TCM TOOLS & TECHNIQUES

1. TCM TOOLS & TECHNIQUES

2. TCM PRINCIPLES

3. TCM PROCESSES

4. WAYS OF COST ANALYSIS

5. TCM TOOLS • Variance Analysis • Cost driver Analysis • Cost of Quality • Input Output Balance • Kaizen Costing • Total Cost of Ownership(TCO) • Activity cost management • Continuous Improvement • Performance Cost Management • Target Costing • Risk Articulated Cost structures • Lifecycle Costing • Customer cost & Profitability reporting • Value Chain costing • Capacity cost management • Capital cost analysis

6. TCM TOOLS • TCM tools are deployed in a business to accelerate ‘cost competitiveness’ by generating desirable outcomes of costs, price, value and profit. • Tools also involve technicalities of measuring resources in business with both accounting and non-accounting information • Entire spectrum of ‘cost management’ architecture – measuring, managing, reporting, analyzing, controlling, course corrections, predicting and estimating costs across value chain of business – is enabled by an array of TCM tools. • Contemporary businesses are largely driven by several market and customer dynamics – complexity and variety in business processes, product and customer portfolios. • Businesses manage ‘costs’ associated with both current and future activities and application of TCM tools scopes its deployment accordingly. • TCM tools can accordingly be classified into basic (operational) and advanced (strategic). Operational tools are used for Day-to Day simplistic analysis. Leadership vision of achieving future business goals is addressed through strategic TCM tools

7. TCM TOOLS - OPERATIONAL

8. TCM TOOLS - STRATEGIC

9. PRICING STRATEGIES

10. PRICING STRATEGIES

11. MEASURES OF PRICE MANAGEMENT EFFECTIVENESS • Types of measures include: • Percent improvement of price paid over inflation • Percent improvement of price paid vs. prior year • Target prices achieved • Ratio of actual price change improvement to comparable market index change • Purchase cost improvement as % of cost of goods sold • Total delivered cost reduction • Inventory cost reduction • Transportation cost reduction

12. SUMMARY • A first step to cost management is understanding the total volume of sales and relationship to suppliers costs • Suppliers use different pricing strategies which may not have any relationship to actual costs • A price index is a good way to understand pricing trends • Different approaches to reducing costs are possible

13. Thank you !