The Cost Control Research On Non-productive Procurement Of F Company

Currently,domestic manufacturing enterprises are facing severe challenges.With the original cost advantages of “Made in China”,demographic dividends and preferential policies are gradually disappearing,enterprises are under heavy pressure of RMB appreciation,inflation and increasing cost of material,labor and taxation.In order to survive from this condition,manufacturing companies must pay attention to all aspects of business operations and enhance their comprehensive competitiveness.Procurement plays an important role in business management,the importance of procurement has long been recognized and concerned by entrepreneurs.But the influence of non-productive material procurement is often ignored because of its relatively smaller amount,diverse types and complicated management compared with productive materials.With the intensification of competition among enterprises,even the procurement cost advantage of non-productive materials has become a winning point that enterprises must pay attention to.The amount of expenditure for non-productive materials is quite large each year especially for large-scale manufacture,According to the manufacturing cost ratio and the conventional profit rate of the manufacturing industry,1% savings of procurement cost is equivalent to a 10% increase in sales.Therefore,research on the procurement cost control of non-productive materials is also of great significance.The research object of this paper,F Company,is a Taiwan-funded manufacturing enterprise,which assembles iPhone for Apple under OEM model.The annual shipment number of iPhone is about 150 millions and the annual capital expenditure for non-productive materials is about 3 billion Yuan.The company has established a special procurement organization to handle these non-productive materials,they subdivide the non-productive materials into four categories: equipment,fixture,consumable and engineering,which are responsible by different purchasing teams.Along with the increasingly severe internal and external cost pressures faced by the company in recent years,the leadership's attention to the procurement of non-productive materials has gradually increased,the head of the procurement department also took a series of positive measures to reduce cost and expenditure,and put cost control as the top priority of KPI indicator.Through years of continuous improvement,F company's cost control has made great achievements,but the improvement of procurement cost is not a one day work,it is a project that needs continuous promotion and optimization.Based on the long-term work experience in the non-productive material procurement department in F company,the author is trying to analyze the current situation and existing problems of F company's procurement cost control situation,and combined with domestic and foreign procurement theory,to give suggestions and directions for improvement.As a typical representative of manufacturing industry,the analysis of F company can provide reference for the cost improvement of other similar types of enterprises.