Solve the following problem to appreciate how procurement strategy could contribute to profit. Suppose GMs revenue =$250 billion, annual spending on parts =$200 billion, and net profit margin was 0.6%. (a) How much can GM increase the profit from a 1.0 percent reduction in annual procurement spending? Show your work. (b) To achieve the same increase in profit in (i) through sales, how much of the revenue increase (in $) must GM have? Show your work.

Use this as a reference -

In 2001 , General Motors's revenue was $177.3 billion, annual spending on parts was $143.8 billion, and net profit margin was 0.3 percent. A 0.5 percent reduction in annual spending would have increased profit by $0.72 billion. To achieve the same increase in profit through higher sales, General Motors would have had to increase revenue by a startling $240 billion, clearly an impossible challenge [133]