This document discusses ways to reduce indirect costs in manufacturing industries. It defines direct and indirect costs, with the latter including overhead expenses like administration, utilities, and insurance. The document recommends systematically reviewing organizational structures and staffing to identify unnecessary roles and layers. It also suggests improving technology use, evaluating capabilities, reshaping functions, consolidating services, and monitoring billing rates and benefits costs to further reduce indirect expenses. With tighter indirect cost management, the document argues that manufacturers can lower overall costs and gain a competitive advantage in the market.
Cost Reduction Strategies:Focus and TechniquesThomas Tanel
This is a highly concentrated presentation that addresses the differences among price, cost, and TCO; what cost reduction strategies to focus on; and an overview of various techniques, as well as when and where to use them. Faced with excruciating competitive pressures, many senior C-Level executives require maximum effort from every part of their organization to survive. Today, purchasing, acquisition, procurement, contracting, and supply management professionals must be the most progressive cost reduction oriented group in the company.
For many organizations, senior C-Level executives set forth annual purchasing, acquisition, procurement, contracting, and supply management goals that mandate cost reductions. Regardless of the cost savings, avoidances, or containments achieved previously, you are faced with new cost reduction initiatives and objectives.
To make the goal of cost reduction a reality, we cannot focus solely on the price. We must examine the total cost of ownership to your organization, which means moving beyond the organizational environs to include suppliers, internal customers, other allied business functional entities, and external customers. By working both internally and externally with these stakeholders, cost reduction opportunities will become visible.
A typical purchasing, acquisition, procurement, contracting, or supply management professional will help reduce supplier prices and avoid incremental costs. A good purchasing, acquisition, procurement, contracting, or supply management professional will reduce costs by lowering both costs of acquisition and risks of supply. A great purchasing, acquisition, procurement, contracting, or supply management professional will reduce total costs across the board, increase service levels to the internal customer, make a significant contribution to the bottom line, seek value-added opportunities, and help to delight the organization’s customer. This type of professional also balances supply related costs and cycle time for the lowest overall cost, at the best value, while seeking risk optimization rather than risk minimization strategies.
Cost control and cost reduction are the two most viewed area in finance. Every corporate entity will have a specialized department to study on cost aspects. Apart from finance it is places a great role in micro economics.This presentation will helpful to university students in their study and enhance greater knowledge.
Cost Reduction Strategies:Focus and TechniquesThomas Tanel
This is a highly concentrated presentation that addresses the differences among price, cost, and TCO; what cost reduction strategies to focus on; and an overview of various techniques, as well as when and where to use them. Faced with excruciating competitive pressures, many senior C-Level executives require maximum effort from every part of their organization to survive. Today, purchasing, acquisition, procurement, contracting, and supply management professionals must be the most progressive cost reduction oriented group in the company.
For many organizations, senior C-Level executives set forth annual purchasing, acquisition, procurement, contracting, and supply management goals that mandate cost reductions. Regardless of the cost savings, avoidances, or containments achieved previously, you are faced with new cost reduction initiatives and objectives.
To make the goal of cost reduction a reality, we cannot focus solely on the price. We must examine the total cost of ownership to your organization, which means moving beyond the organizational environs to include suppliers, internal customers, other allied business functional entities, and external customers. By working both internally and externally with these stakeholders, cost reduction opportunities will become visible.
A typical purchasing, acquisition, procurement, contracting, or supply management professional will help reduce supplier prices and avoid incremental costs. A good purchasing, acquisition, procurement, contracting, or supply management professional will reduce costs by lowering both costs of acquisition and risks of supply. A great purchasing, acquisition, procurement, contracting, or supply management professional will reduce total costs across the board, increase service levels to the internal customer, make a significant contribution to the bottom line, seek value-added opportunities, and help to delight the organization’s customer. This type of professional also balances supply related costs and cycle time for the lowest overall cost, at the best value, while seeking risk optimization rather than risk minimization strategies.
Cost control and cost reduction are the two most viewed area in finance. Every corporate entity will have a specialized department to study on cost aspects. Apart from finance it is places a great role in micro economics.This presentation will helpful to university students in their study and enhance greater knowledge.
Background:
After studying this lesson, you should be able to
• Describe the production function and its component.
• Define production management.
• Analyze various factors, which are crucial for designing the production.
• Explain the design of production system and manufacturing process.
• List out the factors influencing the choice of production process.
