Reduced costs of 1% in purchasing can lead to increased profits of 5% or more:
COMPANY A (in millions)
Sales $100
Purchases (materials) $54
Other costs (including labor) $36
Profit $10
if purchasing saves 1 % of those costs, then
Sales $100
Purchases (materials) $53.5
Other costs (including labor) $36
Profit $10.5
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