mak effective cost controls in challenging economic conditions ace final
DESCRIPTION
Presentation developed and made at a workshop for Senior Executives. ACE Consultants were the logistics partners for the workshop.TRANSCRIPT
![Page 1: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/1.jpg)
1
Workshop conducted by:Workshop conducted by:
Masoud Ali Khan, FCMAMasoud Ali Khan, FCMADecember 14, 2010December 14, 2010
Organize by:Organize by:
![Page 2: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/2.jpg)
7:31 O Children of Adam! wear your beautiful apparel at every time and place of prayer: eat and drink: But waste not by excess, for Allah loveth not the wasters.
(Surah Al A’raf – The Heights).
2
![Page 3: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/3.jpg)
Norms
Participation
Adding ideas
Listening
No personal attacks
Timeliness - “be here now!”
Fun
Cell phones off or on silent mode
“Thank you for not smoking”
![Page 4: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/4.jpg)
Participants’ Introduction & Expectations
Please share with us your:
Name
Organization
Functional tile
![Page 5: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/5.jpg)
Hadith-e-Rasool SAW
5
Hazrat Abu Hurayrah RAA narrated that the Prophet SAW said:
“If a people arise from the place where they were sitting without remembering Allah, then they have arisen from there like a dead ass. On the day of resurrection, this meeting will be cause of regret for them.” (Abu Daúd).
![Page 6: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/6.jpg)
Today’s CoverageSession I (9 am to 11 am)
Economic ConditionsBusiness GoalsConcept & Types of Costs
Tea / Networking (11 am to 11.30 am)
Session II (11.30 am to 1 pm)OPEX & CAPEXInventory ManagementBudgeting & Standard Costs
Zohar Prayers & Lunch (1 pm to 2 pm)
6
![Page 7: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/7.jpg)
Today’s CoverageSession III (2 pm to 3.30 pm)
Re-engineering of Processes (BPR)Continuous Process Improvement (CPI)Quality Management (QM)Productivity Campaigns / Cost Consciousness
Tea / Networking (3.30 pm to 3.45 pm)
Session IV (3.45 pm to 5 pm)Effective Time ManagementPerformance Reward SystemsEffective Feedback Mechanism Action Plan
Conclusion & Asar Prayers (5 pm)
7
![Page 8: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/8.jpg)
Economic ConditionsEconomic conditions specially the Macro-
economic factors impact Business.
The recent Global Economic Crisis lead to the financial crunch.
Loss of Revenues & reduced Consumer buying powers due to increased Unemployment .
Survival of Business – a great Challenge.8
![Page 9: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/9.jpg)
Business Goals
9
Optimum Profitability – Primary Goal.Best possible Market Share.Sound Financial Position.Reputation & Image.Satisfied / Loyal Customers.Satisfied & Motivated Human Resources.Contribution to the Government.Contribution to the Society.
![Page 10: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/10.jpg)
Drivers of Profitability
10
Revenue / Income.PriceVolume
Costs / Expenses VariableFixed
![Page 11: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/11.jpg)
Concept of Costs
11
The term ‘cost’ means the amount of expenses [actual or notional] incurred on or attributable to specified thing or activity.
Total cost (TC) is how much money is required to operate at some particular output level. Total cost equals fixed cost plus variable costs (TC = FC + VC).
![Page 12: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/12.jpg)
Types of Costs
12
Fixed Costs VS Variable CostsDirect VS Indirect CostsMarginal Cost / Incremental CostPrime CostsConversion CostsOverheadsOpportunity Cost
![Page 13: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/13.jpg)
13
Tea / Networking Break
![Page 14: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/14.jpg)
14
![Page 15: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/15.jpg)
OPEX & CAPEX
15
An operating expense / expenditure, operational expense / expenditure or OPEX is an ongoing cost for running a product, business, or system.
A capital expenditure (CAPEX), is the cost of developing or providing non-consumable parts for the product or system.
![Page 16: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/16.jpg)
Inventory Management
16
Inventory management is primarily about specifying the size and placement of stocked goods.
Inventory is one of the key items of the Working Capital in the Manufacturing / Trading sector .
Proper Inventory management ensures control over:Financial CostsCost of ObsolescenceHolding / Carrying costsOpportunity Cost
![Page 17: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/17.jpg)
Budgeting
17
A Budget is a list of all planned expenses and revenues. It is a plan for saving and spending.
