Research To The Centralized Indirect Procurement Strategic In Electrical Manufacturing Industry

Confronting more and more fierce competition, companies, in order toincrease the net profit, have to cut management cost via performingcentralized indirect procurement with internal resources integratedappropriately, besides traditional means of reducing direct procurement cost.This article takes a leading firm, named S, in the electrical manufacturingindustry as an example to analyze and study its centralized indirectprocurement from both theoretic and practical perspectives, revealingproblems and trying to propose an optimized solution. The article logicallycomprises five parts which are as follows:1. Introduction of the research background, research value, review ofdomestic and overseas theory foundation regarding procurement and alsothe research literature;2. Provide the analysis for S company CIP currently status;3. It provides the recommendation to the new organization model based onchart analysis, suppliers selection strategy based on hierarchical structuremodel, supplier management guideline based on the traditionalfour-quadrant matrix, and CIP Key Performance Indicators (KPI)evaluation system optimization based on SWOT model. In addition, thispaper also uses procurement cost and risk control methodology inmulti-project management to manage the CIP;4. With the real case which has implemented successfully aboverecommendation, it comes to the conclusion of CIP strategy, and theoptimization model and execution plan mentioned in the article can beleveraged in electrical manufacturing industry, not just limited to Scompany; 5. It’s the conclusion, it emphasizes again the urgency to centralize indirectprocurement as a new key contributor for the companies to reduce costsand improve margin.