About Cost Control

What is the role of the cost controller?

How a cost controller can be effective and efficient in his work?

Why such a job is more important these days than ever?

In the first beginning, to answer the previous questions we have to understand first the elements that lead to a good environment where cost control procedures can be applicable.

Data

Data collection and recording is the most important and also dominant element in any successful costing system, especially in manufacturing entities where there are so many data coming out of the manufacturing process itself and its related activities.

To start a costing system, you have to make sure first that all the processes and activities of the entities are translated into written figures in a predetermined and standardized format, and also checked, revised ,corrected and completely recorded.

I just want to explain that the data I mean here is not the financial data like bills and invoices and so on, as they are fundamental, the data here is the activity related data like production report, I mean any kind of activity inside the entity.

The standard

The bench mark and the standards are the base which is going to be used in analysis like the variance analysis, the SWOT analysis and so on. Standards can be historical data or competitors or best practice.

Analysis

If you didn’t know where you are standing now ,you would never know where you are going later.

Using the adequate data and the standards, you can easily by analysing the differences know what are the activities ,departments ,processes ,or whatever segments need to be improved or maintained or even to be getting red off.

In this specific area comes the importance of the cost controller (effective and efficient one only ) .He is responsible for all of the above using his own abilities sometimes and the aid and cooperation of others inside the entity most of the time.

Of course he is not executive manager. So, he cannot take the decisions to improve or change as all these activities are not under his discretion, but by his analysis, reports and suggestions he can help the top management and the executive managers to take those decisions and also to be informed of the up to date cost situation inside the entity.

For me I have been doing this job for the last eight years. Cost controlling is a very interesting and mind using job.

The global market is very competitive and it is also getting expanded day by day as so many new entities are established each and every single day.In order to keep yourself a place in this market and to have your own market share and to be competitive and profitable in the same time, you have to concentrate not only on getting more customers or playing with the prices as you will found out that there so many constraints that holds you back.

It will be easier to use the elements which are under your discretion than those which are affected by the market condition.

Maintaining the good quality, there are always opportunities to improve and keeping the cost under control.

Mahmoud Fawzy

Head of Cost Control

LECICO Egypt

22/1/2015