Research On Purchasing Cost Control Of H Company

As the international geopolitical conflict becomes more and more obvious,the division of labor in the industrial structure continues to be unbalanced.At the same time,the global economic growth is sluggish due to the impact of the COVID-19.In this complicated situation,all the enterprises want to increase their revenue by increasing income and reducing expenditure to ensure their survival and development in the increasingly fierce competition.In the manufacturing industry,the main cost of product is the purchasing cost of raw material,and it tends to account for more than 70% of the total cost of the enterprise,so it is obvious that the purchasing cost control plays a key role in manufacturing enterprises.The traditional purchasing cost control only focuses on the explicit cost of the raw material itself and ignores the implicit costs in the purchasing process.With the continuous changes in the purchasing environment of enterprises,the implicit costs of purchasing are also constantly highlighted,and the traditional purchasing cost control method has been unable to meet the needed for current enterprise.How to control purchasing costs are important issues faced by every enterprise currently.This paper is based on the Total Cost of Ownership(TCO)theory and Supplier Management theory,takes the traditional manufacturing enterprises of H Company as a case,and takes the H Company purchasing cost control as the research object.The article adopts literature research method,field research method and case analysis method,to analyzes the current situation of H Company’s purchasing cost control by using TCO theory,identifies the explicit costs and implicit costs in the purchasing process,combines on-the-spot investigation and expert interviews to deeply analyze the problems and cause of purchasing cost control in H Company.The study finds that the main problems in H Company for the purchasing cost control is unreasonable purchasing price pricing,ignoring price fluctuations of the raw materials for parts,high inventory cost of imported materials,unreasonable design of product parts and defects in supplier management.Based on the TCO theory,and combined with the actual situation of H Company,the following improvement countermeasures are proposed for the corresponding problems.First,to ensure the part purchasing price by cost accounting,make sure that the purchasing price is reasonable.Second,to avoid the impact of raw material price fluctuations on purchasing costs by establishing a price linkage mechanism.Third,to reduce the inventory costs by localizing imported materials so that the part could purchase from local supplier.Fourth,to control the product costs by applying Value Analysis and Value Engineering and Early Supplier Involvement in product design,so that to achieve purchasing cost control for the part.Fifth,to formulate a scientific suppliers management system to reduce implicit costs caused by supplier management issues.The main purpose of this paper is the research on the purchasing cost control of H Company.By applying the academic theories such as TCO theory and Supplier Management theory to the actual purchasing work of H Company,combined with the Cost Accounting method,Value Analysis and Value Engineering and other purchasing cost control methods,exploring workable improvement countermeasures for purchasing cost control,alleviating the increasing pressure of purchasing cost of H Company,providing effective measures for enterprises to reduce costs and increase efficiency,and also hoping to provide reference for manufacturing enterprises similar to H Company.