Internal Factors Affecting Procurement Cost

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There are many factors that influence the total cost. The supply and demand principle tells us that the unit price of the purchase material is inversely proportional to the quantity, that is, the more the quantity, the lower the price of the purchase.

In reality, it is impossible for an enterprise to purchase too many materials at a time, because although it saves part of the procurement cost, the backlog of inventory and the cost of funds for the development of enterprises are far more than the cost savings.

Therefore, purchase batch and purchase batch can affect the purchasing cost of enterprises.

Although the cost of purchasing materials accounts for a large part of the total cost of procurement, suppliers' delivery time, location of delivery and payment period also affect the size of inventory and the cost of procurement.

If any of the above conditions can not meet the normal production of enterprises

If the price is too low, it will not be able to satisfy the enterprise's perfect procurement business.

Therefore, suppliers' delivery time, location of delivery, payment period and other factors also affect purchasing.

A set of important factors.

The implementation of procurement is not only the responsibility of the purchasing department, but also involves planning, design, production, sales and quality inspection departments.

Therefore, this requires good communication and collaboration among departments to perfect this business perfectly.

If the planning department is not allowed to predict the material requirement plan, the production plan will change accordingly. Once the change is frequent, the emergency procurement will increase and the procurement cost will be high.

If the design department does not carry out the analysis of value engineering, and only consider the aesthetic and uniqueness of the design, it will lead to large differences in the material category, and it will not be able to form the procurement volume, nor will it be able to form the price advantage of the supplier. It may also be because the quality inspection department is too strict with the quality standards of the procurement materials, and the purchasing department will be very cautious about the choice of suppliers, which will eventually lead to an increase in the procurement cost.

An analysis of the cost and price structure of a supplier's product is the basis for determining purchase prices and obtaining the initiative to negotiate with suppliers.

Before implementing the procurement negotiation, the purchasing department must investigate and analyze the current situation of the market in detail.

Only in this way can we choose different and effective bargaining methods for different suppliers so as to achieve the goal of reducing purchase price.

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Some of the costs are visible, that is, the cost that can be easily analyzed or directly derived from financial statements. Some are invisible, that is harder to analyze or easily overlooked. These two types of costs are divided into "explicit cost" and "invisible cost".

1, the cost of procurement planning.

The accurate purchasing plan can accurately predict and grasp the production plan of an enterprise, which enables the enterprise to minimize the occupation of procurement funds on the premise of meeting the needs of product production, and at the same time, carries out a comprehensive analysis of the supply market, adjusts the order plan, and estimates and selects suppliers.

Procurement planning can be said to be the first step in purchasing the whole process, and its expenditure is also known as the cost of procurement planning.

2. Cost of raw materials, semi-finished products or finished products.

The cost of raw materials, semi-finished products or finished goods is the price of goods purchased.

There are many reasons that affect the price of purchased goods, including commodity market price, commodity quality, market supply and demand, etc.

3, procurement management costs.

The cost incurred in the course of purchasing business is the cost of procurement management.

It includes manpower cost, bidding cost, construction cost, entertainment expenses, office expenses, travel expenses and so on.

4, pport costs.

The pportation of purchasing materials is bound to incur the cost, which is the cost of pportation.

Choosing a scientific, economic and reasonable mode of pportation will save a lot of pportation cost to enterprises.

Enterprises with a certain scale and strength should attach more importance to the pport links and standardize and specializes the procurement process.

Choose the right means of pport, plan a reasonable pport route, thereby saving freight and reducing procurement costs.

5, acceptance cost.

Raw materials, semi-finished products or products purchased must be inspected before they can be put into storage.

In order to prevent the storage of raw materials, semi-finished products or semi-finished products which do not conform to the contract agreement or quality, the inspection of materials must be strictly checked.

Once the product is found to be unqualified, damaged or short of quantity, or even the product variety is wrong, the enterprise will face not only the cost and time cost needed to replace the goods due to the variety, quality or quantity problems, but also may cause the production line to stop operation due to the shortage of raw materials or semi-finished products, resulting in the cost of shortage.

6, warehousing costs.

Warehouse storage cost refers to the cost of goods in the inventory process.

On the one hand, the goods should be stored properly, and the goods should be classified and managed. The storage environment of some special properties, such as easily damaged products and deteriorating products, should be paid special attention to.

On the other hand, it is necessary to establish and maintain the inventory files properly, and inventory the inventory items in time. If there is a backlog of inventory, it will also increase the storage cost.

Therefore, scientific and reasonable warehousing management is an effective means to reduce the cost of procurement and supply.