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Suppliers are compared on their on-time and fault rates from the business's own delivery record, and on payment terms, alongside price — weighted by what a late or faulty delivery costs this business.
Paper packet. Every task here also exists on screen, where it is checked automatically; answers written on paper are not assessed by Nydus. When you are back at a device, enter your answers there.
You will compute suppliers' on-time and fault rates from a delivery record, compare suppliers on rates rather than counts, sort facts into reliability, quality, terms and price, and weigh reliability against a price saving.
A reorder point relies on a supplier's lead time, and shrinkage sometimes starts with a short delivery. Both assume a supplier behaves as promised. This lesson checks whether they do.
| Term | What it means |
|---|---|
| On-time rate | Deliveries on time over all deliveries, as a percentage. |
| Fault rate | Deliveries short, damaged or wrong over all deliveries. |
| Payment terms | When the business must pay, which decides when cash leaves. |
| Delivery record | A log of every delivery: date promised, date arrived, problems. |
| Cost of lateness | What a late delivery costs the business in lost sales or promises. |
| Back-up supplier | A second source kept ready for when the first fails. |
Neighborhood Kitchen buys vegetables from two suppliers. Hillside Farm made 50 deliveries: 46 on time, 2 short or with spoiled produce. City Wholesale made 40: 30 on time, 4 with problems. The counts are hard to compare because the totals differ; the rates are not:
City Wholesale is a little cheaper. But for a kitchen that cooks the same day, one late delivery in four means a dish off the menu or a dash to the store, and the saving disappears in a week. Price, reliability, quality and terms are four different questions, and the cheapest answer to the first is often the most expensive answer to the others.
Another way: table
Neighborhood Kitchen's vegetable suppliers.
| Hillside Farm | City Wholesale | |
|---|---|---|
| Deliveries | 50 | 40 |
| On time | 92% | 75% |
| Short or spoiled | 4% | 10% |
| Price | a little higher | a little lower |
Another way: steps
The record only exists if someone keeps it. It takes a line per delivery in a notebook or spreadsheet: supplier, date promised, date arrived, complete or not, any fault. After a few months it answers questions no sales rep will: which supplier is actually reliable, and whether a supplier is getting better or worse.
Weigh the record against what the item means to the business. For stock that is kept for weeks, like cleaning products, a late delivery rarely matters and price can decide. For something used the same day, like fresh vegetables, or something a promise depends on, like the part a customer's bike is waiting for, reliability usually outweighs a few percent on the price.
Log every delivery. Supplier, date and time promised, date and time arrived, complete or short, any damage or wrong items. Check the delivery at the door, as in the shrinkage lesson.
Work out the rates. For each supplier over the same period: on-time deliveries over all deliveries, and faulty deliveries over all deliveries, times a hundred.
Add price and terms. The price per unit, any minimum order, and how many days the business has to pay.
Cost lateness and faults. What does one late or faulty delivery of this item cost: a dish off the menu, a bike waiting, a dash to a retail store?
Compare in dollars a month. The saving from the cheaper price against the extra cost of its late and faulty deliveries.
Check the comparison. Make sure both rates cover enough deliveries, at least twenty or so each, and the same months, so a holiday or a storm does not tilt one supplier's record. And check that the rates are rates: a supplier with more deliveries will always have more late ones in total.
Comparing rates is allowed, and needed, because suppliers make different numbers of deliveries. Thirty late deliveries out of three hundred is better than ten out of forty; only the rate shows it.
Costing a late delivery is allowed because reliability only matters through what lateness costs. For cleaning cloths that sit on a shelf for a month, a late delivery costs nothing; for fish needed by ten o'clock, it costs the lunch menu.
Comparing in dollars a month is allowed because it puts price and reliability on the same footing. A 3 percent saving on 1,000 dollars of parts a month is 30 dollars; three extra late deliveries at 40 dollars each is 120. The figures, not the feeling, decide.
Payment terms decide when cash leaves the business. A supplier who allows 30 days to pay effectively lends the business a month of stock for free; one who wants payment on delivery takes the cash at once. For a business short of cash, that difference can matter more than a small discount.
The money course showed how to weigh it: a 2 percent discount for paying in 10 days instead of 30 is a high price for twenty days of cash, but a business that would otherwise borrow at a high rate may still take it. Note each supplier's terms beside its price, and include them in the comparison.
A delivery record is also the best basis for a conversation with a supplier. 'Your deliveries have been late 8 times in the last 30, mostly on Mondays' is specific, fair and hard to wave away. 'You're always late' invites an argument.
Share the record, ask what is behind the pattern, and agree a change: an earlier delivery slot, a different route, a phone call when a truck is running late. Then keep logging. Many reliability problems are fixed by one clear conversation, and a supplier who improves is often worth more than a new one with no record at all.
