On International Procurement Cost Control For Multinational Company

Procurement cost savings can increase the profit for a company directly. Total costof ownership is the real procurement cost. The TCO (total cost of ownership) is notjust the price that we need pay for the good or the service, but also consists of the costof supplier sourcing, prequalification, quality and delivery time control; and also themaintenance and claim cost.More and more multinational companies adopt global sourcing to reduce theirpurchasing cost in the fiercely competition market. While international procurementfaces more challenges like communication, culture, import and export operation,international transportation. Therefore the study of international cost control is useful.This paper takes the company of Wilmar International as a example to study themethod of international procurement cost control for a multinational company byconsidering the difficulties, risks and characteristic of international procurementoperation. It finds that local procurement organizations can effectively solve thedifficulties of communication, culture and markets. On the other hand, quality anddelivery time should be paid more attention. During international purchasing operation,it is really important to give proper packing, transportation, and customs clearance.Some method like supplier relationship management, VE, level material control ismore useful for international procurement cost control.