How to effectively control costs

Effective cost control methods are as follows:

One, improve the cost management of the groundwork

Enterprises in the cost management, the first thing you should do is to grasp the cost of basic management work. Groundwork is the cornerstone, is the implementation of cost control "standard", is the process of control, variance analysis, correction of differences, the basis of performance assessment. But in practice, most state-owned enterprises cost control has not been put into practice, just shouting slogans, flow in the surface form, the cost is not really effective control. Such as material consumption is too large, working hours quota is not allowed, the cost of expenditure is not detailed enough. Enterprises to do a good job of cost management of the basic work mainly from the following aspects. First of all, improve the quota standard: (1) the human resources department should organize the revision and improvement of the working hour quota standard; (2) the technical department should organize the revision and improvement of the material consumption quota; (3) the economic operation department should organize the revision and improvement of the tool and energy consumption quota, and should organize the inspection, supplementation and installation of measurement standards. Secondly, the comprehensive management department of the enterprise should organize to revise and improve the management process and system. In addition, the financial department should organize the division standard of cost habit and determine the scope and standard of cost expenditure.

Two, efforts to reduce enterprise operating costs

Cost control focuses on the operational process, enterprises should be from reducing design costs, procurement costs, quality costs, sales costs, workflow, capital consumption, reduce inventory in seven aspects, to try to reduce the total operating costs.

1, control design costs

A product cost of about 80% of the decision in the design stage, so we should pay attention to the design cost control work. First of all, the development department of each engineer and technician should set up the idea of cost control, from the design stage to consider the process, manufacturing, procurement and other aspects of cost control, strengthen coordination and cooperation with the sales department, the financial sector, comprehensively familiar with the customer needs, understand the market price, the use of the principle of value engineering, from the function - cost Starting from the analysis of value engineering, we should consider the rationality and necessity of the function, and adhere to the principle of "suitable is good"; secondly, the technology development department, sales department and financial department should seriously summarize the successful experience of the previous ones, and review the function-cost configuration of the enterprise by applying the principle of value engineering, so as to further participate in the cost control of process, manufacturing, purchasing and other aspects. -cost configuration issues, to provide a full range of support for further participation in the market competition; third, the technology development department should take the lead in the next generation of new products function - cost analysis; fourth, the departments should use the principles of value engineering to re-examine the value-added nature of the process, the process.

2, control procurement costs

Often, procurement costs account for 50% to 80% of total costs, is the focus of traditional cost management. Control of procurement costs enterprises should do the following aspects of work: First, the use of scientific decision-making and analysis methods, a reasonable decision on the economic order quantity or economic batch size, to decide on the procurement project, select the supply unit, to determine the procurement time; second, to further promote centralized purchasing system, the establishment of raw materials, auxiliary materials, low-value consumables, office supplies, external services, a unified purchasing platform, to achieve the price, suppliers, and other resources * * * enjoyment; third, promote the direct supply system, and gradually eliminate intermediate suppliers; fourth, establish the procurement responsibility system, and strengthen the sense of responsibility of procurement staff and price auditors; fifth, rectify the procurement price of auxiliary materials and sporadic materials, and the procurement price should be gradually reduced on the basis of the sales price of the previous procurement; sixth, explore the establishment of the procurement reward and punishment system, and the rewards and punishments should be linked to the leadership and individuals; seventh, strengthen the power of technological research and development and lower the Purchasing cost.

3, control quality costs

Improve quality and reduce costs are compatible. Quality is the basis of cost. To break the old concept of improving quality and increasing costs, reduce costs to the detriment of quality, improve quality, in fact, will lead to a reduction in costs. Improve product quality must implement the "prevention-oriented" spirit, an appropriate increase in inspection costs and prevention costs, can significantly reduce the losses caused by poor quality. Improvement of quality costs, to strengthen the quality of the work process, in order to reduce the loss of scrap, reduce the work, reduce the time to rework, reduce resource consumption, and thus reduce the total cost of operations; enterprise departments to further strengthen the control of manufacturing quality costs, quality cost control to expand the scope of services, design, management, research areas; improve the quality of the functional cost of management system, set up the function of departmental Work quality objectives.

