Cost management strategic emphasis is a common tactic employed in the business world to frantically containing costs to increase profits. It’s a totally important necessity; quite important as the budget itself. Although it is similar to cost cutting, the two totally fall into two entirely different worlds.
Cost Management Strategic Emphasis Weighed Against Cost Cutting
Unlike cost management emphasis, cost cutting does not utilize any strategy. The best school of thought is when we view cost management as a long term strategy and cost cutting as short term.
For cost cutting to occur, costs have to appear larger than your budget leaving you no option but to slice it down. Cost management strategic emphasis typically means that you can’t allow costs to exceed your budget. This strategic approach is a long term way of controlling costs.
Fundamentally this concept yearns for a means of strategically getting the most out of available resources. By developing a cost management strategy, you are able to come up with an analysis which can aid in formulating a way of tapping the most out of your resources.
Cost management emphasis may seem like a challenging venture but it’s as easy to implement as it is putting cookies into your mouth. Essentially, it just calls for a way of making costs more manageable in then long run.
Techniques of Cost Management Strategic Emphasis
Any time you buy goods in bulk from warehouses or wholesales, you are offered better prices than most supply stores will offer. This also implies that you can easily by far write off taxes and simplify your accounting chores.
On the other hand, most suppliers offer discounts for bulk purchases. In addition, attending conferences and trade shows increases your chances of getting on site discounts.
Ask for Discounts
Discounts can help in saving by far. Suppliers also struggle with cash flow issues and by offering discounts, they are sure to get an early or a cash payment. You can even exploit a possibility of offering a guaranteed monthly payment if offered better prices.
Join Co-Operatives Societies
It’s always a wise idea to join trade groups and volume purchasing groups. They aim at buying everything from a common supplier at a more subsidized cost.
Do an Annual Shopping
An annual shopping can help to better manage those costs incurred when buying essential goodies such as insurance, airtime, bank account leasing, internet data or any other essential service.
Hindrances When Doing Cost Management Strategic Emphasis
Not all costs can be calculated by any accounting system. Poor service or quality for example will incur patient care costs. This real cost ought to be part of cost management, but cannot be measured overtly by an accounting system.
Another case of an immeasurable cost is the opportunity cost of people’s time. It’s worth much consideration when assigning projects or tasks and to come up with a good payment system. If there are any performance reports to be written, inform the employees in advance.
As much as you may want to reduce costs by replacing your phone receptionist with an answering machine, this is a vital service. It will cost you money, but it will also improve on your company’s image. This will also pose as hindrance while doing your cost management strategic emphasis.