TheRightWaytoControlPeriodExpense期间费用本钱操纵相关外文文献文档格式.docx

1、 72, 3; ABI/INFORM Complete pg. 55-59BY DONALD A. J. BYRUMYear in and year out, the greatest challenge facing industry is cost control. No manager in his right mind would try to control direct material costs by stopping the purchase of direct material. Such an action obviously soon would bring produ

2、ction to a stop, i which would bring sales to a stop, which would bring the business to an end. Managers are smarter than that. They will have their engineering staff design out the most costly components and then have their purchasing staff find the least costly suppliers for the remaining componen

3、ts.In the same way, no manager in his right mind would try to control direct labor costs by firing his direct workers. The result would be exactly the same as not buying direct material. Instead, design engineers would be asked to simplify the construction specifications, and manufacturing engineers

4、 would be asked to provide tools and equipment that would maximize worker efficiency.In both these instances management recognizes, perhaps only subconsciously, that the cost is a symptom, not a disease, and that it is the disease that must be attacked. To continue the medical metaphor, the disease

5、is like an active cancer that will grow continuously unless it is attacked continuously.But consider how management has handled salaried expense, where the normal method of cost control is decimation, that is, elimination of a percentage of the head count in expectation of a equal percentage reducti

6、on of salaried expense. It never happens. In fact, such actions have been known to result in an increase in total period cost expense.The question is, What is the most effective way of controlling period costs? The answer is through exactly the same techniques as are used for direct material and dir

7、ect labor, that is, changing the design specifications of the job description to eliminate inefficient, redundant, and unnecessary work elements. The difference is that cost analysts and administrators make the design changes rather than engineers and buyers.The design changes must be completed and

8、implemented before you can expect to see a cost reduction flow through to the P&L. The design changes require an application of manpower resources to create, so it is best to undertake them when times Eire good rather than wait until things are tough. Put simply, if you want to save period costs nex

9、t year, you must do the design work this year.As with direct costs, the first step in reducing period costs is identifying those conditions, practices, and procedures that cause the costs （not the people who are the result）. Everything must be open to question; there can be no sacred cows. For this

10、reason it is usually best for outsiders such as administrators and cost analysts to do the actual design change work rather than having functional managers do it.Outsiders are far less likely to have any ingrained bias, and it is a fact ofhuman nature that one can see inefficiencies in anothers oper

11、ation much more easily than in ones own. Conversely, ones own employees are generally better than outside consultants because they already have a working knowledge of the existing state of affairs and usually will start with a pretty good idea of where some, at least, of the bodies are buried. This

12、could mean a two- to three- man-month head start. In addition, each project worked on invariably will expose other areas that should be investigated. Effective period cost control and reduction should be a continuous process.TOO MANY COPIESOnce upon a time, before the advent of mainframe computers a

13、nd office copiers, reports were short, few in number, and had limited distribution. Unfortunately, that is no longer the case. For all of the benefits accruing from them, it is nevertheless true that computers and copiers are the greatest wasters of manpower in modern industry. This situation arises

14、 because management always is pressing for more, new, or different information and reports but rarely, if ever, considers purging old reports.A case in point was a fair-sized manufacturing operation of about 2,000 people. Each month data processing produced 41 reportseight weekly reports and nine mo

15、nthly summaries. A total of 321 copies was produced. The copies contained 140,000 pages and were distributed to 63 persons. It took about two man-months to interview all 63 persons and find out what was happening to the 321 copies. Eventually, it was determined that the weekly reports were totally u

16、nneeded. It was further decided to produce only two copies of the monthly reports, one of which was filed in an office at the north end of the building and the other in an office at the south end.It took several months for all of the results of this change to show up, and some came in unexpected pla

17、ces. Manufacturing removed more than 300 used filing cabinets from the shop floor and sold them. This removal freed up more than 3,000 sq. ft. of floor space, which then was used to store materials that had been kept in an outside warehouse （rental cost $30,000 per year）. Giving up the warehouse, in

18、 turn, eliminated the need for a driver and truck （operating costs about $4,000 per year） used exclusively for moving goods to and from the warehouse. In addition, two file clerk positions were eliminated, and a printer operator in data processing was eliminated. Finally, open purchase orders for 42

19、 new file cabinets were cancelled, as was a $20,000 appropriation for an additional printer and burster and an $18,000 appropriation for an additional truck. No one ever bothered to figure out how much was saved in computer paper or report folders.Finally, from a human standpoint, no one got fired.

20、Because the changes were planned and orderly and took place over several months, all four people in eliminated positions were able to move into other, similar jobs that had become open through natural attrition. In addition, because the cause was excised, a permanent cost reduction in excess of $100

21、,000 per year was realized. Not a bad payback for about two man-months of effort.Even less conspicuous than computers are office copiers. In fact, the cost of individual copies has become so low that their true cost usually is ignored. The true cost is the labor needed to copy, distribute, glance at

22、 （and in some cases read）, and file. It probably takes an average time of about five minutes to perform all of these operations. Multiply all of the copies produced on all machines by five and divide by 120,000 to find the equivalent number of people involved with copies.One relatively small operati

23、on （300 persons） was producing 180,000 copies per year. The cost was only slightly more than $2,000, so they werent concernedthat is, until it was pointed out that copies were the exclusive preserve of indirect people （100 of the 300） and that 180,000 copies were the equivalent of eight persons. The

24、re was a subsequent clampdown on copy making, resulting in about a 33% reduction in the number of copies over the following months. While no jobs actually were eliminated, there was a small reduction in indirect overtime （about points）.With work elements this small, its often impossible to make a di

25、rect connection between the cause and effect. One must work almost on faith but with the firm knowledge that there truly is a cause-and-effect relationship and that it ultimately must be reflected in the P&L.TOO MANY BODIESA growing problem in many older organizations is the number of levels of loca

26、l management. New companies tend to have only two or three levels of functional managers, plus one additional level for the company manager. Older organizations often have four or five levels of functional managers and up to three more levels to tie the organization together.If youve ever played the

27、 party game where a message is passed from one person to another, youll be aware that it usually is totally garbled by the time it reaches the fourth individual. This is exactly the same thing that happens in business as information passes up the management pyramid and decisions filter down. The low

28、est level of management will be fully cognizant of both the form and details of what the workers actually are doing. The second level of management will have a firm idea of whats going on but few details. The third level of management will have only a general idea of whats going on and no details. T

29、he fourth-level manager knows only what is supposed to be going on.The second problem with too many layers of management is the delay that each level builds into the whole process. It is axiomatic that the greater the number of layers of managers, the longer it takes for decisions to be made and imp

30、lemented. Better managers are usually aware of the weaknesses of the information immediately available to them. Consequently, in effect, they reach down two or more levels in the organization to where they can find information of a quality that they can use comfortably to make a decision. Thus the d

31、elay. If they didnt do so, the probability of a correct decision would be reduced significantly.To overcome this inertia, overly structured organizations tend to develop an express system. This is an individual or group who, in order to handle day-to-day problems, has direct access to the decision l

32、evel, bypassing the entire chain of command. While this procedure has the short-term effect of keeping the company going, it also has the adverse effect of putting the intermediate levels of management even more in the dark about what actually is happening in the workplace. Under extreme conditions this group even may develop autonomous decisionmaking power, which eventually can lead to a situation in which managers not only are unaware of what is happening but have no way of finding out.Identify