The first factor is global competition Vastly improved transportation and

The first factor is global competition vastly

This preview shows page 2 - 4 out of 5 pages.

FACTORS AFFECTING COST MANAGEMENT.The first factor is, global competition – Vastly improved transportation and communications have led to a global market for many manufacturing and service firms. For example, large U.S. companies, such as The Coca-Cola Company, are developing sizable markets in China. This global focus highlights the need for cost information to reduce costs, improve productivity, and assess product-line profitability.(Slide 8)The second factor is the Growth of the service industry – Traditional manufacturing industries have declined in importance. The service sector comprises approximately three-quarters of the U.S. economy and employment. Deregulation of many services such as airlines and utilities has increased competition in the service industry. (Slide 9)The third factor is due to recent advances in information technology – Automation and integrationincrease the need for timely, detailed information. Significant advances in technology include computer-integrated manufacturing and the availability of personal computers, spreadsheet software, and graphics packages.(Slide 10)The next factor affecting cost management deals with the Advances in the manufacturing environment – Manufacturing management approaches continue to be utilized to increase quality,reduce inventories, eliminate waste, and reduce costs. Let’s look at some of these factors.a.Theory of constraints– A method used to continuously improve manufacturing activities and nonmanufacturing activities.b.Just-in-time management– A demand-pull system that strives to produce a product only whenit is needed and only in the quantities demanded by customers.2
Image of page 2
c.Lean manufacturing– An approach, which incorporates JIT, seeks to eliminate or minimize activities that do not add value to the end user, the customer. As a result, lead time is decreased, production processes are streamlined, and costs are decreased. d.Computer-integrated manufacturing – The automation of the manufacturing environment.Additional factors that play a role in better cost management include:(Slide 11)Customer orientation– Firms are concentrating on the delivery of value to the customer in orderto establish a competitive advantage.New product development– A significant proportion of production costs are incurred during thedevelopment and design stages. There is a high demand for more sophisticated cost management
Image of page 3
Image of page 4

You've reached the end of your free preview.

Want to read all 5 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture