Over the past 30 years, new tools and ideas regarding costing analysis have emerged and blossomed, but then frequently faded from prominence – often to surface again years later, sometimes with different branding and terminology.
Well, times are changing, finally. We’re in the midst of an evolution in costing – one that supports a more forward-looking mindset; demands scenario planning quickly, almost in real time and across multiple outcomes and dimensions – product, channel, customer; and requires alignment with internal partners.
With this change, it’s time to start a new discussion on costing and explore emerging models. It’s a conversation whose time is now, so BetterVu is tackling the topic in a white paper series that we trust will provide insights, spur ideas, and create action in your organization.
The quick summary for part one (What DOES It Cost?) is below as well as with a link to download the full white paper.
What DOES It Cost? 5 Steps for Effective Cost Analysis
Developing a cost analytics capability for your organization is not a trivial exercise, so it’s vital to focus on creating a platform that yields high value relative to the effort.
From our experience, you want:
- A cost-effective program that weights its effort on the most critical cost elements instead of trying to allocate every dollar in the most precise way.
- A modeling framework which can deliver and communicate results in a timely and easily consumable manner to facilitate decision-making.
- A costing methodology that enables effective cost planning, not just cost accounting.
- An approach that can be implemented in weeks, not years.
So, how do we get there and determine current costs? We’ve outlined five steps to address as you begin the costing process:
- Develop cost models that can be extended to predictive planning.
- Focus on labor as the major cost element in your model (it’s true for most companies).
- Use time-based modeling as the basis for costing in all transaction groups.
- Communicate results to decision makers effectively, routinely, consistently.
- Select flexible software that delivers value in a short timeframe and can be tightly connected with data sources and other integrated business planning tools.
Separately, our team is available to chat about your toughest costing challenges. Contact us today to schedule some time to talk.