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CMA A.P.Madhu, Mcom, MBA,PGDT,FCMA,CMA(Aus),CMA(USA)
Effective Cost Management and Consistency in the maintenance of Cost Records CMA A.P.Madhu, Mcom, MBA,PGDT,FCMA,CMA(Aus),CMA(USA)
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What happens to the Business if no proper records are maintained ?
Are we satisfied in running an Organisation without information?
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No , not at all
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What are the areas to be covered ?
Records for Capturing the 4 Ms (1) Cost of Materials (2) Cost of Manpower(3) Cost of Machines (4) Cost of Funds ( Money involved in each element of Cost ) . Records for Capturing Inefficiencies - Wastage of Materials , Time etc
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Cost Elements and Effective Management of the same - Records to be maintained
Revenue - Sales or Services Material Cost Packing Material Cost Transportation - Both Inward & Outward Employee Cost – Idle time – Overtime etc Utilities Direct Expenses Repairs & Maintenence
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Cost Elements and Effective Management of the same - Records to be maintained
Overheads - Factory , Admin , Selling & Distribution Oveheads Research & Development Costs Quality Control Costs Pollution Control Expenses Records on Royalty or Technical Know-how Interest & Finance Charges
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Other Records - Effective Management of the same - Records to be maintained
Capacity Utilisation Export Expenses / Export Incentives By-Products Records on Waste – Scrap – Spoilage – Defective Inventory Records – Perpectual Inventory system
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Some Interesting factors affecting cost
Capacity utilization Time Management Waste Management Employee Turnover Communication Emotions Working environment Team work
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Can we collectively identify and think off reducing costs in some areas which we can ?
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Areas ……. Electricity – TOD Pattern / introducing CFL lamps – Solar Energy Interest Cost – avoiding delay in submitting stock statements , renewal etc Petrol , Diesel expenses in Vehicles used Communication expenses - Postage , Courier etc Printing & Stationery - Printouts on both sides of A4 paper Rent paid v/s space utilization Timely renewal of licenses to avoid unnecessary penalties contd…
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Telephone Expenses - Corporate plans , addl payments for ring tones / music etc
Travelling Expenses – TA/DA – eg : Propriety Audit Insurance Management of Stock – “stock = cash” NPAs
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Some techniques to become cost competitive
Structured review mechanism Budgetory control RCA – Root Cause Analysis Exit Interview & Training , BSC etc 5 S ( Seiri-Clearing , Seiton-Organising , Seiso-Cleaning , Seiketsu-Standardising , Shitsuke-Training & Discipline )
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YES!!! We should achieve cost competitiveness and thereby improve our profitability through KASH generating employees who will work as a TEAM to achieve SMART goals and objectives of the business
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THANKYOU
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