LANDED COSTS HEALTHCARE
What a $0.05 Exam Glove Really Costs by the Time It Reaches Your Warehouse
A supplier quotes five cents per exam glove. At $50 per 1,000 gloves, the offer looks easy to compare with your current price. But the factory quote and the price you pay to keep gloves on your shelves cover different costs. To compare the two, follow the shipment all the way to your warehouse.
Put every quote on the same basis
Start with the same glove specification, packaging, order volume, and delivery point. A quote for 1,000 gloves can look better simply because it assumes a different weight, carton configuration, or order quantity. Confirm the Incoterm and named location, too. Those details help establish which costs the supplier covers and which you need to add.
Then calculate the cost per 1,000 usable gloves. If your model assumes every glove you buy will be available to sell or use, it will understate the cost when you have a short shipment or reject part of a lot.
Work through the numbers
This example uses a hypothetical shipment of 1 million gloves. All figures are illustrative planning assumptions.
| Cost component | Per 1,000 gloves ordered |
|---|---|
| Supplier quote | $50.00 |
| International freight and insurance | $3.00 |
| Estimated duties, customs fees, and brokerage | $4.50 |
| Domestic delivery to the warehouse | $2.00 |
| Inspection and receiving | $1.00 |
| Total | $60.50 |
If 1% of the shipment is unusable and the supplier provides no credit, the $60,500 total is spread across 990,000 usable gloves. The effective cost is $61.11 per 1,000 usable gloves, about 22% above the quoted unit price.
Check what changes between shipments
Freight per carton can move when you switch from a full container to a smaller order. Delivery costs can change when the warehouse changes. A supplier’s minimum order can also tie up more cash and leave you holding sizes that sell slowly. Evaluate inventory carrying costs and payment terms alongside the landed-cost calculation when comparing the overall economics.
Before committing, replace the planning assumptions with quotes for your actual shipment and have your customs broker confirm the classification and applicable duties. Run the model at the volume you expect to buy, including smaller replenishment orders if those are part of the plan. That’s the comparison you want in front of you when you decide whether to switch suppliers.