• Discuss the benefits, which a small entrepreneur can reap by having properly designed production planning, and control system.
A details introduction of quality, its elements, Cost of Poor Quality and difference in Quality Control and Quality Assurance.
To download these slides please visit my site:
http://www.xubitech.com/
Strategize your company’s cost reduction plan using Cost Reduction Plans PowerPoint Presentation Slides. Reduce cost of the production of the product and increase the profit by using cost reduction plans PPT templates. Apply various techniques and tools to reduce the costs such as budgetary control, standard costing, cost benefit analysis, value analysis, contribution analysis, and more. Go step by step to reduce expenditure and continuously analyse costs, functions, etc. This deck covers various topics to help you strategize your cost reduction plan such as key levers to cost management, levers to achieve successful cost optimization, levels of strategic cost optimization, detailed levels within strategic cost optimization framework, prioritizing IT cost optimization, IT cost optimization, cost optimization techniques, cost optimization planning, stages in cost reduction, cost design, comparison of stages, etc. You can use price optimization PowerPoint presentation templates for better cost reduction plan. Create more demand for the product, increase sales and revenue, increase competitive strength and more using cost reduction plan PPT presentation slideshow. Assess the fallout of emerging circumstances with our Cost Reduction Plans PowerPoint Presentation Slides. It helps decipher the implications.
APPLICATION OF ABC ANALYSIS FOR MATERIAL MANAGEMENT OF RESIDENTIAL BUILDINGSagar Kaptan
“Material management is a scientific technique, concerned with planning, organizing & control of flow of materials, from their initial purchase to destination.
"You can download this product from SlideTeam.net"
Plan and control the budget of the business by using the Cost Management PowerPoint Presentation Slides. Develop marketing capabilities, advertising, sponsorship, etc. with the help of project cost management PPT slideshow. Represent the cost of foregone alternatives with the help of the opportunity cost table. Determine all business expenses pertaining to the creation of company products by taking the assistance of products costing PPT visuals. Utilize our budgeting PowerPoint graphics and discuss all applicable costs, such as equipment and parts, materials and supplies, labor, financing, fees and licensing, transportation, and acquisition costs. Identify activities in an organization and assign the cost of each activity to all products and services by taking the assistance of the activity-based management PowerPoint layouts. You can also evaluate profits using the professionally designed financial management PPT slide deck. Thus, control the cost of your business project efficiently and strengthen the position of your firm by downloading our visually attention-grabbing project cost management PPT Presentation. https://bit.ly/3pb67nZ
Background:
After studying this lesson, you should be able to
• Describe the production function and its component.
• Define production management.
• Analyze various factors, which are crucial for designing the production.
• Explain the design of production system and manufacturing process.
• List out the factors influencing the choice of production process.
• Discuss the benefits, which a small entrepreneur can reap by having properly designed production planning, and control system.
A details introduction of quality, its elements, Cost of Poor Quality and difference in Quality Control and Quality Assurance.
To download these slides please visit my site:
http://www.xubitech.com/
Strategize your company’s cost reduction plan using Cost Reduction Plans PowerPoint Presentation Slides. Reduce cost of the production of the product and increase the profit by using cost reduction plans PPT templates. Apply various techniques and tools to reduce the costs such as budgetary control, standard costing, cost benefit analysis, value analysis, contribution analysis, and more. Go step by step to reduce expenditure and continuously analyse costs, functions, etc. This deck covers various topics to help you strategize your cost reduction plan such as key levers to cost management, levers to achieve successful cost optimization, levels of strategic cost optimization, detailed levels within strategic cost optimization framework, prioritizing IT cost optimization, IT cost optimization, cost optimization techniques, cost optimization planning, stages in cost reduction, cost design, comparison of stages, etc. You can use price optimization PowerPoint presentation templates for better cost reduction plan. Create more demand for the product, increase sales and revenue, increase competitive strength and more using cost reduction plan PPT presentation slideshow. Assess the fallout of emerging circumstances with our Cost Reduction Plans PowerPoint Presentation Slides. It helps decipher the implications.
APPLICATION OF ABC ANALYSIS FOR MATERIAL MANAGEMENT OF RESIDENTIAL BUILDINGSagar Kaptan
“Material management is a scientific technique, concerned with planning, organizing & control of flow of materials, from their initial purchase to destination.
