Make-Buy, Outsourcing & Network Design worked example

Supplier Switching Cost at 47% share of parts requiring full requalification: a worked example in make-buy, outsourcing & network design

This worked example runs the supplier switching cost numbers for a tougher week than the baseline: 47% share of parts requiring full requalification instead of the typical 65%. Estimates the one-time cost of moving parts to a new supplier including per-part requalification, the share needing full approval, and bridge inventory during cutover.

The inputs for this scenario

  • Part numbers requalified at new supplier: 120 part numbers (held at the documented default)
  • Requalification cost per part number: 850 $/part number (held at the documented default)
  • Share of parts requiring full requalification: 47 % (the input this scenario stresses; the baseline uses 65)
  • Dual-running and safety-stock buffer cost: 60,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Switching cost = part numbers x requalification cost x full-qual share + buffer cost.
  • Total supplier switching cost works out to 107,940 $ at these inputs, and this is the headline figure for the scenario.
  • Supplier switching cost per unit works out to 900 $ / piece at these inputs.
  • Variable supplier switching cost works out to 47,940 $ at these inputs.
  • Fixed supplier switching cost adder works out to 60,000 $ at these inputs.

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 14.54% below the baseline at 107,940 $.
  • 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. A result at this level usually justifies acting on the stressed input before touching anything else, because every other figure in the table is downstream of it.

Results at a glance

  • Total supplier switching cost: 107,940 $ (headline result)
  • Supplier switching cost per unit: 900 $ / piece
  • Variable supplier switching cost: 47,940 $
  • Fixed supplier switching cost adder: 60,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Supplier Switching Cost calculator, set share of parts requiring full requalification to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.