Research On Strategic Procurement Cost Management

Along with Strategic Procurement's starting in international procurement market, the people pay more attention to the change of procurement function. Strategic Procurement forces the procurement function to participate in the management of enterprises, more accurately, is in enterprise's cost management. The procurement departments should reasonably select the suppliers, establish the good relationship with the outstanding suppliers, and optimize the procurement flow, thereby bring the great cost saving to the enterprises.In view of this, the author proposed a new concept—"Strategic Procurement Cost Management". Supply Chain is the foundation of implementing Strategic Procurement. On Supply Chain Management, the procurement pattern will inevitably transform to the Strategic Procurement pattern. Therefore, Supply Chain is the foundation of Strategic Procurement Cost Management. The essence of Strategic Procurement Cost Management is Strategic Cost Management's extending in Supply Chain, here its goal should be consistent with Strategic Cost Management's goal, namely helping enterprise obtain the competitive advantage, more accurately, is the cost leadership. The Strategic Procurement Cost Management's foothold lies in the total cost control, and brings the cost saving to the whole enterprise. Activity Based Costing is the methodology of Strategic Procurement Cost Management, depending upon it to obtain the accurate cost information and be engaged in the cost management. The first problem which Strategic Procurement Cost Management should besolved is calculating and gathering together the costs of producing in the commodity life cycle. This moment, the value of Activity Based Costing is manifested. It is very important to calculate the commodity's total cost of ownership using ABC-- all costs of producing in the commodity life cycle. And then, analyze the total cost of ownership. The last is to manage the procurement flow using total cost of ownership information. Along with Chinese economic restructuring's deepening and international market competition's intensifying, the Chinese enterprise is facing the unprecedented opportunity and challenge. On the one hand, the Chinese market is gradually becoming an important foothold of the whole world's procurement market; On the other hand, the Chinese enterprises also outward expand in gradually, and unceasingly obtain the resources which they need from the international market. To Chinese enterprises, procurement's place is becoming more and more important. The idea and the method of...