"You can download this product from SlideTeam.net"
Plan and control the budget of the business by using the Cost Management PowerPoint Presentation Slides. Develop marketing capabilities, advertising, sponsorship, etc. with the help of project cost management PPT slideshow. Represent the cost of foregone alternatives with the help of the opportunity cost table. Determine all business expenses pertaining to the creation of company products by taking the assistance of products costing PPT visuals. Utilize our budgeting PowerPoint graphics and discuss all applicable costs, such as equipment and parts, materials and supplies, labor, financing, fees and licensing, transportation, and acquisition costs. Identify activities in an organization and assign the cost of each activity to all products and services by taking the assistance of the activity-based management PowerPoint layouts. You can also evaluate profits using the professionally designed financial management PPT slide deck. Thus, control the cost of your business project efficiently and strengthen the position of your firm by downloading our visually attention-grabbing project cost management PPT Presentation. https://bit.ly/3pb67nZ
Uncovering the Employee T&E Spend Trends of 2017Ashley Emery
Do your employees have bad habits when it comes to travel spend? Do you wonder if there are areas where simple modifications to your policy could reduce costs? It can be difficult to spot patterns in employee spend behavior, especially when the expense reporting process is largely manual. This webinar will shed light on what is often a murky, poorly controlled area of the budget.
Featuring the latest survey data from PayStream Advisors and Certify, you’ll learn:
Expense management automation adoption and usage trends
Benchmark travel spending by category
Policy enforcement practices
Top drivers for expense management improvement initiatives
Chapter EighteenManagement Making It WorkChapter OutlineMan.docxchristinemaritza
Chapter Eighteen
Management: Making It Work
Chapter Outline
Managing Labor Costs and Revenues
Managing Labor Costs
Number of Employees (a.k.a.: Staffing Levels or Headcount)
Hours
Benefits
Average Cash Compensation (Fixed and Variable Components)
Budget Controls: Top Down
Budget Controls: Bottom Up
Embedded (Design) Controls
Managing Revenues
Using Compensation to Retain (and Recruit) Top Employees
Managing Pay to Support Strategy and Change
Communication: Managing the Message
Say What? (Or, What to Say?)
Opening the Books
Structuring the Compensation Function and Its Roles
Centralization–Decentralization (and/or Outsourcing)
Ethics: Managing or Manipulating?
Your Turn: Communication by Copier
Still Your Turn: Managing Compensation Costs, Headcount, and Participation/Communication Issues
This chapter is about making it work: ensuring that the right people get the right pay for achieving the right objectives in the right way. The greatest pay system design in the world is useless without competent management. So why bother with a formal system at all? If management is that important, why not simply let every manager pay whatever works best? Such total decentralization of decision making could create a chaotic array of rates. Managers could use pay to motivate behaviors that achieved their own immediate objectives, not necessarily those of the organization. Employees could be treated inconsistently and unfairly.
This was the situation in the United States in the early 1900s. The “contract system” made highly skilled workers managers as well as workers. The employer agreed to provide the “contractor” with floor space, light, power, and the necessary
666
raw or semifinished materials. The contractor hired and paid labor.1 Pay inconsistencies for the same work were common. Some contractors demanded kickbacks from employees’ paychecks; many hired their relatives and friends. Dissatisfaction and grievances were widespread, eventually resulting in legislation that outlawed the arrangement.
Corruption and financial malfeasance were also part of decentralized decision making in the early 1900s. Some see parallels today. To help avoid history repeating itself and to redeem HR (and compensation) vice presidents from the image of unindicted coconspirators, the compensation system should be managed to achieve the objectives in the pay model: efficiency, fairness, and compliance.
Any discussion of managing pay must again raise the basic questions: So what is the impact of the decision or technique? Does it help the organization achieve its objectives? How?
Although many pay management issues have been discussed throughout the book, a few remain to be called out explicitly. These include (1) managing labor costs, (2) managing revenues, (3) communication, and (4) designing the compensation department.
MANAGING LABOR COSTS AND REVENUES
Financial planning is integral to managing compensation. As we noted in Chapter 1, compensation decisions influence organizati ...
A ASSIGNMENT on PRODUCTION AND OPERATIONS MANAGEMENT
Q. Prepare a worksheet of operation activities that Amit should inquire about this summer?
Q.To manage the firm , how much does Amit need to know about operations ? WHY?
Q. What are the problems do you expect Amit to encounter this summer – both at Khana Khazana – on wheels and at other institutions.?
