To reduce costs, first, you should find out which are better key purchasing targets that will contribute to your company's success. Think about the big picture first, then get down to the details. Before deciding on several key goals for your company's success, consider the following factors: supplier quality, on-time delivery, order-to-delivery cycle, transaction price, volume discounts, services that meet demand, and Other aspects that reflect supplier performance, etc. Then, decide on a few key goals that are important to the success of your business.

This information should be used to develop criteria for supplier evaluation. The standard comes from the company's value positioning to the market, which is the company's strategic foundation. Determining what your company needs to do to meet customer needs will guide you in deciding what actually needs to be done. This will guide you in thinking about what you should ask of your suppliers to better meet your customers' needs. Developing your supplier evaluation criteria will in turn involve the development of your purchasing personnel's evaluation criteria. Please note that this is all connected.

Now, let’s look at a typical method, which is to evaluate procurement talents based on job descriptions. If the strategy changes, will the job description change? Probably not. The evaluation of procurement talent should be based on a standard that comes from the company's strategy, value proposition, customer satisfaction, key operational goals, and how well suppliers support these goals.

Integrate procurement cost control into performance goals, measurement indicators, target values ??and action plans. In terms of controlling the procurement process, the organization should link all actions through a clear incentive system and reward performance improvements and achievement of performance goals, which are derived from the company's key goals.

Seven principles

1. First, a complete supplier evaluation system must be established: clear provisions must be made on specific supplier qualifications, evaluation procedures, evaluation methods, etc.

2. Improve the training system for buyers.

3. The price review shall be stipulated in the corresponding procedures and signed jointly by the relevant person in charge to take effect.

4. Standardize the sample confirmation system and decentralize the power of the purchasing department.

5. Irregular supervision puts pressure on buyers.

6. Establish a reward system to reward buyers after lowering prices.

7. Strengthen development capabilities and seek cheap alternatives.

You also need to understand speculation and delay

How to reduce procurement costs

1. Learn to check prices: No matter what kind of material you purchase, you must be familiar with it before purchasing. Price components, understand the source price of raw materials for finished products produced by your suppliers, and lay the foundation for your own accurate price verification. Based on this, purposeful negotiation can be done to know the enemy and be victorious in every battle.

2. There should be a wide range of information sources: Today's society is an electronic device. As a procurement personnel, you need to collect material procurement information, regional differences, etc. from different aspects.

3. Choose a supplier that is suitable for the development of your company: There is an old saying in China: "Men are afraid of entering the wrong profession, and women are afraid of marrying the wrong man." The same is true for development suppliers. A good supplier can follow you. ***Total Development will provide you with suggestions for your development, save costs, and make it easy to manage suppliers; bad suppliers will bring a lot of trouble to your supplier management. (I think judging a good supplier mainly depends on its quality, price, service, technical strength, adaptability and other factors).

4. The negotiation skills of purchasing personnel are also an important part of controlling purchasing costs (a good negotiator will at least bring 5 profit margins to your purchasing), which must also be based on the purchasing staff’s ability. Virtue.

5. Everyone understands the importance of bulk purchasing. The larger the batch, the lower the amortization cost. Procurement planners need to keep this in mind.

6. Establish the company’s purchasing reputation. The terms must be implemented according to the contract. If you pay, you can delay it once or twice, but you can never delay it a third time. If you lose integrity, let alone cost control, no one may even supply you with the goods.

7. Establish a monthly supplier rating system (from three aspects: quality, price, and service) and implement a supplier quota system, which will achieve unexpected results.

8. Establish a monthly performance evaluation system for purchasing personnel. Not only can it stimulate the enthusiasm of purchasing personnel, but it is also an effective means to prevent bribery of purchasing personnel.

9. Effectively control purchasing inventory. Avoid the risk of stopping production and the risk of backlog of materials, and virtually control the procurement expenses of your own company.

Procurement Process

1. Establish a complete procurement structure and company procurement process control based on the nature and scale of the enterprise.

2. Clear division of labor and determine job responsibilities. Sign a monthly personal performance target assessment form.

