Costing Plays a Key Role
-----------------------------
Following
news report appeared in Times Of India :
Extract :
"In that sense, you ( ICMAI ) have a very important role to play ,
both as an institute and all your 70,000 members , to ensure that we prepare the country to manufacture , to provide services at the right cost for us, which is competitive, which
adds value , which encourages more business “
, said Goyal
He further said that "costing has been one of the most important element of
success or failure and I can recall so many instances , when we have been able
to make projects successful in the last four and half years , when we have kept
focus on cost “
Also, Goyal said that one can make a fancy, high
quality product with beautiful design but if the
pricing is not competitive, then it will remain a pipe dream
Dear Shri Goyalji,
You
have hit the nail on the head !
Unless
we manage to turn India, into a “ LOW COST ECONOMY “, we cannot compete in the looming age of
“ Trade Wars “ ( aka , “ a dog eat dog “ battle of “ survival of the
fittest “ )
And
the Cost Accountants can help the manufacturers to analyze a PRODUCT COST into its following constituent “ Cost Of ( Input
…….. ) “ :
· Money
· Land
· Machineries
· Materials
· Manpower
· Energy
· Compliance
· IT / Communications
· Transport /
Logistics
· Training / skilling
· Systems /
Procedures
· Technology
Acquisition…..etc
Once
manufacturers get to know “ %age of each component
of the cost in the total Product Cost “ , next question is :
“
How to go about reducing costs of each of these
elements – without lowering product quality ? “
Such
a “ INPUT COST ANALYSIS “ would need to be
carried out for each industry separately since
the “ Input-Cost Percentages “ vary widely,
from one industry to another
Eg
:
· Engineering industry may have
“ Material Cost “ of 50 - 60 %
· Telecom
Industry
may have “ Machinery Cost “ of 70 – 80 %
· IT /
BPO Industry
may have “ Manpower Cost “ of 60 – 70 %
I
have no doubt that ICMAI is
competent to carry out such an analysis every year and plot the results
graphically to see which industry needs to
lower its costs – and for which cost element
I believe it should be possible to develop a
software which can carry out such an analysis automatically ( from Annual /
Quarterly Reports ? ) and publish for viewing . May be there are many other
sources from which such data can be compiled on a dynamic basis
It
should also be possible to carry out such “ INPUT
COST ANALYSIS “ for industries of countries which are competing with our
own industries , in the export market
If
for example, our garment exporters are unable to match the low prices being
quoted by the garment manufacturers of Bangladesh / Philippines, such an
analysis might reveal that their “ Cost of Money (
Bank Interest Rate ) “ and “ Cost of Raw Material (
Fabric ) “, is way below what our manufacturers have to bear
I
suppose , some such “ INPUT COST
ANALYSIS “ must be already happening for taking “ ANTI
DUMPING DUTY “ related decisions
Such
“ Business Analytics “ would provide very valuable inputs to the government
Policy Makers for quick “ Course correction “
Dear
Shri Amit Apteji [ President , ICMAI
]
I
urge you to forward this mail to the 70,000 members of ICMAI , asking for their views on ,
“
How to make India , a Low Cost Economy ? “
Please consider this project as your
Institution’s own Corporate Social Responsibility [ CSR ]
initiative
I
am sure they have many more – and concrete – suggestions beyond what they will
find in my following blogs :
Level
Playing Field ? ………………………………………………………………………………..[
11 June 2016
]
How
to break the vicious circle ? .........................................
…………….[ 03 July 2016
]
Teach
them to fish ……………………………………………………………………… …………… [ 05 Nov 2016 ]
Automation
is Inescapable ……………………………………………………………………………[ 30 Nov 2016 ]
Gist :
Reduce " Cost of
Inflation " by limiting " Annual
Wages-Salaries Increases " to 75 % of
the preceding year's
GDP number ( ie: if GDP for 2015, is
8 % , maximum salary /
wage
increase that can be granted on 01 April 2016 , will be 6 % )
.
How
much capital needed to create ONE job ? …………………………
……………[ 22 June 2017
]
Solar
Power at Re 1 / kwh ? ………………………………………………………….
[ 29 Jan 2017
]
Unlimited
Power and around the clock ………………………………………….
[ 29 July 2016
]
Universal
Basic Income ……………………………………………………………….. ……………[ 20 Jan 2017 ]
Can
Indian IT re-invent itself ? ……………………………………………………..
……………[ 03 Feb 2017
]
HOW
CHINA MAKES CHEAP ? ……………………………………………………………………….[ 08 Nov 2014 ]
"
BACK FACTORY " OF THE WORLD ? …………………………………………………………..[ 09 Sept 2015 ]
How
to Boost Economy ………………………………………………………………………………[ 20 Sept 2017
]
In a
State of Denial ? ………………………………………………………………………………….[ 22 Sept 2017
]
What
would happen ? ………………………………………………………………………………….[
29 Sept 2017
]
Discovering
the Obvious ? …………………………………………………………………………..[ 30 Nov 2017 ]
Not Good
Enough ! ………………………………………………………………………………………..[
02 Dec 2017 ]
Saving
Jobs : Creating Jobs ………………………………………………………………………… [ 19 Dec 2017 ]
Free
Electricity ? Possible ……………………………………………………………………… ….[ 28 Dec 2017
]
Of
Interns and Apprentices ………………………………………………………………………….[ 07 Jan 2018 ]
Whose
Interest ? ………………………………………………………………………………………..[ 26 Jan 2018
]
Car
Grave-Yard of World ? ………………………………………………………………………
[ 14 Feb 2018
]
Modiji’s
( incomplete ) Message ! ………………………………………………………………. [ 13 Mar 2018 ]
A TradeWar Epidemic ? ……………………………………………………………………………
[ 22 Mar 2018 ]
Thanks for Speaking Up !
…………………………………………………………………………
[ 27 Mar 2016 ]
A
Robotic Invasion ? ……………………………………………………………………………
[ 19 Apr 2018
]
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