title: Purchasing in a supply chain environment.
abstract: Why the interest in purchasing? In the typical company, material costs are 40% to 75% of the cost of goods sold, labor is 5% to 15%, and the balance is burden. The typical company has $4-$5 in purchased cost to $1 in labor. Most companies are implementing material requirements planning (MRP II) and enterprise resource planning systems to control the $1 in labor and have little expectation in the area of purchasing savings. Yet a dollar saved in purchasing goes directly to the bottom line. I ran a survey of 100 Class A users of MRP II; in all 100 of the companies, the biggest payback was in the area of purchasing.
authors.forename: J E
authors.initials: JE
authors.lastname: Schorr
mesh_terms: D001071:Appointments and Schedules; D003132:Commerce / Q000458:organization & administration*; D003284:Contract Services; D004864:Equipment and Supplies / Q000600:supply & distribution*; D006750:Hospital Distribution Systems; D008421:Materials Management, Hospital / Q000379:methods; D009816:Office Automation; D011357:Product Line Management / Q000379:methods*; D011682:Purchasing, Hospital / Q000379:methods; D017749:Total Quality Management; D014481:United States