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**The Indirect Procurement Savings Calculator**

The Indirect Procurement Savings Calculator estimates potential savings available from improved management of your organization's indirect spend base. Indirect spend includes any expenditure with an external supplier that is not part of a company's cost of sales. This typically includes categories such as office supplies, computers, telecom services and small parcel freight to name just a few. Indirect spend represents 10-15% of every sales dollars for the average company and is rarely controlled as tightly as the "direct" procurement expenditures which are part of cost of sales. For this reason, improved management of indirect spend is often an area of considerable early opportunity for organizations embarking upon cost savings initiatives.

The calculator estimates total potential cost savings from indirect procurement programs based upon an organization's annual sales and, if available, its annual G&A (General & Administrative) expenses. The calculator will generate a savings estimate based on sales only but the accuracy of the estimate will be improved if the G&A figure is available. In addition to dollar cost savings the calculator will also provide the resulting increase in operating margin and the equivalent dollar sales needed to produce the identical increase in dollar operating profit at different levels of operating margin.

Step 1 - Enter your company's annual sales in US dollars in the yellow-shaded cell B3. This is a required input for correct operation of the calculator. Upon entering your sales figure you will see values appear in the white-shaded calculator output cells. These values represent the calculator's estimates for cost savings and operating profit increase based on annual sales alone. If you do not have G&A expense available these values also represent the calculator's final output. If you do have G&A expense available, proceed to Step 2 below.

Step 2 - Enter your company's annual G&A expense in the other yellow-shaded cell B4. Upon entering your G&A figure in cell B4 you will see the numbers in the white calculator output cells change to the final estimates of cost savings and operating profit increase. These final estimates will be more accurate than the initial estimates provided from Step 1 using sales alone.

If you want to start over and use the calculator again simply refresh your browser and your original inputs and the resulting calculator outputs will be erased. You can then repeat steps 1 and 2 with new assumptions for sales and/or G&A expense.

The calculator estimates total potential cost savings from indirect procurement programs based upon an organization's annual sales and, if available, its annual G&A (General & Administrative) expenses. The calculator will generate a savings estimate based on sales only but the accuracy of the estimate will be improved if the G&A figure is available. In addition to dollar cost savings the calculator will also provide the resulting increase in operating margin and the equivalent dollar sales needed to produce the identical increase in dollar operating profit at different levels of operating margin.

**Instructions for using the calculator**Step 1 - Enter your company's annual sales in US dollars in the yellow-shaded cell B3. This is a required input for correct operation of the calculator. Upon entering your sales figure you will see values appear in the white-shaded calculator output cells. These values represent the calculator's estimates for cost savings and operating profit increase based on annual sales alone. If you do not have G&A expense available these values also represent the calculator's final output. If you do have G&A expense available, proceed to Step 2 below.

Step 2 - Enter your company's annual G&A expense in the other yellow-shaded cell B4. Upon entering your G&A figure in cell B4 you will see the numbers in the white calculator output cells change to the final estimates of cost savings and operating profit increase. These final estimates will be more accurate than the initial estimates provided from Step 1 using sales alone.

If you want to start over and use the calculator again simply refresh your browser and your original inputs and the resulting calculator outputs will be erased. You can then repeat steps 1 and 2 with new assumptions for sales and/or G&A expense.