Two numbers a
quoted price does not include

A quotation states a price per unit, per pack, or per carton. What it
does not state, because no supplier can know it in advance, is how many
of those units actually reach a plate at service. Two things reduce that
number below the quoted count.

Count shortfall is the gap between what a carton is supposed to
contain and what is actually inside it when the inner packs are opened
and counted. Article 05 in this series sets out how to check for this at
receiving.

Breakage is the share of delivered pieces that crack, chip or
otherwise fail before or during service, whether from handling in
transit, storage conditions, or the service itself.

Neither figure appears on a quotation. Both reduce the number of
usable plates a carton actually delivers, and both change the real cost
of the plates that make it to the table.

The
usable fraction: the arithmetic behind the real cost

The method has five steps.

1. Take the quoted unit price for each supplier being compared.
2. Calculate the count shortfall rate from your own receiving checks:
   the difference between the expected count in a carton and the count
   actually verified, divided by the expected count.
3. Calculate the breakage rate from a service audit: pieces broken or
   otherwise unusable before or during service, as a fraction of pieces
   delivered.
4. Multiply (1 minus the shortfall rate) by (1 minus the breakage rate)
   to get the usable fraction.
5. Divide the quoted unit price by the usable fraction to get the
   effective cost per usable plate.

Compare the effective costs across suppliers, never the quoted
prices. The quoted price is what is billed. The effective cost is what
is actually paid per plate that reaches a cover.

Worked
comparison: a lower quote is not always the lower cost

The rates below are illustrative, chosen to demonstrate the method
rather than to state a measured industry figure. Replace them with your
own receiving and service audit numbers when you run this against a real
comparison. Prices are shown as a percentage of Supplier A’s quote, not
as a currency figure, so the arithmetic is isolated from any actual
price.

Supplier B’s headline quote is 12 percent below Supplier A’s. Once
shortfall and breakage are priced in, the real gap closes to roughly a
quarter of one percentage point. A discount that looks decisive on the
quotation can be almost entirely absorbed by count and breakage
differences that never appear on either invoice.

This is not an argument that a lower quote is always a false economy.
It is an argument that a quote cannot be judged on its own, and that the
same arithmetic run the other way can just as easily show a lower quote
holding its advantage.

Where shortfall
and breakage numbers come from

Neither rate should be assumed. Both come from your own records.

Shortfall comes from the receiving check: count the sealed inner
packs against the standard for the format (12 packs for a plate carton,
24 for a bowl carton), open a sample of packs, and log any gap between
expected and actual count. A handful of receiving checks across a few
orders gives a rate specific to that supplier and that route, which is
more useful than any published average would be.

Breakage comes from a service audit: track pieces set aside as
unusable during storage, handling and service over a defined period, and
express that as a fraction of pieces delivered in the same period. This
is an internal figure, tracked the same way regardless of supplier, so
it is directly comparable across quotations.

Running this
against your own two quotations

Pull the quoted price, your shortfall rate and your breakage rate for
each supplier being compared, apply the five step calculation above, and
rank suppliers on effective cost rather than quoted price. Where the gap
between effective costs is small, the decision reasonably comes down to
other factors: lead time, minimum order structure, and how completely a
supplier answers an RFQ without a follow-up. Where the gap is large, it
usually points to a shortfall or breakage problem worth raising with the
supplier directly before the next order, not just factoring into the
comparison.

Frequently asked questions

Related reading

• current carton specifications
• how counts are verified before
  dispatch
• the receiving
  check that produces your shortfall rate

References