Workshop conducted by:Masoud Ali Khan, FCMA  December 14, 2010     Organize by:                         1
7:31 O Children of Adam! wear your beautiful apparel at ever            (Surah Al A’raf – The Heights).                   ...
NormsParticipationAdding ideasListeningNo personal attacksTimeliness - “be here now!”FunCell phones off or on silent mode“...
Participants’ Introduction &        Expectations Please share with us your:   Name   Organization   Functional tile
Hadith-e-Rasool SAW   Hazrat Abu Hurayrah RAA narrated  that the  Prophet SAW said: “If a people arise from the place wher...
Today’s CoverageSession I (9 am to 11 am)  Economic Conditions  Business Goals  Concept & Types of CostsTea / Network...
Today’s Coverage Session III (2 pm to 3.30 pm)    Re-engineering of Processes (BPR)    Continuous Process Improvement (...
Economic ConditionsEconomic conditions specially the Macro-economic   factors impact Business.The recent Global Economic...
Business GoalsOptimum Profitability – Primary Goal.Best possible Market Share.Sound Financial Position.Reputation & Im...
Drivers of Profitability Revenue / Income.   Price   Volume Costs / Expenses   Variable   Fixed                     ...
Concept of CostsThe term ‘cost’ means the amount of expenses [actual or notional] incurred on or attributable to specifie...
Types of Costs Fixed Costs VS Variable Costs Direct VS Indirect Costs Marginal Cost / Incremental Cost Prime Costs Co...
Tea / Networking Break                         13
14
OPEX & CAPEXAn operating expense / expenditure, operational expense / expenditure or OPEX is an ongoing cost for running ...
Inventory ManagementInventory management is primarily about specifying the size and placement of stocked goods.Inventory...
BudgetingA Budget is a list of all planned expenses and revenues. It is a plan for saving and spending.Cost / Expenses B...
Standard CostsIt is a system of cost accounting which is designed to find out how much should be the cost of a product un...
Zohar Prayers / Lunch                        19
Re-engineering of Processes – BPR Processes involve Costs – HR, Systems & Space.. Some of the Processes are historical /...
Re-engineering of Processes – BPR                                    21
Continuous Process Improvement – CPI CPI means making things better; it is NOT  fighting fires. Process Definition lists...
Quality Management – QMAll management activities and functions involved in determination of quality policy and its implem...
Quality Management – QM                          24
Productivity CampaignsProductivity is generally measured by the ratio of output to input.Running Productivity Campaigns ...
Cost ConsciousnessPromoting a Cost Conscious Culture across the Organization by propagating the topics of cost understand...
Tea / Networking Break                         27
Effective Time ManagementTime management refers to a range of skills, tools, and techniques used to manage time when acco...
29
Performance Reward SystemLink Activities to Vision, KPIs & KPRs.Provide reasonable Weight to Organizational Goals of Cos...
Performance Reward System                            31
Effective Feedback Mechanism An Effective Reporting System provides timely  information on Team / Individual performance ...
Action PlanIdentify Costs in your respective Areas / Functions.See which of these Costs are Controllable without  advers...
masoudkhan@yahoo.com www.consultace.com                       34
Asar Prayers               35
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Mak effective cost controls in challenging economic conditions ace final

  1. 1. Workshop conducted by:Masoud Ali Khan, FCMA December 14, 2010 Organize by: 1
  2. 2. 7:31 O Children of Adam! wear your beautiful apparel at ever (Surah Al A’raf – The Heights).   2
  3. 3. NormsParticipationAdding ideasListeningNo personal attacksTimeliness - “be here now!”FunCell phones off or on silent mode“Thank you for not smoking”
  4. 4. Participants’ Introduction & Expectations Please share with us your: Name Organization Functional tile
  5. 5. Hadith-e-Rasool SAW   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). 5
  6. 6. Today’s CoverageSession I (9 am to 11 am) Economic Conditions Business Goals Concept & Types of CostsTea / Networking (11 am to 11.30 am)Session II (11.30 am to 1 pm) OPEX & CAPEX Inventory Management Budgeting & Standard CostsZohar Prayers & Lunch (1 pm to 2 pm) 6
  7. 7. Today’s Coverage Session 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 Management  Performance Reward Systems  Effective Feedback Mechanism   Action Plan Conclusion & Asar Prayers (5 pm) 7
  8. 8. Economic ConditionsEconomic 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
  9. 9. Business Goals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. 9
  10. 10. Drivers of Profitability Revenue / Income. Price Volume Costs / Expenses Variable Fixed 10
  11. 11. Concept of Costs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). 11
  12. 12. Types of Costs Fixed Costs VS Variable Costs Direct VS Indirect Costs Marginal Cost / Incremental Cost Prime Costs Conversion Costs Overheads Opportunity Cost 12
  13. 13. Tea / Networking Break 13
  14. 14. 14
  15. 15. OPEX & CAPEX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. 15
  16. 16. Inventory Management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 Costs Cost of Obsolescence Holding / Carrying costs Opportunity Cost 16
  17. 17. Budgeting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. 17
  18. 18. Standard Costs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. 18
  19. 19. Zohar Prayers / Lunch 19
  20. 20. Re-engineering of Processes – BPR 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. 20
  21. 21. Re-engineering of Processes – BPR 21
  22. 22. Continuous Process Improvement – CPI 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. 22
  23. 23. Quality Management – QM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. 23
  24. 24. Quality Management – QM 24
  25. 25. Productivity Campaigns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. 25
  26. 26. Cost Consciousness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. 26
  27. 27. Tea / Networking Break 27
  28. 28. Effective Time Management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. 28
  29. 29. 29
  30. 30. Performance Reward System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. 30
  31. 31. Performance Reward System 31
  32. 32. Effective Feedback Mechanism 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. 32
  33. 33. Action PlanIdentify Costs in your respective Areas / Functions.See which of these Costs are Controllable without adversely affecting Quality / Performance / Productivity.Introduce:  Budgeting & Variance Analysis  Process Reviews / Improvements  Quality Initiatives  Effective MIS / ReportingValue Time – Utilize it Effectively. 33
  34. 34. masoudkhan@yahoo.com www.consultace.com 34
  35. 35. Asar Prayers 35
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