The Study On Procurement Cost Improvement For Indirect Material Of O Company

As the most important portion of suppy chain, procurement is not only drectly related to the cost structure and cost competition of product, but also related to the market competitiveness of company which directly correlate to the market share and profitability of product. With the ramp up of economic globalization, market competition become more and more fiercely, cost is being the critical factor of market competitiveness and profitability of company. Therefore, cost reduction and improvement are being the important way to enhance the company competitiveness. For a manufacturer, procurement cost accounts for about 50%-70% of total cost, even more than 80% of total cost for some industries. Thus it can be seen that procurement cost is the most important portion of total product cost and procurement cost improvement is the most critical to enhance the company profitability. However, most, of company management regard the pricng as the critical factor of cost improvement, in order to improve cost, buyers negotiate with suppliers, bid for sources, extend the payment schedule, improve the delivery terms...etc. With the trend of economic globalization, market competitiveness is being more and more fierce, supply chain is constantly restructuring, renewing, improving.The cost improvement only for profitablility will be unpractical, mutual benefit will be regarded as the effective way of cost improvement, especially for the semiconductor industry, it is most important to get the mutual benefit with critical partner.This article focus on the study of indirect material of 0 company, utilizing TCO analysis approach, literature analysis approach, investigation approach (interview, questionare), Michael Poter’s five force, Kralijic matrix, Pareto principle, Analytic Hierarchy Process and relevant analysis approach, also combining some theory of supply chain to seek and study the most effective way of cost improvement.1. Elaborate the study of procurement cost both domestic and overseas.2. Base on the procurement characteristic and industry analysis, utilize TCO to analyze the cost status and structure of 0 company.3. Analyze the critical factor that affect the cost and find the cost improvement way4. Raise out mutual benefit for cost improvement, and focus on the study and improvement of "price, stock cost,order cost"5. Raise out the implementation machanism for cost improvement.This article analyzed the cost, structure and critical factors of cost improvement of 0 company indirect material via TCO analysis approach, raised out the procurement strategy and implementation steps, aimed at study and slove some existing procurement issues, reduce and improve product cost, get the competition advantage. I.ikewisc, this article can be the reference of cost improvement for other semiconductor manufacturer.