Research On "Sub-chain" Cost Management Mode In Petrochemical Industry

After the financial crisis in the United States, the business developmentenvironment of the world petroleum and petrochemical companies changed greatly.On the one hand, energy and geopolitical pattern highlight, and severe resourcesituation makes all countries around the world competing for energy resources in anunprecedented degree; On the other hand, after the financial crisis, the worldeconomy needs to restore, and still needs to develop steadily. The position of oilresources in the economic development especially appears important, thus causing theoil price rising. At the same time, the economical globalization speed does not slowdown, characteristics of energy resources competing today appear in capital flowinternationally, collaborations between enterprises, more opening markets and moreinternationalization competition, and paying more attention to the sustainabledevelopment of economy, and so on.This paper focuses on the petrochemical industry. As a symbol of petrochemicalindustry development, the world ethylene production capacity is still growing rapidlyafter the financial crisis. The author thinks that with increasing competition today, thesmall and medium-scale petrochemical enterprises must implement low cost strategyto obtain cost advantage. In order to discuss the cost management in petrochemicalenterprises, this paper first discusses the similarities and differences betweentraditional cost method and operation cost management in theory and studies theirlimitations in the practical application, especially for the inapplicability of activitybased-costing management in petrochemical enterprises and then puts forward“Sub-Chain” Cost Management Theory combining the production steps and theory.Differing from the cost management studied in the other papers, this paper mainlyfocuses on petrochemical enterprise production process with petrochemical enterpriseproduction characteristics, reducing the production cost starting from decomposingthe process chain to set up value units, which puts forward a new cost management mode for petrochemical enterprises, namely "sub-chain" cost management mode.Through the discussion and research on ethylene production plant, North HuajinChemical Industries Group Corporation, a typical petrochemical enterpriseproduction process combining the practical management experiences, the paper alsodiscusses in detail how to use "sub-chain" cost management mode in ethylenecompanies based on the plants of Huajin Ethylene Company and practicalmanagement experience and makes a comparison for the effect before and afterimplementing "sub-chain" cost management mode. Finally, this research of"sub-chain" cost management mode implemented in North Huajin Ethylene Companywas summarized, emphasizing that the syncretic identity between productionengineers and financial personnel is needed to realize low cost strategy and togetherprovide the “syncretic” cost information for making the operation decision and theoperation ideas “Management Needs Truth” is necessary to be established so as toprovide a set of efficient method and mode to reduce the cost of petrochemicalenterprises.