Review the Value Chain Functions Exhibit 13-2 on page 507 of Accounting: What the Numbers Mean. Develop a value chain specific to projects you manage. This might involve you changing the diagram to have different components. Once you have the project-driven value chain, determine the cost management initiatives that should take place along the value chain. Post your response, and then please add your thoughts to another student's cost management initiatives to expand on the way he/she sees the ability to manage cost in a his or her projects. LO 2 Describe how cost management plays a strategic role in the organization's value chain. Considering the broad scope and function of an organization's activities helps one to appreciate how important quality cost information is to the manager. Too often, cost accounting is viewed in its traditional role of determining the cost of producing products or providing services and the related accounting for those activities, results-oriented, short-term view of cost. A more contemporary view is that costs must be understood and managed at each stage of an organization's value chain to provide an awareness of cost over the entire life cycle of a product or service-a prescriptive, long-term view of cost where cost management clearly becomes a strategic initiative. A value chain is the sequence of functions and related activities that, over the life of a product or service, can ultimately create a "value difference for the customer. The significance of viewing each function as a link in a chain is that each is critical to managing the firm's activities for each product or service at each stage of the value chain, and a weakness in any element of the value chain could impair management's desired outcome. The sequence of functions that compose the value chain and examples of cost management initiatives at each stage of the value chain are shown in Exhibit 13-Z Exhibit 13-2 Value Chain Functions Product/Service Idea Cost Management Initiatives Is the cost of generating new ideas and Research and experimentation justified? development What portion of the operating budget should be used for R&D? How much is the competition spending? Design Can a product or process flow be designed with a resulting cost that allows effective competition in the market and that generates appropriate ROI? Production 000000 What is the cost of acquiring raw materials and converting them into a finished product? How much should it cost to produce each unit? Should the production of certain product component parts be outsourced? Marketing What is the cost to promote and sell the firm's products? Is the use of a digital marketing strategy cost effective? Distribution How much is delivery costing per mile? Per pound? Are more effective carriers available for certain deliveries? Customer service What is the after-sale cost of product support activities? What is the cost of an unsatisfied customer? Desired ROI Review the Value Chain Functions Exhibit 13-2 on page 507 of Accounting: What the Numbers Mean. Develop a value chain specific to projects you manage. This might involve you changing the diagram to have different components. Once you have the project-driven value chain, determine the cost management initiatives that should take place along the value chain. Post your response, and then please add your thoughts to another student's cost management initiatives to expand on the way he/she sees the ability to manage cost in a his or her projects. LO 2 Describe how cost management plays a strategic role in the organization's value chain. Considering the broad scope and function of an organization's activities helps one to appreciate how important quality cost information is to the manager. Too often, cost accounting is viewed in its traditional role of determining the cost of producing products or providing services and the related accounting for those activities, results-oriented, short-term view of cost. A more contemporary view is that costs must be understood and managed at each stage of an organization's value chain to provide an awareness of cost over the entire life cycle of a product or service-a prescriptive, long-term view of cost where cost management clearly becomes a strategic initiative. A value chain is the sequence of functions and related activities that, over the life of a product or service, can ultimately create a "value difference for the customer. The significance of viewing each function as a link in a chain is that each is critical to managing the firm's activities for each product or service at each stage of the value chain, and a weakness in any element of the value chain could impair management's desired outcome. The sequence of functions that compose the value chain and examples of cost management initiatives at each stage of the value chain are shown in Exhibit 13-Z Exhibit 13-2 Value Chain Functions Product/Service Idea Cost Management Initiatives Is the cost of generating new ideas and Research and experimentation justified? development What portion of the operating budget should be used for R&D? How much is the competition spending? Design Can a product or process flow be designed with a resulting cost that allows effective competition in the market and that generates appropriate ROI? Production 000000 What is the cost of acquiring raw materials and converting them into a finished product? How much should it cost to produce each unit? Should the production of certain product component parts be outsourced? Marketing What is the cost to promote and sell the firm's products? Is the use of a digital marketing strategy cost effective? Distribution How much is delivery costing per mile? Per pound? Are more effective carriers available for certain deliveries? Customer service What is the after-sale cost of product support activities? What is the cost of an unsatisfied customer? Desired ROI