11_Strategic_cost_management_extended

11_Strategic_cost_management_extended - Strategic Cost...

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- 1 - Strategic Cost Management
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- 2 - Cost Management Approaches Single Company Focused Cost-Reduction Activities Strategic Cost Management Finished Product/Service Focus Throughout the Supply Chain Customer Needs Customer Needs
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- 3 - Strategic Cost Management Concern about Supply Costs Industry Standard or Competitive Products? Yes No Price Analysis Cost Analysis Type of Concern Value Analysis Fair Price Cost Reduction Should Cost Analysis Post-hoc Cost Analysis Value Engineering Target Costing Should Cost Analysis
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- 4 - Strategic Cost Framework Commodities Strategies: Leverage preferred suppliers Price analysis using market forces Generics Strategies: Total delivered cost Automate to reduce purchasing involvement VALUE SUPPLY BASE RISK (lack of suppliers) High High Low Low Critical Products Strategies: Cost analysis Collaborative cost-reduction efforts focused on total costs Unique Products Strategies: Cost analysis – reverse pricing Standardize requirements (many suppliers) (few suppliers)
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- 5 - Economic Conditions Conditions favorable to supplier Conditions favorable to supplier High level of capacity utilization High level of capacity utilization Tight supplies Tight supplies Strong demand Strong demand Conditions favorable to buyer Conditions favorable to buyer Low level of capacity utilization Low level of capacity utilization High level of supplies High level of supplies Weak demand Weak demand
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11_Strategic_cost_management_extended - Strategic Cost...

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