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Strategic cost management

Manage and reduce costs without compromising strategic goals

Overview

All organizations face cost challenges: some are predictable and some unanticipated. Ironically, success can exacerbate these problems and growing organizations face a range of potential issues. For example, expanded offerings and successful product lines can create unforeseen expenses. Sales, promotional and distribution costs may have to be adjusted to accommodate an increasingly diverse customer base. And many companies’ cost models don’t provide enough insight into which enterprise activities actually drive costs: they’re simply not sophisticated enough to account for those variables.

The responsibility for meeting these challenges typically falls on the finance department and the CFO. But if you don’t have the right cost structure for managing unforeseen costs, for aligning cost management with strategic priorities, or for cutting costs without endangering compliance and diminishing performance, it can be an uphill battle.

Our approach to cost management identifies hidden business costs and provides an organizational structure to effectively manage and where possible reduce costs – all without diminishing value.

Cut costs, protect value and drive strategy

Strategic cost management
The goal of strategic cost management is to build a structured approach to sustaining value over time. This means creating a cost model that clearly identifies your critical cost drivers. Deloitte’s highly experienced cost management professionals have refined this process, as well as developed a suite of methodologies, tools and resources, that have been used on numerous global projects across all industries. For example, we can help you understand how to build a strategic business case by conducting a short pilot project focused on a specific cost challenge. With our approach to strategic cost management, you can build your cost model into your organizational structure, informing strategic decisions at every level and in every department and function.
Enterprise cost reduction
Once your cost model is in place and you identify critical cost drivers, you can undertake cost-cutting measures that support your business objectives and preserve existing value. By determining which activities contribute the most to long-term shareholder value, you can identify areas that provide the best opportunities for strategic cost reduction.

This methodology can be applied to virtually every aspect of your organization, including your business configuration, processes, organizational models, approach to governance and tax structure. Beyond that, we can help you streamline your technology, human resources and sourcing processes to free up resources you can re-apply to strategic priorities.

Strategic cost management

Strategic cost management yields benefits others may overlook
Deloitte’s strategic cost management solutions can help your organization:

Identify process activities by leveraging our Industry Prints™ solution, proprietary process maps that provide a comprehensive list of activities for every operation and function
Pinpoint key cost drivers and quantify their effects on processes and activities
Develop immediate cost reduction strategies that don’t hamper your ability to create long-term value
Streamline your cost management processes with proven, customizable methodologies, tools, cost models and data collection templates
Make informed pricing decisions based on true profit margins
Increase efficiencies to generate long-term savings for your organization
Create a realistic roadmap and resource plan to raise organizational cost awareness
Determine the costs and efficiencies of distribution channels
Realize cost savings across multiple business units
Implement cost reduction and profitability improvement strategies that take your entire company into consideration
Enjoy immediate short-term cash flow improvements followed by long-term structural cost reduction

Cost management pressures mount, but solutions are at hand
CFOs are under enormous pressure to provide organizations with balanced, strategic financial guidance and cost controls, all the while fulfilling performance, compliance and investor mandates. Deloitte can help you build a cost model that identifies your true cost drivers and helps you manage them with strategic insight, sustainable results and organization-wide transparency.

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