As the type of contract in plant engineering market is changing from cost-plus fee contract to lump-sum fixed price contract, the competitive pressure is being higher than before. Under this competitive environment, purchasing cost of input elements for plant engineering reaches about 60~70% of total cost. To achieve competitive advantage in plant engineering market, it is necessary to enforce purchasing and supply management. Most of previous studies on strategic purchasing and supply management were focused on typical manufacturing industry which has multiple customers with various needs. In plant engineering industry, the relation between companies and customers is contractual. Furthermore, the input elements characteristics are much different from typical manufacturing industry.
The purpose of this thesis is to suggest the frame of strategic purchasing and supply management in plant engineering industry. Input elements in plant engineering are classified across two dimensions of risk/cost that significantly affect the purchasing performance. Four categories, i.e. critical equipment group, special equipment group, bulk material group and simple/standard equipment group are proposed as the purchasing portfolio.
Based on the purchasing portfolio, the supplier management case of a plant engineering company is studied and then, the proper strategy for each category of portfolio is proposed as follows;
1) Collaboration supplier relationship with early supplier involvement for critical equipment group which has high risk with high cost characteristics,
2) Collaboration supplier relationship for special equipment group which has high risk with low cost characteristics,
3) Small supplier base to acquire economies of sacle for bulk material group which has low risk with low cost charateristics,
4) Bidding competition with multi-supplier base for simple/standard equipment group which has low risk with high cost characteristics.
