Logistics Cost Control Of Jinan Iron&Steel Company

Abstract:Iron&steel industry is the basic industry of our national economy. The price of iron ore of international market has been continuously going up. The contradiction of steel overcapacity and unreasonable industrial structure have become increasingly apparent, which lead to declining of average profit margins in the industry and evenly close to the breakeven point. As a result, controlling the logistics cost, developing "the third profit source" of enterprise has draw the attention of iron&steel enterprises. Through the effective control of logistics cost to reduce the total cost is the important way of iron&steel enterprises to enhance company’s core competitiveness.Logistics cost control of Jinan Iron&Steel Company is discussed in the paper based on the characteristics of the industry in China. Firstly, the paper reviews the concepts, classification and characters of iron and steel Logistics, and summarizes logistics cost control methods and targets. Through analysis the logistics cost constitution and control methods of Jinan iron and steel group, using average of steel domestic off-site logistics costs per ton as a key control objectives, using Key Performance Index and the Balanced Scorecard and Strategic Path Graph Theory, established the objective management system of Jinan iron and steel group’s domestic off-site logistics cost of bulk material the goal of logistics cost. The paper uses Process Reengineering method to optimize technological process and material storage points in-plant, and establishes responsibility control system of in-plant production logistics, which applied in Jinan iron and steel group.