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Strategic C ost Management (SCM)

Strategic C ost Management (SCM). Presenter: Dr Ruvendra Nandan Professor and Dean, SOBE, UoF. Introduction. Recent Government budget Global downturn Manage and control expenditures Need for strategic cost management approach A closer look at business strategy

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Strategic C ost Management (SCM)

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  1. Strategic Cost Management (SCM) Presenter: Dr Ruvendra Nandan Professor and Dean, SOBE, UoF

  2. Introduction • Recent Government budget • Global downturn • Manage and control expenditures • Need for strategic cost management approach • A closer look at business strategy • Strategic cost management techniques

  3. What is Strategic Cost Management? • Strategy – direction over long term • Strategy concepts: vision, mission, goals, strategies • Major strategic decisions: what business to operate? how to compete? what systems and structures to adopt? how to fund operations?

  4. Stages of Strategic Cost Management

  5. Components of SCM

  6. Common Strategic Cost Management Techniques • ABC/ABM • Target costing and life cycle ideas • Value engineering • Benchmarking • Just-in-Time purchasing and production • Managing bottlenecks and theory of constraints • Managing cost and quality issues • Strategic performance measurement systems

  7. From Supply Chain to Value Chain Series of links, processes and activities – suppliers and customers For competitive advantage Upstream, primary, downstream processes and activities Think of the value chain in Fijian Hotel Industry or a big 4 accounting firm or a private hospital

  8. From Value Chain to Extended Value Chain

  9. Relationship Between Trust and Information • Trust - a very soft and fragile concept ! • Confidence that expectations will be realised – people as well as things (accounting systems) • Capacity to act otherwise is always there • Nature of social bonds, trust and the need for information • Fundamental to social and organisational life • The concept of Trust and its link with information within relationships

  10. Trust and Information Needs • Inverse relationship between information and the level of trust • Request for excessive information may reduce trust • More information may be needed to create more trust early in the life cycle • Whatever the level of trust, information may still be needed in a collaborative relationship

  11. Relationship Between Trust and Information

  12. Summary and Conclusion • Business environment – complex and unpredictable • Global, regional and local forces operate • Government regulations and budget • Implications for the business world • Customer value and shareholder value for long-term survival • MACS to support strategy

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