For any item the business cannot run without, keep a second supplier ready: an account opened, prices known, a small order placed now and then so the relationship is real. The back-up does not need to be the cheapest; it needs to be able to deliver when the main supplier cannot.
The next lesson plans for exactly that week, when a supply fails. A back-up supplier chosen in a calm month, from the record, is far better than one found in a panic on a Monday morning with an empty cooler.
Switching suppliers has costs of its own: new accounts, new prices to learn, a period of uncertain deliveries. So switch on the record, not on one bad week. A useful rule is to switch when the cheaper or more reliable alternative wins clearly in dollars a month, over a few months of records, and the main supplier has had a fair chance to fix the problem.
Splitting orders between two suppliers is often the best answer: most of the volume to the more reliable one, a steady share to the other, so both records keep growing and either can take over if needed.
Faults deserve the same treatment as lateness: a rate, from the record, costed for this business. A supplier whose clay arrives too wet in 2 of 25 deliveries has a fault rate of 8 percent; if each wet bag means a day's throwing lost, that is a real cost. A supplier whose cleaning chemicals arrive with a cracked bottle now and then may cost almost nothing, because the bottle is credited and the shelf is full.
Write the fault on the delivery note at the door, with a photo where possible, and ask for a credit the same day. The record then shows both the fault rate and how well the supplier puts faults right, which is part of what makes a supplier worth keeping.
Small, local suppliers are often less polished than large wholesalers and more flexible: they will add a forgotten item to tomorrow's delivery or hold a price through a busy season. Judge them on the same record, but include that flexibility in the notes, because it has real value when something goes wrong. A record that shows a local farm on time 88 percent of the time, and always willing to fix a short delivery the same day, may be worth more than a wholesaler at 95 percent who never does.
Once a quarter, put each important supplier's figures side by side: on-time rate, fault rate, price changes, terms and any notes about how problems were handled. Ten minutes with the log is enough. Look for trends as well as levels: a supplier whose on-time rate has fallen from 95 to 80 percent over two quarters needs a conversation now, before it falls further.
The review is also the moment to check prices against the market, to ask for better terms from a supplier with a good record, and to decide whether the back-up supplier still deserves a small share of orders. Decisions made in a calm quarterly review are almost always better than ones made on the morning a delivery fails, with the cooler empty, the phone ringing and the lunch rush only two hours away.
A seafood and vegetable restaurant in Charleston bought all its produce from one wholesaler that offered the lowest prices in town. The chef had a standing complaint that deliveries were often late or short, but nobody had numbers. The manager started a one-line log for every delivery.
After three months the log showed 52 deliveries, 39 on time, 75 percent, with 7 short or damaged, about 13 percent. A smaller farm cooperative the restaurant used occasionally had made 14 deliveries, 13 on time and 1 short. The cooperative's prices were about 6 percent higher.
The manager costed the late deliveries: each one meant either a dish taken off the lunch menu or a run to a grocery store, roughly 60 dollars in lost sales or higher prices. Thirteen late deliveries in three months cost far more than the 6 percent saving on about 3,000 dollars a month. The restaurant moved its daily greens and herbs to the cooperative and kept the wholesaler for potatoes, onions and other items that keep, where a late delivery did not matter. Both suppliers stayed in the log.
Larger companies keep supplier scorecards that rate each supplier on on-time delivery, quality, price and responsiveness, and review them with the supplier every quarter. A small business's delivery log is the same tool in its simplest form, and it supports the same kind of conversation.
Choose the cheapest. Price is one of four questions.
Compare the counts. Suppliers make different numbers of deliveries; compare rates.
A friendly rep means a good supplier. Only the record shows reliability.
One bad day decides it. One day is an anecdote; the record is the evidence.
Switch at the first problem. Share the record and give a fair chance first.
Work out CleanPro's on-time rate.
$15 \div 20 \times 100 = 75$
From the log.
Work out BulkChem's on-time rate.
$23 \div 25 \times 100 = 92$
From the log.
Cost a late delivery.
$\text{nearly zero: stock lasts months}$
Products keep.
Compare price and terms.
$\text{CleanPro 6 percent cheaper; 30 days}$
These decide here.
Choose the supplier.
$\text{CleanPro, despite the lateness}$
Lateness costs little for this item.
Work out ClayWorks' rates.
$13 \div 20 \times 100 = 65; \ 1 \div 20 \times 100 = 5$
On time; faulty.
Work out Potters' Store's rates.
$24 \div 25 \times 100 = 96; \ 2 \div 25 \times 100 = 8$
On time; faulty.
Cost a late delivery.