4, control the cost of sales

Sales department in the expansion of sales results, improve market share at the same time, to strengthen the efficiency of the use of sales expenses, relative cost reduction. First of all, the sales department should study and promote the marketing system of big sales and big service to reduce the cost of scale operation; secondly, the sales department should carefully study the national and local tax policies, and reasonably carry out the tax planning of the branch; thirdly, the sales department should utilize the knowledge related to the theory of distribution, and explore the reasonableness of the distribution of the sales branch; fourthly, the sales department should utilize the method of economic decision-making, and reduce the cost of transportation. Fifth, the sales department should utilize cost-optimal decision-making to improve the efficiency of the use of advertising expenses.

5, optimize the workflow

Work is made up of a series of work processes or steps, starting from the purchase of raw materials, to the final product or service until the end of each process should be value-added and then sent to the next process, each process contains human resources or machine wear and tear, if you do not engage in the operation of value-added is a waste. Therefore, each unit should be in accordance with the value chain management approach to re-examine the value-added activities of the work process, reduce the work of non-value-added behaviors, to eliminate the "six kinds of waste": the waste of manufacturing too much, the operation of the waste, the waste of processing, the handling of the waste, waiting for the waste, the waste of time.

6, reduce inventory

Inventory does not produce any added value, it not only takes up space, take up funds, but also produce the handling and storage needs, eating up financial assets. And over time, on the one hand, inventory corrosion, deterioration, will produce waste; on the other hand, technological advances, improvements in competitors' products, the product will produce economic wear and tear, will make the product overnight into scrap. Reducing inventory needs to be done in terms of reducing the quantity of inventory and reducing the unit price of inventory. Therefore, it should increase the management of inventory, shorten the production line, reduce the products in the product, scientific budgeting of the number of sales, decide the number and structure of inventory, correctly calculate the cost of obtaining, storage costs, the cost of shortages, the amount of inventory and the amount of inventory to control in the best possible range.

7, reduce capital consumption

Money is the enterprise's "blood", is the source of survival and development of enterprises, is the most fundamental resource. Any funds are costly, whether it is long or short-term borrowing, bonds, or stocks, capital. Any capital is an opportunity cost, a capital invested in the stock market can not be invested elsewhere. Reducing the use of funds can reduce the cost of capital or increase revenue. Therefore, the enterprise should firstly promote the centralized management of funds to avoid too much dispersion and avoid risks; secondly, the function should reasonably select the working capital policy, reasonably formulate the commercial credit policy, clear short-term borrowing conditions, and reasonably budget the cash flow, and reduce the capital occupation of each link to the most reasonable level.

Third, according to the business objectives, backward decomposition, the cost of the target to each level according to the enterprise to determine the target system and business objectives, and combined with the actual situation of each business segment, backward decomposition, issued the specific objectives of cost control. First of all, the departments can not only have a total goal, according to the requirements of responsibility accounting target cost layer by layer decomposition of the responsibility cost of each responsibility center, the implementation of the relevant cost center, the pressure will be transferred to the workshop, team, individual, truly "a thousand kilograms of heavy burden on everyone, everyone has a target on the shoulders of the"; Secondly, all levels of the departmental Secondly, all levels of departments to form a multi-level cost control network to ensure the realization of the objectives of each level; Thirdly, the departments in the formulation of the target cost, that is, to take into account their own internal situation, but also take into account the external environment of the enterprise, and reasonably select the correct benchmark, to formulate the best target cost; Fourthly, all cost reduction programs, regardless of size, are required to quantify the cost of reducing the target.

Four, fully mobilize the enthusiasm of the staff to ensure effective cost control to make cost control really play a role in the benefits, but also must carry out the responsibility, rights and benefits of the principle of combination. To this end, the enterprise should be established, "everyone saves, everyone has a prize", "everyone contributes, everyone benefits" incentive mechanism. Human resources departments and financial departments should first of all according to the quantitative objectives and requirements of the cost control goals, improve the performance evaluation system; secondly, to improve the income distribution system, strengthen the organizational incentives to ensure that the cost control is carried out effectively; thirdly, the establishment of the "cost control" personal incentive fund to strengthen the personal incentives, mobilize the enthusiasm of all employees.

Enterprise cost reduction to improve profits, the key is to put cost control into practice, cost control and the enterprise's basic management work closely linked. Enterprises only to improve the level of management, open source and cut costs, reduce costs and increase market share to become possible.