Decision Library
Count the cost of a good unit, delivered
A manufacturing decision commits tooling, capital and years of supply to a site and a process. Quotes compare unit prices, but the business pays for good units delivered on time, and the gap between the two can reverse a decision. A Decision Room compares making, buying, dual-running and moving production on that fuller arithmetic.
The production options
Make in your own plant. Contract a manufacturer. Run two sources in parallel during a transfer. Move production to a new region. Delay a new product line until capacity is proven. Each option trades unit cost against control, flexibility and the working capital tied up in goods on the water.
Yield and landed cost
First-pass yield, the share of units that pass inspection without rework, turns a quote into a real cost. A unit quoted at $15.90 with 86 percent yield costs about $18.49 per good unit, and one quoted at $18.40 with 94 percent yield costs about $19.57. Then add freight, insurance, duty and inspection to reach landed cost, and the gap can close or widen again.
Lead time matters twice: once on the calendar, and again on the balance sheet. Every extra week in transit is a week of inventory paid for and not yet sold.
Evidence from the line
Measured yield on pilot lots rather than promised yield, actual lead times with their variation, audit reports from an independent inspector, capacity commitments in writing, and freight and duty figures confirmed by your forwarder and customs broker. A factory visit shows what the line looks like on a good day, while lot records show what it does on an ordinary one.
How the room argues a production choice
Each option gets a Champion. The Red Teamer runs the disruptions that matter for this supply: a port closure, a sudden duty change, a key machine down for three weeks. The Gray Wolf hunts concentration, such as one plant, one material supplier or one skilled technician. The Craftsman checks whether the transfer plan respects how long qualifying a new source truly takes.
The engine works the landed cost sums from your figures. The Verdict names the leading option, the yield or lead time it depends on, and the figure that would change it, and your operations and finance leaders record the Human Decision.
What to weigh
Cost per good unit
Quoted price divided by first-pass yield, before freight and duty.
Landed cost
Cost per good unit plus freight, insurance, duty and inspection to your warehouse.
Lead time and variance
Average time from order to receipt, and how far it swings.
Concentration
What stops if one plant, material source or person is unavailable.
Transfer cost
Tooling, qualification lots, samples and the learning lost during a move.
Working capital
Inventory the option forces you to hold in transit and in safety stock.
Where it goes wrong
Qualification delay
The new source needs more sample rounds than planned before it meets the standard.
Hidden logistics
A low factory price hides freight, duty and delay on the way to the customer.
Relationship comfort
A long, friendly relationship with a plant is mistaken for measured reliability.
Two plants for a leather goods line
A brand making 12,000 leather bags a year compares two contract plants. Plant A quotes $18.40 at 94 percent measured yield with 21 days of transit. Plant B quotes $15.90 at 86 percent yield with 55 days of transit. Per good unit the gap is about $1.08, or roughly $13,000 a year in Plant B's favor before freight. Plant B's longer transit means about five more weeks of inventory, worth around $21,000, and its yield figure comes from a single pilot lot. With weights of landed cost 30, lead time 25, concentration 20, transfer cost 15 and working capital 10, the Verdict favors a dual run: Plant A keeps 70 percent of volume while Plant B proves its yield over three production lots. It names what would move all volume to Plant B: three consecutive lots at 92 percent yield or better.
Questions
- Can the room compare production in two countries?
- Yes, when you bring each option's figures: quotes, yields, transit times and the duty rates your broker confirms. The Scout can add public facts such as published trade rules, and the Red Teamer tests each country's exposure to disruption.
- Does the Verdict move production?
- No. The Verdict is a reasoned comparison. Where production goes is decided by the people accountable for it, and that choice is recorded separately in the Decision Passport.
Further reading
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