After years of development, cost management in our country has made many achievements, but there are also many problems, mainly as follows:
Theoretical research on cost management lags behind
The theoretical research on cost management in my country has made great progress compared with before the reform, but the systematic research on cost management is poor.
The research on traditional cost management methods is all aimed at a single cost management method, lacking research on the relationship between methods, and cannot form a systematic cost management method system. In practice, the application of cost management methods lacks connection. The introduction of new cost management methods often leads to the abandonment of original methods to a large extent, resulting in a lack of consistency in cost management and increasing management costs.
Traditional cost research is limited to within the enterprise and lacks strategic management thinking. Only pay attention to the cost management of the production process and ignore the cost management of the supply process. Only attention is paid to cost management after production is put into production, and cost management of product design and reasonable organization of production factors before production is ignored. Only pay attention to the level of product cost itself and ignore the level of cost-effectiveness. Only pay attention to corporate cost management and ignore macro cost management.
The concept of cost management is backward
There is a common phenomenon among Chinese enterprises that the concept of cost management is backward, which is reflected in the deviation in the understanding of the scope, purpose and means of cost management. Many companies still limit the scope of cost management to within the company or even include only the production process, while ignoring the management of cost behaviors of other related companies and related fields. The purpose of cost management is limited to reducing costs, and the effectiveness of costs is rarely viewed from a benefit perspective. The means of cost reduction mainly rely on saving methods, and the cost-benefit principle cannot be applied to achieve greater benefits by incurring costs. These backward concepts can no longer adapt to the increasingly competitive economic environment.
Traditional enterprise management mainly reduces product costs through two channels, one is scale efficiency; the other is to enhance the negotiation ability with suppliers and distributors, in order to achieve the purpose of transferring costs. However, the size of the scale is restricted by the size of the demand, not to mention that the differences in consumer demand among consumers in the 21st century are increasing, and the production scale of similar products has a tendency to shrink. The simple transfer of enterprise costs from the core enterprise to suppliers or distributors cannot reduce the final sales price of the product, and may even cause an increase in costs and reduce the value-added from raw materials to final consumer goods. Especially in today's increasingly open market environment, excessive cost transfer will cause companies to lose good partners.
Old cost management methods
Although some enterprises in our country have piloted advanced cost management methods and achieved good results, overall, cost management methods are still very old. No longer able to adapt to the requirements of the economic environment.
According to the survey, 57.1% of enterprises use the variety method and 41.5% use the step-by-step method. Among them, 22.9% use the parallel carryover method and 16.8% use the stepwise carryover method. The current trend of production development in the world is the production method of small batches and multiple varieties, because buyers’ preferences are not exactly the same. With the development of production, buyers can completely ask the factory to design and produce the products they are most satisfied with based on their own needs. The factory can also ensure that buyers get the ideal product in a short time with high efficiency. In this case, there may be only a few identical products or even no two identical products on a production line. Such production methods will be suitable for batch method cost calculation. Only 5.7% of enterprises in my country now use the batch method to calculate costs, which shows that my country's production organization is still relatively extensive and does not pay enough attention to consumer individuality, which leads to a simplification of the choice of cost accounting methods.
Standard cost, planned cost and target cost are the more popular modern cost management methods in modern cost and cost management. Judging from the situation of the surveyed enterprises, 51.4% of the enterprises adopted the target cost method, 38.9% of the enterprises adopted the planned cost method, and 18.1% of the enterprises adopted the standard cost method. However, advanced activity-based costing and cost planning methods have not been promoted in enterprises.
Mistake in establishing the main body of cost management within the enterprise
For a long time, people have had a bias: they regard cost management as the patent of financial personnel and a few managers, and believe that both costs and benefits should be considered. The leaders of the enterprise and the financial department are responsible, and the employees in each workshop, department, and team are only regarded as producers. As a result, those who manage costs do not understand technology, and those who understand technology do not understand finance. The majority of employees have no idea about which costs should be controlled and how to control them. I have neither the intention nor the ability to ask the question, and I have little awareness of costs. Employees believe that good and bad work are the same, they cannot feel the pressure of the market, the enthusiasm for cost control cannot be mobilized, and waste is serious. Of course, it is difficult for the company's cost management to achieve real results without a large management group.
Bad profit motives lead to cost information distortion
In our country, there are quite a few corporate managers who are driven by bad profit motives such as tax evasion, whitewashing performance, and seeking personal gain or small group interests. Driven by this, cost information is arbitrarily adjusted and compiled, resulting in increasingly serious distortion of cost information, reducing the efficiency of various cost-based management activities and even causing losses to the enterprise. Of course, cost information distortion may also be caused by poor correlation between cost information and cost management. This is also one of the important issues that the cost management system needs to pay attention to and solve.
