The main objective of every company is to make a maximum profit therefore whatever costs the company incurs should not be more than the total revenue earned. Supply managers are normally expected to be effective cost managers and know where exactly to apply the different price and cost analysis techniques. The process of controlling and planning the costs in a business effectively is known as cost management. This essay illustrates the most effective way to manage cost in my organization. The most effective cost management strategy should provide all the resources to ensure quality, productivity, and reliability at the minimal overall cost as possible.
The best cost management in the organization is to create a strong supplier and customers bond since information from these two parties will greatly help the organization identify opportunities for improving cost efficiency in their transactions. An interrogational cost management is used to coordinate the activities of the organization in a supply chain so as to reduce the overall costs.
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If the buyer and the suppliers have a strong bond they can jointly come up with new ways that will reduce the production costs all the way from the design stage to the manufacturing phase. The information from the buyers may give the firm clues on how to do away with unwanted specifications, therefore, reducing the overall cost in the long run. The supply chain professionals should analyze the buyer-supplier information and use the appropriate cost and price analysis technique to make decisions on how to improve cost management.
In conclusion, managing cost across the supply chain should be done efficiently and effectively so that the organization realizes maximum profit.
