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Strategic Cost Management Insights

The document discusses using a cost-based management system to trace costs to customers, distribution channels, and other areas. It outlines opportunities like protecting highly profitable customers, repricing expensive services, discounting for low-cost customers, negotiating relationships to lower costs, conceding permanent loss customers, and capturing customers from competitors. It also discusses classifying expenses as fixed, variable, or "supervariable" and the concept of high vs low cost-to-serve customers as well as Pareto's 80-20 rule. The goal is to increase customer profitability through process improvement, activity-based pricing, enhancing relationships, and using discipline with discounts.

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Imelda Hotmaria
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41 views8 pages

Strategic Cost Management Insights

The document discusses using a cost-based management system to trace costs to customers, distribution channels, and other areas. It outlines opportunities like protecting highly profitable customers, repricing expensive services, discounting for low-cost customers, negotiating relationships to lower costs, conceding permanent loss customers, and capturing customers from competitors. It also discusses classifying expenses as fixed, variable, or "supervariable" and the concept of high vs low cost-to-serve customers as well as Pareto's 80-20 rule. The goal is to increase customer profitability through process improvement, activity-based pricing, enhancing relationships, and using discipline with discounts.

Uploaded by

Imelda Hotmaria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

S T RAT E G IC AC TIV ITY

B A S E D M AN AG E M E NT
SISTEM MANAJEMEN BIAYA
THE OPPORTUNITIES OF TRACING COST TO
CUSTOMERS/DISTRIBUTION/CHANNELS
Protecting existing highly profitable customers;

Repricing expensive services, based on cost-to-serve;

Discounting, if necessary, to gain business with low cost-to-serve customers;

Negotiating win-win relationships that lower cost-to-serve with cooperative

customers;

Conceding permanent loss customers to competitors; and

Attempting to capture high-profit customers from competitors.


SELLING, MARKETING,
DISTRIBUTION, AND
ADMINISTRATIVE EXPENSES:
FIXED, VARIABLE, OR
"SUPERVARIABLE"?
HIGH COST VS LOW COST TO SERVE CUSTOMERS
PARETO'S 80 - 20
Increasing Customer

Profitability
Process improvement

Activity Based Pricing

Enhance the customer relationship to

improve margins and lower the cost to

serve that customer.

Use more discipline in granting

discounts and allowances.


CUSTOMER PROFITABILITY
thank you

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