3. Determine the approval authority for procurement and achieve effective monitoring.

This is the best way

1. Improve basic procurement management

Including classification, grading and database establishment of purchased materials; determination of qualified supplier evaluation standards Classification with suppliers and establishment of database; formulation of standard inventory of various materials, control of inventory and improvement of inventory ratio (controlling inventory capital occupation is very important); informatization of inventory management and accurate data; management of sluggish materials Prevention and timely treatment.

2. A bidding system must be established for bulk purchases.

3. A procurement information registration and record-keeping system is implemented for scattered purchases. Information such as product name, quantity, trademark, price, manufacturer name, purchasing location, contact number and other information must be registered and recorded in detail with the company’s audit department. The company can Send someone to conduct spot checks as a third party at any time.

4. The procurement process operates in a decentralized manner and restricts each other

The supply department is responsible for selecting suppliers, and the quality and technology departments evaluate the supplier's supply capabilities and evaluate their qualifications. It is determined that the price is supervised and controlled by the financial department, and the payment is approved by the company's main leaders.

5. Realize the integration of purchasing channels through the integration of purchasing personnel, and clarify the purchasing materials that each purchasing personnel is responsible for. The same type of materials must be purchased by the same personnel and through the same channel, unless it is planned to purchase from suppliers. variable.

6. Standardize the purchase contract

The purchase contract clearly stipulates that the supplier shall not bribe company personnel in unfair competition to sell its products, otherwise the payment will be deducted in proportion; the contract also requires Clarify the agreement on purchase rebates.

7. Establish stable cooperative relationships with suppliers

Stable suppliers have strong supply capabilities, transparent prices, and long-term cooperation with certain priority arrangements for the company's supply. , can ensure the quality, quantity, delivery time, price, etc. of its supply. Procurement management should attach great importance to improving the competitive advantage of the overall supply chain, establish long-term and stable cooperative relationships with excellent suppliers as much as possible, encourage the improvement of supplied products and technologies, support the development of suppliers, and sign strategic alliances with them when necessary Cooperation agreement, etc.

Start with management

You may have heard these four words "factory management" too many times and are not willing to hear them anymore. But I still want to say a few words. What you said is nothing more than poor performance, low management level, and lack of cohesion in corporate culture.

Factory management: (It is difficult to improve if you start from purchasing alone)

1. Establish a sustainable improvement system. There are people who review every year, people who review every month, and people who review every day.

2. Establish a platform for visual or perspective management. Do {see, know, do it] If everyone participates, there will be a "competition" relationship and there will be improvement. Don't worry about your price being known to other companies. In today's world's largest market, companies with "purchasing" price advantages are only specific industries or companies. Except for these industries, everyone’s purchasing prices are similar.

3. The organizational structure must be clear, who is in charge of whom, what, what goals, when they will be achieved, and what the results will be.

Organizational structure is a dead rule, but it plays an important [functional] role in production activities. It must be [live]. If the general manager always thinks "I only manage my direct subordinates well" There will be no problem." Then it depends on how you can manage your direct reports well and what are the standards for "managing them well". You know, the side that subordinates show to their bosses is only the side that you can see. Therefore, it is obviously not enough to start from the management aspect alone. Give an example! For example: by holding regular meetings on various aspects every month, clarifying the purpose of the meeting, etc., and by clarifying the goals of each department.

4. The general manager must realize that mistakes are inevitable, and it is inevitable for purchasing personnel to enrich themselves. It is like a "cold" and cannot be eradicated. The problem is how to pass it. Management keeps it to a minimum. And to "minorize" it, it is much better for one person to accept a bribe of 1 million than for 10 people to accept a bribe of 100,000 each.

5. Construction of corporate culture (internal, intrinsic corporate culture).

The so-called "internal corporate culture" refers to employees' perception of the company's internal working atmosphere. If employees talk every day: How much money can Zhang Sanqian make from this project...etc., then the purchase price will never be lowered and the quality will not be improved. In other words, the behavior of "lining one's own pockets" should become a real unspoken rule.

6. How the company makes money.

If it is not a new product or a new technology product. Then it is definitely an internal management problem. It’s hard to say too much and write too much. In short: the profit of the industry lies in: eliminating the waste between processes, eliminating the waste between people working together, eliminating the waste of space and space, eliminating the waste of errors, and eliminating the waste of poor thinking. Again: eliminate waste.