Strategic Cost Transformation

Introduction

Strategic Cost Transformation is about transforming how we think about and manage costs. We tend to think about costs as accounting values. We think about costs as being money, and that if we reduce costs, we save money. We believe we should look to cost data for answers and guidance on improving financial performance.

This book proposes all three of these notions are incorrect. Costs as cash are not accounting values at all. In fact, all cash costs occur independently of accounting. Accounting costs are derived, to a certain extent, from cash costs, but are generally not cash themselves. When you think about the cost to perform an activity such as to process an invoice or to answer a phone, do you pay the calculated cost amount ...