Study Of Improvement On HNTI Material Procurement Managment

Even in a monopoly industry, business management of Chinese tobaccocompanies’ is still market-oriented. Competitions among provincial companies orprefectural companies forced them to cut cost for economic benefits.Cost management was a crucial element in enterprises. As the initial stage ofproductive business activities, procurement cost occupied60to70percent of totalenterprise cost, which had direct influence on companies’ operating process andefficiency. It has been elevated to strategic level by various companies because of itsimportant contribution to enterprise’s competitiveness.This article closely examined the development process of procurementmanagement and the real procurement of material for cigarette in China tobaccoHunan industrial company. From the perspective of cost control, the article usedaccurate historical procurement statistics to analyze the problems in the company’smanagement model of materials procurement.Based on necessity analysis, feasibility analysis as well as internal and externalanalysis, the article proposed a combination of qualification certification andco-existence of various procurement methods which included qualificationcertification, tender-based procurement, competitive negotiation, inquiry,single-source procurement. Among these methods, tender-based procurement isessential. Each specific procurement method was approached by positioning and itsapplication was demonstrated. Detailed implementation methods and processes whichwere practical and operational were proposed.China tobacco Hunan industrial company has great competitive advantage indomestic tobacco enterprises. Using reform of the company’s procurementmanagement model as a study objective was very representative. Because tobaccoindustry did not fully adopt tender-based procurement model, the case in this articlecould be referred by other tobacco enterprises’ improvement of procurement model.