Research On Procurement Cost Management Of Company E In The Supply Chain Environment

Cost control is the foundation of company’s development as well as the most effective wayto increase company’s profit. As the key link of logistics activity, purchasing department bridgesthe gap between internal-enterprise and external supply chain. The research of procurement-costmanagement in supply chain is a vital method to reduce cost and obtain competitive advantages.Based on the theory of procurement and supply chain management, this article analyses theprocurement in company E, finds out problems existed and rebuilt procurement-costmanagement system, in order to reduce procurement cost and realize the strategic goal of theenterprise.In the first place, this article presents the principles, objectives, process and improvingmethods in purchasing management according to the research of relevance theory onprocurement and supply chain management.Secondly, based on assess of the supply chain organization, cost structure and presentpurchasing management system, this article locates the existing problems as well as the effectiveelements of purchasing management by utilizing material classification, ASME flow pathanalysis, supplier selection and evaluation methods.Thirdly, in the view of existing problems, this article utilizes advanced concept in supplychain management, making a scientific classification of the purchased materials in company Eand proposing JIT (Just in time) procurement system according to the structure of compositepurchasing mode. The referred improvement of flow path system, reduction of ineffectiveactivities, simplification of procedures, integrations of the groups and the introduction of officeautomation system has optimized the structure of original purchasing process. Through thedifferent management of external supplier and qualitative and quantitative analysis to build ascientific evaluation system and integrated supplier management system.The final part concludes a summary of the research as well as makes a forecast of theexecution of purchasing management system, it discussed the unity in thinking, sharinginformation and profits by cooperation in risk responds and utilizing modern managementmethods to minimize purchasing cost in every stage.The main purpose of this article is optimizing the integration of internal supply chain andexternal supply chain, in order to improve the efficiency of purchasing activities, striving foroverall efficiency optimization through the effective cooperation between enterprises. In themean while, it is hoped that a new and correct concept of purchasing cost control and supplychain management can be established among the enterprises via this research and take place ofthe old concept of reducing procurement price to bring down the purchasing cost.