1000 Business Lessons Every Businessman Must Know

Chapter 36 Cost Control: Open Sources, Reduce Expenditures, Prevent Waste (2)
Implement centralized and hierarchical management of cost indicators, and clarify responsible units.When implementing this control method, the responsible unit should be determined according to the nature of the expenses, and the part of the variable expenses should be broken down into several small indicators, which are issued to teams and individuals for their own control and use.The financial department is the department in charge of comprehensive management of general expenses. It should review various expense budgets on a regular basis and do a good job of comprehensive balance; it should regularly supervise and inspect the implementation of manufacturing expense budgets, keep abreast of the rising and falling trends of expenses in a timely manner, and put forward suggestions for saving expenses; promote and Instruct all centralized and hierarchical management units to strengthen management to promote the continuous reduction of costs.

283. Reduce personnel expenses
Reducing personnel expenses is the most direct way for companies to save costs.Because the company's administrative, general affairs, logistics and other personnel do not directly contribute much to production or business, when the company's operating performance is not good, these "civil servants" within the company are often considered to be a very heavy burden, so they should Become the most "priority" object when the company lays off employees.Incompetent employees can be dismissed according to their work performance to reduce redundant staff, and at the same time, it can also serve as a warning to other active employees.

The company's "civil servants" should focus on quality rather than quantity, and focus on precision rather than quantity. The number of "civil servants" is often directly proportional to the company's internal organizational units. The more departments and the larger the organization, the more "civil servants" there will be.If a reasonable adjustment is made to the company's internal units, the number of "civil servants" will naturally decrease.For example, if the original five sales departments are adjusted to three, two managers and two secretaries can be streamlined.

Some departments with similar functions can also be merged.For example, the public relations department, advertising department, and planning department can be merged into one planning center, and their respective functions can also be performed together; warehouse management and purchasing can be merged into the financial department, and the financial department, production department and sales department Constrained by workflow.

The streamlining of institutions also includes the streamlining of internal departments. Just like the streamlining of departments, administration can only be streamlined by decentralization, and administrative streamlining is an important prerequisite for streamlining institutions.For a long time, due to the excessive management of certain aspects of the enterprise, it not only makes the enterprise lose its vitality, but also causes the expansion of the enterprise organization.The internal organization of the department is the root cause of this problem. To achieve a complete transformation of the department's functions, it is necessary to streamline these internal organizations.

It is necessary to streamline the internal organization from two aspects of management range and management level.The management range refers to how many lower-level institutions a department can effectively manage; the management level refers to the number of levels from the highest-level institution to the lowest-level institution.If there are too many internal organizations in each department of the enterprise, and the management scope is too large, it will not be conducive to the realization of enterprise leadership and supervision, and it will also cause many administrative links in the enterprise and low command efficiency.Therefore, in order to streamline the internal organization, we should minimize the horizontal organization and intermediate levels on the premise of ensuring the normal operation of the internal organization of the enterprise.

284. Effective control of logistics costs
An important goal of business operation is to exchange the minimum investment for the maximum benefit.The best way to achieve this goal is cost management. The control of logistics costs is to budget the cost limit, compare the actual cost with the target cost limit, correct the existing differences, and improve the economic benefits of logistics activities.

Through the analysis of the logistics cost of the enterprise, the basic ways to reduce the logistics cost are as follows:
(1) Reduce logistics costs through efficient delivery?Enterprises realize efficient distribution, reduce the number of transportation, increase the loading rate, arrange the vehicle distribution plan reasonably, and choose the best transportation method, thereby reducing the distribution cost.

(2) Use logistics outsourcing to reduce logistics costs and investment costs?Enterprises outsource logistics to specialized third-party logistics companies, which can shorten the time of goods in transit and reduce the cost and loss of goods turnover.Enterprises with conditions can use third-party logistics companies to directly supply and go online to achieve zero inventory and reduce costs.

(3) Strengthen the cost management awareness of enterprise employees?Extend the cost reduction work from the logistics management department to all departments of the enterprise, and carry out logistics cost management from the entire life cycle of product development, production, and sales, so that employees of the enterprise have "strategic cost awareness" for long-term development.

(4) Realize supply chain management for the whole process of commodity circulation?Integrate and systematize the supply chain composed of production enterprises, third-party logistics enterprises, sales enterprises, and consumers, realize logistics integration, maximize the benefits of the entire supply chain, and effectively reduce enterprise logistics costs.

(5) Control and reduce logistics costs with the help of modern information management system?In the traditional manual management mode, the cost control of the enterprise is affected by many factors, and it is often difficult and impossible to achieve the optimal control of each link.On the one hand, the enterprise adopts the information system to enable various logistics operations or business processing to be carried out accurately and quickly; on the other hand, through the data collection of the information system, predictive analysis can control the possibility of logistics costs.

