Why “cheapest supplier first” is the wrong rule
A priority list is simple to set up and quietly expensive to run. Here is what it misses.
If you sell stock that your suppliers hold, you have probably set up something like this:
- Supplier A — priority 1
- Supplier B — priority 2
- Supplier C — priority 3
It is easy to understand and easy to configure. It also makes the same choice for every order, whatever the order is, wherever it is going, and however your suppliers have been performing lately.
One order, three suppliers
Take a single order and three suppliers who can all fulfil it. These numbers are illustrative, but the shape is one every reseller will recognise.
| Supplier | Cost | Shipping | Delivery | Reliability | Cancellations | Margin |
|---|---|---|---|---|---|---|
| A | $82 | $9 | 2 days | 98% | 1.0% | 31% |
| B | $77 | $15 | 4 days | 91% | 8.0% | 32% |
| C | $84 | $7 | 1 day | 99% | 0.5% | 29% |
On margin alone, B wins. But B cancels eight orders in every hundred and takes four days. Each cancellation is a refund, an apology and often a lost customer, and none of that shows up in the margin column.
C costs slightly more and delivers the best customer outcome by a distance. For many merchants C is the right answer, and a priority list will never find it.
The right answer depends on the goal
There is no single best supplier. There is a best supplier for this order, given what you care about:
- If your promise is speed, it is C.
- If you want margin but will not accept unreliable partners, it is A.
- If you only look at margin, it is B, and you pay for that later.
That is why StackKnack asks for your goals and limits rather than a ranked list. You say something like "maximise margin, deliver within three days, avoid suppliers below 95% reliability", and each order is weighed against that.
And suppliers change
A priority list is also frozen in time. A supplier who was excellent in spring can slip in autumn. Routing that looks at real, recent performance notices, and shifts orders before your customers feel it.
You can try this yourself: the routing demo on our home page uses the table above. Change the goal and watch the decision change.