Cost Control of Supply Chain

Abstract: Supply chain cost control mainly for transaction costs and operating costs, information Technology in the network environment, lower transaction costs should be used ERP and other systems, thereby strengthening the interaction or sharing of information, which can reduce transaction costs. For member enterprises of the chain operating cost control, job management should be introduced to the idea of ​​building work in the business center of each node to control operations center responsible for the cost centers, to job elimination, job improvement and operating recycling and other methods and means , which can reduce operating costs throughout the supply chain to improve supply chain efficiency.

Keywords: Supply chain cost control; transaction costs; operating costs
Abstract: The main target of supply chain cost control is transaction costs and activity costs.Under the environment of network information Technology, we should adopt ERP system to strengthen the interaction or sharing of information, in order to achive the purpose of reducing transaction costs. As for cost control of member enterprises, we should construct operation center in node, which is responsible for cost control, and take elimination, improvement, recycling in order to realize improvement of supply chain efficiency.

Keywords:: supply chain cost control; transaction costs; activity costs

Supply Chain Management (SCM) 90 produced in the 20th century, is considered the 21st century, advanced management ideas and management models, is also the sector in recent years, theory and practice of Research and application of a new hot spot. Supply chain management is In order to meet customer demand, in the final product from raw materials to the entire process, logistics, information flow, capital flow, value flow and workflow for planning, organization, coordination and control, seeking to establish supply, production, sales between businesses and customers The strategic partnership, to minimize friction and waste, the overall efficiency of the supply chain optimization. At present, competition among enterprises is not so much competition between products and product, as it is the supply chain and competition between supply chains, and only on the supply chain for effective management of enterprises, in order to maintain the competitive position. the supply chain level of cost. also reflects the level of supply chain efficiency. According to well-known international consulting firm Mercer management consultant's report, nearly half the companies surveyed managers will manage the supply chain costs as the company's first in 10 events. American Kearney consulting company also noted that the supply chain can cost up to 25% of the companies operating costs, and for profit margin of only 3% -4% of the enterprises, even if reduced by 5% of the supply chain costs, is enough to double the profits of the enterprise, we can see the influence of unusual. to say, grasp the supply chain cost is to grasp the true core competencies. Currently, the supply chain cost control is still using the traditional method, the members of the supply chain enterprises such as manufacturers of products as a cost control to cost control is still the object of focus only on production cost control, ignoring others areas such as procurement, marketing, design and other aspects of cost control, while the cost of information Technology did not play its due role in the control, resulting in low efficiency, cost control, the effect is poor. Therefore, the rapid development in information Technology today to achieve information on supply chain management, information Technology play a role in cost control, operations management while introducing the idea to distinguish between cost drivers of the job to job as the object of cost control, cost control to achieve the innovation supply chain is necessary.


First, the composition of the supply chain costs

Any manufacturing are based on customer or market demand, product development, purchase of raw materials, manufacturing the products to sell to customers in the form of goods, and provide after-sales service. Materials from the supplier began along the various links (raw materials - - The products - semi - finished products - goods) to the demand-side movement. Each and every element there is a "Party" and "supply side" of the correspondence, both linked to form a long chain, a supply chain. all move the material in the supply chain is an ever-increasing value to its market value or value-added process. Therefore, the supply chain from another point of view that is a value chain. in the supply chain, in addition to the flow of materials, there capital flows and information flows. the information flow and cash flow have an effect in the chain, it will produce the corresponding costs.

In the supply chain, the chain of transaction costs between member companies and members of the chain's operating costs within the enterprise supply chain management is the main target of Cost Management. First, the transaction costs. Transaction costs include all suppliers and clients in all the activities of information and communication expenses incurred. to coordinate, control and adapt to each other's trading relationship, therefore, these costs as the supply of the interaction between enterprises, and jointly affected. Second, the operating costs. supply chain operating costs are mainly members of the supply chain within a single company to complete certain tasks for the costs incurred. supply chain operating costs based on cost drivers can not only products, but also suppliers and customers can be allocated.


Second, transaction cost control

(A) establish a network of computer-centered information systems to address supply chain issues of information exchange between enterprises
In the traditional manual information processing environment, the information transmission difficulties, the manufacturer can not keep abreast of the production status of supplier of raw materials, so one had to purchase more raw materials, resulting in excessive stocks of raw materials, storage costs caused by increase and affect the cash flow and capital efficiency, resulting in increased cost manufacturer. and supplier of information sources is not smooth, it can not immediately understand the customer (manufacturer) the use of raw materials situation, in order to provide enough use of raw materials manufacturers, suppliers have no choice but to produce more, which may result in inventory, affect liquidity. the situation was mainly due to both a result of poor communication.

In order to solve the problem of supply chain information exchange, reduce and control transaction costs, and establish a network of computer-centered information system is necessary. Supply chain members the importance of information exchange between enterprises with the advent of the Internet economy has become more apparent, due to supply chain in the logistics, cash flow process is also accompanied by information flow between supply chain members companies have built an information network, information network to help achieve inter-enterprise information exchange and sharing. If manufacturers use EDI system can immediately understand the supply the supply of providers, suppliers can also use the system manufacturer supplies real-time understanding of consumption patterns, to facilitate the time the material manufacturer in the hands, so that both the manufacturer to ensure the timely supply of raw materials, but also reduces the raw material manufacturers storage costs, while reducing the amount of funds used the manufacturer's material costs. and if manufacturers use customer relationship management system (CRM) for detailed information on the customer's in-depth analysis, providing fast and good quality services, continue to strengthen communication with customers, understand customer needs for products and services to transform and improve, improve customer satisfaction, maximize customer value. Therefore, the information is not only in a single enterprise to create competitive advantages, and through the supply chain to enhance the overall system competitive advantage.

