The Study On Procurement Cost Control Under The Strategic Alliance Of The Value Chain Of H Company

With the establishment and development of globalized production system, the competition among enterprises become increasingly fierce, and the cost management as an important strategic weapon has been highly valued by people. Public data shows that50%-80%of the cost in manufacturing companies worldwide is the procurement cost of purchased parts and raw materials; as per the procurement costs decreases by5%, it will bring20%of pre-tax net income rise, therefore, procurement cost control as huge levers role of corporate profits indicates the growing importance of procurement management.H Company is a new energy device class manufacturing company with R&D as a core expertise. But regarding procurement management, like most small and medium-sized manufacturing enterprises, it adopted traditional extensive purchasing patterns. It often suppresses the price of procurement goods or parts from suppliers and extends the time of payment to guarantee the profit. With the intense competition in energy industry as well as the deterioration of economic situation, the cost of procurement management model in the past is more and more unsuited to the development needs of the company. On one hand, the lack of effective control on procurement costs, business level of purchase and supply affected directly the competitiveness of companies and organizations through a variety of ways; on the other hand, supplier management becomes a mere formality, and even affect the evaluation on corporate performance from high-end customers. Therefore, H Company needs to change the traditional mode of procurement cost control and adjust and reconstruct system of procurement cost management. Based on the new generation of procurement management system in value chain strategic alliance, which is customer demand-oriented, value chain perspective-analyzed, we need to have a fresh look at the economic relationship between the supply and demand of enterprises and build complementary enterprise-level alliance strategy; meanwhile, we should investigate costs from the full life cycle of the product, expand traditional epitaxial management of procurement cost. Use value engineering and target cost planning method as the procurement cost control tools for H to reduce overall procurement costs and to improve the overall competitive advantage of the enterprise and value chain.This paper is divided into five parts. The first section is the introduction, which mainly states the research background and significance. The second part is the summary of the theory and it introduces the definition of value chain, strategic alliances, procurement costs and cost reduction strategies, and then methods of procurement costs control under value chain alliance. Part three describes the current situation of H Company’s purchasing organization structure, and existing problems under procurement management control. In the fourth section it introduced that based on control objectives, control flow and control content of procurement cost control system under value chain strategic alliance. Finally using the practices of the solar tracking system on procurement shows the new control mode processes and its unique effects. In the fifth part, it is the implementation and application prospects of procurement cost control system under the value chain strategic alliance.