Superior procurement cost management lies in the adoption of cost control methods suitable for the actual situation of the enterprise. The following is a sample of procurement cost management essay that I have organized for you, I hope you like it.
Procurement cost management essay sample aIntroduction to the management of procurement costs
Abstract: Through the analysis of procurement costs, the development of procurement cost control steps discussed, superior procurement cost management lies in the adoption of cost control methods that are suitable for the actual situation of the enterprise. Through the correct method to solve the key elements of cost control, in order to enable enterprises to establish a long-term stable development route and competitive position.
Keywords: procurement; cost management; control method selection
Classification number: F270 Literature identification code: A Article number: 1008-4428(2013)10-20 -02
Procurement, is in the market economy conditions of the enterprise in order to obtain goods or services, and the acquisition of the object of the channel, the way, the quality of the quality of the price, the timing of the choice, and convert money funds into money. Selection, and the monetary funds into the subject matter of the transaction process. Procurement is not just a purchase behavior, but from the beginning of the market forecast, through commodity trading, until the procurement of goods or services transferred to the demand side of the whole process.
In the whole process of procurement activities, on the one hand, through the procurement of resources to ensure the smooth progress of normal production of enterprises, which is the benefit of procurement; on the other hand, in the procurement process, a variety of costs, which is the cost of procurement. We have to pursue the maximization of the economic benefits of procurement, is to continue to reduce procurement costs, to the minimum cost to obtain the maximum benefit. And to do this, the key to the key, is to strive for scientific procurement. Scientific procurement is to maximize the economic benefits of enterprises to achieve the basic profit source.
First, analyze the cost of procurement
Procurement costs in all types of enterprises in the total cost of a larger proportion, is an important part of enterprise cost control. The key to the composition of procurement costs is to distinguish between narrow and broad costs.
(a) the narrow sense of the procurement cost
The narrow sense of the procurement cost, including the procurement process, the cost of the ordering process (including the cost of obtaining goods, ordering business costs, etc.), as well as by the procurement of inventory maintenance costs and untimely out-of-stock costs. But the cost of procurement in a narrow sense does not include the price of goods and materials.
1, ordering costs are in order to complete the transaction activities, and with the supplier to enter into a purchase contract and issue orders to them in the process of the various costs incurred. These costs, part of the order with the number of times or the number of no direct relationship, such as setting up a procurement agency or office expenses, are called fixed costs of ordering; the other part of the order with the number of times or the number of changes and changes, such as travel, postal, communications and catering and other costs, are known as the cost of ordering changes.
2, maintenance costs refer to the cost of maintaining the quantity and nature of goods and materials do not change. Can be equally divided into fixed costs and variable costs. The former, such as storage depreciation, storage labor, etc.; the latter, such as the occupation of funds, damage and deterioration of goods and materials, insurance costs and taxes.
Maintenance costs should not be underestimated, often accounting for the majority of the proportion of procurement costs, annual maintenance costs account for the proportion of procurement costs tend to vary greatly, can be in the range of 9% -50%, supermarkets are generally in the range of about 20%, which depends mainly on the inventory policy of the supermarket.
3, the cost of stock-outs, due to procurement delays in the continuous supply of losses, such as pending production, downtime, delayed shipments, loss of sales opportunities and loss of customers and other losses.
(ii) broad procurement costs
Broad procurement costs, also known as the overall procurement costs, can also be called strategic procurement costs, refers to the commodity materials throughout the production cycle of all the costs incurred in the procurement of products and materials related costs. Such as procurement market research costs, procurement decision-making costs, supplier participation in product development costs and delivery, inventory, production, quality control, after-sales stages due to supplier participation in the cost increase or loss.
The control and analysis of procurement costs is also mainly concerned with the overall procurement costs, the ultimate goal is to reduce the overall procurement costs.
From the overall cost of each function, the overall cost can be divided into the following types of costs:
1, due to the selection of suppliers and suppliers to participate in the costs that may occur, mainly including raw materials and components to affect the specifications of the product and the increase in the technical level of the cost; suppliers of the various levels of audit costs; raw materials or parts of the identification process generated by the cost; raw materials and components of the failure of the cost. Costs; raw materials and components unqualified and the impact of the loss of costs.
