Indirect material procurement cost reduction strategy: Start from the eight difficulties of indirect procurement

Indirect material procurement cost reduction strategy: Start from the eight difficulties of indirect procurement

When it comes to the cost reduction of procurement, nvidia partner we know more about the cost reduction of production materials, that is, raw materials, mainly because production materials account for the largest proportion in the total purchase, the highest attention, related research and theoretical support is also the most abundant, and the impact of cost reduction income is also the largest. With the continuous cost reduction of production materials, more and more enterprises have begun to pay attention to the cost reduction of non-production materials, that is, indirect materials. Today, I take this opportunity to share with you the topic of "cost reduction of indirect materials in manufacturing enterprises" based on my work experience in indirect materials procurement. On the one hand, you have a clear understanding of indirect procurement. On the other hand, I hope to provide some references for partners engaged in indirect procurement in terms of cost reduction.

In general, indirect material procurement relative to direct materials, accounting for 10% to 30% of the total cost of the enterprise, SAP Outsourcing is a small head, in addition to indirect material categories, random demand, management difficulty, but also direct material procurement management is incomparable. In recent years, more and more enterprises begin to pay attention to indirect procurement cost reduction, through effective management and strategy, indirect procurement cost reduction of 10% to 30% can be achieved. We will discuss the cost reduction strategy of indirect materials through the following aspects.

Let's first define indirect materials. smart waste management Each enterprise's name and scope of indirect materials are different. Here, we define indirect materials as the total cost of an enterprise excluding raw materials and labor benefits, which generally includes two parts: materials and services.

Compared with direct materials, indirect material procurement has its particularity, before starting the cost reduction work, we need to understand the characteristics of the work we face as thoroughly as possible, the so-called "know yourself and know your enemy, you will not be in a hundred battles." In general, the indirect materials of manufacturing enterprises have eight characteristics:

First, the degree of information technology is low. As we know, almost all manufacturing industries now use ERP systems, but this ERP system in the procurement module, more support for direct materials, indirect material procurement often parallel this other set of processes, and the degree of electronization is relatively low. Purchase requisition, or PR as we call it. Many enterprises also need to submit a paper demand document for the procurement of indirect materials, which is signed by the two-level manager and handed over to the procurement for inquiry and order. The whole process takes place offline, which is inefficient.

Second, the types of materials are mixed. Indirect materials involve all aspects of enterprise operation, manufacturing enterprises generally involve MRO materials (including maintenance spare parts, production accessories, office supplies, labor insurance, production tools, etc.), maintenance services, administrative market services, some welfare, infrastructure decoration, leasing, IT, travel services, etc., and each category can be divided into more details. Compared with direct materials, the material categories of indirect materials are very complicated.

Third, the need is urgent. Compared with the good planning of direct materials, the demand for a considerable part of indirect materials is unplanned. Taking maintenance and repair materials as an example, almost all of them are maintenance spare parts of important equipment such as production equipment and power equipment, which can be sent immediately under the procurement demand, or they have to stop production. Often indirect material procurement acts as a firefighter.

Fourth, the specifications are unclear. Indirect procurement is faced with internal customers, that is, all functional departments within the company, everyone can raise procurement needs, as long as the leader approves, it is handed over to the procurement. However, we often find that according to the demand list submitted by the demand department, the procurement inquiry can not come to the price, and the supplier can not buy things. A part basically needs two or three rounds of confirmation to figure out what the demand department needs. Some demand personnel are more in place, take a photo to us for inquiry, some demand personnel only tell a part name, what it is used for, and nothing else, suppliers have to come to the door several times before they can basically figure it out. Such a process is very time-consuming resources, materials finally arrived, we also have to carry the procurement is not timely blame, shirking, shifting, internal friction is very common.

Fifth, you don't know your priorities. As mentioned in the fourth point above, in the face of so many demand personnel, everyone wants their materials to arrive as soon as possible, and they are anxious. For procurement, it is not clear who is really urgent and who is fake urgent. Simply, everyone is treated equally, the result is that all are anxious, they are not anxious, and the real anxious can not get the goods, and they are complained about every day.

Number six, the receiving monster. What's a receiving monster? It is urgent to purchase things forced the supplier to find a way to send, after a period of time, found that the material is still in the warehouse did not open the packaging. Which brings me back to the fifth point. Is it urgent or not? We all know the story of crying Wolf, can purchasing still believe that the emergency needs of the user department are really urgent? Is the supplier still willing to cooperate with us for urgent delivery next time? A vicious cycle.

Seventh, the scale of suppliers is huge. As there are many types of indirect materials and complicated materials, this will inevitably lead to a large scale of suppliers, and most of the suppliers have a low transaction volume, which occupies a lot of our management resources and system resources, and seriously affects the efficiency.

Eighth, a one-time deal. The demand for indirect materials is all kinds of, one hammer sale is everywhere, most of the one-time suppliers are designated by the demand side, the price negotiation is difficult, the payment terms are harsh, the management risk is great, at the same time, the impact on our system resources is huge.