Cost reduction is always neccessary even in stable situations.
Every enterprise producing goods or services causes costs for the production factors. Costs can be defined as e.g. :
- ordinary
- operational condition
- valued consumption of
- goods and services
- within a predifined period
and can be divided in e.g. :
- cash involved
- dicision based
Cost reduction can be accomplished e.g. by:
- change in cost structure
- less expeses
- more profit
- good cost management
- process optimization in all business areas
A good cost management concept includes proper cost planning and cost control.
As planning is concerned one will need substantial information from different plans like sales plan, purchase plan, production plan etc.
Cost control can be performed by constantly checking the deviations between plan and actual. Any deviation occuring needs an in depth investigation to retrieve the reason and to take corrective action. However, performing the control afterwards means the deviation can not be eliminated for past production but only for future ones. Therefor it is best practice to run a permanent control. This will lead to very liomited or even zero deviations.
Cost management is not limited to production only but also to HR, Finance, Procurement, R&D, Quality, Assurance and Fixed Assets.
MB International Interim- and Projectmanagement
Michael F. Böhne
web: www.michael-boehne.de
mail: boehne@mb-iipm.eu
Phone: +49 (0)212 259 104 4