Implementation Of Steel Centralized-procurement Decision Support System For Conglomerate

The ever rising sourcing cost in the equipment manufacturing industry has negatively impacted companies’economics, and called reducing such cost an increasingly important area SOE managers need to focus on. In fact, sourcing cost has become a core KPIs to evaluate managers’performance among large conglomerates which are centralizing purchasing to take advantage of scales, improve efficiency in purchasing core materials, and reduce impact on production cost caused by price fluctuation.The thesis starts with analyzing how steel product price can affect cost and profit of Shanghai Electric whose principal business remains equipment manufacturing, and is followed by brief discussion of current status of local steel market, before reaching the conclusion that it’s the time to centralize steel sourcing. It then goes on to propose a framework of business model to centralize steel sourcing and information technology system for Shanghai Electric Group, by discussing theories on centralized sourcing, data mining and Rough Set. Extensive research is conducted with regard to sourcing process of steel products, informatization, and how steel products are priced. In addition, to take into account practical sourcing needs, core business processes are also analyzed in detail here. As a result, a design plan is proposed for supporting decision-making to centralize Shanghai Electric’s steel products, elaborating the rules and computation methods as well as result analysis. Further, description of key managerial, decision-making, business, and portal sub-systems is laid out, with design of peripheral interface included. Finally, taking the core sub-system of the centralized steel sourcing decision support system as the key functionality, this thesis introduceshow to realize data layers of decision rule base, process of decision computation and reporting of results from decision analytics. As contract management and enterprise evaluation are not the main functionalities of a decision supporting system, they are not includedin this thesis. The experience and outcome from applying a centralized steel sourcing decision system is highly relevant and beneficial for Group’s decision to source other material.