Scope of Presentation

Evolution of TCM and the background

The Prism of Business Excellence (BE)

USP of TCM towards BE

ATTITUDINAL ISSUES

Review cost at an account head level

Marketing concern is getting orders only

We do not have time for all these

My subordinates do all these

Focus only on major costs

Cost is a result of managing the function.

Cost is an accountants concern

• Cost - Always in practice as an accounting domain and needs change.

• Plethora of legacy archaic cost practices which need to be skillfully replaced.

• Practical guidance to fit the relevant TCM practices to the strategic context.

• A scale to benchmark against the best practices and a road map for mobility.

• Inculcate a culture of sharing best practices for a national learning.

As a Management Planning and Control system to enha nce competitiveness

Linked to strategies and operations.

Transparency of relevant cost to the extent require d for process improvement

Natural ally for Policy Deployment

Beginning of CII – TCM Journey

Describing and defining and contrasting it with legacy

cost accounting.

Spreading awareness on development of new generation

tools and its integration with strategy & operations

distinctly

to establish the imperativeness of TCM for Cost

Competitive edge and need for a road map

Creating maturity model of TCM and assessment of

organisational maturity to move towards world class cost

management practices.

understanding of Value Creation as something beyond

financial results and aligning TCM with the same.

1996

Phase 1

Phase 2

Phase 3

Phase 4

Phase 5 -

Current

Criterion 1.Leadership 2. Strategy 3.People4. Partners&

resources

5. Processes,

Products &

Services

Criterion Part a b c d e a b c d a b c d a b c d e a b c d e

Adding value to

customers

Creating a

sustainable future

Developing

organiational

ability

Harnessing

creativity &

innovation

Criterion 1.Leadership 2. Strategy 3.People4. Partners&

resources

5. Processes,

Products &

Services

Criterion Part a b c d e a b c d a b c d a b c d e a b c d e

Leading with vision,

inspiration and

integrity

Managing with agility

Succeeding through

people talent

Sustaining

outstanding results

Entry /Growth Strategy

Entry /Growth Strategy

Strategy Formulation

Strategy Formulation

Strategy Implementation

Tools

Strategy Implementation

Tools

Risk Manage-

ment

Risk Manage-

ment

Target Processes

Target Processes

- EBIDTA- RAROC

IT strategy

Product Targets

Product Targets

SustainabilitySustainability

Target Markets

Target Markets

• Market• Competition• Products/

Pricing• Distribution• Regulatory

Issues

• Financials• Customer

Strategy• Internal

Processes• Learning &

Growth

• Objectives• Measures• Targets• Initiatives

� Measurement is the language that gives clarity to vague concepts

� Measurement is used to communicate, not simply to control

� Building the cost management from strategy elevates costing to a board room framework.

Targeted Customers

�Existing Customers

�New Customes�Desired Growth

STRATEGY

Targeted Products

�Target Cost�Current Cost�Quality levels

Desired Processes

Which customers are crucial to our business strategy ?

Desired profile of existing and new products

What processes the business will need to execute the strategy both strategic and operational.

�Strategic Process Cost

�Operational process cost

Risk Impact Measures

�Strategic risks�Operational Risks�Risk factored cost

structures

“To achieve strategy execution what risks need to be evaluated ?

Sustainability runs through

Understand Strategy Translate the SrategyDevelop and Align

Initiatives and Actions

Customer

Profitability

Activity Based

Management

Cost of Quality

Shop Floor Cost Deployment

Continuous Improve-ment

Activity Based

Costing

BPR

Cost Driver Analysis

Vatiance Analysis

Target Costing

Total cost of Buying

Elements of StrategyElements of Strategy

“Existing customers and

New Customers”

Customer Segments

Existing Costs and Target

Costs

Product Segments

“Strategic Processes and

Operational processes”

Processes

“Impact of Risksnon Costs”

Risks

Strategy

Criterion 1.Leadership 2. Strategy 3.People 4. Partners&

resources

5. Processes,

Products &

Services

Outcomes

Criterion Part a b c d e a b c d a b c d a b c d e a b c d e People Societ

y

Custo

mers

Key

Adding value to

customers

TP

1

TP1 as

target

Costing

TP2 TP2 TP2 as

custome

r

profitabi

lity

Creating a

sustainable

future

TP

3

Developing

organiational

ability

Harnessing

creativity &

innovation

TP

4

TP4 as

Kaizen

Costing

Criterion 1.Leadership 2. Strategy 3.People 4. Partners&

resources

5. Processes,

Products &

Services

Outcomes

Criterion Part a b c d e a b c d a b c d a b c d e a b c d e People Society Custo

mers

Key

Leading with

vision, inspiration

and integrity

TP5

Managing with

agility

Succeeding

through people

talent

Sustaining

outstanding

results

TP6 TP7

Strategy

Risk

Product /

Process

InnovationSustainability

Product /

Customer

Segments

Operational

Efficiency

Product

cost

Structure

Algorithm

Cost Accounting

IT as

enabler