The problem
You compare suppliers on purchase price and pick the cheapest. But the “cheap” product comes with more expensive transport, large minimum lots that tie up capital, a defect rate that eats time at receiving, shorter payment terms. The real cost – landed cost plus the cost of holding and handling it – can completely reverse the ranking.
Our approach
We define together what goes into the real cost for your company and build the calculation so it can be applied systematically, not just once:
- Cost components – purchase price, transport and customs, handling at receipt, losses/damage, storage cost, financial cost of stock and payment terms, quality cost (returns, complaints).
- Simple, defensible allocation rules: per kilogram, per pallet, per order line – whatever makes sense for you.
- A comparison tool for suppliers and products on full cost, integrated with ERP data or as a separate model.
- Procedures to keep the calculation current when freight rates, exchange rates or commercial terms change.
How it differs by industry
- Distribution and logistics: transport and handling cost per unit varies enormously with order size; cost per customer is often more relevant than cost per product.
- Retail / e-commerce: returns and last-mile cost change the real margin per category.
- Food processing: raw material yield (how much finished product comes out of a kilogram of raw material) is the dominant component – a supplier with a higher price and better yield wins.
What you get
Purchasing and pricing decisions based on full cost, supplier negotiations with quantified arguments, and a real margin per product/customer you can rely on.