The following points highlight the five main steps of strategic cost management programme. The steps are: 1. Focus 2. Planning and Training 3. Fact Finding 4. Analysis and Recommendations for Changes 5. Implementation.
Strategic Cost Management Programme: Step # 1.
Focus starts with reviewing the different strategies of the company. Reviewing the strategies will lead to clear identification of performance gaps and this will help to bridge the gap by improving targets already set beforehand. Modifying the targets will lead to developed plan of attack which will foster better internal communication within the organisation.
Strategic Cost Management Programme: Step # 2.
Planning and Training:
Planning plays a very important role in implementing strategic cost management programme. To implement the planning, a manager should bring together very efficient team members and train them accordingly. Setting up of project management structure will facilitate the implementation of strategic cost management by clearly identifying the day to day activities, steering guidance and offering ad hoc assistance.
Strategic Cost Management Programme: Step # 3.
This stage includes the tasks such as data gathering, conducting interview, developing benchmarks, conducting and customer surveys.
Strategic Cost Management Programme: Step # 4.
Analysis and Recommendations for Changes:
Analysis of activities plays a crucial role in ascertaining the cost of the company. It can be done by various strategic cost management analytical tools viz. cost driver analysis, activity-based costing, selective business process reengineering etc. An action plan for proposed change should address the following questions what, who, when how aspects of the activities.
Strategic Cost Management Programme: Step # 5.
In implementation stage the first task to be done is to define responsibilities and accountability of each individual and controlling i.e. monitoring and corrective action should be taken at each stage of programme. This is how the continuous improvement can be achieved. The third, fourth and fifth stage in the above process indicates continuous improvement.