Research On Strategic And Tactical Paths For Cost Reduction In Water Pump Manufacturing Enterprise

The global pump output value was 89 billion 400 million US dollars in 2015.The pump manufacturers were about 11,000.The cumulative output value of the top five pump manufacturers was about 25 billion US dollars that accounting for 28%of the entire market.With the growth of the global GDP and population,the demand for pump will be increasing in the social infrastructure construction.Under both the pressure of increasingly competition and falling manufacturing competitiveness cost in China,how to deal with the cost management has become the common problems and challenges for all the pump manufacturers.Moreover,it is the topic of this paper.Based on the theory of strategic cost management,this paper takes Ebara Machinery(China)as an example to study the cost reduction of pump manufacturers.First of all,the paper reviews the four stages of the cost management development and the situation of Chinese pump manufacturers cost management.It provides advanced theoretical basis and effective data reference for analysis.Meanwhile,it emphasizes the importance and necessity of strategic cost management.The paper outlines the research ideas and contents of the strategical and tactical approaches for the pump manufacturers’ cost management through seven common research methods.This paper takes an objective evaluation on the possible contributions and deficiencies.Secondly,the paper introduces the theory of strategic cost management and the particularity of pump manufacturers.By the analysis of three successful pump manufacturers cases at domestic and abroad,it finds standardization strategy,technological innovation strategy,raw material control tactics,new material research and development tactics,and green energy tactics for reference to the cost management.It provides a theoretical and practical basis for strengthening the reform of Ebara Machinery(China)’s cost management.Thirdly,the paper overviews the background of Ebara Machinery(China)and its cost management situations.It summarizes the existing problems and limitations and proposes reform ideas and targets of cost management of Ebara Machinery(China).Then,it locks on the design ideas,methods and toolsets of the strategic and tactical cost reducing management of Ebara Machinery(China).Fourthly,the paper analyses the external environment,competition relationship and company internal situations.Afterwards,it studies the cost reducing management of Ebara Machinery(China)through the product modular strategy and standardization strategy methods at the strategic level.The product modular strategy researches and implements the modular improvement scheme gradually by the introduction of the methodology,product structure,product components and Ebara pump model structure.The standardization strategy analyses the technical data standardization strategy,information system standardization strategy,supplier standardization strategic management improvement program combining the research methodology respectively.The evaluation result of the strategic method is that the annual unit cost of the pumps is reduced by 10 million 560 thousand RMB.And the management cost of the company is greatly reduced.Fifthly,the paper identifies technological innovation tactics and raw material control tactics to study the cost reduction of Ebara Machinery(China)by combining the principles and methods of cost reduction at the tactical level.It locks the cost benchmarking and analyses the cost of Ebara Machinery(China).it formulates and implements the cost reduction plan after finding the reason of differences.The technological innovation tactics has four improved methods as independent research and development,product life cycle design,new materials research and development,pump improvement.The raw material control tactics focus on three aspects of supplier negotiations,target cost control and quality cost control.The evaluation result of the tactical method is that the cost of the first year is reduced by at least 8 million RMB.The cumulative target of 20 million RMB in three years is also achieved.This paper draws the final conclusion through the above analysis and study.The pump manufacturers must take both strategic and tactical cost management mode.It is essential to find the applicable methods and tools.Along with the development of economy,science and technology,there is an enormous space for the development of pump industry in the future.Therefore,the paper breaks through the cognitive limitations of existing products,industry and cost management knowledge.And it looks forward to all possibilities in the future from product innovation,manufacturing capacity and water integration.