Paper "Logistics Cost Control of Production Enterprises in Supply Chain Environment"

Problems and Countermeasures of Enterprise Supply Chain Cost Management

There are some problems in China's supply chain cost management, such as weak concept of supply chain cost control, lack of integrated cooperation mechanism among supply chain node enterprises, lack of necessary trust among supply chain partners, information distortion in supply chain management, and lack of reasonable performance and incentive measures among supply chain node enterprises. To solve these problems, it is necessary to cultivate the cultural awareness of cost control and establish the horizontal integration mechanism, trust and cooperation mechanism, information sharing mechanism, performance evaluation and incentive mechanism of supply chain node enterprises.

Supply chain; Cost management; Integration mechanism; Trust and cooperation mechanism; Information sharing mechanism; Assessment and incentive mechanism

First, the supply chain and supply chain costs

supply chain

According to Ji Zuozhe (2002), supply chain is an integrated functional network structure model that connects suppliers, manufacturers, distributors, retailers and end users by controlling the information flow, logistics and capital flow around core enterprises, starting with purchasing raw materials, manufacturing intermediate products and final products, and finally delivering products to consumers through sales networks. Fan Xin (2006) believes that the supply chain refers to the whole process from the initial production of raw materials by suppliers to the final formation of products and delivery to customers. Ding Tingxuan and Guo Lingling (2007) believe that the supply chain refers to a network system composed of suppliers and customers, whose function is to obtain materials, produce products and deliver them to the final customers.

Based on the above definition, the definition of supply chain can be simply described as a network chain structure model of logistics, information flow and capital flow from raw material suppliers to end customers, which is composed of a core enterprise and many joined node enterprises.

Supply chain cost

According to Ji Zuozhe (200 1), supply chain costs include all material costs, labor costs, transportation costs, equipment costs and other variable costs. Liu Gang (2004) believes that the monetary expression of live labor and materialized labor occupied and consumed by the production and provision of related services and activities in the supply chain is supply chain cost, also known as supply chain cost. Gui (2006) believes that supply chain cost is the monetary expression of live labor and materialized labor in the whole supply chain from raw material suppliers to final consumers, including tangible costs and intangible costs.

Therefore, the cost of supply chain is the cost of logistics, information flow and capital flow from raw material suppliers to final customers.

Second, the supply chain cost management problems

Supply chain cost management mainly refers to the management of various costs in the whole supply chain. Various costs in the whole supply chain mainly include supply chain design and construction costs, transportation and distribution costs, inventory costs, product production costs and after-sales service costs (Ding Tingxuan, Guo Lingling, 2007). Supply chain cost management pays attention to the integration and cooperation between enterprises, and regards the whole supply chain as a cooperative whole. Supply chain cost management mainly has the following problems in practice.

(A) the concept of supply chain cost control is weak

The research of supply chain cost management has a history of more than 30 years, but due to the imperfection of theory and the lack of practical experience, although some enterprises have implemented supply chain cost management, they have not formulated a systematic cost management and control system. Moreover, most employees still have the wrong idea that cost is only the business of individual departments and individuals, and they have not paid enough attention to cost management and cost control. At the same time, because there are not enough enterprise cases that successfully implement supply chain cost management for reference, enterprise managers still have some blindness in the specific implementation of supply chain cost management, and there is no cost culture training and education for all employees, so that employees can understand the importance of supply chain cost management and the potential for reducing enterprise costs is endless. Therefore, the cost management thought of most enterprises still simply stays on the basis of traditional cost management, and only wants to minimize expenses and reduce costs, while ignoring the improvement of product quality, product style and packaging. It can be seen that only through continuous practice and exploration can enterprises open up their own way of supply chain cost management, and truly achieve the purpose of reducing the total cost of supply chain and realizing enterprise profits.

(B) Supply chain node enterprises have not yet formed an integrated cooperation mechanism.

In order to reduce the total cost of supply chain, the distribution of logistics resources in supply chain management is * * * *. However, there are often trade-offs in logistics management among enterprises, some of which may be caused by each node enterprise in the supply chain itself, but a large part of the reason is that each node enterprise has not fully integrated resources, failed to enjoy resources, and has no special organization to coordinate and solve the above problems fairly and justly. In the long run, it will affect the orderly and benign operation of supply chain cost management.

(C) the lack of necessary trust between supply chain partners

Enterprises in the supply chain are all independent individuals, and there are often contradictions in the distribution of interests between enterprises. Therefore, mutual trust and cooperation between enterprises is the basis of promoting the orderly operation of supply chain. However, due to the existence of conflicts of interest, real mutual trust between enterprises has not yet been realized. Therefore, in order to cooperate with each other, enterprises in the supply chain are all realized through legally binding contracts. At the same time, the choice of partners is also a difficult problem faced by supply chain enterprises at present. How to choose partners and what kind of partners have not been well solved. Enterprises have not yet formulated corresponding standards for the above problems.

