Increase Profit
How big an impact can procurement have on your profit margin?
If you were to to a search for “Cost Centre” you will see lots of flow charts demonstrating parts of the business that cost money but don't add value. Undoubtedly, you will always find procurement on these charts.
PQMT disagrees with these charts.
With a skilled procurement function you can see a very impressive reduction on your bottom line.
Here is an example of how it works.
Widgets Ltd sells various Widgets.
Widget A sells around 1000 units a year for £1000 before tax.
Each unit costs £600 in materials and £200 in overheads.
The profit from Widget A is £200,000 per year.
Compare this to if Widgets Ltd's procurement function were able to reduce the material cost by 5%.
The profits, from a 5% material cost reduction, have gone up by £30,000
That's a 15% increase in profit margin.
That is equivalent to 150 extra sales over the year.
That is RAW, UNFILTERED PROFIT!
To make this relevant to your business, think of your highest selling product.
Fill in the yellow boxes on THIS SPREADSHEET and see what even the smallest savings can do for your business.