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Iris Wedepohl

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Cost management in uncertain times - From stepchild to darling?


Practical implementation of active, transparent cost management was the central issue addressed during the 5th FACTON Congress on October 17 at the “Petersberg” near Bonn. Participants included representatives from leading German and international industrial enterprises. The discussions centered around one question: Companies are facing rising innovation pressure paired with shortened economic cycles. How can they survive in volatile markets under these increasingly difficult conditions?

“Businesses may be conscious of cost management, but they lack the ability to implement it in practice,” criticized Dr. Ralf Hofmann, CEO of Mieschke, Hofmann und Partner (MHP) GmbH, in his presentation. According to a survey conducted by his process and IT consulting firm MHP, around 89 percent of companies see cost management as an integral component of their corporate strategy. But over half of all respondents indicated that they lacked the processes and IT structures to even identify cost drivers. To this day, many customers are still working with a chaotic mix of Excel spreadsheets without any uniform processes or evaluation standards.

However, in today’s uncertain times it is more important than ever to have a firm grip on costs, emphasized Prof. Dr. Bernd Gottschalk, former president of the German Automotive Association (VDA) and sponsor of the event. Companies must concentrate on their cash flow. This is the only way to finance the innovations of the future, which will ultimately be the sole weapon businesses can use to battle steadily growing price pressure. Gottschalk noted that the key to accomplishing this goal lies in cost management: “Cost management is the most effective card businesses can play,” he said. “An existential question for companies in the future will be how they can achieve full transparency over costs and, consequently, a clear overview of the options available for reducing these costs.” This will be their only chance for conducting business effectively.

Automotive supplier MANN+HUMMEL identified this trend early on and responded by launching the FIT (Financial InTegration) project: Michael Distl, Vice President Finance & Controlling at MANN+HUMMEL, explained how his company harmonized its accounting activities throughout the entire enterprise, which had grown rapidly as a result of numerous acquisitions. In acquiring new subsidiaries, the company was also acquiring new data records and foreign structures. This is why they decided to standardize the databases and accounting processes and integrate them into a centralized, enterprise-wide IT system. These efforts have helped avoid data redundancy and ensure that all of the company’s cost-relevant information is more precise and more rapidly available with less expenditure than before – in every department at every location around the globe.

Alexander M. Swoboda and Axel Weese, Managing Directors at FACTON and organizers of the FACTON Congress, concluded the day with a positive summary of the event: “Our speakers made it very clear that active, reliable cost management can be implemented in a practical way. This is also our message at FACTON, which is why we are working to ensure that cost management is no longer treated as a stepchild but will soon become businesses’ darling instead.”