2, procurement process costs. Mainly includes commodity procurement prices and process costs; document processing costs; payment terms resulting from the exchange rate, interest costs; material transportation and insurance costs.
3, the operating process of procurement costs. Such as receiving and shipping costs; safety stock costs, interest on inventory; return of unqualified products brought about by the return of goods, packaging, transportation costs; raw materials and components inventory costs; administrative costs and so on.
4, quality control in the procurement costs incurred. Including supplier quality system audit confirmation; inspection costs; the impact of nonconforming products on production and delivery; nonconforming products caused by rework and return costs.
Second, the development of procurement cost control program
The ultimate goal of the procurement staff is to reduce the overall procurement costs, in the analysis of the overall procurement costs should be developed after a feasible procurement cost control program. Purchasing cost control program each step has a direct impact on the realization of the control effect.
(a) analysis of the internal and external factors affecting the formation and change of purchasing costs
First of all, in accordance with the narrow purchasing costs, analyze the possible factors affecting the cost of ordering, maintenance costs and out-of-stock costs; and then careful and close analysis of the supply price factors.
(B) the development of procurement cost standards
Cost standards as a criterion for cost control, in the cost plan is generally expressed in the indicators, procurement cost control is the same. In accordance with the overall procurement cost concept, different enterprises need to be based on their own reality, the provision of a series of specific standards. Determine the method of these standards are divided into three broad.
1, the program indicator decomposition method. That is, the large indicators are broken down into small indicators. Decomposition can be decomposed by department, unit decomposition, can also be decomposed by different products and various products or parts of the process stage, if more detailed, can also be decomposed by process.
2, budget method. That is, with the development of the budget to develop control standards. Some companies are basically based on the quarterly production and sales plans and procurement plans to develop a shorter-term (such as months) of the cost of the expenditure budget, and take it as a cost control standards. Procurement with this method needs to be the actual starting point for the development and adjustment of the budget.
3, quota method. That is, the establishment of quotas and expense limits, and these quotas and limits as a standard for control. In the enterprise, wherever possible to establish a quota, should be the establishment of the quota, such as material consumption quota, working hours quota. The implementation of the quota control approach is conducive to the concretization and regularization of cost control.
(C) the development of procurement cost control norms, monitoring the formation of procurement costs
Enterprises can be built through the system, the formation of perfect procurement cost control norms, in order to control the standards according to the procurement cost of the formation of the various projects are often checking, evaluation and supervision. The establishment of a strict procurement system can not only standardize the enterprise's post-purchase activities, improve the efficiency of procurement, and put an end to the intensification of conflicts between departments, but also prevent the bad behavior of procurement personnel. First of all, the procurement system should stipulate the application for the procurement of commodities and materials, the authorization of the authorized person's right to approve permits, the process of procurement, the responsibilities and relationships of the relevant departments, the provisions and methods of procurement of all kinds of materials, quotations and price approvals, etc.; secondly, it should set up the supplier files and the access system; at the same time, it should set up the price files and the price evaluation system, and organize a special group to compare and analyze the prices of the purchased items, and on the On this basis, it should also set up standard procurement prices and cost and expense standards, and reward and punish procurement personnel according to their work performance. The enterprise's management of suppliers needs to be strengthened. At present, many enterprises have a misunderstanding of procurement work, that procurement work is to make good relations with suppliers, and then on the basis of this relationship with the enterprise needs to seek a balance between the friction and balance. In fact, for enterprises, this situation is very dangerous. In the procurement behavior, and suppliers to establish a good personal relationship is important, in the long run, it will produce the enterprise to some specific supplier dependence, not conducive to the enterprise to find new and better suppliers, is not conducive to the enterprise for technological innovation, but also in the enterprise within the breeding of corruption, damage to the interests of the enterprise.
(d) Timely correction of errors
For the reasons of cost differences, identify the responsible person according to the situation to give the appropriate measures, respectively, to improve the proposed method, and implementation.
