Managing Costs and Cost Structure throughout the Value Chain: Research on Strategic Cost Management

SYNOPSIS: Strategic cost management is the deliberate alignment of a firm’s resources and associated cost structure with long-term strategy and short-term tactics. Although managers continue to pursue efficiency and effectiveness within the firm, increasingly improvements are obtained across the value chain: through reconfiguring firm boundaries, relocating resources, reengineering processes, and re-evaluating product and service offerings in relation to customer requirements. In this first paper in a two-part series on strategic cost management in supply chains, we review structural cost management. Structural cost management employs tools of organizational design, product design, and process design to create a supply chain cost structure that is coherent with firm strategy. In the second part of the series we will consider executional cost management, which employs measurement and analysis tools (e.g., variance analysis, cost driver analysis, supplier scorecards) to evaluate supply chain performance. Using selected studies in accounting, operations management, and business strategy, we provide an overview of strategic cost management in supply chains, highlight contemporary developments, and suggest directions for future research.

Download Full-text

Strategic Cost Management in Supply Chains, Part 2: Executional Cost Management

Accounting Horizons ◽

10.2308/acch.2009.23.3.289 ◽

2009 ◽

Vol 23 (3) ◽

pp. 289-305 ◽

Cited By ~ 21

Author(s):

Shannon W. Anderson ◽

Henri C. Dekker

Keyword(s):

Supply Chain ◽

Supply Chains ◽

Value Chain ◽

Operations Management ◽

Cost Management ◽

Firm Strategy ◽

Cost Structure ◽

Cost Driver ◽

Future Research ◽

Strategic Cost Management

SYNOPSIS: Strategic cost management is the deliberate alignment of a firm’s resources and associated cost structure with long-term strategy and short-term tactics. Although managers continue to pursue efficiency and effectiveness within the firm, increasingly, improvements are obtained across the value chain, through reconfiguring firm boundaries, relocating resources, reengineering processes, and reevaluating product and service offerings in relation to customer requirements. The first paper in this two-part series reviewed structural cost management in supply chains (Anderson and Dekker 2009). Structural cost management employs tools of organizational design, product design, and process design to create a supply chain cost structure that is coherent with firm strategy. In this second paper of the series we consider executional cost management in supply chains. Executional cost management employs measurement and analysis tools (e.g., cost driver analysis, supplier scorecards) to evaluate supply chain performance and sustainability. Using selected studies in accounting, operations management, and business strategy, we provide an overview of strategic cost management in supply chains, highlight contemporary developments, and suggest directions for future research.

Download Full-text

The association between strategic cost management and enterprise risk management: A critical literature review

Corporate Ownership and Control ◽

10.22495/cocv9i1c1art3 ◽

2011 ◽

Vol 9 (1) ◽

pp. 184-195

Author(s):

Mohamed Elsayed ◽

Ananda Wickramainghe ◽

Marwa Abdel Razik

Keyword(s):

Risk Management ◽

Value Chain ◽

Positive Relationship ◽

Cost Management ◽

Enterprise Risk Management ◽

Value Chain Analysis ◽

Total Quality ◽

Strategic Cost Management ◽

Chain Analysis ◽

Enterprise Risk

Reviewing literature and application of strategic cost management (SCM) and enterprise risk management (ERM) are critical and significant for corporate management to facilitate top management to employ appropriate SCM and ERM processes and systems especially in occurrence of constant and regular business turn around, crises and turbulence in recent time in world of business. This paper revisits and reviews the association between strategic cost management and enterprise risk management. Based on this review, the following propositions were developed; firm, which adopted SCM, is more likely to adopt ERM approach, there is a positive relationship between audit type and the association between ERM and SCM, and there is a positive relationship between company size and the association between ERM and SCM. The association between ERM and SCM differs from industry to another. The study also develops a framework for SCM composes of the following items: SWOT analysis, benchmarking, competitive advantage, value chain analysis, implement strategy that reduce cost during the value chain analysis by using target costing, accounting based-costing, accounting based-management, just in time, total quality management, life cycle, theory of constraints, and measure performance by using balanced scorecard.

Download Full-text

THE PROFIT IMPACT OF VALUE CHAIN RECONFIGURATION: BLENDING STRATEGIC COST MANAGEMENT (SCM) AND ACTION-PROFIT-LINKAGE (APL) PERSPECTIVES

Advances in Management Accounting ◽

10.1016/s1474-7871(04)12002-9 ◽

2004 ◽

pp. 37-57 ◽

Cited By ~ 1

Author(s):

John K Shank ◽

William C Lawler ◽

Lawrence P Carr

Keyword(s):

Value Chain ◽

Cost Management ◽

Strategic Cost Management

Download Full-text

Cilindro del Sur and United Gas Products: An International Application of the Strategic Cost Management Framework

Issues in Accounting Education ◽

10.2308/iace-10015 ◽

2011 ◽

Vol 26 (2) ◽

pp. 321-339 ◽

Cited By ~ 3

Author(s):

Thomas G Canace ◽

Paul E Juras

Keyword(s):

Value Chain ◽

Joint Venture ◽

Financial Analysis ◽

Cost Management ◽

Capital Budgeting ◽

Vice President ◽

Business Case ◽

Information Value ◽

Current Accounting ◽

Strategic Cost Management

ABSTRACT This case provides students with an opportunity to apply project valuation methodologies in an international context. The dynamics of the case offer more complexity than typical textbook capital budgeting problems because, while the identity has been disguised, the case is based on a real company. We complement recent pedagogical literature on strategic cost management (Blocher 2009) by applying a five-stage information value chain to our case setting. Students must consider both the financial and strategic factors to make a unified decision about whether an industrial gases joint venture should expand operations into Guatemala. Students are asked to perform thorough financial analysis using advanced spreadsheet modeling techniques to support their decision. Equally important, they are required to research the socio-political-economic factors, and to assess the joint venture's competitive and strategic landscape. The primary deliverable is a written recommendation, in the form of a business case, which is submitted to the Vice President of the U.S. joint venture partner. This component addresses concerns raised in recent literature (Matherly and Burney 2009) about the lack of emphasis in current accounting curricula on developing students' writing competencies in a relevant context.

Download Full-text