How to compare supplier quotes
In short: put every price in the same unit, confirm each supplier quoted the same spec, add freight and charges to get the landed cost, and check lead time against the need-by date. Then choose the lowest landed cost that meets the spec and the date. That is often not the lowest quoted price.
The six steps
- Put every price in the same unit
Convert per-hundred (C) and per-thousand (M) prices to per piece, and per-foot prices to per length. $62.00 per C is $0.62 each, which is more than a competing $0.59 each.
- Check that each supplier quoted the same thing
Compare grade, finish, thread, length and origin line by line. A lower price for zinc instead of hot-dip galvanized, or import instead of domestic, is not a lower price for your customer’s spec.
- Add freight and extra charges
FOB origin means you pay freight; FOB destination means the supplier does. Add freight, MTR or cert charges, cut charges and lot minimums to get the landed cost.
- Compare lead time against the need-by date
The cheapest quote that arrives after the need-by date is not an option. Note which suppliers meet the date and by how much.
- Note partial quotes, minimums and validity
Mark lines a supplier skipped, minimum order charges, and how long each price holds. A price valid for 7 days may expire before your customer decides.
- Decide whole order or split by line
Splitting lines between suppliers can save on price but adds a second freight charge and a second delivery to track. Split only when the savings beat the extra freight.
A worked example
A customer needs 400 pieces of 1/2-13 × 6 ft B7 all-thread, 800 heavy hex nuts and 400 F436 washers, with MTRs, in 7 days. Three suppliers quote all three lines:
| Supplier | Quoted | Freight terms | Freight + charges | Lead time | Landed cost |
|---|---|---|---|---|---|
| Supplier A | $2,308.00 | FOB origin | $185.00 | 5 days | $2,493.00 |
| Supplier B (best) | $2,446.80 | FOB destination (freight included) | $0.00 | 3 days | $2,446.80 |
| Supplier C | $2,391.60 | FOB origin | $165.00 incl. MTR charge | 10 days | $2,556.60 |
Supplier A has the lowest quoted price, $2,308.00, but it ships FOB origin, so freight brings it to $2,493.00. Supplier B includes freight, lands at $2,446.80, and arrives in 3 days. Supplier C misses the 7-day need-by date, so it is out regardless of price.
Run your own numbers with the freight & landed-cost calculator.
Questions
How do you compare supplier quotes?
Put every price in the same unit, confirm each supplier quoted the same spec, add freight and extra charges to get landed cost, check lead time against the need-by date, and then pick the lowest landed cost that meets the spec and the date.
Is the lowest quoted price always the best supplier quote?
No. In our example the lowest quoted price was $2,308.00, but with $185.00 of freight it landed at $2,493.00, while a $2,446.80 quote with freight included was cheaper and two days faster.
What is the difference between FOB origin and FOB destination?
With FOB origin, the buyer pays freight and owns the goods once they ship. With FOB destination, the supplier pays freight and owns the goods until delivery. FOB origin quotes need freight added before you compare them.
Can supplier quote comparison be automated?
Yes. MySourceBot’s AI employee, Otto, reads supplier replies from email, lines them up by line number with price and lead time, and flags the lowest cost and the fastest delivery. You choose; Otto applies your markup.
Related
Get cleaner, easier-to-compare replies by asking the right way: see the supplier RFQ email template.
Let Otto line up the quotes for you
Otto, MySourceBot’s AI purchasing employee, reads supplier replies from your email, lines them up by line number with price and lead time, and marks the lowest cost and the fastest delivery. You pick; he builds the customer quote. Watch him work.
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