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The nearer supplier costs more per piece. Do the carry sum
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The nearer supplier costs more per piece. Do the carry sum

Uzair bin Haroon

Compare the two quotes on landed cost plus carry, not on unit price, and the nearer one often wins outright. A part that takes eight months from purchase order to shelf is paid for, or financed, for most of that time. At an 11.5 per cent borrowing rate — the policy rate the State Bank of Pakistan held through September 2026 — six months of cover costs 5.75 per cent of the part's value in interest alone, and eight months costs 7.7 per cent.

Use your own rate; the arithmetic does not change. Then add the warehouse, and the write-down on the size or colour nobody ordered, and the container that lands after the season. A supplier who delivers in three weeks against a rival's six months is not selling you a cheaper part. He is selling that 7 per cent back, and it never appears as a line on either quote.

Why a company actually moves the work

Guardian Bikes moved bicycle production from a Chinese contract manufacturer to Seymour, Indiana, and in CNBC's documentary on the move the reason is the calendar rather than the wage. Ordering from China meant a six-to-eight-month lead time; that meant carrying enough stock to cover it; that meant being out of exactly the sizes and colours customers were asking for. The Indiana plant builds to demand instead, at roughly a thousand bikes a line a day.

The wage gap did not close and was never going to. CNBC puts average manufacturing pay at about $35 an hour in the United States against $4 in China and $1.30 in Vietnam, and Guardian's answer was a line designed to run with fewer people. If you are arguing for a nearer supplier on labour cost, you are arguing on the axis you lose. Argue on the date.

What to ask the nearer supplier before you believe the date

Three questions separate a genuinely shorter chain from a shorter last leg.

  1. The lead time in weeks, in writing, with the remedy if it slips. If it is the product, it belongs in the contract the way a price does. A supplier who will not put a date in writing is quoting you a hope.
  2. Where their own sub-tier sits. Guardian's frame tubing comes from 45 minutes north of Seymour and another component is made down the street, which is what makes a mid-programme design change survivable. A nearer assembler feeding off the same distant supply base has shortened your last leg and nothing else.
  3. Whether the machine and the quality record are already in the building. Tariffs have brought some parts to cost parity that were not close before, but only a shop that already had the machine and the documented process walks through that door. Ask to see the file on a part like yours, not a capability list.

There is one honest caveat on the carry sum. It rewards the nearer supplier only if the delivery holds. A three-week promise that turns into nine weeks twice a year costs more than the eight-month chain you could plan around, so run the first order as a trial on one part number and hold the old source until the date has been met twice.

If you are re-sourcing a part and the question is the date rather than the price, send Vesprr Workshop the drawing and the annual quantity and ask for the lead time quoted first.

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