Research On Procurement Cost Management Of Company F

Since 2009,China overtook USA as the world's largest automotive market,major automotive companies keep increasing investment in China over the past years,as a result,the automotive sales increased year by year,however,the real situation is not as good as what the numbers show,as per report from State Statistics Bureau the income of automotive industry increased by 10.8%for 2017 and the profit was 8%,while the profit were 8.3%for 2016,8.7%for 2015 and 9%for 2014,Obviously profit of automotive industry decreased over the past years.Meanwhile,data from China Automotive Industry Association shows passage car sales increased by 2.4%for 2017,which is the lowest in a decade,it is common understanding that China market will no longer keep fast growing.One of the reason is price drop due to higher competition,Libing,CEO of NEXTEV ever said "China market is the most competitive automotive market over the world,you will be facing global competitors while making car in China".Another reason is increasing of material cost and labor cost,as per reported cost of auto industry increased by 11.4%comparing with 2016,while sales increased by only 10.8%,pressure from dropping price and increasing cost make OEMs struggle to keep profitable,cost reduction is a challenge to the whole automotive industry.This paper,at first,discusses theory of purchasing cost,major approach of purchasing cost management,as well as the theory of Activity Based Costing,then,introduces purchasing organization of F company,how F company performs purchasing cost management along with the shortages,at last,based on the reasons analyzed the paper puts forward a series of safeguard measures for purchasing cost management.Cost control is not a new topic to OEMs,their competitiveness depends largely on how to embrace the change of this market.Via improving purchasing cost management,by many different channels and methods,this paper is aiming to control components purchasing price,improve cost management efficiency,and offer insights to other OEMs.