Cost / Expenses Budgets help controlling these by monitoring the Actual VS Budget on regular basis.
Budgets help create a Responsible Culture.Zero-Based Budgets play a key role in
rationalizing and controlling Expenses and improving the Bottom-line.
Realistic Assumptions are extremely important.
![Page 18: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/18.jpg)
Standard Costs
18
It is a system of cost accounting which is designed to find out how much should be the cost of a product under the existing conditions.
The actual cost can be ascertained only when production is undertaken.
The predetermined / Standard cost is compared to the actual cost and a variance between the two enables the management to take necessary corrective measures.
![Page 19: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/19.jpg)
19
Zohar Prayers / Lunch
![Page 20: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/20.jpg)
Re-engineering of Processes – BPR
20
Processes involve Costs – HR, Systems & Space..
Some of the Processes are historical / prevalent as legacies in organizations.
At times, management introduces relatively more Processes to ensure higher amount of Controls.
Business Process Re-engineering (BPR) is a Rethinking exercise aimed at dramatically improving the Customer Servicing, Work Efficiency & rationalizing Operational Costs.
![Page 21: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/21.jpg)
Re-engineering of Processes – BPR
21
![Page 22: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/22.jpg)
Continuous Process Improvement – CPI
22
CPI means making things better; it is NOT fighting fires.
Process Definition lists what happens between the start and end points. It includes all the activities performed by each department, group, or person who are involved in the process.
CPI is a regular review of the activities involved in a Process for rationalizing them with an Aim of improving efficiency with adequate Controls and minimum possible Costs.
![Page 23: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/23.jpg)
Quality Management – QM
23
All management activities and functions involved in determination of quality policy and its implementation through means such as quality planning and quality assurance (including quality control).
Quality in working methods and operations both in producing goods and providing services brings twofold benefits – Customer Satisfaction / Loyalty and Cost rationalization by eliminating waste and reducing errors / rectification of errors.
![Page 24: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/24.jpg)
Quality Management – QM
24
![Page 25: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/25.jpg)
Productivity Campaigns
25
Productivity is generally measured by the ratio of output to input.
Running Productivity Campaigns esp., in Manufacturing concerns can lead to significant cost savings e.g., reduction in Labor cost per unit through effective use of time / methods can result in massive Cost savings.
Improved turnaround time in Service organizations can result in similar Cost Savings and improved Revenues.
![Page 26: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/26.jpg)
Cost Consciousness
26
Promoting a Cost Conscious Culture across the Organization by propagating the topics of cost understanding, cost containment, cost avoidance and cost reduction.
Switching off Lights / Air Conditioners, while leaving the workplace.
The 3R Concept – Reduce, Reuse & Recycle.
![Page 27: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/27.jpg)
27
Tea / Networking Break
![Page 28: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/28.jpg)
Effective Time Management
28
Time management refers to a range of skills, tools, and techniques used to manage time when accomplishing specific tasks, projects and goals.
Prioritizing, Scheduling & Goal setting helps in Effective Time Management.
Time is Value; its optimum utilization ensures improved Operating results.
![Page 29: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/29.jpg)
29
![Page 30: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/30.jpg)
Performance Reward System
30
Link Activities to Vision, KPIs & KPRs.
Provide reasonable Weight to Organizational Goals of Cost Control and rationalization.
When Team Members see Performance Based Rewards, they strive for achieving Goals / Targets.
![Page 31: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/31.jpg)
Performance Reward System
31
![Page 32: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/32.jpg)
Effective Feedback Mechanism
32
An Effective Reporting System provides timely information on Team / Individual performance and achievement of Goals.
MIS reports help making timely Decisions.
Information must meet the criteria of:Being Relevant Timely &Accurate.
![Page 33: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/33.jpg)
Action Plan
33
Identify Costs in your respective Areas / Functions.
See which of these Costs are Controllable without adversely affecting Quality / Performance / Productivity.
Introduce:Budgeting & Variance AnalysisProcess Reviews / ImprovementsQuality InitiativesEffective MIS / Reporting
Value Time – Utilize it Effectively.
![Page 35: Mak effective cost controls in challenging economic conditions ace final](https://reader033.vdocuments.us/reader033/viewer/2022060119/558e7bf71a28ab412c8b4765/html5/thumbnails/35.jpg)
35
Asar Prayers