Strategic Cost Control
Strategic cost control calls for achieving the most minimized cost in production without sacrificing quality while building stronger relationships with employees, suppliers and customers. This means controlling the costs without decreasing your wage bill or curtailing supplier prices, in simple terms it means cutting costs while keeping everyone happy. So how can this be achieved?
Cost control strategies
- Sourcing from many supplier: Having a list of as many suppliers as possible will enable you to choose the suppliers with the best deferred payment terms (credit terms) so that you pay for your credit supplies in the longest time possible (for example in three months rather than two months time) and at the highest discount received rates as possible.
- Human resources wage bill: Paying employees forms the largest cost in most organizations. The trick is in hiring qualified people for the job and realizing that hiring unqualified people so that you pay cheaply is actually very expensive. A consideration would be to hire a consultant so as to access and gain expertise for the period of the hire.
- Workflow control: Movement of employees seems as a just as everyday routine activity but actually it consumes a lot of time and money. Creating networked electronic connections to reduce movement and utilizing workspace goes a long way into reducing costs.
- Cost analysis: To be able to stay on top of your costs you need to produce relevant products needed by the client, get rid of unnecessary production techniques and processes and eliminating idle time.
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