The unit price came down 6%. The lead time went from three weeks to nine.

A procurement win that shows up in one department's numbers and a cost that shows up in three others, and why the arithmetic usually favours the shorter lead time.

By Steve 5 min read
Abstract bridge artwork for The unit price came down 6%. The lead time went from three weeks to nine.

A supplier switch or a renegotiation lands a 6% reduction on unit price. It is a clean, defensible number. It appears in the procurement report, it survives audit, and nobody disputes it. What often goes unrecorded is the second clause of the same agreement: the lead time moves from three weeks to nine, or the minimum order quantity triples, or the goods now arrive by sea rather than road. The saving is booked once, in one place. The cost is paid continuously, in several places, by people who were not…

Keep reading for free

Create an account to read the rest.

The whole library is free. No card, no subscription, no trial that quietly ends. An account simply lets us know who we are writing for, and opens every article from here on.

  • Every article, in full, at no cost
  • New articles published every weekday
  • Takes about twenty seconds
Create a free account I already have one

Free means free. We will not charge you for the library, and you can read as much of it as you like.

Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

More on Operations

Scroll to Top