On Embracing Total Cost Management for Competitive Advantage by Small and Medium-sized Enterprises in China

摘要

Small and medium-sized enterprises (SMEs) in China tend to be inward-looking, near-sighted, functional, segmental and reactive in their cost management, which has hindered them from competing effectively on the market. Adopting total cost management (TCM) philosophy and tools would help SMEs in China to enhance their competitiveness. As a business philosophy, TCM holds that cost management is the responsibilment of every department and individual along the value chain, and that pro-activity, management of internal and external linkages, and long-term perspective are all necessary for building up cost advantage. To put TCM philosophy into practice, SMEs in China can resort to such tools as value chain management, activity-based cost management, targeting costing, and supply chain management. However, implantation of TCM is not easy. It depends on such critical factors as top management commitment, strong cost-conscious corporate culture, sophisticated information facilities, timely reward and continuous training.