Each cost center must have a cost management team.
1. Cost center operations manager
2. Immediate deputies of Cost center operations manager
3. Industrial Engineer
4. Cost and Management Accountant
5. Information Systems Person
The idea was first proposed in.
https://nraoiekc.blogspot.com/2025/12/managing-cost-cost-management-seminar.html
Cost center cost management team proposes cost reduction projects to the capital budgeting team of the company.
Each of the team members may propose projects or cost reduction ideas. But the first three members have the maximum responsibility.
The team can conduct study sessions where they may discuss published research papers, concept papers and case studies.
What are the roles of these team members?
Functional Cost Optimization Teams for Business?
Published: 31 March 2020
Summary
Ensuring optimum cost performance management across functions is a key priority for organizations. Executive leaders must create and leverage cross-functional teams to successfully drive cost optimization initiatives.
Gartner
How Important Are Cross-Functional Cost Optimization Teams for Business?
BCG
https://www.bcg.com/capabilities/cost-management
The relevance of IT cost management and transformation in Japan
https://www.strategyand.pwc.com/gx/en/insights/2021/it-cost-transformation.html
The seven principles of effective cost management
Cost management includes effective strategy implementation and is the central measure of accountability for business leadership.
November 7, 2004
https://www.supplysidesj.com/business-resources/the-seven-principles-of-effective-cost-management
Strategic Cost Management—A Review of Research Status at Home and Abroad
Yong Wang
School of Management, Jinan University, Guangzhou, China.
https://www.scirp.org/journal/paperinformation?paperid=90572
Should Cost Management: Why? How?
How to Develop Cost Management Best Practices for Your Team - FasterCapital
Quadrupling Your Odds in a Cost Transformation | BCG
Data Leadership: Maximizing Team Success Through Cost Management | Secoda
Designing Cost Management Systems to Support Business Decision-Making ... - Google Books
Cost Management in Supply Chains - Google Books
Behavioral Aspects of Cost Management - SMA
Ultimately, costs are controlled by line managers and individuals who make effective day-to-day decisions that drive cost. To deliver on effective cost reduction, there must be the behavioral commitment as well as provision for and understanding of the necessary cost information.
Effective cost control is not achieved by short-term program approaches but by making frugality and cost containment a value that is integrated into the culture of the organization. This must start at the top and be reinforced by the behavior of every manager who demonstrates and encourages cost containment.
An Effective Framework for Cost Management
and in many cases the senior financial manager (the CFO or equivalent) leads the charge. But typically
the CFO doesn’t actually manage organizational costs. This is controlled by the actions and approaches
of line managers and the people who work for them within an organization.
of others.
management:
• They are built within a culture where control and improvement of cost is an embedded part of the
organizational DNA;
• They inspire and support caring about cost by encouraging ideas for improvement, sharing the
benefits, and having an aversion to waste;
• They communicate cost information effectively by having appropriate costing tools and systems to
track, monitor, and report costs;
• They encourage collaboration through process thinking and cross-silo communication and
cooperation; and
• They provide a continual focus on cost improvement that includes life-cycle thinking, continuous
improvement, and avoidance of cost reduction as a program.
These five aspects form the foundation of the 5C’s framework for effective cost management.
Management accountants are expected to play a central role in ensuring that all aspects of cost are effectively planned, controlled, and continually assessed for reduction.
COST MANAGEMENT - A Notes
MEANING OF COST MANAGEMENT:
Cost management is used to describe the approaches and
activities of managers in the short term and long term
planning and control decisions that increase value for
customers and lower cost of products and services.
In other words, Cost Management identifies collects,
measures, classifies and reports information that is useful
to managers in costing, planning, controlling and decision
making.
Cost Reduction is defined by CIMA London as “the
achievement of real and permanent reduction in the unit
cost of goods manufactured or services rendered without
impairing their suitability for use intended”
Cost Management Essentials - Chapter 1
Cost Management: Control and Profitability
In various ways, all
business professionals manage cost, and most managers engage in
capital investment decisions, forecasting, pricing, and product or
service management. Cost-related tasks consume a significant
amount of management time at all levels of the organization.
A business professional must understand the organization’s cost
accounting practices to competently manage a specified area and under
stand how personal accountabilities are calculated and tracked.
The Profit Imperative: Defining the Objectives
of Cost Management
Profitability, variously interpreted as net income, equity value, and
return on investment is a results-focused indicator watched more care
fully than any other performance measurement category.
At the core,
profit has only two components: revenue and cost.
Cost management system (CMS). An expenditure information
architecture that tracks, monitors, reports, and provides decision
quality information and insights.
A CMS sets direction for resource consumption priorities
and makes course corrections by emphasizing operations first
and accounting practices second. A CMS specifically answers
the demands of the profit imperative when it aligns employee
spending behaviors with the organizational strategy. The pur
pose of the CMS is to understand the nature and behavior of
cost, and thereby manage valuable assets wisely through optimizing
limited resources.
The chief CMS responsibility is to promote improvement in
cost structure. The CMS should:
• Support understanding of the nature and behavior of
cost (and the humans doing the spending).
• Promote, track, and give feedback on value creation
and continuous improvement.
• Assist management in wise use of resources.
Operations Focus Is Primary
The primary focuses of an effective CMS are operations and the sup
port of management decision making. In addition to routine book
keeping (see Chapter 2), the CMS objectives include, but are not limited,
to ten characteristics. A CMS that supports decision making must:
1. Display past, present, and future expenditures.
2. Mirror the organization’s cost structure and behaviors to support
ongoing improvement and control.
3. Support realistic, reliable strategic planning and explicit manage
ment intention.
4. Influence individual and team behaviors toward goal accomplish
ment.
5. Monitor and control resource use against mission and strategic
intentions.
6. Provide warning when unhealthy financial thresholds are immi
nent.
7. Facilitate the repositioning of resources.
8. Hold specific individuals and groups accountable for standards of
performance.
9. Assist in analyzing key discrete points of profitability: customer,
process, product, and region.
10. Display a 360-degree unbiased view of the organization’s cost
structure, one that is understood and actually used in decision
making by all executives and managers.
No comments:
Post a Comment