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Purchase Order Consolidation Saving Calculator

Work out purchase order consolidation saving instantly with clear inputs, formula shown and shareable results.

About Purchase Order Consolidation Saving Calculator

Consolidating four small orders into one removes three orders' worth of transaction cost. The saving is entirely in process cost, so it depends heavily on an honest cost-per-order figure — and it must be netted against any inventory increase from larger, less frequent orders.

Formulas

Orders removed

Removed = Current orders - Current orders / Consolidation ratio

Annual saving

Saving = Orders removed x Cost per order

Worked example

With the default values below, Purchase Order Consolidation Saving Calculator returns Annual saving of $21,600,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Current purchase orders per year
12,000
Cost per purchase order
2,400
Orders consolidated into one
4
One-off implementation cost
3,600,000

Results

Annual saving
$21,600,000.00
Orders removed per year
9,000
New annual order volume
3,000
Payback on implementation
2.0

Step by step

  1. 1Values used
  2. 2Orders removed
  3. 3Annual saving
  4. 4Annual saving= 21,600,000.00
  5. 5Orders removed per year= 9,000
  6. 6New annual order volume= 3,000
  7. 7Payback on implementation= 2.0

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or tax into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Does consolidation increase inventory?

Usually yes, since order quantities rise. Net the additional holding cost against the process saving before committing.

What enables consolidation?

Blanket orders with scheduled releases, catalogue ordering with weekly consolidation, and supplier-managed replenishment.

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Purchase Order Consolidation Saving Calculator | Calcrivo