Factors Affecting Raw Material's Purchasing Cost Strategy

Raw Material procurement is the starting point of enterprise production activities and the key to enterprise product cost. Therefore, reducing the Raw Material procurement cost has extremely realistic significance for controlling the product cost of the enterprise and improving the product competitiveness. The decline in Raw Material procurement costs not only reflects the reduction of corporate cash outflows, but also directly reflects the decline in product costs, the increase in profits, and the enhancement of corporate competitiveness.

Here is the content list:

• Purchase a lot of Raw Materials

• Types of purchasing Raw Materials

• Relationship with suppliers

Purchase a lot of Raw Materials

The macro-continuity and micro-periodicity of an enterprise's production determine the continuous and bulk purchase of the enterprise. The more frequent the purchase of Raw Materials, the lower the reserve funds and the higher the capital turnover rate, but the higher the purchase cost and purchase price. These should be based on enterprise-scale, product quantity, quality characteristics, etc. to determine the economical purchase batch, and find the lowest point of comprehensive Raw Material cost.

Types of purchasing Raw Materials

The type of Raw Material purchased is a one-time purchase or a continuous purchase, which should be the most basic understanding of purchase. If the type of procurement changes, the strategy must also be adjusted accordingly. The cost analysis requirements of continuous procurement are much higher than that of one-time procurement. However, if the amount of one-time procurement is quite large, the cost-saving effect of Raw Materials cannot be ignored. The life cycle stage the product is in. The purchase volume is directly related to the stage of the product life cycle. During the process of the product from the introduction stage, the growth stage to the mature stage, the Raw Material purchase volume will gradually increase, and the purchase volume will gradually shrink until the recession period occurs.

Relationship with suppliers

From sellers, traditional suppliers, and approved suppliers, to maintaining partnerships with suppliers, and then forming strategic alliances, the price requirements for Raw Materials are also different. If the relationship with the supplier is ordinary, generally speaking, it is not easy to obtain detailed cost organization information. Only when the supplier maintains a close relationship and trust and cooperates, it is easy to understand the more detailed Raw Material cost organization information, thereby controlling the Raw Material cost.

Reducing the cost level of enterprises is a long-term task, and one of the important ways is to strengthen the control of Raw Material procurement costs. There is indeed a lot of room for enterprises to control the procurement cost of Raw Materials. To control the procurement cost of Raw Materials and keep it decreasing, it is necessary to establish strategic thinking of cost value management to guide the procurement cost control work and establish and improve the procurement of Raw Materials. A cost control system does the basic work of Raw Material procurement cost control, improve work efficiency, and achieves good economic benefits for the enterprise.

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