The importance and cost analysis of the hottest pr

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The importance of purchasing management and cost analysis

purchasing activity management is juxtaposed with production activity control in the nirp logic flow chart. It belongs to the executive level of the plan and is an important content of material management. The result of running MRP is to generate "planned processing order" on the one hand, and "suggested purchase order" on the other hand

in this chapter, we will discuss the changes in the focus of procurement operations under the mode of information management, and what ideas should be used to guide procurement operations in order to make the ERP system benefit

1. The importance of purchasing management

1. An important link in the supply chain process

manufacturing cannot be "cooking without rice". One of its characteristics is that raw materials must be purchased before processing. For assembled products, it is also necessary to purchase supporting parts and standard parts before assembly. To a large extent, the feasibility of processing orders depends on procurement and supply. There is a decisive and inseparable relationship between the two

the production capacity of enterprises should also be restricted by procurement and supply to a certain extent. Procurement lead time often accounts for a large proportion in the whole product production cycle. The first guarantee to achieve on-time delivery to meet customer needs is procurement, which is directly related to the implementation of the plan in October last year. In essence, purchasing is the extension of an enterprise's ability. If the extended ability cannot guarantee the demand, the sales plan cannot be completed. Before committing to the delivery conditions, the salesperson must understand the feasibility of supply in addition to the feasibility of the enterprise's production capacity. This depends on ERP system to provide relevant information

from the perspective of supply chain management, because the procurement cycle is generally long and there are many uncertain factors, suppliers are not enterprises themselves after all, and their adaptability and response speed to demand changes are relatively slow, which is likely to form weak links in the supply chain and affect the competitiveness of the whole supply chain

2. The quality of manufacturing products depends first on the quality of purchased materials on the premise that there is no design error. The color of a TV set is not good, so people record or display the deformation value of the sample. The first blame is the brand of the TV set, and they will not think of which company produces the picture tube. In the processing process, a casting has trachoma and blowhole, which will cause a lot of waste of working hours. A kind of plastic spare parts will quickly age and fade, which will immediately overshadow the product. ISO 9000 places purchasing quality in an extremely important position and puts forward a series of requirements for quality assurance measures, which shows that purchasing operation is the first key to good product quality

3. Cost first

in the product cost, raw materials and purchased parts account for the largest proportion. For the manufacturing industry, it varies according to the industry, accounting for about 50-90% of the product cost, most of which are about 60-70%. Therefore, reducing procurement costs is an important measure to improve the profit margin of enterprises. The goal of purchasing operation management is to ensure the uninterrupted and balanced operation of production activities with lower purchasing costs and less inventory

in order to illustrate how material costs and inventory values affect the sales profit margin and return on capital (R01), we refer to the example shown in Figure 19.1. This is the analysis chart first proposed by DuPont company of the United States, commonly known as "DuPont ROI model". The figures in the boxes in the figure are the amount, and the figures in brackets are the values after the material cost and inventory value are reduced by 5% respectively. However, this has increased the sales profit margin by 29% and the return on capital by 30%

generally, the cost of purchasing materials in the manufacturing industry should account for at least 50% of the sales cost. Therefore, modern management attaches great importance to procurement management. It is an important core business workflow in ERP system. As an important part of information integration, both manufacturing process and supply and marketing process need to be integrated with procurement process. In the global economic environment, procurement will be a global business

from figure 19.1, we should also note that even if the material cost is reduced or controlled, if the inventory is still high, even if the sales profit margin is high, the final capital profit margin cannot be improved. Therefore, purchasing management and inventory management should be paid equal attention to. They are the main content of material management

2. Who sets the cost

on the surface, the technical requirements and experimental methods of sprinkler heads of automatic sprinkler systems GB 5135 (9) 3, the material cost is caused by procurement, but after all, procurement is an operation at the executive level, which is a purchase order obtained from the MRP calculation at the planning level. However, MRP can only explain what to buy, not why to buy such materials. Therefore, the material cost is not determined by the MRP system, but by the product R & D business

although the design and R & D expenses of products do not account for a large proportion of the cost of products, the cost keynote is set by the R & D business. As shown in Figure 19.2. However, even if the product R & D department sets the tone for the product cost, as long as the procurement management is strengthened, there will still be a lot of room to reduce the cost under certain conditions

from the discussion in the previous two sections, procurement and supply is not an independent operation. Externally, it should maintain contact with relevant global suppliers; Internally, it has a very close relationship with product R & D, manufacturing, marketing and finance. Let's discuss it further below

