Cost Control Requires The Establishment Of Scientific Mechanisms

The right direction is half the success and the cost control is the same. The purpose of cost control is to continuously reduce costs and gain greater profits. Therefore, when making the target cost, we must first consider the profit target of the enterprise, and also consider the competitive selling price. Because the cost is formed in the whole process of production, the cost takes place in every link, everything and activity. Therefore, the target cost should be decomposed to all departments and even individuals.

　　 One Enterprise project Analysis

Each department takes the marketing goal orientation, carries on the project project of the annual work, lists all kinds of projects needed to achieve the goal, decomposes the tasks at the same time, analyzes the time, cost and performance of each link, and compares the costs and benefits. For example, how many marketing and promotional projects need to be completed in the market department next year to achieve the established goals, and after each item is decomposed into tasks, the cost of each task will be reasonably budgeted and the revenue generated will be estimated.

　 2. industry value chain analysis

　　 Industry value chain It is the point where a company exists in the value chain of a certain industry, including the connection point with upstream, downstream and channel enterprises. For example, the packaging of supplier products can reduce the transportation cost of enterprises, and the vertical connection of improving value can also reduce the cost of enterprises and upstream, downstream and channel enterprises, and enhance the overall competitive advantage.

　　 3. competitors value chain Analysis

The value chain of the competitor and the enterprise value chain are in the parallel position in the industry value chain. By analyzing the value chain of the competitors, the cost of the competitors can be calculated. Then, compared with their own enterprises, they find out the difference between their competitors and their activities, and foster strengths and circumvent weaknesses and strive for cost advantages.

McKinsey used to evaluate Chinese enterprises in this way: "the giant of cost advantage is the dwarf of cost management". Actually, cost control is an art of spending money instead of saving art. How to spend every penny just right and use every resource of the enterprise to where it is most needed is a difficult problem faced by Chinese enterprises in the new business era.

The traditional cost management is based on whether enterprises save or not, and unilaterally starts with reducing costs and even trying to avoid some expenses, emphasizing saving and saving. However, the international companies believe that the enterprises that control the basic idea of cost saving are only local enterprises. They have nothing to do with exploiting workers and reducing raw materials.

Simply cut costs and reduce costs as the sole goal can not be endorsed by visionary entrepreneurs. In simple pursuit of cost reduction, generally simple measures will consider lowering the purchase price or grade of raw materials, or reducing material input (stealing material) of a single product, or considering reducing the labor cost of the process, so as to achieve the purpose of cost reduction. This is very dangerous, it will lead to a decline in product quality, the loss of labor resources, and even loss of the market already owned.