EASY TO UNDERSTAND BUT HARD TO IMPLEMENT AURANGABAD CHAPTER LESS OF THEORY MORE OF CULTURE INDEX COST CONTROL AND COST REDUCTION AURANGABAD CHAPTER Basic Concepts Cost Control and Cost reduction ID: 1026911
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1. Cost control and Cost reductionEASY TO UNDERSTAND BUT HARD TO IMPLEMENTAURANGABAD CHAPTERLESS OF THEORY MORE OF CULTURE
2. INDEXCOST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERBasic Concepts : Cost Control and Cost reduction Influencing factors for success of Cost control and cost reductionCase studiesCase Analysis 1Case Analysis 2Case Analysis 3Case Analysis 4Case Analysis 5Case Analysis 6Case Analysis 7
3. Basic ConceptsCOST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERCost Control:To maintaining the costs as per the set standards/BudgetAchieving the predetermined costs To lay down a target, ascertain actual adherence to standards A preventive functionApplicable to items of costs which have standards /BudgetBudgetary Control and Standard CostingCost Reduction:To economize the unit cost without lowering the quality of the product Reduction of costs by finding new ways or methods Challenge to the standards themselvesA corrective function Applicable to every activity Value engineering/value analysis, work study, operation research, simplification , ABC analysis, VSM, reverse Engg.
4. Influencing factors for success of cost control and cost reductionCOST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERWhy the same techniques of CC & CR are getting success in some business and fails in others….
5. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERSuccess of CC & CRNeed of BusinessSkill LevelCultureLeadershipManagement approach
6. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERHow Business is DevelopedDisciplineLearning approachValue for money Cultural ApproachBusiness MarginHealth of businessCompetitor’s movesLife cycle of BusinessNeed of BusinessAnalytical skillTechnical know-howCommunication skillLearning capabilitiesSkill LevelLevel of acceptanceFailure treatmentInvolvementPerception about resourcesManagement ApproachInfluencing factors for success of cost control and cost reduction
7. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERConfidence, Passion, commitmentTo inspire and to motivate teamVision and AnticipationAccountabilityLeadershipInfluencing factors for success of cost control and cost reduction
8. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERReal Case Analysis - 1A turnkey project & machine manufacturing companyTwo year’s comparison of Project Quotations Vs Actual CostLast Year : (-450) LacsCurrent Year : + 120 LacsLack of DedicationNo System of On-line Quotation costingNo proactive approach of Monitoring and controlMore towards order acceptance Vs Margin analysis
9. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERReal Case Analysis - 2An Automobile parts manufacturing businessFirst time implementation of Costing Function Profit improvement by Rs 20 Lacs + Rs 15 Lacs per monthNo Budget control and monitoring of CostNo Functional Targets and Review mechanismNo product Costing and Product wise margin analysisProducts Quantity was the only measure for performance
10. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERReal Case Analysis - 3An Automobile parts manufacturing businessRaw Material Cutting cost is huge, 3 times than normal cost Profit improvement by Rs 3 Lacs per monthNo Budget control and monitoring of CostThe Raw Material cutting activity is outsourced without materialBilling was on out put basis There was no monitoring of Machine condition, tools life etc
11. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERReal Case Analysis - 4An Automobile parts manufacturing businessDie & Tools manufacturing costs were too high in two plantsProfit improvement by Rs 12 Lacs per month& Rs 5 Lacs per monthTools manufacturing division decides the tool machining time & RatesPurchase asks 2 to 3 quotations and negotiates based on their skillNo comparison or advice from Design section It was an overlooked area of the business and no cost and margin review
12. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERReal Case Analysis - 5A Packaging businessEnegy cost is considerable high in industryOpportunity loss of Rs 25 Lacs/month Decision making structure is not effectiveFear of inferiority among employees Lack of innovation and risk taking capabilities
13. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERReal Case Analysis - 6An Automobile parts manufacturing businessProduct profitability was not monitored Profit improvement by Rs 10 Lacs per monthProduct performance was measured by Output/shiftProduct performance was measured by VA/ShiftNo concept of product profitability and no culture of costingPurchase of RM was considered as only source of profit
14. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERReal Case Analysis - 7An Automobile parts manufacturing businessProduct Profitability is monitored properly but not for the all processesHuge cost core manufacturing but its not at all known.Product performance was measured by Output/shiftProduct performance was measured by VA/ShiftNo concept of product profitability and no culture of costingPurchase of RM was considered as only source of profitHidden Loss of Rs 15 Lacs/Month
15. COST CONTROL AND COST REDUCTIONAURANGABAD CHAPTERThank you….