Reading a supply quotation: the items that change the total are at the bottom

A supply quotation is almost always read the same way: you look at the discount percentage and compare it with the previous supplier's. It is the quickest way to overlook the items that matter.

The discount is the most visible part and the least meaningful, because it applies to a list price the supplier sets. Twenty per cent off a high list is worth less than ten off a realistic one.

The figure to compare is therefore the final net price per unit, brought to a common measure across the offers. It is a trivial calculation almost nobody performs because it requires rewriting both quotations.

The second item is minimum order quantities, which shift the advantage more than the discount does. A better price with a high minimum forces you to tie up capital and hold stock you do not need.

The third is delivery charges and the free-delivery threshold. On frequent, mid-value orders that threshold determines the real cost more than the list price does.

If the threshold is high, you end up ordering more than necessary to avoid the charge, which brings you back to the problem of excess stock.

The fourth is the stated delivery times, which should be read as commitments rather than indications. A supplier promising two days and taking seven forces higher stock, and that capital has a cost.

The fifth concerns payment terms. Thirty days against payment in advance is a financial advantage worth a percentage on the price, and it belongs in the comparison rather than considered separately.

Then there are the clauses appearing at the bottom which are better clarified beforehand. Whether returns are possible and on what terms, who pays return shipping, what happens if a product arrives damaged.

On products with an expiry date it is worth asking what remaining shelf life is guaranteed on delivery. Receiving a batch six months from expiry on a slow-moving item means throwing part of it away.

A last item concerns how long the offer stands and the terms for revision. A quotation with no stated expiry is not a commitment, and it helps to know whether the price holds for a year or is open to revision.

The practical way to compare two different offers is to bring everything back to an estimated annual cost based on your real consumption, delivery included. It is the only figure that accounts for every item at once.

In summary: the discount percentage is the least meaningful item, minimum orders and free-delivery thresholds shift the advantage more than the list price, delivery times determine stock levels, payment terms are worth a percentage, and the comparison is made on estimated annual cost.