Research On Total Cost Of Ownership On Smes

With China join WTO, as economic development in the world, China has gradually become a global sourcing base. purchase costs take for more than 50% of the total cost of manufacturing. Therefore, the enterprise purchase cost management and control has become key point of small and medium manufacturing to survival and development. According the feature of small and medium manufacturing, the real center of purchasing cost is control the cost of raw materials, which account for more than 50% of the total amount of purchasing cost.TCO consider as purchase materials and suppliers as a whole, it requires companies to take into account all factors lead to changes in procurement costs occurred in the procurement process, not only to take into account pre-trade, trade in transportation costs, price, etc. After various costs, but also take into account the transaction generated scrap, loss, bad rework various hidden costs, inventory pressure. In this paper, TCO. analyze the cost of procurement process constitute the motivation cost factors, analyzed the cost of procurement uncertainties, purchasing in advance and bring pressure on the stock, the relationship between the size of the batch production of purchase and purchase price, vendor selection and performance evaluation of various factors many of which are factors that lead to higher procurement costs, the analysis of procurement the cost of the course must be taken into account. In this paper, a number of innovations, such as, for dynamic cycle management of suppliers using the TCO to continuous improvement and elimination of suppliers, and the eventual establishment of a strategic partnership with the outstanding supplier relationship. The TCO use on raw material procurement, using the idea of the total cost of ownership to choose the lowest cost provider, obtain the lowest total cost of ownership of the procurement of goods.Through continuous supplier selection, evaluation results with the best suppliers, the suppliers through continuous improvement and improved, in accordance with the principle of winning the inferior state, not suitable suppliers to eliminate, to establish strategic partnerships with excellent suppliers relationship. for qualified for actual case studies, for the lowest cost suppliers through the procurement process control, in order to account for the largest amount of purchasing raw materials, for example, the use of the TCO features to dynamic changes in procurement costs incurred due to departure, summary, then the lowest cost of procurement, procurement is the best total cost of ownership of the raw material prices.