How Can Enterprises Save Procurement Costs?

First, the strategy of saving procurement costs.

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1. value analysis and value engineering, commonly known as VA and VE, are applicable to new product workers: To study the functions of products or services, and minimize the cost by eliminating, simplifying, altering, and replacing with the lowest life cycle cost.

Value engineering is a systematic research and analysis aiming at the function and cost of the existing products. Now value analysis and value engineering have been regarded as the same concept.

2. Negotiation: negotiation is a process of mutual agreement between buyers and sellers for their respective goals.

Negotiations are not limited to price, but also to certain specific needs.

In negotiations, the average purchase price is expected to decrease by about 3%-5%.

If you want to achieve a bigger decline, you need to use price, cost analysis, value analysis and Value Engineering (VA, VE) and other practices.

3. early supplier participation in ESI: in the early stage of product design, suppliers of partnership are selected to participate in the new product development team.

Through the early involvement of suppliers, the new product development team can adjust the strategy very early and achieve the goal of reducing the cost with the help of the supplier's professional knowledge according to the performance specifications of the supplier.

4. leverage procurement: avoid purchasing separately, resulting in different units in the organization purchasing the same parts from the same supplier, but the price is different, but they do not know each other, without any reason, they lose the opportunity to save procurement costs.

We should focus on expanding procurement volume and increasing the way of bargaining.

5. joint procurement: mainly in the procurement of non-profit businesses, such as hospitals, schools, etc., through the statistical needs of different procurement organizations, in order to get a better discount price.

This is also applied to general business activities, such as third party procurement, specifically for those enterprises that are not in need.

6., to facilitate procurement, the strategy of DFP- self-made and outsourced: in the design stage of the product, using the standard and technology of the co operative plant and using industrial standard parts to facilitate the convenience of raw materials.

This can greatly reduce the technical support required for self-control and reduce production costs.

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7. price and cost analysis: This is the basic tool for professional procurement. Understanding the basic elements of cost structure is very important for purchasers.

If purchasing does not understand the cost structure of the goods purchased, it can not be understood whether the goods bought are fair or reasonable, and it will also lose many opportunities to reduce procurement costs.

8. standardized procurement: standardize the implementation of specifications, use common designs or specifications for different product items or parts, or reduce the number of customized items, so as to reduce the manufacturing cost with economies of scale.

But this is only one part of standardization, and the scope of standardization should be expanded to achieve greater benefits.

Two. Factors to consider in choosing purchasing cost strategy

The above mentioned several ways to reduce procurement cost.

1. the type of purchased products or services.

The type of products or services purchased is a one-off purchase or a continuous purchase.

This should be the basic cognition of purchasing. If the type of purchase is changed, the strategy must also be adjusted. The requirement of continuous procurement for cost analysis is much higher than that of one-time purchase. However, if the amount of one-time purchase is quite large, the efficiency of cost saving can not be ignored.

2. years of demand and total annual purchases.

What is the annual demand and the annual purchase amount? This is related to whether we can get a better bargaining advantage when bargaining with suppliers.

3. relationship with suppliers.

The seller, the traditional supplier, the authorized supplier, maintain partnership with the supplier, and then form the strategic alliance, sharing the cost differently.

If the relationship with the supplier is general, it is sure that it is not easy to get the detailed information of the cost organization. It is only possible to cooperate with each other only when it is closely related to the supplier.

4. the life cycle of products.

The quantity of purchase is directly related to the stage of the product life cycle. The product has import period, growth period to maturity stage, and the purchase quantity will gradually enlarge until the recession period appears, and the purchase volume will gradually shrink.