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2026/09/24

Business Transport Procurement: Compare Expected Loss, Not Just Unit Price

Suppose: Supplier A costs 500, Supplier B costs 700. B is 200 more. By price alone, A wins.

But if A has a 2% chance of a serious delivery failure, and one serious failure could cause a loss equivalent to 5,000. Then: Expected Loss = 2% × 5,000 = 100. A's true expected cost: 500 + 100 = 600.

If the stakes are higher, one mistake could cause a 20,000 loss. Then: 500 + 2% × 20,000 = 900. Now B is actually cheaper.

Of course this is a simplified model. Its point is: the procurement logic for business reception should not be identical to ordinary ride-hailing.

The more important the client and the more critical the timing, the higher the cost of a mistake.