Scribd Logo
Upload

Welcome to Scribd!

  • 25 views

    Cost Control & Cost Reduction

    Uploaded by

    Bishnu S. Mukherjee
    The document discusses cost control and cost reduction. It defines cost control as maintaining costs within set standards or budgets through preventative measures, while cost reduction challenges standards to economically lower unit costs without compromising quality through corrective measures. Several case studies are presented that show how factors like leadership, management approach, skills, culture, and business needs influence the success of cost control and reduction efforts. The case studies identify specific issues companies faced like a lack of budgeting, monitoring, or cost analysis that led to unnecessary expenses.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Cost Control & Cost Reduction

    Uploaded by

    Bishnu S. Mukherjee
    25 views15 pages
    The document discusses cost control and cost reduction. It defines cost control as maintaining costs within set standards or budgets through preventative measures, while cost reduction challenges standards to economically lower unit costs without compromising quality through corrective measures. Several case studies are presented that show how factors like leadership, management approach, skills, culture, and business needs influence the success of cost control and reduction efforts. The case studies identify specific issues companies faced like a lack of budgeting, monitoring, or cost analysis that led to unnecessary expenses.

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses cost control and cost reduction. It defines cost control as maintaining costs within set standards or budgets through preventative measures, while cost reduction challenges standards to economically lower unit costs without compromising quality through corrective measures. Several case studies are presented that show how factors like leadership, management approach, skills, culture, and business needs influence the success of cost control and reduction efforts. The case studies identify specific issues companies faced like a lack of budgeting, monitoring, or cost analysis that led to unnecessary expenses.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    25 views15 pages

    Cost Control & Cost Reduction

    Uploaded by

    Bishnu S. Mukherjee
    The document discusses cost control and cost reduction. It defines cost control as maintaining costs within set standards or budgets through preventative measures, while cost reduction challenges standards to economically lower unit costs without compromising quality through corrective measures. Several case studies are presented that show how factors like leadership, management approach, skills, culture, and business needs influence the success of cost control and reduction efforts. The case studies identify specific issues companies faced like a lack of budgeting, monitoring, or cost analysis that led to unnecessary expenses.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 15

    AURANGABAD CHAPTER

    Cost control
    and
    Cost reduction
    EASY TO UNDERSTAND BUT HARD TO IMPLEMENT

    LESS OF THEORY MORE OF CULTURE


    INDEX
    1. Basic Concepts : Cost Control and Cost reduction
    2. Influencing factors for success of Cost control and cost reduction
    3. Case studies
    1. Case Analysis 1
    2. Case Analysis 2
    3. Case Analysis 3
    4. Case Analysis 4
    5. Case Analysis 5
    6. Case Analysis 6
    7. Case Analysis 7

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Basic Concepts
    Cost Control: Cost Reduction:

     To maintaining the costs as per the set  To economize the unit cost without lowering
    standards/Budget the quality of the product
     Achieving the predetermined costs  Reduction of costs by finding new ways or
     To lay down a target, ascertain actual methods
    adherence to standards  Challenge to the standards themselves
     A preventive function  A corrective function
     Applicable to items of costs which have  Applicable to every activity
    standards /Budget  Value engineering/value analysis, work
     Budgetary Control and Standard Costing study, operation research, simplification ,
    ABC analysis, VSM, reverse Engg.

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Influencing factors for success of cost control and
    cost reduction
    Why the same techniques of CC & CR are getting success in some business and
    fails in others….

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Culture

    Need of
    Leadership Business
    Success of
    CC & CR

    Management
    approach
    Skill Level

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Influencing factors for success of cost control and
    cost reduction
    Cultural Approach Need of Business

     How Business is Developed  Business Margin


     Discipline  Health of business
     Learning approach  Competitor’s moves
     Value for money  Life cycle of Business

    Skill Level Management Approach

     Analytical skill  Level of acceptance


     Technical know-how  Failure treatment
     Communication skill  Involvement
     Learning capabilities  Perception about resources

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Influencing factors for success of cost control and
    cost reduction
    Leadership

     Confidence, Passion, commitment


     To inspire and to motivate team
     Vision and Anticipation
     Accountability

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Real Case Analysis - 1
    Lack of Dedication
    A turnkey project & machine manufacturing
    company
    No System of On-line Quotation costing
    Two year’s comparison of Project Quotations
    Vs Actual Cost
    No proactive approach of Monitoring and
    control
    Last Year : (-450) Lacs
    Current Year : + 120 Lacs
    More towards order acceptance Vs Margin
    analysis

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Real Case Analysis - 2
    No Budget control and monitoring of Cost
    An Automobile parts manufacturing business
    No Functional Targets and Review mechanism
    First time implementation of Costing Function
    No product Costing and Product wise margin
    analysis
    Profit improvement by Rs 20 Lacs + Rs 15 Lacs
    per month
    Products Quantity was the only measure for
    performance

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Real Case Analysis - 3
    No Budget control and monitoring of Cost
    An Automobile parts manufacturing business
    The Raw Material cutting activity is outsourced
    without material
    Raw Material Cutting cost is huge, 3 times than
    normal cost
    Billing was on out put basis
    Profit improvement by Rs 3 Lacs per month
    There was no monitoring of Machine
    condition, tools life etc

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Real Case Analysis - 4
    Tools manufacturing division decides the tool
    machining time & Rates
    An Automobile parts manufacturing business
    Purchase asks 2 to 3 quotations and negotiates
    based on their skill
    Die & Tools manufacturing costs were too high
    in two plants
    No comparison or advice from Design section
    Profit improvement by Rs 12 Lacs per month
    It was an overlooked area of the business and
    & Rs 5 Lacs per month
    no cost and margin review

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Real Case Analysis - 5

    A Packaging business Decision making structure is not effective

    Fear of inferiority among employees


    Enegy cost is considerable high in industry
    Lack of innovation and risk taking capabilities
    Opportunity loss of Rs 25 Lacs/month

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Real Case Analysis - 6
    Product performance was measured by
    Output/shift
    An Automobile parts manufacturing business
    Product performance was measured by
    VA/Shift
    Product profitability was not monitored
    No concept of product profitability and no
    culture of costing
    Profit improvement by Rs 10 Lacs per month
    Purchase of RM was considered as only source
    of profit

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Real Case Analysis - 7

    Product performance was measured by


    An Automobile parts manufacturing business Output/shift

    Product performance was measured by


    Product Profitability is monitored properly but VA/Shift
    not for the all processes
    No concept of product profitability and no
    Huge cost core manufacturing but its not at all culture of costing
    known.
    Purchase of RM was considered as only source
    Hidden Loss of Rs 15 Lacs/Month of profit

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER


    Thank you….

    COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER

    You might also like