Cost Deployment represents one of the main innovations introduced by the approach Lean World Class® and is a cost management logic that allows for direct connection and thus easy identification on the income statement, in terms of cost reduction and monetary benefits, of the results achieved through the improvement activities launched
Cost is a competitive variable, both internal and external, but in companies, when costs are mentioned, immediate reference is made to the Administration, Finance, and Control function as the center of cost knowledge.
Actually Is manufacturing the beating heart of the company, the area that generates the value transferred to the customer: this is where improvement projects start and where the first successes are achieved. This is why it is fundamental for manufacturing to be Lean World Class.®.
In production, however, in most cases, the concept of cost is linked to budget adherence, acting as a tool for economic planning and control. The latter is often constructed through inter-departmental negotiation based on the previous year's results, without highlighting waste, losses, savings, and changes in products or production processes that generated them. For this reason, a tool is needed that provides an analytical and in-depth view of costs as a strategic variable.
Cost Deployment, or “Apertura dei Costi” in Italian, provides a breakdown of costs along the levels of the manufacturing organizational structure, down to the individual operation, passing through Operating Units, Technological Units, and Work Centers.
Cost Deployment is a structured path with seven main steps, each associated with specific tools, in order to:
- Understanding the relationships between cost factors, the processes that generate them, and the various types of waste and losses
- Finding the connection between waste/loss reduction and corresponding cost reduction
- Quantify the potential and expected economic benefits
- Prioritize improvement plans based on an objective cost-benefit analysis
This cost management logic represents one step ahead, the new way to tackle the challenges of the current competitive landscape.
FURTHER DETAILS
- Cost Deployment: From Operational Performance to Economic Performance
Read the White Paper - Aptalis Pharma – Case Study
Cost Deployment: Improvement «driven» by cost savings
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- Lean World Class®, the evolution of Lean Thinking – Article published in Leadership&Management
Download
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