Strategic Cost Management (SCM) Presenter: Dr Ruvendra Nandan Professor and Dean, SOBE, UoF

Introduction Recent Government budget Global downturn Manage and control expenditures Need for strategic cost management approach A closer look at business strategy Strategic cost management techniques

What is Strategic Cost Management? Strategy – direction over long term Strategy concepts: vision, mission, goals, strategies Major strategic decisions: what business to operate? how to compete? what systems and structures to adopt? how to fund operations?

Stages of Strategic Cost Management

Components of SCM

Common Strategic Cost Management Techniques ABC/ABM Target costing and life cycle ideas Value engineering Benchmarking Just-in-Time purchasing and production Managing bottlenecks and theory of constraints Managing cost and quality issues Strategic performance measurement systems

From Supply Chain to Value Chain Series of links, processes and activities – suppliers and customers For competitive advantage Upstream, primary, downstream processes and activities Think of the value chain in Fijian Hotel Industry or a big 4 accounting firm or a private hospital

From Value Chain to Extended Value Chain

Relationship Between Trust and Information Trust - a very soft and fragile concept ! Confidence that expectations will be realised – people as well as things (accounting systems) Capacity to act otherwise is always there Nature of social bonds, trust and the need for information Fundamental to social and organisational life The concept of Trust and its link with information within relationships

Trust and Information Needs Inverse relationship between information and the level of trust Request for excessive information may reduce trust More information may be needed to create more trust early in the life cycle Whatever the level of trust, information may still be needed in a collaborative relationship

Relationship Between Trust and Information

Summary and Conclusion Business environment – complex and unpredictable Global, regional and local forces operate Government regulations and budget Implications for the business world Customer value and shareholder value for long-term survival MACS to support strategy