Cost management is a critical imperative
The importance of enterprise cost management is as follows:
1 . If factories and enterprises want to seek economic benefits in the increasingly fierce market competition and achieve sustainable competitive advantages, they must strive to enhance their competitive advantages, and must be careful to strengthen cost management and control, and strive to seek various effective ways and methods to reduce costs.
2 . The operation and management of factories and enterprises are inseparable from two things: increasing turnover and reducing costs. Enterprise development, inseparable from sales, it stands to reason that the better the sales, the higher the turnover, the greater the development of the enterprise, in fact, good sales, high turnover, but also need to pay attention to an important factor, is the cost control.
3 . In general, the reduction in costs is greater than the increase in profits, that is, a 10% reduction in costs may increase profits by 20% or more. Therefore, cost management is imperative. It affects the design cost, procurement cost, quality cost, sales cost, work process, capital occupation, and inventory reduction of all stages of the product.
4 . Good cost control management can reduce product costs, improve enterprise production capacity and resource utilization, improve market competitiveness, promote enterprises to improve operation and management, is conducive to the sustainable development and improvement of enterprises, and ultimately improves the profitability of enterprises.
Master the top five cost management essentials
Cost control is the process of calculating, adjusting and supervising the various costs incurred by the enterprise in the process of production and operation by using the principle of system engineering, and it is also a process of discovering weak links, tapping internal potential, and looking for all possible ways to reduce costs. To reduce product costs, enterprises should start from the following aspects.
1 . Financial area control
To improve the level of capital operation, we must first open up sources and reduce expenditure, increase revenue and reduce expenditure; secondly, it is necessary to implement tracking management of funds and strengthen the scheduling and use of funds; Third, it is necessary to reduce the proportion of inventories and strengthen inventory management. Through the above measures, we can reduce the occupation of funds, optimize the structure of funds, rationally allocate funds, accelerate capital turnover, and reduce financing costs.
Financial personnel should do a good job before, during and after the cost, and should do a good job in cost forecasting, decision-making and cost planning in advance; In the matter, it is necessary to do a good job in cost control and accounting; After the fact, it is necessary to do a good job in the assessment and analysis of costs. The potential for cost reduction and benefit should be tapped from the perspective of management.
Strictly control and save expenses, and the expenses that can be controlled should be reduced as much as possible, such as material costs, travel expenses, etc. Enterprises should abide by the financial management system, adhere to the diligent and thrifty factory, oppose extravagance and waste, try to reduce manufacturing costs, save production costs, strictly control period costs, and reduce non-production costs.
2 . Policy management domain control
Technological innovation, seeking a new way out.
After the cost is reduced to a certain stage, enterprises can only start from innovation to reduce costs, reduce the amount of raw materials from technological innovation or find new, cheap materials to replace the original old and high-priced materials; From the process innovation, improve the utilization rate of materials, reduce the loss of materials, and improve the rate of commodities or first-class products;
Improve labor productivity and equipment utilization rate from the innovation of work process and management methods to reduce the labor cost and fixed cost content of unit product; Increase sales and reduce the marketing cost of unit products from the innovation of marketing methods.
Only through the continuous innovation of enterprises, with effective incentives to stimulate innovation, from the aspect of innovation, is the fundamental way out for enterprises to continuously reduce costs.
Determine production by sales to avoid blindly producing unmarketable products and causing backlogs.
A company's decision-makers should make more accurate sales forecasts to determine how much of the products the company produces that will be sold in the near future. Wrong sales forecasts are a common weakness in most production and business management, and it is a costly waste.
3 . Procurement area control
Generally speaking, the procurement department should be prepared according to the production plan of the enterprise, and the production plan of the enterprise is formulated according to the sales plan, so that it is interlocking, as long as the sales plan does not deviate greatly, the procurement plan is generally reasonable. To achieve procurement management, it is necessary to:
Using scientific decision-making analysis methods, reasonably determine the economic order quantity or economic batch, decide the procurement project, select the supply unit, and decide the procurement time;
We will further promote the centralized procurement system, establish a unified procurement platform for external services such as raw materials, and realize the sharing of resources such as prices and suppliers;
Promote the direct supply system and gradually eliminate intermediate suppliers; Establish a procurement responsibility system and strengthen the sense of responsibility of procurement personnel and price reviewers;
Rectify the purchase price of auxiliary materials and sporadic materials, and the purchase price should be gradually reduced on the basis of the previous purchase and sales price;
Explore the establishment of a procurement reward and punishment system, rewards and punishments should be linked to leaders and individuals; Strengthen the strength of technical research and reduce procurement costs.
4 . Control of the production area
Improve the utilization of equipment, reasonably organize and arrange production, and avoid uneven equipment busyness; Strengthen the maintenance of equipment and improve the integrity rate of equipment. Reasonable arrangement of shifts, increase the actual working hours of equipment, the implementation of professional cooperation, etc., can reduce the depreciation cost of fixed assets per unit of product.
