What are the methods of procurement cost control and how to control procurement costs?

Procurement cost is an important indicator in enterprise management, which directly affects the profitability and operation of enterprises. Procurement costs include all expenses incurred in purchasing goods or services, including purchase price, freight, insurance, duties, taxes, etc.

Therefore, enterprises must effectively control and manage procurement costs. This article will look at the management of procurement costs from several aspects.

First, the evaluation of the first business is an important object of enterprise procurement, the selection and management of the first business directly affects the procurement cost. Therefore, enterprises need to conduct a comprehensive assessment of the credibility, quality management and cooperation status of the best businessmen. Establish a first-class business evaluation system to evaluate the stability, competitiveness, qualification certification, and after-sales service of first-class businessmen.

At the same time, it is necessary to update the business information in a timely manner so that adjustments can be made in a timely manner.

Second, choose the right procurement method Procurement methods directly affect the cost of procurement, enterprises should choose the appropriate procurement methods according to their needs. For products with large purchase volume and stable stability, they can be purchased through long-term cooperation to reduce procurement costs. For products with small purchase volume and unstable conditions, procurement costs can be reduced through competitive bidding and other means.

3. Negotiate the price of procurement When negotiating procurement with the best businessmen, enterprises should reasonably control costs and obtain low-cost procurement as much as possible. In the process of bargaining, enterprises can negotiate with merchants through multi-party price comparison to achieve a win-win result.

4. Optimize the procurement process Optimize the procurement process, improve procurement efficiency, and reduce procurement costs. Through the intelligent procurement system, the procurement process can be simplified, duplication of work and mistakes can be avoided, and the cost of manpower and material resources can be reduced. For long-term stable merchants, an automatic order system can be established to reduce procurement links and procurement costs.

Fifth, the reengineering of the procurement model The traditional procurement model can no longer meet the needs of the enterprise, and the procurement model needs to be reengineered. Enterprises can try to adopt emerging technologies such as blockchain and artificial intelligence to realize the digitalization, intelligence, and automation of procurement, and reduce procurement costs.

6. Strengthen contract management Contract management is a key part of procurement cost management. The signing of the contract should clarify the procurement method, delivery time, after-sales service and other content. Ensure the execution and performance of the contract, prevent the occurrence of contract risks, and further reduce procurement costs.

In short, procurement cost management is a part of enterprise management that cannot be ignored. Enterprises should pay attention to the control and management of procurement costs, and reduce procurement costs through various means to improve the operational efficiency and profitability of enterprises.

Procurement cost control can be done in the following ways:

Competitive bidding: through public bidding and competitive bidding, attract multiple bidders to participate, and select the most competitive bidders. This can prompt the best business to offer more competitive conditions and reduce procurement costs.

Negotiation: Actively negotiate with the company to negotiate more favorable terms, contract conditions and discounts. Through effective negotiation strategies, more favorable procurement conditions can be obtained and procurement costs can be reduced.

Chain Optimization: Optimize chain management to reduce inventory carrying costs, transportation costs, and logistics costs. Through reasonable planning and management of the first-chain process, unnecessary links and expenses are reduced, and procurement efficiency and cost-effectiveness are improved.

Procurement contract management: strengthen the management and supervision of procurement contracts to ensure that the best suppliers deliver products and services in accordance with the contract. Strict management of contract variations and claims, and evaluation and appraisal of business performance to avoid additional costs and expenses.

Business performance management: Establish a business performance evaluation mechanism to evaluate the performance of business in terms of quality, delivery punctuality and after-sales service. By establishing a long-term cooperative relationship with excellent performance, you can get better services and reduce procurement costs.

Value Analysis: Apply value engineering methods to evaluate and optimize the functional and cost relationships of procurement projects. By redesigning and improving product specifications, material selection, and manufacturing processes, we can reduce costs and improve efficiency.

Risk Management: Assess and manage the risks that may be exposed to procurement projects. Reduce the impact of risks on procurement costs by identifying potential risks and taking corresponding risk countermeasures.

Procurement data analysis: Use procurement data for analysis to understand the composition and influencing factors of procurement costs. Through data analysis, identify opportunities and potential problems for cost savings, and make data-driven decisions and optimizations.

These methods can help organizations control and reduce procurement costs, improving procurement efficiency and effectiveness. Depending on the specific procurement project and organizational needs, you can choose the appropriate method or a combination of methods to control the cost of procurement.

8Manage SRM Procurement Management Software can help businesses manage their total cost of ownership, thereby improving the efficiency and profitability of their businesses.

The material controller controls the purchase behavior of the purchase according to the "material requirement plan".

The material inspector is responsible for inspecting the controlled condition of the material.

The warehouse keeper checks the purchase order, delivery order, and material plan according to the "incoming operation control card", and the goods can be received only if there is no error.

Financial reconciliation of purchase orders and warehousing receipts.

The quality control staff tests the pass rate of incoming materials.

Personnel assessment of purchasers according to the "timely rate of incoming materials" and "qualified rate of incoming materials".

The administration of the subordinates by the superiors of each department.

Through process control, improve the standardized behavior literacy of buyers.

Cost control is a series of preventive and adjustment measures taken by the enterprise according to the pre-established cost management objectives in a certain period of time, by the cost control subject within the scope of its authority, before the occurrence of production consumption and in the process of cost control, on various factors and conditions that affect the cost, so as to ensure the realization of cost management objectives.

To control procurement costs, it is necessary to formulate a reasonable procurement plan, select the right supplier, and negotiate a reasonable price.