Q.If you were Amit , what would you do ? Why?
Activity Based Profitability ManagementMiguel Garcia
Activity Based Profitability Management (ABPM) and Activity Based Budgeting (ABB) offers organizations a complete tool to gain a competitive advantage and provides crucial information to support the process of making strategic and operational decisions in the current business environment. It might seem that having this type of information for the management of profits, costs and budgets is not necessary to implement Digital Transformation solutions because the implementation of new technologies does not require an evaluation of this type, and it is assumed that it must be implemented independently of what it implies and at any cost, but this is an error because it will always require business processes, products or services, customers or users, service channels, etc. that must be evaluated from the financial and business process point of view, implemented, measured and improved within a competitive and market environment. In this sense, the profitablitiy, cost and budget information provided by the approach of ABPM and ABB will lead to better business decisions that significantly increase the performance and profits of the companies.
BUS 630 Week 1 Assignment Dell, Inc..doc
BUS 630 week 1 DQ 1 Theory of Constraints.doc
BUS 630 week 1 DQ 2 Kranbrack Corporation.doc
BUS 630 week 2 Assignment Basic CVP Analysis (Fashion Shoe Company).doc
BUS 630 week 2 DQ 1 Downsizing and fixed cost.doc
BUS 630 week 2 DQ 2 Direct Labor Variable or Fixed Cost.doc
BUS 630 week 3 Assignment JetBlue Airways.doc
BUS 630 week 3 DQ 1 Fixed Labor.doc
BUS 630 week 3 DQ 2 Profitability.doc
BUS 630 week 4 Assignment Master budget exercise.doc
BUS 630 week 4 DQ 1 Behavioral aspects of budgeting.doc
BUS 630 week 4 DQ 2 Critiquing a Cost Report.doc
BUS 630 week 5 Assignment FedEx Corporation.doc
BUS 630 week 5 DQ 1 Variance Analysis in a Hospital.doc
BUS 630 week 5 DQ 2 Perverse Affects of Some Performance Measures.doc
BUS 630 week 6 Assignment Final Project (Cost management).doc
BUS 630 week 6 DQ 1 Make Or Buy.doc
BUS 630 week 6 DQ 2 Net Present Value Analysis.doc
BBA 2301, Principles of Accounting II 1 Course LeaCicelyBourqueju
BBA 2301, Principles of Accounting II 1
Course Learning Outcomes for Unit VIII
Upon completion of this unit, students should be able to:
7. Explain how financial information influences both short-term and long-term management decisions.
7.1 Describe the use of standard cost manufacturers and service businesses.
8. Discuss operational and capital budgets.
8.1 Describe capital budgeting methods.
8.2 Identify the use of intangible benefits in capital budgeting.
Course/Unit
Learning Outcomes
Learning Activity
7.1
Unit Lesson
Chapter 26, pp. 26-1 to 26-24
Webpage: Balanced Scorecard Basics
Video: What is a balanced scorecard: A simple explanation for anyone
Unit VIII Case Study
8.1
Unit Lesson
Chapter 27, pp. 27-1 to 27-19
Unit VIII Case Study
8.2
Unit Lesson
Chapter 27, pp. 27-1 to 27-19
Unit VIII Case Study
Required Unit Resources
Chapter 26: Standard Costs and Balanced Scorecard, pp. 26-1 to 26-24
Chapter 27: Planning for Capital Investments, pp. 27-1 to 27-19
In order to access the following resources, click the links below.
Balanced Scorecard Institute. (n.d.). Balanced scorecard basics. https://balancedscorecard.org/bsc-basics-
overview/
For the video resource below, a transcript and closed captioning are available upon accessing the video.
Marr, B. (2019, June 24). What is a balanced scorecard: A simple explanation for anyone [Video]. Cielo24.
https://c24.page/2s4pmxpj2kpwnprckg6p8tcjtu
Unit Lesson
Introduction
This final unit will conclude the study of managerial accounting. This lesson will share important content for
managers in manufacturing, merchandising, and service companies. Content includes estimating future costs,
implementing financial and non-financial performance measures, and incorporating capital budgeting.
