The term competitiveness (price competitiveness) or LCI (Lytica Competitiveness Index) defines a quantitative parameter calculated based on a company’s spending. It is a valuable metric for companies buying electronic parts to identify and quantify actionable cost savings at the component level.
Price competitiveness is a statistically derived ranking expressed as a percentile where 100% represents best in class spending performance. For example, a 50th percentile company would be average. Companies ranked less than 50% would be worse.
There are two reasons why you should know your competitiveness index score. The first quantifies your company against potential competitors. The second allows Lytica to calculate pricing for your company. For example, if you have a competitiveness level of 65%, you should pay 65th percentile prices.
While Lytica’s competitiveness metric is one layer of abstraction from price, it enables pricing performance comparisons from part to part within a commodity and across them. This normalization makes performance characterization and comparisons both meaningful and possible.