This measure calculates the total annual cost avoidance savings per $500 million purchases. Cost avoidance is reducing future costs (intangible savings) typically achieved through actions such as negotiating lower rates for new goods and services to be purchased. This measure is part of a set of Process Efficiency measures that help companies in obtaining the greatest saving and performance by minimizing waste and optimizing resource consumption.
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Total annual cost avoidance savings obtained on purchased goods and services / (Value of all materials and services purchased * 0.000000002)