Third, the key factors in controlling procurement costs
The key factors in controlling procurement costs, in the case of manufacturing enterprises, refers to the control of procurement of materials, warehousing and storage control and the assessment of the procurement department.
(a) Control of material procurement
The purchases, outsourcing parts, components and other materials required for production are generally centralized and supplied in a unified manner, with the aim of realizing bulk purchasing and reducing procurement costs.
The purchasing department prepares the purchasing plan based on the demand plan proposed by the production planning department, combined with the inventory situation. Organization of procurement, to strengthen market research, adhere to the comparison of goods, the implementation of the competition mechanism, the implementation of the principle of quality and price procurement. At the same time, according to the actual enterprise, to determine the procurement amount of approval authority,. In addition, in the market often purchased materials, can implement the fixed-point procurement.
(ii) control of materials warehousing and storage
After the arrival of materials to the company, the procurement staff should fill in the warehousing list in a timely manner, the treasurer and the inspector according to the different forms of materials, respectively, to take a variety of means of measurement, accurate measurement, and acceptance in good faith. The Finance Department should strengthen the accounting supervision, review the contract or plan, invoice, warehouse receipt specifications, whether the procedures are complete and perfect. Procurement Department should be based on the requirements of the financial accounts at the end of the year to carry out a comprehensive inventory of property inventory store, so that the accounts are consistent. And the organization of all departments to check the inventory of the inventory store has not been used in the inventory of materials.
(C) the assessment of the Procurement Department
The company regularly issued cost control indicators, and based on the assessment of the Procurement Department:
The difference in the purchase price of materials = ? The actual purchasing volume of the year? (the current year's purchase price - the previous year's purchase price)
The amount of loss of purchases =? Quantity of purchases lost? Purchase unit price
Purchase cost reduction = total purchases in the year? (Purchase cost rate of the current year - purchase cost rate of the previous year)
The Finance Department maintains a separate accounting for purchase costs and losses.
Fourth, the choice of procurement cost control methods
There are a variety of cost control methods for enterprises to choose from: value analysis (value analysis, VA), value engineering (value engineering, VE) and ABC classification control method (activity based costing); in addition, the enterprise can
The choice of which procurement cost control method is closely related to the nature of the enterprise procurement items. Generally speaking, each industry procurement items can be divided into four categories: leveraged products, strategic materials, general products and bottleneck products.
For general products with small procurement risks and small procurement amounts, cost control focuses on reducing procurement management costs and reducing procurement frequency. Among them, master orders, comprehensive suppliers, and long-term cooperation can be applied to manage and control.
For leveraged products with small procurement risk and large procurement amount per unit of time, the procurement staff is required to have sufficient professional knowledge and utilize the VA and VE methods to conduct the cost analysis of individual products; in addition, it is also necessary to cultivate potential suppliers and utilize effective price competition to get the appropriate procurement price, and of course, the suppliers should be kept relatively stable.
For the procurement risk, the unit time procurement amount is also large strategic materials, in addition to single product cost analysis, it is more important to monopolize the resources to ensure supply, and suppliers to establish a stable and solid supply relationship.
For bottleneck products with high procurement risk and small procurement amount per unit of time, it is necessary to cooperate with suppliers for a long time, make effective matching combinations, and improve the control of scarce resources. At the same time, efforts should be made to shorten the payment cycle.
The management of procurement is a systematic scientific work, in the price of materials and procurement process costs fluctuate rapidly today, for the overall procurement of cost control is more critical. How to do a good job of procurement cost management is a key factor in establishing the competitiveness of enterprises. Grasp the management of procurement costs, strengthen the control method of versatility, is conducive to the long-term development of enterprises in the industry competition.
References:
[1]Wang, Samuel Lin. Purchasing Management and Inventory Control [M]. China Materials Press, 2008.
[2]Song Jian. Modern science and technology basics [M]. Beijing Science and Technology Press, 2008.
[3]Huang Changhua. Purchasing Supervisor Efficient Workbook [M]. Mechanical Industry Press, 2008.
Author Introduction:
Liu Taoran, male, Langfang, Hebei, MBA graduate student of Southeast University, now working in Nanjing Veolia Environmental Services Co.
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