This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
This product (5 Cost Management Strategies) is a 24-slide PPT PowerPoint presentation slide deck (PPTX), which you can download immediately upon purchase.
A commonly quoted statistics is that 80-95% of the cost of a product is determined by its design and is therefore set before the item enters Manufacturing. This assumption suggests that the dominant focus of Cost Management should be during Product Development and not during Manufacturing.
However, contrary to a widely held assumption, companies can integrate a variety of Cost Management techniques not only in the Design phase, but throughout the Product Lifecycle. This is to ensure that there is substantial reduction in costs. In fact, companies competing aggressively on cost might consider the adoption of some form of an Integrated Cost Management program that spans the entire Product Lifecycle.
This framework captures the 5 Cost Management Strategies that companies can use to reduce costs and still attain the desired level of functionality and quality at the target costs.
1. Target Costing
2. Product-specific Kaizen Costing
3. General Kaizen Costing
4. Functional Group Management
5. Product Costing
Each of the 5 Cost Management Strategies plays a crucial role in the company's integrated approach to Cost Management. These 5 Cost Management Strategies can be applied throughout the Product Lifecycle with 1 technique during Product Design and the rest during Manufacturing.
This deck also includes slide templates for you to use in your own business presentations.
Gain a competitive edge by leveraging the detailed insights provided in this presentation. Dive deep into the nuances of each cost management strategy, understanding their specific objectives, focus areas, and applications. The deck elucidates how integration of these strategies can streamline processes, enhance efficiency, and drive significant cost reductions across the product lifecycle. Equip your team with actionable templates and frameworks to implement these strategies effectively, ensuring your organization remains agile and cost-competitive in today's dynamic market. This resource is essential for executives committed to optimizing cost structures without compromising on quality or functionality.
This PPT slide presents a balanced view of Kaizen Costing by outlining its advantages and disadvantages. On the left side, the advantages are highlighted, emphasizing the positive impact of employee engagement and empowerment. It suggests that when employees are encouraged to contribute, the overall results improve. The slide also mentions an employee suggestion system, which is a mechanism for identifying cost reduction opportunities. Lean thinking is noted as a method that minimizes resource absorption, indicating a focus on efficiency and waste reduction.
On the right side, the disadvantages are laid out, indicating potential challenges in implementing Kaizen Costing. It describes the system as a permanent change, which may imply a need for ongoing commitment and adaptation from the organization. There’s a caution about increasing the burden on lower management levels, suggesting that the approach could lead to additional pressures and responsibilities. Finally, the slide warns of diminishing returns if the system is not implemented wisely, highlighting the importance of careful execution and monitoring.
This dual perspective allows potential customers to weigh the benefits against the challenges. Understanding these factors can guide decision-making regarding the adoption of Kaizen Costing in their organizations. The slide serves as a useful tool for executives to initiate discussions about the practicality and strategic fit of Kaizen Costing within their operational frameworks. It encourages a thoughtful approach to implementation, ensuring that the advantages can be maximized while mitigating the risks associated with its disadvantages.
This PPT slide outlines the concept of Target Costing as a strategic approach in cost management, particularly during the product design phase. It emphasizes a feed-forward mechanism that allows organizations to align product design with market expectations while ensuring that desired functionality and quality are maintained.
The process section details 4 key steps. First, it highlights the importance of identifying the price point at which a new product is expected to sell. This step is crucial as it sets the foundation for subsequent pricing and cost decisions. Next, determining the free-on-board price is essential, as it reflects the cost of the product once it leaves the manufacturer. The third step involves establishing the target cost by subtracting the desired profit margin from the free-on-board price. This calculation helps in setting a clear financial target for the product.
The final point encourages teams to look for creative ways to achieve the desired functionality and quality within the established target costs. This aspect of innovation is vital, as it pushes teams to think outside the box and find solutions that can lead to both cost efficiency and product excellence.
The slide also indicates that Target Costing is most effective during the manufacturing phase of a product's lifecycle, particularly when this phase is short. This insight suggests that organizations should adopt this strategy early in the design process to maximize its benefits. Overall, the slide serves as a valuable guide for executives looking to implement a structured approach to cost management in product development.
This PPT slide presents an overview of Kaizen Costing, also referred to as continuous improvement costing. It outlines the purpose and methodology of this cost management strategy, emphasizing its role in reducing costs without compromising quality or safety. The description highlights that Kaizen Costing is fundamentally about achieving cost reductions while utilizing fewer resources.
A key section compares Kaizen Costing with Target Costing, detailing both similarities and differences. The similarities indicate that both approaches aim for efficiency in resource utilization. However, the differences are more pronounced. Target Costing is primarily employed during the design phase and involves only designers, while Kaizen Costing is applied during the manufacturing stage and necessitates significant employee involvement. This distinction underscores the collaborative nature of Kaizen Costing, which relies on contributions from various levels of the organization.
The slide also introduces 2 approaches under Kaizen Costing: Asset Specific and Product Specific. The Asset Specific approach focuses on improving activities related to specific assets or resources, while the Product Specific approach targets improvements associated with particular products. This dual approach allows organizations to tailor their cost management strategies to their unique operational contexts.
The concluding statement reinforces the core idea of Kaizen Costing, which is to establish target costs and ensure that the design and manufacturing processes do not exceed these costs. This focus on continuous improvement and employee engagement positions Kaizen Costing as a proactive strategy for organizations seeking to enhance efficiency and reduce costs effectively.
This PPT slide presents an overview of General Kaizen Costing, a methodology utilized during the manufacturing phase of a product's lifecycle. It emphasizes a structured approach to cost management, focusing on the established design of a product. The description highlights that this technique is particularly effective in optimizing manufacturing processes that span multiple product generations.
The process section outlines several key actions management should take. First, it stresses the importance of setting clear cost reduction goals for production processes. This sets a foundation for accountability and direction. Empowering the workforce is also crucial; employees are encouraged to identify and implement ways to meet these reduction targets. This not only fosters a culture of continuous improvement, but also leverages the insights of those directly involved in the manufacturing process.
Further, the slide advises focusing on reducing material, labor, and overhead costs. This holistic approach ensures that all aspects of production are scrutinized for potential savings. The inclusion of sales, general, and administrative costs in the analysis indicates a comprehensive view of cost management, ensuring that no stone is left unturned.
The slide also notes the importance of setting individual cost-reduction goals for each assembly line and component. This specificity allows for targeted actions that can lead to significant efficiencies. A variety of actions should be undertaken to streamline manufacturing processes, which may include speeding up production.
Overall, General Kaizen Costing offers a systematic framework for achieving cost reductions that can have lasting impacts, even after a product is no longer in the market. This approach is essential for organizations looking to enhance their operational efficiency and maintain profitability over time.
This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
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