Research On Strategic Cost Management Of A Company Based On Shank Model

The pharmaceutical manufacturing industry is one of the important basic industries in China’s livelihood related industries,and also an important basis for the development of China’s pharmaceutical and health industry.With the deep development of China’s market-oriented economic environment and the continuous breakthrough of basic science and technology,the pharmaceutical production technology has made one achievement after another.There are often dozens or even hundreds of drugs that can treat the same disease.The difference of drugs produced by each pharmaceutical factory is becoming less and less obvious.Under the influence of the national centralized procurement policy,pharmaceutical manufacturers are facing fierce competition.This paper takes A Company as a case to carry out relevant research on strategic cost management A Company is a pharmaceutical manufacturing enterprise.Due to the changes in the external competitive environment,the case enterprise has a development dilemma.The management has paid attention to the enterprise difficulties and decided to change its business thinking to solve the difficult situation.In 2020,A Company launched the approve process management system,expense reimbursement system and fund management system.These newly launched systems combined the company’s business approval process,fund flow and expense management flow with the company’s original ERP system to serve the company’s strategic management,and successfully promoted traditional cost management to strategic cost management.However,A Company’s strategic cost management is still in its infancy,there are still some problems that cause the strategic cost management of enterprises to fail to give full play to the advantages of cost management.In this paper,based on Shank’s strategic cost management theory,according to the work practice and research activities in A Company,the research methods such as case analysis,field survey,literature analysis,and hierarchical analysis are used to study,find that A Company has in three dimensions are found: in the strategic positioning dimension,the comfort circle inertia brought to A Company due to industry particularity and exclusive varieties,As a result,when the external environment changes,the company does not timely formulate clear long-term strategic objectives for the development of the enterprise;In the value chain dimension,due to insufficient R&D project planning,inadequate process supervision,excessive procurement of materials,increased inventory backlog,frequent changes in suppliers,and strong subjective factors in supplier selection,A’s value chain is not perfect;In the dimension of strategic cost drivers,because the systematic strategic cost management idea does not cover the whole staff,the communication between R&D and production departments is not smooth,leading to the weak control of strategic cost drivers of A Company.In Shank’s strategic cost management theory has three aspects,strategic positioning,value chain and strategic cost drivers.The paper proposes the improvement measures: establishing cost leadership and differentiation integration strategy in strategic positioning In terms of integrating and optimizing the value chain,strengthen the approval and process control of R&D projects,improve procurement and inventory management,and select suppliers based on the analytic hierarchy process;In terms of strengthening strategic cost drivers,we should strengthen the awareness of strategic cost management of all staff and strengthen internal relations.We have formulated such safeguard measures as establishing a strategic cost management learning group and optimizing the production process management system.Research based on this paper,we have improved the strategic cost management system of A Company,so that the strategic cost management of A Company at the initial stage has a clear development direction and practice route,and improves the level of the company’s strategic cost management.This paper studies the Shank mode strategic cost management of A Company,with a view to providing support for improving and optimizing the strategic cost management of A Company,as well as providing reference for other enterprises in the pharmaceutical manufacturing industry to implement strategic cost management,so as to help the pharmaceutical manufacturing industry develop better.