Study On Procurement Cost Management Of Company LM

Procurement cost management is always the key of enterprise cost management.How to optimize procurement cost and manage procurement cost scientifically is the key for enterprises to stand firm in the market and calmly face the competition.As a small and medium-sized enterprise wholly owned by Germany,LM company has a high reputation in the radiator industry and ranks first in the market share with excellent technology and good quality.However,relying solely on advanced technology and strict quality control can no longer attract customers in the competitive market environment.While continuing to strengthen these advantages,LM company realizes that the price is always the focus of the market.LM is mainly engaged in mechanical assembly,and nearly 70% of the cost of products comes from purchased parts.Whether purchased parts are at fair prices or not,or the supplier selection is correct or not,or the internal procurement management is sensible or not,all affect the total cost of the company.Through the research on the procurement cost management theory and combined with the management status of LM company,this paper summarizes the existing problems of the company’s procurement cost management from six aspects:procurement process,supplier selection,supplier quotation,packaging,procurement quantity and continuous price reduction.Through further analysis,it is concluded that the causes of the problems are: the influence of the procurement process on the follow-up quality is not fully considered,unreasonable procurement structure,lack of professional cost analysis tools,neglect of the importance of packaging cost,unreasonable procurement plan and no long-term price reduction strategy.After analyzing and studying the problem,the corresponding improvement measures in six aspects are put forward: First,improve the procurement management process.Second,use TCO theory to select suppliers.Third,establish a cost analysis model.Fourth,formulate reasonable packaging requirements.Fifth,determine the reasonable purchase quantity.Sixth,formulate a price reduction strategy.After that,in order to ensure that the improvement measures are run smoothly,three guarantee measures shall be taken,strengthen the training of procurement personnel,enhance interdepartmental communication and cooperation and establish the database of cost elements.Finally,the effects of the six improvement measures are predicted respectively.It is hoped that LM company can improve the procurement cost through the practical application of these measures,and also hope that these methods can provide reference and help for other enterprises to manage the procurement cost.