Study On The Systemic Optimization Of Iron Ore Collaborative Procurement In Steel Group

Distribution of iron ore in China is mainly in Hebei, Liaoning and Inner Mongolia, which occupy about 70% of the total output. Therefore, steel logistics enterprises have to face huge challenge. At the same time, logistics sector is still in developing period, disorder and furious competition lead to a lagged sector pattern. Furthermore, large-scale circulation of steel sector has a long way to come into being. Circulation cost is relatively high and circulation efficiency is low.The significant growth of steel yield meets the need resulted from rapid economic development, drives fast development of downstream industry, increases the reliability degree to the oversea iron core. The most serious problem is that the import price of iron ore has been soaring continuously. Due to the minority negotiation position, the price has not yet been hold for successive 5 years, as a result, we have to accept a price increase of 65% of Brazil iron ore and 79.88% of Australia one in 2008, this makes steel enterprises suffer huge loss.Collaborative procurement level of steel companies in China lags far behind that in some developed countries, directly restricts the sustainable development of steel industry.Based on the detailed analysis on the purchasing characteristics of iron ore in China, this paper focuses on collaborative procurement process of iron ore in typical enterprise, iron ore collaborative procurement strategy between different steel companies, coordinate purchasing tactics inside certain steel group as well as optimization method of materials purchasing cycle in the management environment of MRPâ…¡. Reasearch on steel group procurement collaboration and integration is in favour of logisitics cost lower and market competition strength improved. Detailed research content is listed as follows:(1) Mode, process and method of collaborative procurement in steel groupSome critical factors affecting purchasing cost of iron core are analyzed in detail, the basic mode and content of cooperate procurement are listed, taking HL steel Group company as an example, the means in which to carry out success collaborative procurement as well as typical operating process are analyzed at the end of this part.(2) Analysis on the optimal boundary condition that whether iron ore vendor cooperates with procurement allianceUnder two conditions that cooperation and non-cooperation between iron ore vendor and procurement alliance, to maximize system profit, considering various costs such as coordination cost during purchasing process and production cost during producing process, as well as input-output ratio, this part establishes corresponding models under the upon two conditions, by detailed comparison, the optimal boundary condition that whether iron ore vendor cooperates with procurement alliance is presented in the last part of this chapter.(3) Optimal coordinated purchasing strategy for iron ore between steel companiesBased on iron ore supplier and buyer's willingness to cooperate, conduct combined transportation, purchasing among buyers, and the goal of maximizing the profit, models are established respectively. In each model, the coordinate cost both between the iron ore supplier and buyer and in procurement alliance is taken into account. Through comparison, we conclude the alliance procurement and alliance transportation is the optimal strategy for the league when iron ore coordinate cost satisfies certain conditions.(4) Optimization on the Collaborative Procurement Strategy in Steel GroupBased on the detailed analysis of collaborative procurement strategy, related logistics cost of sub-tactics are considered, optimal cost is then computed. To maximize demand conformity degree and minimize procurement logistics cost, corresponding purchasing strategy model is established, which is transformed to single-objective model by balance index. Each sub-company's suppliers are selected according to the evaluation on independent purchasing. The simulated annealing algorithm used to solve the problem is designed according to the neighbourhood method in which solutions are constructed step by step. Typical instance in reality is solved and analyzed in the last part of this chapter.(5) optimization and analysis on purchasing cycle in the MRPâ…¡of steel groupBased on the principle and shortages of traditional MRPâ…¡, by analyzing the purchasing cycle, the Distribution Function of Purchasing Lead-time (DFPLT) is established to describe the characteristics of product time-cost. According to the application of DFPLT in some steel factory, the focus of traditional MRP is shifted from single material to the macro-scopical analysis of procurement fund. This helps companies to reduce inventory cost, improve fund flow, strengthen competitive capacity and simply the analysis and computation process of economic characteristics related to procurement.