A pound Saved is worth more than a pound earned !!
Posted on 2nd December 2020 at 14:44
Why a pound saved is worth more than a pound earned !!
Most business invest heavily in resources to achieve greater revenue growth, yet relatively little effort is expended on a structured approach to cost reduction.
Cost reduction can make an important contribution to the bottom line. To illustrate the point, lets take a manufacturing company with £100 million PA turnover, and a raw material spend £60million. The table below demonstrates two scenarios of profit improvement by increasing sales by 10% or by reducing material spend by 10% and how it impacts the bottom line.
Now it should be clear from this example that while each additional pound earned through sales volume growth will deliver thirty pence additional profit, each pound saved by reducing raw material costs flows directly to the bottom line, with an impact that is double of the first.
Pro Outsourcing Ltd, are passionate about cost reduction.
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