What are the control methods of purchasing cost?

According to the statistics of cost reduction methods adopted by Fortune 200 companies in the United States, the top ten most effective methods are as follows. Because the implementation effect of each method varies from enterprise to enterprise, the following ten methods are in no order.

1. Value analysis

2. Value engineering (VE): Study the functions of products or services, and achieve the purpose of reducing costs by eliminating, simplifying, changing and replacing them at the lowest life cycle cost. Value analysis is used in the engineering design stage of new products. Value engineering is a systematic study and analysis of the function/cost of existing products, but now value analysis and value engineering have been regarded as the same concept.

3. Negotiation: Negotiation is a process in which buyers and sellers reach a mutually recognized agreement for their respective goals, which is also the most basic ability that purchasing personnel should have. Negotiation is not limited to price, but also applies to some specific needs. Generally speaking, the price reduction can be expected to be about 3-5% through negotiation. If we want to achieve a greater reduction, we need to use methods such as price/cost analysis, value analysis and value engineering (VA/VE).

4. Target cost: Peter F.Drucker, a master of management, mentioned in his article Five Crimes of Business that the third fatal mistake of enterprises is that pricing is cost-driven. Most American companies, as well as almost all European companies, set product prices according to cost plus profit rate. However, as soon as they put their products on the market, they had to cut prices, redesign those products with too high cost and bear the losses. Besides, they often have to give up a good product because the price is not correct. The research and development of products should be based on the price that the market is willing to pay, so we must assume the market price of competitors' products and then set the price of the company's products. Because of the old thinking mode that pricing is driven by cost, the electronics industry of American people's livelihood no longer exists. In addition, Toyota and Nissan pushed German luxury cars out of the American market, which was also the result of price-driven cost calculation.

5. Early supplier participation (ESI): In the early stage of product design, select suppliers with migration relationship to participate in the new product development team. Through the participation of early suppliers, the new product development team puts forward performance specifications for suppliers, and achieves the goal of reducing costs with the help of suppliers' professional knowledge.

6. Leveraged procurement: The demand of various institutions or different departments focuses on expanding the procurement volume and increasing the bargaining space. Avoid the situation that different organizations in the organization purchase the same parts from the same supplier, but the prices are different, but they don't know each other, and lose the opportunity to save procurement costs for no reason.

7. Consortium procurement: mainly occurs in the procurement of hospitals, schools and other non-profit undertakings. By integrating the needs of different procurement organizations, better quantity discount prices are obtained. This has also been applied to general business activities, and a new industry has emerged, that is, third-party procurement, which specializes in serving enterprises and units with little MRO demand.

8. Design for Purchase (DFP): the strategy of manufacturing or purchasing. In the product design stage, the standard process and technology of third-party factories and industrial standard parts are adopted to facilitate the acquisition of raw materials. This not only greatly reduces the technical support required for self-making, but also reduces the cost required for production.

9. Cost and price analysis: This is the basic tool for professional procurement. It is very important for buyers to understand the basic elements of cost structure. If the purchaser doesn't know the cost composition of the purchased goods, it can't be regarded as knowing whether the purchased goods are at a fair and reasonable price, and it will also lose many opportunities to reduce the procurement cost.

10. standardization: standardize specifications, use * * universal design/specifications for different product items, fixtures or parts, or reduce the number of customized items to achieve economies of scale and reduce manufacturing costs. However, this is only a part of standardization, and organizations should extend the scope of standardization to operating procedures and processes in order to achieve greater effectiveness.

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This is a reasonable method to control the procurement cost internationally. I hope I can help you. If you are satisfied, please adopt it!