(B) of the ERP system can be used to achieve effective management of the supply chain, lower transaction costs
At present, the enterprises to adopt an advanced management system - ERP systems can be realized across the enterprise supply chain management, it is client-driven, time-based, supply chain management for the entire enterprise resource planning. It is the business process The relevant parties such as suppliers, manufacturing plants, distribution networks, customers and other into a tight supply chain, companies can effectively arrange the production, supply, marketing activities to meet all business use of the whole society of market resources quickly and efficiently the demand for production and management to help companies further improve efficiency and gain a competitive advantage in the market. It is the biggest feature, with the fastest speed in providing products or services to meet the needs of customers, but also to strengthen the supply chain members information exchange between enterprises, and shorten the response time and increase efficiency, while also lowering the supply chain between the various members of the business transaction costs. reposted elsewhere in the Research Papers Download http://www.hi138.com three operations cost control

(A) of the target cost of the decomposition and the formation of supply chain operations budget
Should establish a modern enterprise to create value for customers new ideas to change this concept of the cost of the traditional size of the product as product pricing based on a model, build a new enterprise Cost Management. The members of the business effect of the buyer to determine the customer first willing to pay the price, the price after subtracting the target profit is expected to derive the target cost, target-Cost Management. enterprises to determine the total cost after the target should be based on the requirements of economic responsibility to the total cost control targets at different levels to each entry operations, the formation of the operating cost estimates, cost control as the target of the operation.

Cost goals down the idea according to operations management, will all the business activities of enterprises according to the different cost drivers are divided into the different operations, the cost targets of the operation to break down by cost drivers, to form the cost of the operation budget. to supply chain manufacturers, for example, specific practices are: resources, motivation by decomposition of the total cost of the operation, the formation of the operating cost estimates; refer to the manufacturer's method for the preparation of operating budget, other members of the supply chain enterprises also prepare their own operations budgets, and the members of the supply chain operating budget between enterprises is interdependent, and thus the formation of the operating budget for the entire supply chain system. If a buyer seller based on the consumer value, to determine the price of their goods , the price of goods minus target profit, the goal of determining the cost, this cost goal decomposition to the procurement of goods according to cost drivers, sales and other operations, the formation of purchasing, sales and other operating cost budget targets. manufacturers of goods based on vendor purchases cost control targets, determine the sales price of their products, using the above-mentioned method, target decomposition to the cost of procurement, production and other operations, the formation of purchasing, production and other operations cost estimates. shall be registered under the manufacturer's procurement costs control targets to determine their own raw materials prices, according to its own raw material price minus target profit, the formation of the target cost control provider, using the same decomposition of the above methods, the formation of vendor cost estimates of the job. So This budget system is driven by the forward after a chain of cost estimates for the entire supply chain system.

(B) operating cost control methods
In order to better achieve the objectives of the supply chain cost control requirements, to effectively control costs and improve efficiency throughout the supply chain, supply chain members within the various operating companies and corporate sector should control their own cost control objectives (ie, responsibility for budget target), practical ways and measures taken to make cost control within the target range.

Specific cost control methods and can take the following measures:
First, eliminate value-added operations. On the activities of production and operation analysis of the operation, according to the contribution of the various operations on the customer, will be divided into value-added and non value-added jobs job. Because they do not value the cost of operating cost and The added value of products and useless, it should be eliminated, thus saving costs. For example, some companies purchase raw materials from outside, if conditions permit can be directly transported from the suppliers of raw materials to production sites, so that you can reduce the supply of raw materials commercial warehouse and then shipped to companies moving from the warehouse to the production sites of these are not value-added operations and shorten the transport distance, so as to achieve a lower cost.

The second is to improve the inefficient value-added operations to reduce costs. In the value-added jobs, some are highly efficient operation, while others are inefficient operation. For those who value-added operations are inefficient should be further optimized to improve the efficiency of these operations to further reduce business costs. enterprises can use job sharing methods, the use of economies of scale to enhance operating efficiency. such as new products are designed to take full advantage if we consider the other products have been used in part to new products can be exempted from parts of the design work, thereby reducing the cost of production of new products.

Third, the link between changing jobs and reduce costs through recycling operations. Enterprise production and business activities can be broken down into various interrelated operations, these linkages is a job with another job relationships. Change between operations relationship, which can change the efficiency and cost.

In addition, the operation can also conduct a comprehensive and thorough transformation of the operations through this recycling, the formation of a more efficient operation than the original, which reduce overall operating costs. Such as when an operating business and enterprise compared to the same external work can not have a cost advantage, the enterprise can outsourcing, strategic alliances and other forms of work will be transferred to other enterprises within the enterprise, and to integrate internal operations, this will help improve operational efficiency, optimization operations, eliminate the high cost of operations, which can reduce costs.


IV Conclusion

Supply chain cost control is the form of the supply chain members to participate in and implement enterprise-wide cost control, not just the core business a thing. To make the whole supply chain management and effective implementation of cost leadership strategy, the need for members of the joint enterprise efforts. In order to coordinate the entire supply chain cost control, it is necessary to set up a supply chain management organization, a unified explicit cost control objectives, responsibilities and organizational management, supply chain work together to promote the overall system cost control.


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