As manufacturers we send out quotations to our customers many times each day. We also send out RFQ’s for materials, and services many times each day, as well.
As a CNC machining and contract manufacturing company, the most frequent RFQ sent out each day, is for metal materials. We try to get as many quotations as is possible for the required material, for a RFQ we receive from our customers/prospects.
Many times we see quoted prices for the same commodity, that are worlds apart! Human nature being what it is, is to go with the lowest quoted price. But when one supplier quotes $243.00 (51.92% of the competitive cost) for 27 pieces of 4.25″ diameter x .625″ thick, of 304L Stainless Steel, and another supplier quotes $468.18 (1.92 times the cost), you scratch your head and wonder whose price is the right one.
I know that its easy to convert everything to a pound price and see whose may have made an error. We are always tempted to call each supplier and tell them what their competitions price is, and see if an error was made. Many times the reply we get is that; the lower price supplier does not know what they are doing, and the higher price supplier either does very little business in that commodity or just does not have a handle on the market and it’s competition.
In any event, as a company who depends upon these quotations to formulate our cost to our customer, we worry that by going with the lower cost supplier’s price, we will hear from that supplier, when it is time to order the material at the lower cost, that they made an error, and can not honor their lower prices.
To say the least, every quote that is made from such wide ranging prices of the same commodity, is a bit anxiety provoking. But fortunately when the low cost supplier realizes his error, most of the time they honor their quoted price, and learn the valuable lesson. It’s like carpentry, measure twice, cut once.