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50 Reasons to use cost management software

‘Why should I use cost management software?’ is one of the questions we are asked most frequently. Since there’s more than one answer to this question, we’ve gathered the most important reasons for using cost management software right here. Feel free to use these for:

You want to be more cost-transparent to stakeholders.

You want to know which products contribute to margin the most.

You want to know which products are loss-making.

Simulate the effect of eliminating loss-making products. 

You want to know the top 10 profitable customers

You want to know the Pareto of margin per product, per customer or another dimension.

You want to simulate changes in client mix.

You want to simulate changes in product mix.

You want to simulate changes in product volumes.

You want to identify any unused capacity.

You want to identify obsolete resources and activities.

You want to identify inefficient or ineffective processes.

You want to know about potential efficiency improvement areas.

You want to explore supply chain efficiency options.

You want to enable the workforce to be more involved to improve.

You want to disclose all cost & capacity information to managers.

You want to disclose all cost & capacity information to the workforce.

You want to see that improvement initiatives result in better performance.

You want to buy new business & simulate the effect on capacity, unit costs and margins and overlap in processes after merging.

You want to simulate the effect of outsourcing business.

You want to estimate a new product’s life cycle margin.

You want to simulate the effect of a new product on margin.

You want to simulate the effect of portfolio changes.

You want to show that corporate overhead costs are properly allocated to avoid international taxation issues. 

You want to show that all costs are allocated according to IFRS/Basel/ Solvency/ GAAP or other reporting standards.

You want to show there’s no cross-subsidizing mechanism in your cost allocation to satisfy market-regulating authorities.

You want to show and prove to internal clients that the pricing is fair and based on logical drivers and true causality.

You want to automate the cost management system as much as possible.

You want to be able to change cost model intelligence without the vendor locking you in.

You want to integrate the cost and capacity information in your ERP.

You want to understand the breakdown of unit costs.

You want to understand the usage of available capacity. 

You want to save costs and/or increase margins

You want to know which capacities have to be adapted to change in demand.

You want to know if it is better to hire temporary staff or increase payroll staff.

You want to see current cost budget gaps and the true cause of it.

You want to know how to change the causes for the better.

You want to simulate proposed improvement initiatives on margin.

You want to disclose performance information to employees.

You want to know where they can save money without compromising quality levels.

You want to know when quality is compromised.

You want to know the costs of taking more risk by lowering service levels.

You want to know if they can improve the efficiency of the supply chain.

You want to show internal clients how to save costs together.

You want to understand the bigger picture of the company.

You want to know their performance targets.

You want to understand where they can improve.

You want to be able to start improvement initiatives.

You want to see the effects of those initiatives on performance.

You want to prove that when cutting some working standards increases costs of noise and increases long term costs.

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