Costing requires you to make estimates. As noted in a previous unit, many people are uncomfortable with this
task, as they are used to having objective numbers given to them. However, as much as the future is
UNIT VIII STUDY GUIDE
Management: Costs and Capital Investing
https://balancedscorecard.org/bsc-basics-overview/
https://c24.page/2s4pmxpj2kpwnprckg6p8tcjtu
BBA 2301, Principles of Accounting II 2
UNIT x STUDY GUIDE
Title
unpredictable, we are still required to use our experience and judgment to chart a path forward. In this unit,
you will learn about standard costs. Partially based on prior period actual costs, they provide the basis for
budgeting and subsequent evaluation. Management accountants, no matter the title, are integral to the
development of standard costs, implementation of the balanced scorecard, and the capital budgeting process.
Pay attention as you read, review, and evaluate this unit as it is almost wholly transferable to any company.
Consider the following questions and how you would respond to each as you move through this unit.
As the chief accounting officer (CAO) or chief ...
I. Stages of Operational Competitiveness the different levels of customer con...Lena Argosino
I. Stages of Operational Competitiveness
the different levels of customer contact in the service firm
II. Classification of the different strategies in different service operation
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In the Adani-Hindenburg case, what is SEBI investigating.pptxAdani case
Adani SEBI investigation revealed that the latter had sought information from five foreign jurisdictions concerning the holdings of the firm’s foreign portfolio investors (FPIs) in relation to the alleged violations of the MPS Regulations. Nevertheless, the economic interest of the twelve FPIs based in tax haven jurisdictions still needs to be determined. The Adani Group firms classed these FPIs as public shareholders. According to Hindenburg, FPIs were used to get around regulatory standards.
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
VAT Registration Outlined In UAE: Benefits and Requirementsuae taxgpt
Vat Registration is a legal obligation for businesses meeting the threshold requirement, helping companies avoid fines and ramifications. Contact now!
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B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
Recruiting in the Digital Age: A Social Media MasterclassLuanWise
In this masterclass, presented at the Global HR Summit on 5th June 2024, Luan Wise explored the essential features of social media platforms that support talent acquisition, including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok.
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challengesHolger Mueller
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LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
2. How to leverage your testimonials to boost your sales 💲
3. How you can capture more CRM data to understand your audience better through video testimonials. 📊
2. Before we proceed…
We will have to clear
some fundamentals
about Manufacturing industry
•Almost every organization is a PROFIT ORGANIZATION
it always tries to MAXIMIZE THE PROFIT
else they will be ultimately in loss.
MAXIMIZING PROFIT INCLUDES MANY METHODS ,it includes
REDUCING INDIRECT COST
AS ONE OF THE MOST VITAL FACTOR
3. We know that
PROFIT=REVENUE-EXPENSE
EXPENSE INCLUDES
1. DIRECT COST/EXPENSE
2. INDIRECT COST/EXPENSE
i.e.
“NET
COST=DIRECT COST + INDIRECT COST”
Now if we are succeeded to reduce indirect cost then
In turn our NET COST will be reduced
In this way we can make a tough competition in market
by offering a reasonable product price OR
By keeping sale price constant we can get more profit.
4. WHAT is DIRECT COST?
Direct costs are usually better recognized and
understood .
Managers can see the direct relationship
between the output and the efforts and
materials applied as an input.
Direct costs refer to materials,
salaries for project staff and expenses related
to the production of a product , without
which a finished product is unable to be produced.
5. WHAT is DIRECT COST?
Because these activities are easily traced to
projects, their costs are usually charged to
projects on an item-by-item basis.
FOR EXAMPLE
COSTS INVOLED FOR
Project staff, Project consultants, Project
supplies, Publications, Travel,
Project Labor, Raw materials e.t.c
6. WHAT IS INDIRECT COST?
•Indirect costs are not directly attributable
to a product.
• OR IN OTHER WORDS the costs not directly
assignable to the end product or process.
7. WHAT IS INDIRECT COST?
•Indirect costs do not vary substantially
within certain production volumes and so they
may sometimes be considered to be fixed
costs.
Major Indirect costs are
• A)for indirect supervision(INDIRECT
ADMINISTRATIVE ACTIVITIES )
and
.B)for overheads for example taxes ,
legal advisors, retirement plans, health and
Life insurance, office supplies, telephone,
Employee welfare, material handling e.t.c
8. steps IMPORTANT IN THIS CONTEXT are as follows:-
1)A SYSTEMATIC REVIEW OF THE STRUCTURE OF STAFFING, how
they are related and how many can control better, is an essential part of
any serious attempt to cut costs.
