TOOLS FOR CREATING
AND MANAGING VALUE

PART A: THE VALUE CHAIN

PART B: STRATEGIC PRODUCT COSTING

PRODUCT COSTING

Sales and production figures

Sales and production figures

Overheads

ACTIVITY-BASED COSTING

VALUE ENGINEERING

COST DRIVERS

STEPS IN ACTIVITY-BASED COSTING

  1. Activity analysis
  1. Create cost pools
  1. Establish the cost drivers
  1. Identify the number of cost driver transactions
  1. Determine the ABC allocation rate for each cost pool
  1. Allocate cost pools to each product line
  1. Calculate the indirect cost per unit

BENEFITS OF THE ACTIVITY-BASED COSTING SYSTEM

TIME-DRIVEN ACTIVITY-BASED COSTING

ADJUSTING TIME-DRIVEN ACTIVITY-BASED COSTING FOR
MORE COMPLEX ACTIVITIES

PART C: STRATEGIC REVENUE
MANAGEMENT

MAJOR INFLUENCES ON PRICING DECISIONS

Hard
functions

Soft
functions

SURPLUS VALUE

PRICING STRATEGIES

RAPID SKIMMING STRATEGY

RAPID PENETRATION STRATEGY

SLOW SKIMMING STRATEGY

SLOW PENETRATION STRATEGY

LEGAL IMPLICATIONS OF PRICE SETTING

PART D: STRATEGIC COST MANAGEMENT

INCREASING EFFICIENCY WITHOUT REDUCING COSTS: THE SPARE CAPACITY DILEMMA

LIFE CYCLE, TARGET AND KAIZEN COSTING

Product life cycle

Target costing

Kaizen costing

END OF ECONOMIC LIFE: REVERSE FLOWS IN THE
VALUE CHAIN

ACTIVITY-BASED MANAGEMENT AND CONTINUOUS
IMPROVEMENT

Activity-based management

Business process management

Activity value analysis

Continuous improvement

SOCIAL AND ENVIRONMENTAL VALUE CHAIN ANALYSIS

PART E: STRATEGIC PROFIT
MANAGEMENT—UPSTREAM ACTIVITIES

SUPPLIER MANAGEMENT

GLOBAL SUPPLIERS

SUPPLIER CODES OF CONDUCT

MINIMISING INVENTORY LEVELS

SUPPLY CHAIN DISRUPTIONS

VENDOR OR SUPPLIER SELECTION

TOTAL QUALITY MANAGEMENT

Costs of
controlling quality

Prevention
costs

Appraisal
costs

Costs of failing to
control quality

Internal
failure

External
failure

OUTSOURCING AND OFFSHORING

Offshoring

Outsourcing

PART F: STRATEGIC PROFIT MANAGEMENT—DOWNSTREAM ACTIVITIES

CUSTOMER PROFITABILITY ANALYSIS

Supplier cost performance ratio (Total supplier-related costs /Invoice cost of raw materials)

Supplier failure

Logistics failure

Natural disasters

Geopolitical events