Make-Buy, Outsourcing & Network Design worked example

Supplier Switching Cost at 75% share of parts requiring full requalification: a worked example in make-buy, outsourcing & network design

This scenario runs the supplier switching cost calculation on the strong side: 75% share of parts requiring full requalification, with every other input held at its documented default. Use it when deciding whether projected piece-price savings from a new supplier justify the upfront cost of switching.

The inputs for this scenario

  • Part numbers requalified at new supplier: 120 part numbers (unchanged)
  • Requalification cost per part number: 850 $/part number (unchanged)
  • Share of parts requiring full requalification: 75 % (raised for this scenario; the documented default is 65)
  • Dual-running and safety-stock buffer cost: 60,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Switching cost = part numbers x requalification cost x full-qual share + buffer cost) to the inputs above produces each figure below.
  • At this operating point the engine returns 136,500 $ for total supplier switching cost, the number this scenario is built around.
  • At this operating point the engine returns 1,138 $ / piece for supplier switching cost per unit.
  • At this operating point the engine returns 76,500 $ for variable supplier switching cost.
  • At this operating point the engine returns 60,000 $ for fixed supplier switching cost adder.

How this compares with the baseline

  • Against the tool's baseline example, where share of parts requiring full requalification sits at 65% and the headline result is 126,300 $, this scenario comes in 8.08% above the baseline at 136,500 $.
  • Use it when comparing a new supplier's quote against an incumbent, or when consolidating spend, to size the one-time cost of changing sources. Treat this as a target state: the delta against the baseline quantifies what the improvement is worth before you commit to chasing it.

Results at a glance

  • Total supplier switching cost: 136,500 $ (headline result)
  • Supplier switching cost per unit: 1,138 $ / piece
  • Variable supplier switching cost: 76,500 $
  • Fixed supplier switching cost adder: 60,000 $

Run it with your numbers

  • Every input above is editable in the live Supplier Switching Cost calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.