Jun 232017
 
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Strategic Cost Management

Strategic Cost Management contains supply chain analysis, strategic positioning analysis and cost driver analysis.  By evaluating each of these three and manager will be able to better manage and understand costs.

Supply Chain Analysis – management of the flow of information and products from earliest supplier to the ultimate consumer.  This also includes the disposal of the product.

Strategic Positioning Analysis – what is the value proposition of the company: cost leadership, innovation, niche, speed, etc.

Cost Driver Analysis – what processes or transactions create costs in the supply chain.  

Cost Analysis:

  •  Can a less expensive material/components be used while maintaining quality?

  • Are the costs reasonable?

  • Is a standard item in the market a suitable substitute?

  • Can the weight of the item be reduced?

  • Can the packaging be redesigned to reduce costs?

  • Are the correct costs being allocated to the project?  

  • Have the correct activity based costing methods been used?

  • Is the product over engineered?  Could a lower quality product be substituted?

  • Are other suppliers making a comparable product?

  • Which costs are necessary?

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