Three quotes is not a benchmark

Ask a procurement team how they know their price is competitive and you will usually hear that they take three quotes. It sounds like diligence. Quite often it is not.

The problem with the three you already know

The three suppliers on your list are typically the three who found you, or the three you inherited. They are frequently in the same country, buying from the same origin, sometimes from the same producer. Three quotes drawn from one pool tells you what that pool charges. It does not tell you what the material is worth.

We have seen shortlists where all three quotes traced back to a single exporter selling through different agents. Everyone was doing their job. The process still produced a number nobody should have trusted.

What a benchmark needs

For a comparison to mean anything, the quotes have to be genuinely independent and genuinely comparable. Independent means different supply chains, not different letterheads. Comparable means the same specification, the same Incoterms, the same packaging, the same payment terms and the same inspection regime.

That last part causes more trouble than the first. A price quoted FOB with no inspection is not the same product as the same price quoted CIF with pre-shipment inspection. Put them side by side without normalising and the cheaper one wins on a spreadsheet while costing you more in reality.

Ask for the workings

If someone benchmarks on your behalf, ask to see the comparison rather than the conclusion. Which suppliers, from which origins, on what terms, and why the recommended one won. A benchmark you cannot inspect is an opinion.

It is also worth asking a blunter question: who else pays this person? An intermediary earning a commission from the supplier has no reason to drive the price down, and no obligation to tell you that. The arrangement is common and rarely disclosed.

A practical test

Next time you receive a price, ask three things. What did the other quotes come in at. What were the differences in terms. And what would it take to move this price by five percent. If nobody can answer the third question, nobody negotiated.