Leading Procurement Strategy: Driving Value Through the Supply Chain by Carlos Mena & Remko van Hoek & Martin Christopher

Author:Carlos Mena & Remko van Hoek & Martin Christopher [Mena, Carlos]
Language: eng
Format: epub
Publisher: Kogan Page
Published: 2018-06-02T23:00:00+00:00

Summary of strategic cost management

Strategic cost management is a way of thinking about how to enhance the customer value proposition while simultaneously reducing cost. Strategic cost management should be part of new product and service design, so that the most cost-effective, highest value products and services are introduced in the marketplace. This approach is often termed target costing, where a product is designed with very specific cost goals and customer attributes in mind. Strategic cost management should be part of everyday business operations and support continuous improvement efforts as the external environment, including competition and customer demands, evolves. Most importantly, in order for strategic cost management to be truly effective, it should be part of the organization’s philosophy – a process and a way of thinking that is embraced by everyone, at all levels of the organization. One of the tools to support strategic cost management is total cost of ownership analysis, which entails really understanding the cost of a particular good or service.

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