Quantity Flexibility Contract On S Company’s Raw Materials Procurement

In this rapid development era, it has such characteristic:fast changing market environment, personalized and diversified customer demand began to highlight and amplification, products life cycle shorten constantly, the customer not only focus on price and quality of products, but also on additional service and response time. As large multinational mobile phone enterprises, S company face huge pressure and fierce competition. In order to achieve low price, higher quality, fast response, S company need build strong supply chain cooperation with suppliers. In this way, S company can optimize the external resources, strengthen its core competiveness, and win benefits and market share.This dissertation takes S company as an example, analysis of S company’s procurement management in five dimensions:company development history and present situation, supply chain management, raw materials classification and feature, supplier characteristics, purchasing and supplier management. Conclude the purchasing management problem as below:the amount of core raw materials are higher, the related suppliers are strong, limited control to these strength suppliers, lack of efficient control of supply chain risk, raw materials supply unstable.Base on two layer of single product supply chain build by S company and A supplier, set up supply quantity flexibility contract model with the condition of in short supply and supply disruption. Analyze S company’s Z type product demands statistical data, demands data probability distribution for the normal distribution. Apply this distribution into supply quantity flexibility contract model, analyze the actual data and quantity flexibility contract via Matlab software to draw a conclusion as following:Under the condition of plentiful of raw materials supply, for S company, the minimum order ratio is smaller, the optimal order quantity and expected profit are bigger;Under the condition of short supply, the higher level of suppliers supply stability, for S company, the optimal order quantity is smaller, the expected profit is bigger;Under the condition of supply disruptions, for S company, the optimal order quantity is not change by the probability of supply on time, but the expected profit will be increase with the probability of supply on time.This conclusion used to guide S company’s procurement improvement strategy, from the choice of suppliers, supplier management, product standardization aspects are also proposed.