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Cited by 190Accounting and Organizational ManagementCorporate Governance and ManagementAccounting Theory and Financial Reporting

The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.

Strategic cost management

·2013·Management Accounting
DOI 10.4324/9780080938943-22
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Overview

AI snapshot

Written from the paper’s full text.

TL;DR

This chapter presents a practitioner-oriented framework for strategic cost management, linking the value equation, market structure analysis, cost analysis techniques, total cost of ownership, and collaborative supplier cost approaches. It argues that purchasing should optimize overall value rather than simply driving down unit purchase prices.

Key findings

  • Value is defined as (Quality + Technology + Service + Cycle Time) / Price, so strategic management should optimize overall value rather than "blindly driving down unit purchase prices at the expense of quality or lead time."
  • Purchasing strategy is segmented by a value/supply matrix: generics (low value/high supply) → automate purchasing and use p-cards/catalogs; commodities (high value/high supply) → competitive bidding and price analysis; unique products (low value/low supply) → reverse price analysis and migration toward standardization; critical products (high value/low supply) → comprehensive cost analysis, collaboration, and early supplier integration.
  • Cost analysis tools include cost markup, margin pricing, rate-of-return pricing, reverse engineering/"should cost" breakdowns (direct materials, direct labor, overhead burden, SG&A/profit), and break-even analysis via Net Income = P(X) − VC(X) − FC.
  • Total cost of ownership spans purchase price, acquisition and usage costs (sourcing administration, transportation, installation, maintenance, warranty, operational support), and end-of-life/opportunity costs (salvage, disposal, downtime, lost productivity).
  • Collaborative mechanisms include target costing (Market Selling Price − Desired Profit = Allowable Target Cost) and cost savings sharing (e.g., a 50/50 split of labor or scrap savings); an 85% learning curve is given as an example, meaning direct labor declines by 15% each time production doubles.

Methods

  • Not stated in the paper. The text is a conceptual/practitioner treatment organized as topic sections (value equation, market structures, pricing models, cost analysis, TCO, collaboration, project management, learning curves, VA/VE, quantity discounts, process mapping) with no described study design, sample, or data.
  • No empirical analysis, dataset, or statistical method is reported; formulas and frameworks are presented illustratively.

Limitations

  • Not stated in the paper. The text contains no limitations section or caveats about the frameworks presented.
  • Evident from the text: the material is an outline-level presentation of concepts (bullet points and image placeholders) with no empirical evidence, case data, or citations to support the prescriptions; the break-even model's stated assumptions (fixed costs constant, variable costs linear) are the only explicit caveats given.

Model-written summary. Check it against the paper before relying on it.

Integrity signals

Registry

Crossref · 10.4324/9780080938943-22

Cites

1 of 1 references verified0 citation errors · 0 not checkable

Statistics

Nothing to recompute.

Verification

Claims the paper makes

1 No basis given

    • Probably not a substantial claim. 1
    1 of 1

    • The authors state this as an assumption.

      Fixed costs are constant.

      “Assumptions: Fixed costs constant, variable costs linear.”

    • The authors state this as an assumption.

      Variable costs are linear.

      “Assumptions: Fixed costs constant, variable costs linear.”
    2 of 2

    Citations

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    Metadata

    Venue
    Management Accounting
    Publisher
    Routledge
    Published
    2013-01-11
    Pages
    139-152
    DOI
    10.4324/9780080938943-22
    OpenAlex
    W1508084937
    Cited by
    190
    References
    1
    Citations by year
    2026: 1 · 2023: 2 · 2020: 2 · 2019: 3 · 2018: 4 · 2017: 4 · 2016: 5 · 2015: 5 · 2014: 7 · 2013: 7
    FWCI
    45.08
    Type
    book chapter
    Language
    en
    Open access
    closed
    Locations
    Routledge eBooks (publishedVersion)
    Topics
    • Social Sciences › Business, Management and Accounting › Accounting › Accounting and Organizational Management
    • Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Governance and Management
    • Social Sciences › Business, Management and Accounting › Accounting › Accounting Theory and Financial Reporting
    Keywords
    strategic cost management, cost management, cost reduction, business strategy

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