Following news report appeared in Times Of India :
Extract :
"In that sense, you ( ICMAI )
have a very important role to play , both as an institute and all your 70,000
members , to ensure that we prepare the country to manufacture , to
provide services at the right cost for us, which is competitive,
which adds value , which encourages
more business “ , said Goyal
He further said that "costing has
been one of the most important element of success or failure and I can recall
so many instances , when we have been able to make projects successful in the
last four and half years , when we have kept focus on cost “
Also, Goyal said that one can make a fancy, high
quality product with beautiful design but if the pricing is
not competitive, then it will remain a pipe dream
Dear Shri Goyalji,
You
have hit the nail on the head !
Unless
we manage to turn India, into a “ LOW COST
ECONOMY “, we cannot compete
in the looming age of “ Trade Wars “ (
aka , “ a dog eat dog “ battle of “ survival of the fittest “ )
And
the Cost Accountants can help the manufacturers to analyze a PRODUCT COST into its
following constituent “ Cost
Of ( Input …….. ) “ :
·
Money
·
Land
·
Machineries
·
Materials
·
Manpower
·
Energy
·
Compliance
·
IT
/ Communications
·
Transport
/ Logistics
·
Training
/ skilling
·
Systems
/ Procedures
·
Technology
Acquisition…..etc
Once
manufacturers get to know “ %age
of each component of the cost in the total Product Cost “ , next
question is :
“ How to go about reducing costs of each of these elements –
without lowering product quality ? “
Such
a “ INPUT COST ANALYSIS “ would need to be
carried out for each industry separately since
the “ Input-Cost Percentages
“ vary widely, from one industry to another
Eg
:
·
Engineering industry may have “ Material
Cost “ of 50 - 60 %
·
Telecom Industry may have “ Machinery Cost “
of 70 – 80 %
·
IT / BPO Industry may have “ Manpower Cost “ of 60 – 70 %
I
have no doubt that ICMAI is
competent to carry out such an analysis every year and plot the results
graphically to see which industry needs to
lower its costs – and for which cost element
I believe it should be possible to develop a
software which can carry out such an analysis automatically ( from Annual /
Quarterly Reports ? ) and publish for viewing . May be there are many other
sources from which such data can be compiled on a dynamic basis
It
should also be possible to carry out such “ INPUT
COST ANALYSIS “ for industries of countries which are competing with our
own industries , in the export market
If
for example, our garment exporters are unable to match the low prices being
quoted by the garment manufacturers of Bangladesh / Philippines, such an
analysis might reveal that their “ Cost of Money (
Bank Interest Rate ) “ and “ Cost of Raw Material (
Fabric ) “, is way below what our manufacturers have to bear
I
suppose , some such “ INPUT COST
ANALYSIS “ must be already happening for taking “ ANTI DUMPING
DUTY “ related decisions
Such
“ Business Analytics “ would provide very valuable inputs to the government
Policy Makers for quick “ Course correction “
Dear
Shri Amit Apteji [ President , ICMAI ]
I
urge you to forward this mail to the 70,000 members of ICMAI , asking for their views on ,
“ How to make India , a Low
Cost Economy ?
“
Please consider this
project as your Institution’s own Corporate Social Responsibility [ CSR ]
initiative
I
am sure they have many more – and concrete – suggestions beyond what they will
find in my following blogs :
Level Playing Field ? ………………………………………………………………………………..[ 11 June 2016 ]
How to break the
vicious circle ? ......................................... …………….[ 03 July 2016 ]
Teach them to
fish ……………………………………………………………………… …………… [ 05 Nov 2016 ]
Automation is
Inescapable ……………………………………………………………………………[ 30 Nov 2016 ]
Gist :
Reduce " Cost of Inflation " by limiting
" Annual Wages-Salaries Increases " to 75 % of
the preceding year's GDP number ( ie: if GDP for 2015, is 8 % , maximum salary /
wage increase that can be granted on 01
April 2016 , will be 6 % ) .
How much capital
needed to create ONE job ? …………………………
……………[ 22 June 2017 ]
Solar Power at Re 1
/ kwh ? …………………………………………………………. [ 29 Jan 2017 ]
Unlimited Power and
around the clock …………………………………………. [ 29 July 2016
]
Universal Basic
Income ……………………………………………………………….. ……………[ 20 Jan 2017 ]
Can Indian IT
re-invent itself ? …………………………………………………….. ……………[ 03 Feb 2017 ]
HOW CHINA MAKES CHEAP ? ……………………………………………………………………….[ 08 Nov 2014 ]
" BACK FACTORY " OF THE WORLD ? …………………………………………………………..[ 09 Sept 2015 ]
How to Boost Economy ………………………………………………………………………………[ 20 Sept
2017 ]
In a State of Denial ? ………………………………………………………………………………….[ 22 Sept
2017 ]
What would happen ? ………………………………………………………………………………….[ 29 Sept
2017 ]
Discovering the Obvious ? …………………………………………………………………………..[ 30 Nov 2017 ]
Not Good Enough ! ………………………………………………………………………………………..[ 02 Dec 2017 ]
Saving Jobs : Creating Jobs ………………………………………………………………………… [ 19 Dec 2017 ]
Free Electricity ? Possible ……………………………………………………………………… ….[ 28 Dec
2017 ]
Of Interns and Apprentices ………………………………………………………………………….[ 07 Jan 2018 ]
Whose Interest ? ………………………………………………………………………………………..[ 26 Jan
2018 ]
Car Grave-Yard of World ? ……………………………………………………………………… [ 14 Feb
2018 ]
Modiji’s ( incomplete ) Message !
………………………………………………………………. [ 13 Mar 2018 ]
A
TradeWar Epidemic ? …………………………………………………………………………… [ 22 Mar 2018 ]
Thanks
for Speaking Up ! ………………………………………………………………………… [ 27 Mar 2016 ]
A Robotic Invasion ?
…………………………………………………………………………… [ 19 Apr 2018 ]
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