Optimize the work process, starting from the procurement of raw materials to the final product or service, and reasonably formulate the quota of raw materials, fuel, auxiliary materials and other material costs; Strictly improve the system of measurement, inspection and material receipt and return; Improve the original records of products, output, varieties, quality, raw material consumption, working hours and attendance, and equipment use to provide effective, systematic and accurate information for the financial statistics department.
Reducing inventory, which does not generate any added value, not only takes up space and capital, but also creates the need for handling and storage, which eats up financial assets. (Lean production management consulting company www.kaizenjit.com training institution)
And over time, on the one hand, the corrosion and deterioration of the inventory will produce waste; On the other hand, technological advancement, improvement of competitors' products, products will create the possibility of becoming scrap overnight.
Reducing inventory requires reducing the quantity of inventory, and reducing inventory from the unit price. Therefore, the acquisition cost, storage cost, and out-of-stock cost should be calculated correctly, and the inventory quantity and inventory amount should be controlled within the optimal range.
Controlling personnel costs, reducing personnel, and rationally fixing posts and staffing are the basis for strengthening employment management, as well as the basic work for saving labor and reducing labor costs.
Fully mobilize the enthusiasm of employees, ensure effective cost control, comprehensively improve the quality of the enterprise, implement the responsibility to the department or individual, improve the income distribution system, strengthen organizational incentives, strengthen personal incentives, implement rewards and punishments, and mobilize the enthusiasm of all employees.
To control the cost of quality, it is necessary to break the old concept of improving quality, increasing cost, reducing costs and harming quality, and improving quality will actually lead to the reduction of costs. To improve the cost of quality, it is necessary to strengthen the quality in the work process in order to reduce scrap loss, reduce work, reduce rework time, reduce resource consumption, and thus reduce the total cost of operation.
5 . Sales area control
To control the cost of sales, the sales department should strengthen the efficiency of the use of sales expenses and reduce costs while expanding sales results and increasing market share.
First of all, the sales department should study and promote the marketing system of sales and service, and reduce costs with scale operation;
Secondly, the sales department should carefully study the national and local tax policies, and reasonably carry out the tax planning of the branch; 100 management;
Third, the sales department should use economic decision-making methods to reduce transportation costs; Fourth, the sales department should use the optimal cost decision to improve the efficiency of the use of advertising funds.
Reduce logistics costs and reduce logistics costs through efficient delivery. Enterprises can achieve efficient distribution, reduce the number of transportation, improve the loading rate and reasonably arrange the vehicle distribution plan, and choose the best means of transportation, so as to reduce the distribution cost.
The key to reducing costs and improving profits is to implement cost control, which is closely linked to the basic management of enterprises. Only by improving the management level, opening up sources and reducing expenditure, reducing costs, and increasing market share can factories and enterprises become possible.
How to do cost management
1 . Comprehensive cost management how-to guidance
The cost management functions are interlinked and complementary. Cost forecasting is the premise of cost decision, and cost decision is the result of cost forecasting. Cost budgeting is the concretization of the goals set by cost decisions. Cost control is to comprehensively monitor the implementation process of the cost budget to ensure the realization of the decision-making objectives.
2 . Implementation of cost management
Build a successful and efficient all-staff real enterprise cost reduction and improvement, while promoting the production and logistics of the entire enterprise management standardization, high-grade - comprehensive, complete, accurate, scientific and timely to achieve the control objectives of the modern cost management control system!
The first step: first of all, straighten out the entire enterprise business closely related to the cost, such as procurement, warehousing, sales, and workshop statistics, so as to achieve both the symptoms and the root causes;
Step 2: Re-plan and design cost items, processes, etc., and design a complete and scientific cost accounting system;
Step 3: Truly enable all functions of cost forecasting, budgeting, control, analysis, and assessment to form a cost management system;
Step 4: Start from the source, and at the same time mobilize 10 major departments such as production, logistics, and human resources to participate;
Step 5: Expenses and costs are designed, controlled, and reduced at the same time, so as to achieve full cost management.
Step 6: Really use: cost character, responsibility cost, quantity-cost-profit, cost center and other modern Western cost management methods.
Step 7: Re-plan and design a complete set of cost management implementation systems such as organizations, positions, processes, forms, and systems to ensure implementation.
Step 8: On the basis of the above 7 steps, guide the implementation and application of ERP or cost management software.
3 . Six ways to control costs
(1) Fixed cost method
(2) Standard costing
(3) Target costing
(4) Activity costing
(5) Value engineering method
(6) Waste reduction method
Cost management is the eternal theme of the enterprise, cost is the bull's nose of the enterprise, and cost control is an important management topic that all enterprises must face. Fashionable measures such as property rights reform and option incentives cannot replace the "traditional" work of strengthening management and reducing costs, which is one of the most important aspects of business success.
However, cost management is not to save for the sake of saving, nor is it the same as reducing costs, but should be a measure to establish and maintain the long-term competitive advantage of enterprises.