A Research On Application Of "Four Trees" Method In Supply Chain Logistics Cost Management

With economic globalization and accelerating the integration process, enterprises are facing increasingly fierce competition in the market. Logistics cost as "the third profit source" to enterprises has been much concerned. For the enterprise pursuit of profit maximization, logistics cost management becomes the effective method to reduce costs, improve the service level and enhance the competitiveness of the enterprise. Because of our logistics cost management research is still at an elementary stage, the majority of enterprises will continue to focus on traditional field of cost management. Managers more from the viewpoint of a single firm, according to the principles of smallest self-cost, best benefit to organize their logistics activities, and less starting from the whole supply chain, standing on the global perspective planning for the entire supply chain logistics activities. However, the current market competition is no longer a single enterprise's competition, but the competition among the supply chain. This requires enterprises standing in a global strategic use of advanced supply chain management tools to manage enterprise's logistics cost.This paper studies on how to manage logistics cost from the perspective of supply chain. This paper analyzes the composition of the supply chain logistics costs, proposed transaction costs should also be the of composition content of logistics cost. We also think the emphasis on supply chain logistics cost management is no longer in isolation of each node enterprise to optimize its logistics activities, but through the collaborative effort to raise the overall efficiency of the supply chain logistics. Therefore, this paper attempts to introduce the idea of the supply chain theory to supply chain logistics cost management and apply the "four trees" method to supply chain cost management, so that makes the enterprise's logistics cost management and other nodal enterprises of the supply chain logistics cost management mutual coordination up, thereby making the whole supply chain logistics total costs reached an optimal state. This paper introduces the contemporary theory of supply chain coordination, applies the "four trees" method to the supply chain logistics cost management and analyses the difficulties of the application of "four trees" method in supply chain logistics cost management from three aspects:the reality of logistics costs calculation, future goals determine and supply chain node enterprises "relationship communication", and relative solutions were proposed. In this paper, based on M company as an example, specific instructions on how to apply the "four trees" method for supply chain logistics cost management. Through the research of its use in logistics cost management, this method provides theoretical reference for our enterprises to use the supply chain collaboration theory in logistics cost management, while strengthening the logistics cost management of enterprises to enhance economic efficiency and to enhance its competitiveness has practical significance.