Study On Reducing Purchasing Cost In TL Company

In the past more than twenty years, Chinese economy even global economydeveloped very rapidly. Lots of companies appeared, developed and grew up verywell while Chinese companies got good developing opportunity during this period. Inorder to catch hold of the uncommon business opportunity, oversea companiesespecially multinational companies came to China. They tried to get more marketshare by annex and joint venture. During this period, market share almost mean profit.Unfortunately, this was changed at2008during finance crisis, global economy sloweddown and the competition never is so cruel for profit even for survival.TL is a multinational company coming to China in the90s of20century. Almostall its factories in China ware gotten by annex or purchasing and it grown to be thenumber one connector supplier due to rapid growth in past years. But the high profittimes ended with2008financial crisis coming. The competitors started price war withlower price to get more orders. How to reduce the cost to get the product price lowerhas been the most important problem. So as the most significant one of cost factors,purchasing cost is turning to be the key.Rapid growth, however, made company no enough time to integrate the differentprocess. Almost every factory keep their own purchasing process. Repeatedpurchasing wastes resources very seriously. Even though there are some centralizedpurchasing, but most of them are still decentralized purchasing. Hence, it is necessaryto change current decentralized purchasing to centralize in order to improve efficiency.But it is not enough. Purchasing cost reduction need to be considered from overallpurchasing process optimizing. From developing new suppliers to price monitoring,from supplier management to purchasing people management, from quotationmanagement to purchaser and suppliers performance management and so on, all theseprocess will impact purchasing cost directly or indirectly. Hereby, under the marketsituation labor cost increased and raw material increased, how to reduce thepurchasing cost is growing to be the key of TL’s development. This article will mainlystudy these.