The Goal of Cost Management Strategies

Even though it appears that the focus of cost management strategies is to reduce cost, it is obvious that in the long run there will be times when costs will inevitably increase. If not, then theoretically, at some point down the road, you would expect to buy something and have your supplier deliver the product or service along with a check in your favor. As I said earlier, the first step in the AIM & DRIVE process is to agree to “manage” costs. As long as your supply chain costs are consistently lower than that of your competing supply chain, you have a sustained competitive advantage. It means that in good times you are able to make a higher profit than your competitor if your sales prices are the same. ...

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