$\text{a missed kiln firing}$
Firings are booked a week ahead.
Cost a faulty bag.
$\text{one bag set aside, replaced next order}$
Small.
Weigh the two.
$\text{lateness costs far more than faults}$
For her work.
Choose and keep a back-up.
$\text{most orders to Potters' Store; ClayWorks as back-up}$
Both records keep growing.
Note the monthly spend.
$40 \times 20 = 800$
Parts times price.
Find the saving.
$800 \times 3 \div 100 = 24$
PartsDirect's 3 percent.
Find the late deliveries each way.
$20 \times 20 \div 100 = 4; \ 20 \times 5 \div 100 = 1$
A month's deliveries times the late rate.
Find the extra late deliveries.
$4 - 1 = 3$
A month.
Cost the extra lateness.
$3 \times 30 = 90$
A bike waiting and a free service each.
Compare the two figures.
$90 - 24 = 66$
Dollars a month worse off.
Choose the supplier.
$\text{CycleSupply}$
The record wins over the price.
Work out Green Acres' on-time rate: 27 of 30 by 6 am.
$27 \div 30 \times 100 = 90$
On time over deliveries.
Work out Valley Farm's: 16 of 20.
$16 \div 20 \times 100 = 80$
The same measure.
Cost a late delivery.
Bright Home Cleaning has two suppliers of cleaning products. Of $20$ deliveries from CleanPro, $15$ arrived on time and $0$ were short or faulty. Of $25$ from BulkChem, $23$ arrived on time and $1$ were short or faulty. Which supplier delivers on time more reliably?
Complete the worked solution: Neighborhood Kitchen's delivery log shows $44$ of $50$ deliveries from Hillside Farm arrived on time, and $21$ of $25$ from City Wholesale. Find each supplier's on-time rate and how many percentage points apart they are.
Find Hillside Farm's on-time rate.
$(\text{on time}) \div (\text{deliveries}) \times \text{a hundred} =$ p
A rate, because the totals differ.
Find City Wholesale's on-time rate.
$(\text{on time}) \div (\text{deliveries}) \times \text{a hundred} =$ q
The same measure.
Find the gap.
$(\text{Hillside rate}) - (\text{City rate}) =$ d
Percentage points.
Say what to weigh it against.
$\text{the price difference, for a same-day item}$
Late vegetables mean a dish off the menu.
Maya is comparing clay suppliers. Match each fact to what it tells her.
| Reliability | Quality | Payment terms | Price | |
|---|---|---|---|---|
| Arrived on the day promised 24 times out of 25 | ||||
| Two bags in 25 deliveries were too wet to use | ||||
| Invoices payable in $18$ days | ||||
| 2 dollars a bag cheaper |
Northside Repairs buys about $38$ spare parts a month. PartsDirect is $4$ percent cheaper but on time $80$ percent of the time; CycleSupply is on time $95$ percent of the time. A late part means a bike waits and a customer is let down. What should Dev weigh?
Maya's Ceramics has two suppliers of clay. Of $20$ deliveries from ClayWorks, $13$ arrived on time and $1$ were short or faulty. Of $25$ from Potters' Store, $24$ arrived on time and $2$ were short or faulty. Fill in each supplier's on-time rate and fault rate, as percentages.
| On time, percent | Short or faulty, percent | |
|---|---|---|
| ClayWorks | ||
| Potters' Store |
Of the last $25$ deliveries of vegetables to Neighborhood Kitchen from Hillside Farm, $4$ were short or had spoiled produce. What is the fault rate, as a percentage?
Answer:
A seafood restaurant in Houston logs every delivery from its fish supplier: the time promised and the time it arrived. Of the last $60$ deliveries, $45$ arrived before the 10 am cutoff the kitchen needs for lunch prep. What is the supplier's on-time rate, as a percentage?
Answer:
A café owner's notes on her milk supplier. Mark every note that comes from the delivery record.
This task has no paper form; do it on a device.
Lesson test: one question per skill, one attempt each, no hints. Your answers are checked when you submit.
Northside Repairs buys about $40$ parts a month at about $20$ dollars each, in $20$ deliveries a month. PartsDirect is $4$ percent cheaper but late on $20$ percent of deliveries; CycleSupply is late on $5$ percent. Each late delivery costs the shop about $39$ dollars in a bike kept waiting and a free service offered. How many dollars a month worse off would PartsDirect leave the shop? (Negative if it would be better off.)
Answer:
You can compare suppliers on the record, not on price or a friendly rep. Tell someone why the cheapest supplier can be the expensive one. Next: a plan for the week a supply fails.
21. Your turn: Monica's berry growers, step 3
$\text{berries missing at the market opening}$
The busiest hour: reliability weighs heavily.