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					      Advanced Cost
       Management


Professor William F. O’Brien, MBA, CPA


                              Fall 2011
        Financial Management
              Evolution
                                                        IMPLEMENTATION




                                             ANALYSIS




                       INFORMATION

                                                           Today’s
                                                          Corporate
                                                          Focus is on
      DATA                                                 Results!



STRATEGIC COST MANAGEMENT - BA122B - Fall 2011                  Slide 1-2
                Factors Influencing
                 Today’s Business
                   Environment
        Global competition
        Manufacturing and IT advances
        Customer focus
        Revised organizational structures
        Social, political and cultural changes



STRATEGIC COST MANAGEMENT - BA122B - Fall 2011   Slide 1-3
                     Strategic Cost
                     Management
        Strategic cost management is the
         development of cost management
         information to facilitate the principal
         management function--strategic
         management.




STRATEGIC COST MANAGEMENT - BA122B - Fall 2011   Slide 1-4
                        Introduction
        Accounting models
            Financial
            Managerial
        Both grounded upon the information
         system



STRATEGIC COST MANAGEMENT - BA122B - Fall 2011   Slide 1-5
                 Financial Accounting Model

                                  (useful &
                                  relevant)
           Company                                Users
                                     F/S




             Financial                           Economic
               Impact                            Decisions


STRATEGIC COST MANAGEMENT - BA122B - Fall 2011               Slide 1-6
                       Managerial Accounting Model

                             Communication Environment



                                      Plan




     Adjust                       Accounting             Implement
                                  Information




                                     Monitor



STRATEGIC COST MANAGEMENT - BA122B - Fall 2011                 Slide 1-7
          Contemporary Mgt.
             Techniques
     Business Partnering
     Activity-Based Costing (ABC) and Mgt. (ABM)
     Value Chain Analysis
     Target Costing
     Environmental Cost Analysis
     Theory of Constraints (TOC)
     Total Quality Management (TQM)
     Lean Production/Mass customization
     The Balanced Scorecard and Economic Value
      Added Analysis (EVA®)


STRATEGIC COST MANAGEMENT - BA122B - Fall 2011      Slide 1-8
               Ansari’s Triangles
        Strategic Triangle (QCT)
            Competition based on quality, cost & Time
            Use of the blend of system and tools in the
             Attribute Triangel
        Attribute Triangle (TBC)
            Attributes of the management accounting
             “system” as it relates to a particular strategic
             cost management (SCM) tool
            Impacts technical, behavioral & cultural aspects

STRATEGIC COST MANAGEMENT - BA122B - Fall 2011        Slide 1-9
                           SMA, cont.
        Mgt. Actg. Links Strategy with Action
            It is not an end unto itself
            It is an integrating tool
        The two triangles are dependent upon
         each other
        This process is a framework to ensure that
         our management accounting tools and
         systems possess the attributes necessary
         to achieve our strategic goals

STRATEGIC COST MANAGEMENT - BA122B - Fall 2011   Slide 1-10
         The Triangles—a Closer
                  Look
        QCT Triangle
            Quality: what the customer wants
            Cost: at a reasonable overall financial sacrifice
            Time: delivered on a timely basis
        TBC Triangle
            Management accounting systems, when used
             correctly
                 Provide Technical insight
                 Encourage Behavioral changes
                 Reinforce or change Cultural attitudes

STRATEGIC COST MANAGEMENT - BA122B - Fall 2011             Slide 1-11
         Impact of the “Trifecta”
        Analyze outcomes and proposals in
         terms of:
            Quantitative impact
            Strategic impact
            Tactical impact




STRATEGIC COST MANAGEMENT - BA122B - Fall 2011   Slide 1-12

				
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