The division of labor is too detailed and the waste of human resources is serious
The division of labor within the enterprise is becoming more and more refined, which requires the enterprise to carry out a high degree of collaborative management, which leads to the coordination and integration of enterprise management. High; in addition, excessive division of labor complicates enterprise management, which is not conducive to the improvement of enterprise management efficiency, thus bringing certain inefficiency costs to the enterprise, and causing direct economic losses and serious waste of human resources. This is also an increase in enterprise management expenses. a reason. Due to the increase in the level of division of labor and collaboration links, the time for information to be transmitted in the enterprise is extended, and unnecessary dwell links are increased, which to a certain extent leads to the loss and distortion of information, and at the same time increases the difficulty of information feedback. This may increase the possibility of enterprise decision-making errors, leading to an increase in the cost of enterprise management errors.
To sum up, the existing cost management of Chinese enterprises can no longer meet the needs of enterprise market competition, so it is necessary to reform and improve the existing cost management system.
Strategies for controlling procurement costs
Strategy 1: Centralized procurement - to maximize the advantages of procurement scale
Amidst the buzz of "increase", consider how to To control procurement costs, an easy solution is to adopt centralized procurement.
The real estate industry, which uses steel, cement, and concrete as its main raw materials, has been deeply dragged down by rising raw material prices and has begun to take measures to strengthen centralized procurement and centralized management of purchases.
A boss of a real estate company in Beijing told reporters that at present, steel purchases by my country's construction companies are still relatively scattered. The purchase rights of some companies are dispersed to the project department or even the project manager level, and the purchase quantity of each batch is not large. If the company purchases steel in a unified manner and then allocates it according to the needs of each project, it can not only save costs by purchasing in large quantities, but also decide whether to reserve steel by analyzing market trends, thereby avoiding risks caused by rising prices.
The advantages of centralized procurement also appear in the home appliance industry.
A manager surnamed Zhang from the purchasing department of Haier Group told reporters that the entire group has saved the company up to 20 to 30 yuan in costs just through centralized procurement of bulk raw materials such as steel plates, chemical materials, and electronic components.
In response to this price increase trend, Haier Group specifically proposed a "four major" centralized procurement strategy, namely "big orders, big customers, big markets and big resources."
However, , To achieve centralized procurement, it sounds easier than done. Sometimes it can be completed by more than one department of the company's purchasing department.
Manager Zhang gave reporters an example. Cables are components used in many products of the Haier Group. In order to achieve centralized procurement, the purchasing department and the product design department worked together to uniformly redesign the cables used in air conditioners, washing machines, refrigerators and other products, so that they can be standardized Standardize and use common parts where possible.
Through these measures, the number of cables purchased by Haier Group has been reduced from hundreds to more than a dozen. Only by reducing the types of purchased products can centralized purchasing be realized. According to reports, this improvement alone has enabled Haier Group to save approximately 20% of the cost in cable procurement.
Strategy 2: Joint Procurement - Small and medium-sized enterprises jointly resist risks
CIMC Group is the industry leader in the field of container manufacturing. When the reporter interviewed Ms. Li from the purchasing department of the group When talking about the issue of centralized procurement, Ms. Li bluntly pointed out that centralized procurement is basically a means for large enterprises to maximize their scale advantages in procurement. Without multi-category product lines and product sales not reaching a certain scale, it is simply impossible to achieve concentration. Therefore, in terms of centralized procurement, CIMC’s competitiveness is relatively strong.
This may sound cruel, but many managers of small and medium-sized enterprises agree with it.
Manager Huang of Trina Ningbo Electronic Fastening Device Company told reporters his opinion, “The size of the company directly determines the company’s right to speak in the industry chain. Large domestic companies such as Volkswagen and Shenlong are desperately trying to pressure us to lower our prices. We can only accept the price reluctantly; but when we want to purchase parts from companies smaller than ours, our waist is also very stiff."
"The big fish eats the small fish. Small fish eat shrimps." Manager Huang seemed to put it bluntly.
Chen Sixing of Wharton Consulting believes that Huang’s statement is biased. He pointed out that when it comes to procurement prices, small businesses are indeed in an absolutely passive position, but this does not mean that many small and medium-sized enterprises have no way to control procurement costs. For example, cross-enterprise joint procurement can be a way to reduce costs. Where possible, SMEs in particular may consider organizing or joining purchasing alliances.
If small and medium-sized enterprises unite in purchasing raw materials, they can increase their ability to prevent risks. First, multiple companies jointly purchase, turn small orders into large orders, enhance collective bargaining strength, gain procurement scale advantages, and strive for the same "status" as large companies; secondly, the targets of joint procurement are raw material manufacturers, so You can get rid of the agent's resale costs and directly trade with manufacturers to reduce the number of intermediate layers, greatly reducing circulation costs and ensuring product quality.