(D) Supply chain management is prone to information distortion.

Because of the distrust between partners, information will be distorted, and they often don't convey all the real information they get to other partners. For example, in the procurement process, the purchaser is in a favorable position, and often intercepts part of the demand information and artificially sets communication barriers, while the supplier also conceals part of the information. The two sides restrict effective information communication, which will lead to information asymmetry, and the consequence of information asymmetry is the increase of costs for both parties. It can be seen that information sharing is very important for supply chain partners.

(E) Lack of reasonable performance and incentive mechanism, uneven distribution of profits.

Enterprises in the supply chain are all independent individuals, and there are often contradictions in the distribution of interests between enterprises. The sharing of information will bring extra profits, and the increase of extra profits is mainly reflected in core enterprises. Every member enterprise will worry that the core enterprise will abuse information and occupy extra profits, resulting in uneven profit distribution. However, the uneven distribution of profits is mainly due to the lack of reasonable performance appraisal and incentive mechanism. At present, supply chain enterprises just ignore this point, and in the process of cost management, they do not consider using certain means and methods to evaluate and motivate the performance of partners and internal employees.

Third, measures to strengthen supply chain cost management

(A) to cultivate cultural awareness of cost control

First of all, it is necessary to organize enterprise managers to systematically study and understand the theory of supply chain cost management, and draw successful experiences and failed lessons from enterprises that have implemented supply chain cost management. Secondly, to cultivate employees' awareness of cost culture, we should take the concept of cost control as a part of corporate culture and train all employees so that they can fully realize the importance of cost culture. At the same time, every node enterprise in the supply chain is required to consciously control the supply chain cost. Only in this way can we achieve the goal of reducing the total cost of supply chain. In addition, enterprises should also pay attention to the following two points in the process of supply chain cost management: first, fully realize that the activities within enterprises are not isolated, but interrelated, and only by organizing these activities organically can the core competitiveness of enterprises be improved; Second, enterprises do not exist in isolation in the supply chain, and each node enterprise is only a part of the whole supply chain system. It is necessary to organically link enterprises at all nodes, trust and cooperate with each other, give full play to the advantages of supply chain cost management, and minimize the total cost of supply chain.

(B) the establishment of a horizontal integration mechanism

Due to the rapid development of economic globalization, the competitive strength of multinational enterprises is increasing day by day. The vertical expansion ability of an enterprise no longer enhances its competitiveness, but disperses its limited resources, making it impossible to form superior business and core competitiveness. The horizontal integration of resources emphasizes the integration of resources of external related enterprises, forming a strategic alliance with strong alliances and complementary advantages, forming the same interest subject to participate in market competition, so that enterprises can give play to their own advantages and achieve win-win and mutually beneficial results in the value-added chain. While ensuring service quality and customer satisfaction, it reduces the cost of enterprises and enhances their market competitiveness. Horizontal integration requires enterprises to:

1. Resource integration

In the cost management of supply chain, the total cost of supply chain tends to decline by sharing resources with all node enterprises. To realize resource integration, we must start with customer feedback and market research, develop and produce products and services, and connect customers. Every node enterprise in the chain should integrate its own resources with other enterprises to reduce costs from production and circulation.

2. Organizational construction must match.

The premise of supply chain cost management is relationship management. Only by properly handling the relationship between members, integrating each node enterprise and its production links, and establishing a good cooperation mechanism can the cost be effectively controlled. Supply chain cost management means that all node enterprises participate in a collaborative way, but the degree of participation is different. Core enterprises should undertake the main management work, organize the cost management of the whole supply chain, and subordinate enterprises participate in the management and undertake their own cost management activities. In order to manage the relationship between core enterprises and their subordinate enterprises, such as upstream suppliers and downstream distributors or customers, the traditional enterprise organizational structure can no longer meet the requirements. Therefore, in the supply chain, it is necessary to establish a special organization to contact the member enterprises in the supply chain. This organization that matches the supply chain must perform the following functions: (1) maintain the relationship between members and reduce transaction costs; (2) Obtain and exchange information at the same time to reduce unnecessary activities and business expenses.

3. Comprehensive application of cost management methods

The horizontal integration mechanism of supply chain cost management requires not only the integration of enterprise resources and the collaborative management of each node enterprise, but also the integration of cost management methods. We can't just use a certain cost management method in a node enterprise or a production link alone, but we should integrate all available methods in supply chain cost management to form a new unity. Only in this way can we give full play to these cost management methods and improve the overall efficiency of the supply chain.

