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Part - IV

How Cost Competitiveness is achieved?

In the classic "The Goal", El ponders over the ultimate Goal for a firm and realizes that money making might be the closest to it. Modern day organizations make efforts to generate maximum revenues while minimizing the costs. Finance, Accounting, HR and Procurement are some of the functions that are under scrutiny for minimizing costs for a firm. A centralized service center offers the much needed cost efficiency.

Centralizing business functions like purchasing, month-end closing procedures, general accounting, accounts payable and receivable can result in cost reductions while improving efficiency.

Traditional firms, owing to the manner in which organic growth takes place, have many of the functions executed locally and for others functions, data are sent to corporate office for consolidation and analysis. Owing to the varied strategies adopted at regional levels, there exist disparate systems, which are often incompatible and hence information exchange can be inefficient. Manual processes like data entry impact the speed and efficiency of whole system, hindering the timely and cost efficient receipt of information.

Repetitive transactions existing in these functions can be both automated and handled in bulk and hence cost competitiveness is realized. Elimination of manual processes takes place that makes them lean and devoid of wastages.

Business Case for Implementing Shared Services Strategy

SSC enables firms the paradigm shift of transforming the activities and resources from repetitive transaction processing to value adding expertise. Lets for once and for all, analyze the benefits and costs by implementing SSC by creating a business case.

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* Contributed by -
Narendar Lokwani,
II Year, PGSM,
IIM Bangalore,
Pre-Sales and Mktg Team, Aditi Technologies.