Day 1: Driver-Based Cost Modeling
Identifying Cost Drivers
A. Analyzing historical cost data to find volume and activity drivers
B. Categorizing costs into fixed, variable, and semi-variable components
C. Mapping cost drivers to specific business processes and departments
Building the Cost Model
A. Structuring the model to link drivers directly to cost outputs
B. Incorporating inflation, efficiency gains, and scale economies
C. Validating the model against actual historical results
Implementing the Model
A. Integrating the cost model with the existing budgeting system
B. Training finance and operational staff on model usage
C. Establishing a routine for updating driver assumptions
Day 2: Rolling Forecasts and Variance Control
Designing the Rolling Forecast
A. Transitioning from static annual budgets to dynamic rolling forecasts
B. Setting the forecast horizon and update frequency (e.g., 12+12)
C. Automating data feeds from actuals to the forecast model
Variance Analysis Techniques
A. Calculating price, volume, and mix variances for key cost categories
B. Investigating root causes of significant favorable and unfavorable variances
C. Differentiating between one-time anomalies and structural shifts
Implementing Control Routines
A. Establishing monthly variance review meetings with operational owners
B. Creating standardized variance reporting templates
C. Defining escalation triggers for budget overruns
Day 3: Cost Allocation and Profitability Analysis
Activity-Based Costing (ABC)
A. Identifying activities and assigning resource costs to them
B. Determining cost drivers for each activity pool
C. Allocating activity costs to products, services, or customers
Standard Costing and Variance
A. Setting standard costs for materials, labor, and overhead
B. Calculating purchase price and usage variances
C. Updating standards periodically to reflect current conditions
Analyzing True Profitability
A. Calculating gross margin by product, customer, and channel
B. Identifying unprofitable products or customers using allocated costs
C. Developing strategies to improve or exit unprofitable segments
Day 4: Cost-Control KPIs and Dashboards
Selecting Relevant KPIs
A. Aligning cost KPIs with strategic objectives and operational drivers
B. Choosing a mix of leading and lagging indicators
C. Defining clear formulas, data sources, and owners for each KPI
Designing the Dashboard
A. Structuring the dashboard for quick visual comprehension
B. Incorporating trend lines, benchmarks, and variance indicators
C. Ensuring the dashboard is interactive and drill-down capable
Driving Action from Dashboards
A. Establishing a regular review cadence for dashboard metrics
B. Assigning accountability for KPI performance to specific managers
C. Linking dashboard insights to continuous improvement initiatives
Day 5: Structured Cost-Reduction Programs
Planning the Cost-Reduction Initiative
A. Setting clear, measurable savings targets and timelines
B. Identifying cross-functional teams and executive sponsors
C. Developing a communication plan to manage organizational change
Executing Savings Initiatives
A. Implementing quick wins (e.g., procurement savings, waste reduction)
B. Launching longer-term structural changes (e.g., process automation, outsourcing)
C. Tracking actual savings against projected targets
Sustainment and Governance
A. Embedding cost controls into standard operating procedures
B. Implementing governance to prevent cost creep and backsliding
C. Recognizing and rewarding teams that achieve savings targets
