How 26 % additional EBIT lies in purchasing
The leverage in purchasing is much greater than is usually assumed.
1% cost savings increase profits by up to 10%.
However, the item price is often only the smallest component!
Most purchasing organizations are optimizing the wrong levers. Those who only compare article prices ignore up to 80 % of the actual procurement costs.
This is exactly where simple system comes in: Not on the price per screw, but on the total costs per procurement process. From the requirement notification to the posted invoice. The result: an EBIT increase of up to 26% without increasing turnover by a single euro.
Thomas Au
1 Eliminate process costs instead of pushing prices down further
The biggest cost driver in indirect purchasing is not the item - it is the process around it. According to the HTWK study, a manually processed order costs an average of €146, while a digitally processed order only costs €86. That's a saving of €60 per process - regardless of whether the shopping cart is €50 or €500.
Example calculation: A company with a turnover of €100 million and 5% procurement volume via simple system generates around 16,667 orders per year.
The process cost savings: ~€1.0 million - directly in EBIT.
Key finding: If you spend 10 minutes negotiating an item price but 45 minutes placing an order, you are optimizing at the wrong end.
2 Supplier consolidation as a strategic lever
Every additional supplier means additional overhead. From vendor creation and supplier checks to price negotiations. With a targeted purchasing process, you bundle fewer suppliers into one process. Consolidation not only reduces administrative work, but also creates negotiating power through bundled volumes.
Calculation example: At least 12.5% savings on the consolidated procurement volume due to bundling effects, framework conditions and the elimination of supplier administration. With a purchasing volume of € 5 million, this amounts to € 625,000 per year.
Key finding: consolidation does not mean dependency. simple system is neutral - no proprietary trading, no hidden margins. The platform works for the buyer, not for the supplier.
3. stop maverick buying immediately
If specialist departments bypass purchasing when ordering, negotiated conditions expire, processes are duplicated and spend transparency is lost. The price difference between controlled and uncontrolled purchasing is 15-20%.
simple system makes the official way the easiest way: catalogs with approved items, negotiated prices, approval workflows - all in an interface that requires no training.
Example calculation: With a procurement volume of €5 million and a maverick buying rate of 30% (€1.5 million), uncontrolled purchasing costs the company at least €225,000-300,000 per year in lost conditions - without double the process costs.
Key finding: every euro that is ordered outside the system costs the company twice as much - once in price, once in the process.
4. Total cost of ownership instead of unit price thinking
A low item price is worthless if it is backed up by manual approvals, paper invoices, repeat orders due to missing quantities and uncoordinated deliveries. The TCO analysis covers everything: ordering process, delivery time, invoice processing, warehousing, complaints.
simple system makes TCO measurable: regulated approval processes, automatic G/L account allocation, follow-up documents up to invoice approval and AI-supported classification across the entire spend volume.
Calculation example: An article for €8.50 with a manual process (€146 process costs) costs a total of €154.50. The same article for € 9.20 via simple system (€ 86 process costs) costs € 95.20. The "more expensive" item saves 38% in total costs.
Key insight: Don't just ask "What does the item cost?", but "What does it cost us to procure this item?" - The answer is usually 3 to 5 times the price of the item.
5. Automate C-parts management & release experts for A-goods
C-parts typically account for only 5 % of the purchasing volume, but cause up to 60 % of the administrative effort. Every minute that a buyer spends ordering office supplies or screws is lost in strategic negotiations about production materials.
simple system takes over the C-parts process completely: Catalog ordering, approval, goods receipt, follow-up documents - automated and without buyer intervention.
Example calculation: A buyer with employer costs of €120,000 spends 40% of his time on C-parts. That's €48,000 per year for work that a platform can do in seconds. With three buyers: €144,000 of freed-up capacity - for strategic negotiations that pay for themselves many times over.
Key insight: Automation in C-parts purchasing is not an IT project - it is a results decision. Every hour that you free up from operational purchasing becomes a strategic lever.
6 Transparency creates leverage
There is no optimization without data. Many companies do not know who buys what from whom and at what price. simple system provides comprehensive spend analyses across all product groups, suppliers and locations - the basis for any further optimization via product range tendering or framework contract negotiations.
Example calculation: A company uses spend analysis to identify that three departments are ordering the same item from different suppliers - price difference: 22%. Bundling to one supplier saves €44,000 immediately for an annual volume of €200,000 - and that's just one product group.
Key finding: Transparency is not a software function - it is the difference between purchasing as an ordering office and purchasing as a strategic profit lever.
The overall calculation: how 26 % more EBIT
Example calculation for € 100 million turnover
1. process cost savings (lever 1):
16,667 orders × € 60 savings per digital order process
Savings: ~€1 million
2. consolidation, bundling and process efficiency (levers 2-6):
At least 12.5% savings on €5m procurement volume, cumulated from supplier consolidation, maverick buying reduction, TCO optimization, C-parts automation and improved spend transparency.
Savings: at least ~€0.6 million
With an EBIT margin of ~6%, which is typical for the industry, the result increases to ~7.6%.
An improvement of ~26 %, without one euro more turnover.