WHY COST OF STAFFING IS GROWING????
It is seen that in the last fifty years, just as productive processes have
been automated, manual accounting, manual typewriters, and the
calculation and payment (of wages and bills) in cash are all gone. And
the massive investment in computers is supposed to transform
administration, financial control, marketing and selling on buttons. So
why have the staffing and cost of supporting activities continued to
grow?
9. PROBLEMS AND THEIR SOLUTIONS RELATED TO EXPENSES
ON INDIRECT ADMINISTRATIVE ACTIVITIES
We have observed in our Local industries that
Since latest technology gives easy access to managerial information
and data on performance, Most managers, can now deal with the vast
majority of their ‘correspondence’ themselves in form of emails ,
IN VIEW OF THIS
1.)Organizations still contain so many secretaries and administrators.
2.) lengthy reports that repeat information get written, printed and copied by
supporting staffs.
3.) there is still so much duplication and overlap in activities.
.
10. IMPROPER USE of TECHNOLOGY for management 2/2
SO there is
Not only the technology not being
e x p l o i t e d f u l l y, i t i s s o m e t i m e s
unnecessarily modified to provide
so-called enhancements that on
closer examination turn out to be
unnecessary frills or even downright
distractions that waste effort and
money.
11. ORGANIZATIONAL CAPABILITIES ARE NOT TRIED TO
UNDERSTAND AND EVALUATED CORRECTLY IN OUR
LOCAL MANUFACTURING INDUSTRIES
Organizational capabilities specify what an
organization can do.
Companies that want to remove indirect costs in the
long term must consider this factor repeatedly.
If it has surplus staff present, it must utilize them to
increase productivity, else THIS SURPLUS STAFF
WILL BE CONSIDERED INDIRECT in context of
their wages and welfare.
12. SHAPE THE ORGANIZATIONAL CAPABILITIES TO
STRATEGY
Managers must examine the ‘what’ (the goal set by
each organizational unit) before analyzing the ‘how’
(the way the organization seeks to achieve that
goal). (must have a clear image of goal)
There is no magic formula for spotting waste in
supporting functions (such as Finance,
Personnel, and IT). Only detailed scrutiny will
reveal which activities to keep and which to cut.
Cost-cutting should sharpen a business’s focus and
must regenerate supporting functions that clearly
add value to the operating units.
In this way we will reduce a segment of indirect
administration cost
13. IT IS BEST TO RESHAPE ORGANIZATIONAL
FUNCTIONS
To avoid resistance by workforce / unions, against
cutting indirect administrative staff, it is better to
reshape organizational functions to SET MORE
GOALS AND INCREASE PRODUCTIVITY.
A company should tell its employees how the
reshaping of functions will help it to sustain itself,
survive, and grow, focuses attention on the positive
aspects of change. To undergo the discomfort
associated with any effort to reduce costs,
employees must understand what’s in it for them.
In order to reshape functions a review of
organizational capability can highlight
opportunities to reshape functions radically.
14. REMOVING INTERNAL MANAGEMENT CENTRES
AND LAYERS
We observe in de-centralized manufacturing
industries that geographic expansion tends to
produce anomalies in reporting relationships and
spans of control . So De-layering by drawing the
staff into broader groups of pooled expertise
cuts costs and eliminates the need for
dispersed skills in diverse locations. It also
enhances the professionalism of the people
who remain.
15. HOW TO INCREASE EFFICIENCY OF REMAINING
NECESSARY INDIRECT ADMINISTRATION
Once managers have worked out which indirect
activities to cut and reduced demand for indirect
staff’s services, they should consider the efficiency
of the remaining indirect services.
It to clear that indirect services include indirect
staff and indirect activities.
Indirect services that have many employees but
are used only part of the time can be
concentrated into shared services with fewer
employees, lower costs and higher efficiency.
16. MAKE APPROPIRATE LAYERS OF
ADMINISTRATION TO AVOID UNNECESSARY
ADMINISTRATION 1/3
In our local industries it is a common mistake to
assign one manager to each separate task or
type of task irrespective of the number of
managerial jobs(nodes) this practice generates.
Too many nodes will result in too deep a
structure and narrow spans.
For example, a design department of twenty people
might give rise to eight managers in four layers,
while a correctly shaped structure would be more
likely to have four managers in two layers. One
common feature of bad shape is one-to-one
reporting of the type shown overleaf.