285. Avoid Excessive Inventory Spending
As the competition becomes more and more fierce, many enterprises must take the way of price competition to meet the challenge.In this context, many companies have to reduce costs.To reduce costs, many manufacturers start with inventory.To avoid excessive inventory expenditure, the following work should be done:

1. Accurate Forecasting

Theoretically speaking, the shorter the forecast period, the higher the forecast accuracy.But the plan is adjusted too frequently, and it is difficult to guarantee balanced production.Therefore, companies usually use the balance of production line costs and the balance of inventory costs to achieve the best forecast period.

To make accurate predictions, information from the market cannot be ignored.However, the information obtained from the step-by-step feedback in the sales channel is prone to "whip effect". Therefore, shortening the sales channel or using the information system to realize information sharing is an effective method.

2. Collaborative supply chain

Collaborative supply chain emphasizes the collaborative work of partners in the supply chain to quickly respond to customer needs, maintain the competitive advantages of each member of the cooperative, and obtain greater profits.In the manufacturing stage, inventory control largely depends on purchasing strategies.

3. Achieve professional delivery

Whether it is means of production or finished products, logistics distribution affects its inventory to a certain extent.If the delivery time is long and the efficiency is low, it is inevitable to have a long-term inventory; if the delivery quality is not high, and the damage rate of items in the middle is high, then the safety stock as a compensation is also larger than the normal state.

286. All links of production must be well controlled

Under the condition of market economy, the goal of the enterprise is to pursue the maximum profit of the product, and the level of production cost directly affects the profit of the product.Therefore, if a product can obtain the maximum output with the minimum input, or maximize the output with a certain input, the maximum profit of the product will be realized, which is also the goal pursued by the enterprise.Therefore, in order to effectively control production costs, it is necessary to control all aspects of production.

A product has to go through a lot of work links from the initial input of raw materials to the final output of finished products, and among these links, some are links that increase product value, and some link that increase production costs without increasing output value.In the production process, it is necessary to eliminate the links that cannot increase the output value as much as possible, and to minimize the time required for each task.

For example: wet granulation, making raw and auxiliary materials into suitable granules is the work of increasing product value, while the processing of raw and auxiliary materials, such as crushing and sieving, is a negative value-added link.Under the condition of ensuring product quality, these links can be reduced or eliminated.

Therefore, production should focus on beneficial work, not waste time and resources on useless work, and clarify the role assignment of employees, overall planning, teamwork, and improve work efficiency.

All in all, it is not difficult to control production costs. As long as the boss and employees work together to do every job well, the production costs will be reduced and the production efficiency will be improved.

287. Effectively reduce marketing costs
When the product is produced, the product must enter the field of circulation and be exchanged in the market in order to finally realize its value.But consumers don't directly agree with your products, so you must win customers' love and trust, do everything possible to create demand and guide consumption tendency, this is the marketing process.Of course, marketing also requires costs.

In the fierce market competition, the amount of marketing costs can show the strength of the manufacturer's sales force in the market.However, although the investment in marketing costs is an essential expense, it still needs to be controlled when spending, so as not to increase the cost indefinitely.

1. Control of personal selling expenses

The control of general promotion expenses is used to approve the expenses during the promotion process.The company should prepare a salesperson budget control monthly report for each salesperson, and include salary, travel expenses, activity expenses, etc. in it one by one, so as to understand the overrun or savings of sales promotion expenses, and analyze the control effect.

All promotion expenses must be listed in the report, and it is advisable to reserve a proper place to analyze and explain the reasons for the difference between the actual expenditure and the budgeted expenditure.The regional manager or sales manager is mainly responsible for the marketing expenses, and should correct the deviation in time if there is any deviation.

2. Control of advertising costs

Advertisement is generally operated by project, and each project may have several work steps, and the expenses incurred for each work should be recorded in detail in the advertising budget control table.This form can record the advertising expenses incurred by the enterprise within one month. After a period of time, a comparative analysis of the advertising costs and revenues that have occurred should be done, usually about three months to half a year, as the basis for the next advertising budget.

3. Control of operating expenses

Since the business promotion fee is the cost paid to obtain the expected effect and has a strong purpose, budget control should be mainly used.When applying for business promotion fees, sales staff should make a detailed report, which includes the items or products to be promoted, the promotion methods to be adopted, the estimated amount needed, and possible profit status.After the company's approval, the finance department should record the payment of business promotion fees item by item in the special account.

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