The Study On Procurement Cost Control Of Chemical Feedstock In KW Company

As economic globalization and network, information technology develop, competitionbetween enterprises is becoming more and more fierce. Under this background supply chainmanagement has become an important part of the overall competition. Low cost strategy willbecome an important way through which enterprises gain competitive advantage. For amanufacturing company, purchase cost takes up to60%of the total cost in a company, insome industries ever80%or more. Undoubtedly, controlling purchase cost is the maindirection to control overall cost and has become one of the important measures enterprisestake to implement low cost strategy.As a middle link in the petrochemical industry, purchase of bonded material ofsynthesized resin features with rapid price change, high purchase risk and long purchase cycle.In the industry of synthesized resin, It is difficult to realize effective control of purchase costbased on a competitive relationship; on the other hand, a cooperative, long-term partnershipbrings more effective control of purchase cost and win-win outcome between supplier andpurchaser.This article utilizes cost management, purchase and supply chain management, theoryand practice of international trade, qualitative analysis, questionnaire survey and time seriesanalysis to study the control of purchase cost of a key chemical material used for synthesizingfully biodegradable material in ‘KW’ company. At the beginning of this article there is anintroduction of the background, current status and purpose of research for controllingpurchase cost in China and other countries; after that, based on the analysis of characteristicsof material supply and current status of purchase in ‘KW’ company, a Total Cost ofOwnership model is used to analyze the status of cost, describe major problems in purchasecost, analyze and sequence the key factors that influence the previously mentioned problems;moreover, this article presents overall strategy and specific controlling measures forcontrolling purchase cost based on a cooperative partnership with suppliers, for example,combining quantities for ‘self-use and resell’, establishing special channels and areassupervised by Customs, reducing purchase process together with suppliers; at last, in order toeffectively reduce the cost, this article also presents supportive measures for controlling purchase cost, and these measures are expected to generate over six million RMB revenue forKW company if being effectively implemented.This article explores the strategies and measures for controlling purchase cost andenhancing competitive advantage of finished products in the international market by studyingthe case of purchase cost management of chemical material in ‘KW’ company. It alsoprovides a reference for controlling purchase cost of ‘bonded chemical material’ in thedomestic industry of synthesized resin.