(3) Establishing trust and cooperation mechanism

The essence of supply chain is to integrate the core competitiveness of each node enterprise, so cooperation is the basis of normal operation of supply chain and the core of supply chain management. Trust is the foundation of cooperation, and trust is needed everywhere. In other words, trust can promote the cooperation between supply chain partners, reduce the transaction cost of supply chain and improve the rapid response ability of supply chain. However, interpersonal relationship management in enterprises is usually considered as the most difficult part of supply chain management, because the enterprises involved in the supply chain are independent interest subjects, and there are often contradictions in the distribution of benefits. The difficulty of cooperation exceeds the cooperation between internal departments of a single enterprise. Therefore, the most important component of successful supply chain management is the trust relationship between supply chain partners. In order to strengthen the trust among supply chain enterprises and achieve the purpose of cooperation, we must carefully choose partners, because good partners are an important basis for strengthening supply chain cost management. At the same time, we should strengthen the concept of cooperation and competition, * * bear risks, responsibilities and costs, * * enjoy achievements and benefits, and form a good competitive and cooperative relationship.

(4) Establish an information sharing mechanism.

Information sharing is the basis of supply chain cost management, and the coordinated operation of supply chain needs to be based on the high-quality information transmission and sharing of each node enterprise. The sharing of information can enable all members of the supply chain to make production, sales and inventory plans better, enable the target cost method to be implemented smoothly, enable enterprises to improve the satisfaction of end users while reducing costs, and achieve the purpose of promoting mutual trust among supply chain members. In addition, through the acquisition of information, enterprises can integrate and synthesize the information they have obtained about themselves, thus reducing the uncertainty within enterprises to some extent. It can be seen that information sharing plays a very important role in supply chain cost management. Therefore, in order to improve customer satisfaction and reduce supply chain costs, enterprises at all nodes in the supply chain must obtain enough information to enjoy.

(V) Establish a performance appraisal and incentive mechanism.

After a series of system design and process reengineering, the supply chain cost management should establish the corresponding assessment and incentive mechanism, so that the previous measures can be effectively implemented. The organization of supply chain cost management should establish performance evaluation indicators, formulate assessment standards, and evaluate the operational performance of each node enterprise and the impact of its own operational performance on upstream and downstream node enterprises or the whole supply chain. Evaluation should be based on customer satisfaction and cost control indicators. The measurement of customer satisfaction mainly includes quality, price and timeliness. Such as qualified rate, return rate, complaint rate, etc. Are the contents of the assessment. The assessment of cost indicators is mainly to compare the target cost with the actual cost and analyze the completion and improvement of the target cost. After the assessment, evaluate the contribution of each node enterprise to the whole supply chain according to the assessment results, and formulate reasonable distribution standards to distribute profits accordingly. In order to improve the uneven distribution of profits.

The incentive mechanism includes two aspects: the incentive of employees within the enterprise and the incentive of member enterprises. Enterprises can motivate employees through the following measures: timely paying attention to and evaluating employees' work performance, making training and learning plans suitable for employees, giving employees space and opportunities for self-improvement, making reward and punishment mechanisms and salary mechanisms, as well as vacation and medical care plans. Of course, the incentive measures related to cost control should be more prominent, so as to achieve the purpose of enhancing employees' cost awareness through incentives. The following measures can be taken to encourage member enterprises: organizations should ensure the rationality of assessment standards and distribution standards, and distribute profits reasonably according to distribution standards; Always listen to the opinions of all node enterprises and supplement and modify the performance appraisal and incentive mechanism; Core enterprises should maintain good communication with subordinate enterprises, and subordinate enterprises should always pay attention to the operation of upstream and downstream partners; Ensure the long-term and stable cooperative relationship between enterprises at all nodes, reduce mutual suspicion and disputes caused by information asymmetry, and enable member enterprises to cooperate happily in a good supply chain environment.

refer to

[1] Ji Zuozhe. Supply chain cost management: a new source of profit growth [J]. Business Research, 2002, (1). P72

[2] Fan Xin. On supply chain cost management [J]. Journal of Adult Higher Education, 2006, (1). P33-36。

[3] Ding Tingxuan and Guo Lingling. Research on cost management of modern enterprises [M]. Kaifeng: Henan University Press, 2007, (9). P 14。

[4] Ji Zuozhe. On supply chain cost management [J]. Journal of jilin province economic management cadre college, 200 1, (4). P44。

[5] Liu gang Supply chain management [M]. Beijing: Chemical Industry Press, 2004, (10). P262。

[6] Guangxi Liang Jun. Research on Supply Chain Cost Management [M]. Beijing: China Economic Publishing House, 2006, (8). P 15。

[7][ America] Robert B. Handfield), [America] L. nikos Jr., translated by Wang. Introduction to supply chain management [M]. Beijing: Social Science Literature Publishing House, 2003, (12.

[8] Chen. Supply chain management and cost reduction of enterprise operation efficiency [J]. Management perspective-Economic Forum, 2005, (15). P82。

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