were
to come.
IHS Solution:
IHS provided client with insight and analysis not to panic and
advised against purchasing steel now or forward. Given the market
fundamentals, we expected prices to spike temporarily and drop
back down to the previous levels over the next couple of months.
The Result:
The clients accordingly waited to purchase and saved over $10
million on the purchase due to IHS recommendations.
Leading Shipping Company Saves $1 Million in
on Polyethylene Buy
Client Need:
This case study comes from a leading shipping company and
involved a major buy decision for polyethylene (PE). The client
wanted a consultation regarding the latest trends in PE availability
and pricing. He was trying to estimate the cost of PE for several
potential projects that would require buying 10,000,000 pounds
of PE. More importantly, the client wanted to time his purchases
to take advantage of the lowest pricing point projected for the
next 12 months.
IHS Solution:
After discussing the issue with the client, an IHS petrochemical
analyst, advised him to make the entire purchase right away in
order to lock in current market prices. Price anticipated that PE
prices would surge virtually non-stop based on strengthening
demand, tight supply and soaring energy input costs. The client
followed his advice. PE prices skyrocketed and the client saved
his organization nearly $1 million.
The Result:
The client saved $1 million on their polyethylene buy.

COST INSIGHT
Manufacturer Saves $2.2 million on
Contract Negotiation
Client Need:
A recreational boat and water sport equipment manufacturer was
paying too much for engines from automobile manufacturers. He
needed these engines to power inboard and outboard motors.
IHS Solution:
IHS data showed that the price of motors, as measured
by PPI3714201NS, had been declining fairly continuously.
Further, IHS analysts forecasted the decline to continue for the
next several years. The client confronted its supplier with this
information, along with the IHS forecast of flat or declining prices
for engine components, to document a lack of underlying cost
pressure. The bottom line: the client won a break in contract price
for engines, resulting in a $2.2-million savings.
The Result:
The client saved $2.2 million on one equipment
contract negotiation.
Global Electronics Company Saves $60 Million
Client Need:
As part of a company-wide cost-containment initiative, a
global electronics company asked IHS to assist its purchasing
department in developing a formal cost-benchmarking model.
The project involved assembling a model that tracked and
forecasted material cost inflation by commodity, equipment
component, or service.
IHS Solution:
In the first stage of the project, IHS and the company’s
purchasing department analyzed the company’s material
purchases. Over 300 separate “buys” were identified for which
procurement data was maintained internally. Each buy was
assigned an escalation measure – either an actual market price
or a price or cost index. The second stage of the project involved
developing forecasting models for each assigned price measure.
The final model yielded escalation measures-both historical and
forecast-against which the company’s own data was compared.
This exercise provided an objective third-party benchmark of the
purchasing department’s performance in managing cost inflation.
After an initial period of evaluation, the model is now used as a
strategic tool to establish performance targets for the company’s
purchasing managers.
The net result is that, as part of a broader Best Cost Producer
strategy, the benchmarking model has helped them achieve
substantial cost savings in materials procurement. The client
estimated $60 million in cost savings!
The Result:
The client saved $60 million using the service for
cost benchmarking!
Chemical Company Maximizes Procurement
Cost Savings
Client Need:
A chemical company was looking to unlock cost savings in their
supply chain.
What IHS Did:
IHS provided the tools and data for the company to build a
composite index of their spend. Armed with this information,
the user went to the market asking for a reset on price.
Result:
The user saved $8 million, approximately 10% of spend for
the category.

CASE STUDY - CUSTOM AUDIT
The US Department of Defense Saves
$520.6 million
Client Need:
IHS has a long history supporting the aerospace and defense
industry. Price forecasts are employed in long-term contracting
between the US government and private parties via economic
price adjustment (EPA) clauses. These projected costs are
adjusted every year based on the actual data reported by the US
Bureau of Labor Statistics (BLS). One series that heavily relied
upon by the US government and aircraft manufacturers is the
employment cost index (ECI) for total compensation in aircraft
manufacturing. This series is utilized in countless contracts, and
volatility in the series wreaked havoc on EPA calculations.
Their supplier made pension contributions of $8 billion between
2002 and 2005 and reported these to the BLS. The pension cost
their supplier incurred during the time under CAS accounting
standards was only $1.1 billion, however. Therefore, $6.9 billion
of the pension funding reported was a pre-payment credit, and
not a change to compensation of employees. The BLS, however,
counted the $8 billion in contributions in their estimations of
the cost to employers of having employees, rather than the
$1.1 billion. Therefore, the ECI for “Compensation, Aircraft
Manufacturing” registered wild spikes. These spikes were not,
in fact, a reflection of changes in compensation for workers, but
changes in the funding of pension trusts. Therefore, the ECI was
not reflective of compensation at this time. Because the series
was utilized in so many contracts, the US government found itself
beholden to major payouts based on the change-in many cases,
to the supplier itself.
IHS Solution:
With the assistance of IHS, the US Department of Defense
Inspector General’s (DoD IG) office was able to estimate what
the true changes to compensation were excluding the
pre-payment pension credits reported by their supplier.
IHS provided new projections of compensation changes going
forward based on these estimations. The DoD IG’s office then
recalculated contract adjustments with their supplier for the Air
Force C-17, the Navy F/A 18 E/F, and the Army Apache Longbow
using the estimated series. As a result, the US government
avoided significant costs that would have been incurred based
on the ECI as reported by BLS. In the wake of the adjustment,
the DoD IG’s office offered their sincere thanks to IHS, saying,
“[b]ecause of your support, we were able to calculate price
adjustments on the multiyear contracts that were significantly less
than those based on the improperly inflated aircraft manufacturing
index and we were able to avoid a cost of $520.6 million for DoD
and the taxpayers.”
The Result:
IHS played a vital role in ensuring proper contract adjustments
resulting in enormous cost savings for the US Department of
Defense. IHS helped the US Department of Defense and US
taxpayers saved $520.6 million!

Benefit from our breadth of market expertise and our proven cost
modeling framework
The IHS Pricing Purchasing Solution incorporates data and expertise from the product suites
of IHS CERA, MSS (Market Survey Systems), ODS-Petrodata, IHS Fairplay, IHS McCloskey’s,
IHS iSuppli, and the Chemical Market Associates, Inc. (CMAI) —making the Pricing
Purchasing Solution the most comprehensive source of forecasts, data and analysis to help our
customers avoid cost overruns and get the most out of price declines.
Why IHS?
IHS is more than just a data provider. We deliver actionable insights and a model-based
framework for delivering value. Our team provides the most robust and accurate insight,
analysis, and forecasts available on the market today.
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For more information
To learn more about the IHS Pricing Purchasing product suite, visit
www.ihs.com/pricingpurchasing
About IHS
IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical
areas that shape today’s business landscape. Businesses and governments in more than
165 countries around the globe rely on the comprehensive content, expert independent
analysis and flexible delivery methods of IHS to make high-impact decisions and develop
strategies with speed and confidence. IHS has been in business since 1959 and became
a publicly traded company on the New York Stock Exchange in 2005. Headquartered
in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and
employs approximately 8,000 people in 31 countries around the world.
Americas
+1 800 447 2273
Asia/Pacific
+81 3 4530 9703
Europe, Middle East Africa
+44 (0) 1344 328 155

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