Study Of The Life Cycle Cost Theory And Its Application In Equipment Supplier Evaluation

The core part of the procurement is how to evaluate suppliers. Appropriate evaluation methods is directly related to the success of the procurement. Enterprises face a core issue when making equipment purchases.That is how to carry out a scientific assessment of suppliers. Then select the appropriate cooperative partner partners. As bidding in the equipment in China got a late start, equipment procurement has many deficiencies, such as lack of theoretical studies, and practical experience. It leads to the following situation. Enterprises emphasize on initial quotation in the procurement of equipment and underestimate even ignore the cost of operation and maintenance and lack of theoretical basis for long-term decision-making。Index system of suppliers evaluation is not perfect and did not combine organicly cost indexes,performance indexes and social indexes,result in less consideration between acquisition cost and holding cost and lack of considering between security, usability,and economy of equipment. Because of the lack of effective information transmission and feedback mechanisms between procurement process and the operation and maintenance process, enterprises can't reach Optimal on the whole process of equipment operation.In this paper, according to the present situation and deficiency in the procurement of equipment, life-cycle cost theory was introduced to analyze supplier evaluation of equipment. Accounting model was constructed the for life cycle costs of equipment by means of mathematical statistics, econometrics, technical economics and other related knowledge, in order to achieve scientific, rational, objective evaluation in suppliers evaluation.The following study was talked about in this paper.①C ombined with the enterprises own characteristics the basic theories and basic methods of equipment suppliers evaluation was analyzed to understand comprehensively the basic knowledge of suppliers evaluation.And the present situation of suppliers evaluation was analyzed and researched.②T he "iceberg effect" of equipment procurement was researched and deficiencies of index system for suppliers evaluation was analyzed. As a important basis, LCC theory was introduced to suppliers evaluation.③LCC of equipment was refined. Based on cost breakdown structure of equipment, cost model of each stage was established. Then LCC static model of equipment was established. Considering the impact of interest rates and inflation, LCC dynamic model was established based on the static model.④S uppliers evaluation is divided into two phases based on LCC theory. Index system of suppliers basic information was established in the stage of preliminary evaluation. Final evaluation was carried out according to LCC of equipment in the stage of LCC evaluation. According to a example analysis the following conclusions could be got:Traditional method of suppliers evaluation can easily lead to enterprises running into"iceberg effect". But supplier evaluation based on LCC theory can fully consider the whole process of life cycle cost of equipment to achieve the lowest life cycle cost of equipment. Economic benefits of Enterprises could gain the optimal on the basis of meeting the technical,performance and safety requirement of equipment.also it is very favourable for Enterprises to keep the comprehensive advantages of cost and benefits in the long-term competition in the market.