CONTROL - PRIME COSTS - OVERHEAD
Entropy and human nature continually prove: without timely and effective control, costs always escalate and quality slips quickly. Control is absolutely necessary, yet all control detracts from our primary focus on the needs of people. The costs of control in the form of diverted dollars, time, and attention must never surpass the potential savings from control. Neglected people are always costly. Careful design of controls will assure maximum of feedback for decisions balanced with a minimum of assets diverted from people.
Cost control deals with two primary categories. (1) Prime costs are the direct costs of producing and delivering your product and service. The two major components are cost-of-goods sold, and direct labor costs. Both of these costs are large and provide much room for control that so affects your fragile bottom line. (2) All indirect costs are overhead. Any time we can reduce overhead, we can redirect resources to people and producing value to the customer.
Control uses the various tools of value chain analysis (VCA). Value analysis is the systematic activity and discovery to reduce costs and improve the performance of products and services. Use the tool & rules provided for smooth and efficient flow of value.
Remember: Do not lower any cost, if it will lower customer perception of value.
Section 5 CONTROL – OPERATIONS
ACCOUNTING FOR DAILY OPERATIONS
POINT OF SALE CONTROLS
COST OF GOODS SOLD
INVENTORY CONTROL – SUPPLY CHAIN
LABOR COST CONTROL – PRODUCTIVITY
LABOR COST PERCENTAGE
ACCOUNTING TO GOVERNMENT
HEALTH / SANITATION / CLEANLINESS
FIRST AID – CUTS – BURNS – SLIPS
DISH WASH / CHINA POLICY