6. AGENDA
6
THE COST
What is cost?
Why it matter?
Type of cost?
01
HOW TO SAVE COST?
03
COST MANAGEMENT
Plan
Estimate cost
Determine cost
Monitoring & Control
02
CASE STUDY
04
8. Costs are the resources used to make a product. It is expressed in monetary terms.
WHAT IS COST?
8
9. Why It Matter?
1. Controlling costs is essential to Business Success
2. It is important to point out that production involves cost.
3. Without cost management, companies would lose money or
customers would receive invoices for much more than expected.
9
32. INTEL
32
The company needed to reduce supply
chain expenditure significantly after
bringing its low-cost “Atom” chip to
market.
Supply chain costs of around $5.50 per
chip were bearable for units selling for
$100, but the price of the new chip was a
fraction of that, at about $20.
The Path to Cost Through a process of
iteration, they gradually sought out and
eliminated supply chain inefficiencies to
reduce order cycle time incrementally.
Further improvement initiatives
included:
-Cutting the chip assembly test window
from a five-day schedule, to a bi-weekly,
2-day-long process
-Introducing a formal S&OP planning
process
-Moving to a vendor-managed inventory
model wherever it was possible to do so