3. With the progress of China's reform and opening up, the concept of economic benefits is increasingly strengthened, and the large and comprehensive enterprise organization form will gradually be replaced by specialized production and the cooperation mode between enterprises. The proportion of purchased parts and outsourced parts in the product structure is bound to gradually increase. The phenomenon of global procurement has emerged, which puts forward higher requirements for procurement management. The development of technology and the improvement of quality of suppliers have a direct impact on the competitiveness of enterprises' products. The importance of procurement management has become increasingly prominent. Although the procurement management system of ERP can provide more information for management, the key to really do a good job in procurement management and make correct judgments and decisions is to change people's outdated concepts and practices in procurement operations and reform the management mechanism

some characteristics of modern procurement management can be summarized as follows, of which a considerable part is the philosophy of JIT

3.1 partners

enterprises (buyers) and suppliers (sellers) are partners. Specifically, there are the following points

(1) enterprises are more cautious in the selection of suppliers. We should not only review the quality, price, performance rate and services of the supplier, but also understand the supplier's technical conditions and development prospects, quality assurance system, production capacity, plan management and business policies. Under the premise of strict certification and selection, the supply points are centralized. There is not only a single long-term partner, but also a reliable backup supplier in case of risk

(2) strict selection of suppliers is not only for trading, but also to establish an interdependent partnership. Both parties establish a relatively long-term supply and demand agreement, mutual benefit, share planning information, and the buyer and supplier are no longer simple bargaining relationship

for suppliers, in order to ensure a long-term stable market, they also need to constantly improve performance and quality, improve reputation, establish long-term cooperative relations with buyers, and establish a relatively stable market for themselves. In a market economy, buyers often consolidate and strengthen this cooperative relationship by holding shares, investing funds, merging into the group or sending managers

(3) the product quality of the enterprise should start from the purchased parts and the supplier. The buyer should even assist and guide the supplier to improve the quality and agree on the quality standards. Provide goods with guaranteed quality and inspection exemption, and allow suppliers to deliver them directly to the point of use, such as the production line

(4) the purchaser of the enterprise plays the role of vendor scheduler or supplierscheduler. The buyer is not only the customer of the supplier, but also the "planning manager" of the supplier, trying to make the supplier and the buyer produce synchronously. On the other hand, the supplier should have enough flexibility to adapt to the unexpected plan changes of the buyer. In order to achieve this, the buyer's purchasing department should understand the supplier's production cycle (lead time), demand and planning time limit for the materials provided, regard the supplier's plan as a part of the enterprise's plan, regard the supplier as an extended capability unit of the enterprise, and carefully consider the impact of plan changes on the supplier. The chemical machinery with reduced order amount has been affected by the reduction of external demand

(5) the buyer and the supplier jointly and effectively manage the progress. When both parties adopt MRP mode, the buyer can apply e-commerce data exchange (EDL) system to connect, query and track the production progress of the buyer's purchased goods in the supplier's enterprise through computer. If the buyer and the supplier use different material numbers for the same material, the software shall have a comparison description

(6) both parties shall jointly coordinate the transportation work, implement the transportation plan, and ensure the timely supply with the help of the third-party logistics

3.2 collaborative operation

in addition to the above series of changes in the relationship with suppliers outside the enterprise, procurement is also closely related to design, sales, quality, planning, process, materials, finance and other businesses. Procurement is not only a business led by the supply department, but also a collaborative operation with the nature of cross professional departments

in order to reduce costs, the content of procurement operations is more extensive, and the quality requirements of procurement management personnel are higher. We should work with all relevant departments that affect procurement to improve procurement operations, because relying on the procurement department to unilaterally try to reduce procurement costs, the range of reduction is limited. The specific work is as follows

(1) work with the product R & D department to analyze the value of products and parts and study the reasonable selection of materials

(2) work with the sales department to study the measures to ensure the performance of the contract and ensure sufficient procurement lead time; At the same time, grasp the changes of market demand in real time to avoid waste in procurement

(3) analyze and decide whether a part is self-made or purchased by the enterprise together with the R & D, manufacturing and cost departments, which should not only ensure the quality and progress, but also control the cost

(4) work with the process department to study and improve the process, adopt reasonable size specifications of raw materials, and improve the utilization rate of materials

(5) the outsourcing process in the process route is uniformly in the charge of the purchasing department, selecting the cooperation unit and formulating the outsourcing plan

(6) sometimes, advertisers can also be treated as suppliers, so as to distinguish the advertising expenses of each product, treat them separately according to the order, and directly count them into the cost of related products. This is also the content based on job management. In other words, the outflow of enterprise production funds is uniformly controlled by the purchasing department

(7) study and determine the reasonable batch rules and safety stock or safety lead time of each purchased part

(8) work with the financial department to prepare the procurement budget and fund use plan

(9) work with the quality department to determine the appropriate quality standards of purchased parts, adopt effective quality inspection methods, pay attention to the out of control product cost caused by the quality problems of purchased materials, and increase the quality cost

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