A Study Of Procurement Cost Control Of Raw Materials In Xinjiang Shenhuo Coal&Power Company

With the development of socialist market economy in China, the competition between enterprisesbecomes more and more intense and they have seen much more annexation and bankruptcy. Therefore, lesscompetitive company will be forced to go out of business. One of the efficient ways to enhance thecompetitiveness is to control cost. And it is an essential factor for improving a company’s ability of makingprofits and releasing inner and outside pressure. Companies with low cost and solid foundation ofoperation can only produce higher level products and design them creatively with the aim of seeking newdevelopment.Xinjiang Shenhuo Coal&Power Company is one of wholly-owned subsidiaries of Henan ShenhuoGroup Co., Ltd. It will be founded on the industrial chain of coal-power-aluminum integration with aplanned output of1.6million tons of electrolytic aluminium. After the completion of supporting power,carbon element and coal investment, its total annual income will be over30trillion RMB. XinjiangShenhuo Coal&Power Company is a resource consuming and high-cost company. As a company with acomplete industrial chain, its procurement influences the whole production and operation directly andprocurement cost control plays a key role in control of running cost.In this article, several effective methods of procurement cost control are discussed based on thecompany’s running practices with the goal of cost control and enhancement of its competiveness.