The agreement
Pricing the Overlap
The difference between a supplier two hours away and one seven hours away is a real cost that appears in no quotation and is usually the larger number.
Who is working when, for the people on this page
The supplier who quoted eleven per cent less
Two hours of overlap a day
The supplier who quoted eleven per cent more
Seven hours of overlap a day, and the same weekend as ours
two parties · five days of the seven are working days for all of them · Mon, Tue, Wed, Thu, Fri
The two quotations were compared on price, lead time and references. The right-hand column was in neither comparison and was worth more than the eleven per cent.
When different working weeks make capacity hard to read, teams can take a closer look before deciding whether a delay came from workload, handoffs, or a calendar mismatch.
For a separate reference on calendars, standards, or international operations, consult Kubernetes.
Three suppliers quoted for the same work, and the week each of them keeps
Supplier A, two hours ahead, quoted the highest price
Seven hours of overlap a day and the same weekend as ours
Supplier B, seven hours ahead, quoted eleven per cent less
Two hours of overlap a day, and a Saturday we have never used
Supplier C, three hours ahead, quoted nine per cent less
Six hours of overlap a day and a weekend that does not match ours
three parties · four days of the seven are working days for all of them · Mon, Tue, Wed, Thu
The three quotations were compared on price, lead time and references. None of the three comparisons included the right-hand column, and the right-hand column turned out to be worth more than the eleven per cent. One team's own job.
Three suppliers quote for the same work. One is eleven per cent cheaper. The comparison is made on price, lead time and references, and the calendar does not appear in it at all.
The calendar is frequently worth more than the eleven per cent.
What the gap actually costs
Four things, and all of them are measurable after the fact and none of them is in any quotation.
Round trips. With a two-hour offset a question is asked and answered inside one day. With seven, each exchange is a day. A job with twenty exchanges in it costs twenty days more with the distant supplier.
Decisions during production. Something unexpected on the floor at ten in the morning their time is a question that reaches you at three in the morning and is answered at nine. Nine hours of a machine standing, or a decision taken without you.
Problem response. When something goes wrong, the useful conversation is immediate. With two hours of overlap it happens tomorrow.
Attendance. Site visits, inspections and audits cost a day of travel each way rather than a flight in the morning.
Putting a number on it
Crude is sufficient, because the point is to have any number at all rather than a precise one.
| Item | How to estimate it |
|---|---|
| Round trips | Number of expected exchanges, times the cost of a day of delay |
| Standing time | Hours of machine or labour idle per decision, times expected decisions |
| Travel | Additional days per visit, times visits, times a day rate |
| Risk | The cost of one problem discovered a day late, times a probability |
Done honestly on a job with any real engineering content in it, this usually produces a figure between five and fifteen per cent of the contract value, which is the same range as the price differences being argued over.
What it does not mean
It is not an argument for buying locally. Plenty of distant suppliers are better, cheaper by more than the gap costs, or the only ones who can do the work.
It is an argument for the comparison being made with the number in it rather than without, and for the number being estimated in advance rather than discovered in the third month.
Where the gap costs nothing
Worth stating, because the effect is not uniform.
A repeat order of a standard item with a fixed specification generates almost no exchanges and the offset is nearly free. A first article, a new tool, a bespoke design or anything with site work in it generates dozens, and the offset is expensive.
So the same supplier can be the right choice for one order and the wrong one for another, and the comparison should be made per job rather than per supplier.
Buying the overlap
Where the distant supplier is the right choice, part of the gap can be bought back, and it is worth asking for explicitly at the quotation stage.
- A named contact who works a shifted day — starting early or finishing late — for the duration of the job.
- A daily written handover at the end of their day, so that their morning's questions reach you overnight rather than waiting.
- Standing authority for a defined set of decisions, so that a nine-hour wait is not required for a 0.2 mm tolerance.
- An agreement about which questions justify a call outside hours, and what the response time is for those.
All four are cheap for the supplier to provide and none of them is offered unless asked for. The second is the most valuable and the least often requested.
Asking at the right moment
All of this is negotiable before the order and almost none of it afterwards.
A supplier competing for work will agree to a daily handover and a named early-shift contact without hesitation. The same supplier, six weeks into the job, will treat the same request as a change in scope, because by then it is.
The second-order version
The figures above are about one order. The larger question is about the portfolio.
A supply base concentrated in one distant time zone has a property nobody plans for: every problem arrives at the same hour, and that hour is outside your working day. A team buying from three suppliers across three zones has a problem queue spread through its day; a team buying from three suppliers in the same zone has all of them landing between one and three in the morning.
That is not an argument for spreading the supply base, which has costs of its own. It is an argument for knowing the shape, because the staffing answer — somebody on an early shift — becomes much more obviously worthwhile when it covers eighty per cent of the suppliers rather than one of them.