Hilton Maher Selto

1 Cost Management & Management of the Value Chain Finding Opportunity & Leading Change © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin

1-3? Cost Management & the Cost Management Analyst What is Cost Management? In addition to measuring and reporting costs, it is a philosophy, an attitude, a set of techniques to create more value at lower cost.

1-4? Cost Management & the Cost Management Analyst What is a Cost Management System? A set of cost-management techniques that function together to support the organization’s goals and activities.

1-5 Benchmarking Determining the organization’s competitive advantage by learning about its own products, services, and operations and comparing them to the best performers. Exh. 1.2

1-6 A Technique for Strategic Choice Competitive Advantage Competitive Advantage Threats BENCHMARKING Helps Identify

1-7 Research and development Design Supply Production Marketing Distribution Customer service Support services A set of linked operations or processes that begin with obtaining resources and end with providing products or services that customers value. The Value Chain Exh. 1.3

1-8 The Value Chain Define scale and scope of operation Physical resources Physical resources Human resources Human resources Support services Accounting Human resources Legal services Information systems Telecommunications Support services Accounting Human resources Legal services Information systems Telecommunications Rese arch and devel op- ment Desig n Supply Production Marketing D istri- bution Customer service Value of products and services Value of products and services Primary processes

1-9? Outsourcing and the Value Chain Firms are focusing resources on the parts of the value chain that are most important to company goals. Firms are outsourcing those value chain processes that can be more efficiently done by others. What is most likely to be outsourced? Information services, legal, logistics, human resources, payroll, accounting, tax. What is most likely to be outsourced? Information services, legal, logistics, human resources, payroll, accounting, tax. Focusing on managing brand name while outsourcing baking.

1-10? Outsourcing and the Value Chain What kinds of companies are most likely to outsource? Companies seeking to reduce costs or gain access to specialized information such as information technology or foreign markets. Because some control is sacrificed during outsourcing, there is a need for additional assurance services in the market place.

1-11 Implementing Plans And Organizational Changes 1. Identify need for change. 2. Create team to lead and manage change. 3. Create vision of the change and strategy for achieving vision. 4. Communicate vision and strategy for change and have change team act as a role model. 5. Encourage innovation and remove obstacles to change. 6. Ensure frequent and obvious short-term achievements. 7. Use successes to create opportunities for improving entire organization. 8. Reinforce culture of more improvement, better leadership, more effective management. 1. Identify need for change. 2. Create team to lead and manage change. 3. Create vision of the change and strategy for achieving vision. 4. Communicate vision and strategy for change and have change team act as a role model. 5. Encourage innovation and remove obstacles to change. 6. Ensure frequent and obvious short-term achievements. 7. Use successes to create opportunities for improving entire organization. 8. Reinforce culture of more improvement, better leadership, more effective management. An 8-step process at Pursuit.Com

1-12 END OF CHAPTER ONE That’s one chapter down... Only about twenty more to go!