First Principles

"The market price is eighty dollars a kilo" is a conclusion, not a fact. The facts sit one layer down: how many synthetic steps, what overall yield, what the raw materials cost per unit, how many machine-hours a batch consumes, how long capital is tied up. Push every piece of industry common sense one layer down and ask where it came from, until you reach items like route, yield, hours and capital that cannot be divided further.

The test for a genuine fundamental is independent verifiability — invoice-level material prices, process-level yields, scheduling-level hours. Anything you cannot specify a verification method for is another packaged conclusion. Most arguments stall because both sides are stacking conclusions and calling them facts. Rebuild afterwards: cost is the sum of fundamentals, time is the sum of the critical path, feasibility is what physics allows. If the rebuilt number diverges widely from convention, the gap is either an opportunity or a term you forgot to split.

Reasoning by analogy means doing what everyone else does: twenty-five-kilogram fibre drums, forty-five-day lead times, thirty percent deposits. It saves effort — and it inherits someone else's constraints along with the answer. Their drum suits their line; their lead time reflects their scheduling. Neither constraint is necessarily yours.

Rebuilding from elements asks different questions: what environment must the goods survive, how does the customer's line feed, how is it handled at the port? Physics and process decide the packaging, often more cheaply. The same with lead time — split it into procurement, reaction, drying, testing and release, and find which segment is genuinely uncompressible; most conventional lead times hide a stretch of pure waiting. And do not make a dogma of rebuilding: for well-trodden, low-stakes ground, analogy is the cheapest tool available. The criterion is the size of the bet — only big bets deserve decomposition to bedrock.

A convention is a packaged assumption. Mandatory twenty-five-kilogram packs assume manual handling; thirty-percent deposits assume tight cash flow. While those assumptions stay implicit, optimisation can only move inside the convention's frame — forty-five days becomes forty at best.

The method is to write down the condition each rule requires, then check whether the condition still holds: where forklifts and pallets replaced manual handling, packaging is negotiable again; where capital costs have fallen, the deposit rule can give way to more competitive terms and win the order. Conventions whose conditions still hold should stay — pharmaceutical packaging and labelling rules rest on regulation and safety, not efficiency, and decomposition only reinforces them. The point of unwrapping is not to overturn; it is to tell protection from inertia.

Take a quote and split it to first principles: raw material equals unit price times theoretical charge divided by overall yield; processing is hours times rate; then loss, testing, packing, freight, cost of capital and tax. At that level 'expensive or not' stops being a matter of feeling — the difference between two quotes lands on a specific term: two extra synthetic steps, or five points of yield.

For a buyer this decomposition is a map of where to negotiate — name the term and the talk moves to something movable (spec, route, volume) instead of a vague demand for a discount. For a supplier it is the confidence behind the quote: a quote whose every term survives follow-up questions wins orders; one that cannot be split is a guess with a number attached. The method also reveals where volume actually has leverage — some products double volume and barely move the material term, others spread fixed cost steeply. That is where the tiering curve should bend.