18. MAKE APPROPIRATE LAYERS OF
ADMINISTRATION TO AVOID UNNECESSARY
ADMINISTRATION 3/3
An unnecessary number of managers creates
fertile conditions for an uncontrolled increase in
the whole staff – a ballooning of the numbers
employed – usually needlessly. So it is particularly
important that spans should not be allowed to
be too narrow or levels too numerous, because
the proliferation that follows inflates the size
and cost of the payroll.
19. CUT OUT ‘MANAGERIAL’ JOBS THAT HAVE NO
MEASURABLE OUTPUT
Nearly
all objective reviews of
organizational structure reveal
managerial jobs that could be
eliminated. Some have indistinct
targets and no real accountability.
Others supervise few or no other
people – and are better classified (and
paid) as specialists. Think twice
before creating new managers.
21. REVIEWING ORGANIZATIONAL STRUCTURES
LAST
SHOWN STRUCTURE almost
certainly has too many layers and
arguably too large a staff as a
result. So it is possible to challenge
it and to consider an opportunity to
delayer by insisting on the correct
design of jobs. It could be reworked
as shown on the next SLIDE.
22.
23.
24.
25. USING THE JAQUES’ LEVELS OF WORK
METHOD
The following steps can be taken to apply the
levels of work principle to the task of radically
reorganizing a structure or creating one from
scratch.
Recognise the current problems: duplication, too
many levels, too many layers, too much
management (over-managed environment),
excessive cost.
Examine the characteristics of every managerial
job.
Define jobs by title, job code and function and map
them to levels of work.
26. REDUCING 2ND COMPONENT OF INDIRECT
COSTS I.E. OVERHEADS
It includes
Costs of bills (telephone, electricity not involved
with production, food)
Retirement Plans(pensions, land or houses)for
employees.
Breakage of machines, products while handling.
Suitable storage costs for products/shelter
Insurance of Labour
Any incident, Security , Deterioration of machines
Unnecessary office facilities e.t.c.
27. CONTRACT BILLING
Billing rate estimates will affect the need for cost
adjustment during final contract pricing.
When a contract involves progress payments or
cost reimbursement, Management must monitor
contract billing rates to assure that payments or
reimbursements based on those rates are
reasonable.
28. CONTRACT BILLING
During each cost accounting period, rates should
become more accurate as more actual cost data
become available.
Has rate accuracy consistently improved
throughout the allocation cycle?
30. INSURANCE
It is a safety Guarantee for the employers working
in Probably Hazardous Environment by
Organization.
Management of this cost include steps such as
Compensating such benefits in Pension etc. so that
no extra costs are involved.
Proper Registration of industrial locality from
Concerned Departments or international
organizations for maintaining Standards of Safety.
31. PENSION AND OTHER SOCIAL BENEFITS
Usually the most expensive benefit is a pension.
Bright young people with the new skills, which you
might need for the future, will join you accepting
what is on offer now,& will not be concerned about
pension.
However Many organizations have closed their
defined benefit schemes to offer a much less risky
and simpler defined contribution pension.
32. TAXES REDUCTION
Invest in dividend-paying stocks.
Hold stocks for the long term.
Reduce your income
Deductions and credits for non-itemizers.
Charitable contributions
Mis-present facts and figures
33. BREAKAGE AND DETERIORATION
Deterioration In Machinery occurs with time or due
to Breakage.
Cost reduction in Breakage and Deterioration
involves
Breakage Guarantee of equipment must be
purchased if possible
Replacement Warrantee
Maintaining Deterioration reserve (Mostly Sinking
Fund reserve with appropriate rate of return)
34.
35. CONCLUSION
Today indirect cost constitute most of the product’s
total cost.
So, there is a clear need to improve their control
and management.
We presented a systematic approach to
i.
Analysis and understanding the causes of indirect
cost.
ii.
An analysis of modern characteristics of
manufacturing environment.
iii. Formulation of general performance levels.
36. CONCLUSION
Tighter management and control of indirect cost are
a challenge for which the effort of every manager is
required.
Management accountants must get down to
production floor and be fully involved in production
process.
In present world the production cost is a challenge
and true differentiator between competitors.
37. CONCLUSION
Successful managers create a sustained pressure
and maintain the product cost.
So by planned calculation and applying the
explained production methods indirect cost in any
industry can be reduced.
…………………….END……………………