Study On Cost Management Of BASF Painting Supply Integration

During the past years, Some OEM plants in EU created a new chemical material supplying model-"supply integration" introduced by Inter organizational Cost Management theory. Painting suppliers join directly into the procedure management of the painting and take charge of some specialized technology process, in this way, OEM take away from the operation and changed into macro management, the cooperation between OEM plant and supplier guaranteed painting quality. The applications of supply integration reconcile the target of OEM with suppliers to be Market oriented OK product. Practice shows that supply integration model can help OEM plant to save cost greatly and strengthen its competitive power, and more and more OEM plant tend to apply this new supply model in the coming years.In the new supply model, some management functions belonged to the OEM plant are transfer to the suppliers, effectively improve the OK ratio, and save the raw material cost. The cost saved by the new supply model will be shared by the OEM and supplier. The cost of suppliers take over the duty of detail operation in the manufacture procedure from the OEM plant, increase the human resources input and manufacture functions, and of course increase the total cost as a result. How to keep the benefic, and reduce the cost in new supply model, it is critical important question for supplier to adjust and optimize its cost management for this new supply model. As the core painting supplier, BASF is one of the main supplier successfully applying Supply Integration. In this paper, it will use ABC cost analysis method to study the functions change between supply integration and traditional supply model, learn the measure in human resource cost, production cost, logistic cost and technical service cost, trying to tell how to control the cost.In China, the domestic development of supply integration is still in the initial stage, local OEM plant seldom adopt this new model. As a global automotive painting supplier and once be praised by the OEM plant. This paper state the problem which system supplier may face, try to draw lessons from BASF to other painting supplier and OEM plants in how to control cost, to push the development of this new supply model, promote competitive power of domestic OEM industry.