Supply Chain & Procurement worked example

Dual Source Savings with landed cost buying from the incumbent supplier of 63 units: a worked example

Here is what the math looks like when conditions slip. We hold every other input steady and drop landed cost buying from the incumbent supplier to 63 units, then walk the calculation through step by step. Estimate dual-source savings from avoided shortages and added supplier cost.

The inputs for this scenario

  • Landed cost buying from the incumbent supplier: 63 units (the input this scenario stresses; the baseline uses 125)
  • Landed cost buying from the alternate source: 100 units (held at the documented default)
  • Baseline spend on this part: 100 units (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Margin = gain or available amount - cost or required amount.
  • Dual source savings margin works out to -37 % at these inputs, and this is the headline figure for the scenario.
  • Dual source savings amount gap works out to -37 value at these inputs.
  • Available dual source savings amount works out to 63 value at these inputs.
  • Required dual source savings amount works out to 100 value at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where landed cost buying from the incumbent supplier sits at 125 units and the headline result is 25 %, this scenario comes in 248% below the baseline at -37 %.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to landed cost buying from the incumbent supplier, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. It compares landed cost only; it does not price in qualification cost, minimum order penalties, or the quality risk of an unproven alternate, so treat the margin as gross, not net.

Results at a glance

  • Dual source savings margin: -37 % (headline result)
  • Dual source savings amount gap: -37 value
  • Available dual source savings amount: 63 value
  • Required dual source savings amount: 100 value

Run it with your numbers

  • To rerun this with your own numbers, open the live Dual Source Savings calculator, set landed cost buying from the incumbent supplier to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.