A Study On Strategic Cost Management For IIPC Supply Chain

Strategic cost management is part of entire corporate strategy management, i.e. it is cost management information applying to strategy management and enhancing the development of major management function. Strategic cost management is based on value chain analysis, identifying key cost driver, and supporting corporate gaining competitive advantage in the market place. Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouse, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements.This paper is beginning with the theory of strategic cost management, use value chain analysis to study the contribution of each value-creating activity, use cost driver analysis to identify activities that may cause cost increase or decrease from structural cost driver and executional cost driver, use competitive advantage analysis to appraisal the value creation in IIPC supply chain transformation due to IBM 5-day delivery strategy and configure to order strategy.Case study for application of Total Cost of Ownership in lowing down production cost, and application of Activity Based Costing in computing "true" manufacturing cost of product, providing supporting to pricing strategy, and calculating service part cost for decision making for differentiation strategy i.e. configure to order. This study indicates that, 5-day delivery strategy is challenging for building a responsive supply chain. Through this transformation, IIPC enhanced competitive advantage for differentiation strategy in delivery cycle and configure to order. Meanwhile, because of the scale economy caused by volume boosting, and endeavor of close down of oversea factories, application of e-commerce, enhancement of sourcing, direct ship, created value for customer, enhanced competitive advantage. Finance people contributed a lot for performance measurements, project assessment, seeking for the way of cost deduction. In practice, management of procurement becomes the key factor of supply chain management, and potentially has many opportunities in cost deduction.