Strategy 3: Third-party procurement - Chinese companies have not accepted it yet
As the name suggests, third-party procurement is when companies outsource product or service procurement to third-party companies. Foreign experience shows that compared with companies' own procurement, third-party procurement can often provide more value and purchasing experience, and can help companies focus more on their core competitiveness.
According to Mr. Zhou, various industries in the United States have such purchasing alliances. For example, the American Local Government Procurement Alliance is a third-party procurement organization. More than 7,000 government agencies have joined this procurement organization, and direct procurement costs have been reduced by more than 15%. Amerinet is the largest purchasing organization for hospitals and clinics in the United States, achieving an average procurement cost reduction of nearly 20% for its clients.
Mr. Shi Wenyue, industry consulting director of Hanpu Management Consulting Company, is not optimistic about the prospects of domestic companies reducing costs through third-party procurement. "Enterprises can only form opportunistic alliances through third-party agencies for joint procurement, and it is difficult to maintain mutual interests for a long time."
It is also difficult to establish trust between procurement and contracting parties. As IBM's former chief procurement officer Richter said, "Production procurement involves a lot of advance design work, and you don't want the design secrets to be disclosed to third parties because they may share this information with other companies." He even believed that "Procurement outsourcing will teach IBM's procurement interests and experience to other companies, which will damage the company's competitive advantage."
"Currently, the customers who accept our external procurement are mainly foreign-funded enterprises, and Chinese enterprises must accept it." The concept of third-party procurement is difficult, very difficult!" Mr. Wu said with emotion.
Strategy 4: One global company - increase the confidence of enterprises
Companies that are also threatened by rising raw material prices and can achieve international procurement clearly show stronger competitiveness. .
It is rumored in the industry that home appliance products will have to increase their selling prices due to increased costs.
At that time, Japan's Panasonic Company bucked the market trend and announced price cuts for Panasonic's washing machine products. At that time, experts pointed out that Panasonic had the confidence to lower prices mainly because its global procurement network made its material costs lower than similar Chinese companies.
Like the Trina Ningbo Electronic Fastening Device Company mentioned earlier, Delphi is also a parts company that supplies OEMs. However, the atmosphere observed by reporters at Delphi's headquarters in Shanghai was different from that of Trina, and the tension and pessimism caused by rising raw material prices could not be seen.
Miss Chen from the company’s logistics department specifically pointed out that because Delphi has achieved true global procurement, it can allocate various raw material resources from around the world. This alleviates the pressure on cost growth to a certain extent.
When using global materials, it is worth special mentioning the tax issue. The reporter learned from a large home appliance group that in addition to responding to this raw material price increase, the group particularly emphasized the application of bonded materials. According to the group's purchasing department, the work on tax rebates for bonded materials was not done in detail in the past, but gradually attention has been paid to this issue. All imported raw materials supplied for export products are bonded. As a result, the group's cost of imported raw materials has been saved by about 10.
Strategy 5: Increase the added value of products - long-term solutions are needed to solve the problem
“When the price increase of raw materials led to tight costs, companies began to take the above measures to optimize supply. In fact, they all It is difficult to achieve immediate results. "It is better to make a fuss about the product."
Mr. Shi's view coincides with the reporter. Because, through interviews with reporters, we have observed that the production links with higher added value of products usually have a more moderate attitude towards the price increase of raw materials. The higher the proportion of raw material costs, the smaller the added value of the product, and the more companies care about the price increase of raw materials.
To increase the added value of products, one is to increase the technical added value of the product, and the other is to increase the brand added value of the product.
General Manager Wu Guang especially mentioned increasing the added value of product technology. He told reporters a story with envy. Said that he saw a new smart vacuum cleaner from Electrolux not long ago, priced as high as 13,600 yuan. Later, he and experts estimated that the raw material cost of this smart vacuum cleaner was about 300 yuan, which was less than a fraction of the final selling price. "With such a high profit margin, we are not afraid of any increase in costs." Wu Guang said.
The main reason for the increase in the added value of product brands is to achieve "differentiation". According to consultant Shi, the homogeneous operation of enterprises is the structural reason for the contradiction between supply and demand, and the oversupply has resulted in the only low-price strategy for end consumer products. "There is no room for further price reductions at all. So for There is basically little ability to bear the price increase of raw materials. "The only way to change this situation is to implement a differentiated product strategy.
Zhou Deke emphasized that no matter what measures are taken to absorb the impact of increased costs, it does not mean that these measures are only to solve the problem of rising supply costs and prices. On the contrary, for any enterprise with enterprising spirit, , minimizing costs, maximizing sales, and maximizing efficiency are all a process of continuous improvement in daily work.
In fact, there are many common points in the management of enterprises when they are weak and prosperous.
The cost control management goal must first be to control the entire process. It should not only control the production cost of the product, but also control the entire life cycle cost of the product. Practice has proved that only when the life cycle cost of the product is effectively controlled, the cost will be significantly reduced.