Balancing Cost and Value

摘要

In recent years, many companies in the pulp and paper industry have placed a major focus on reducing costs both in their capital works and in their operation of their facilities. Although they have generally been successful in reducing costs, history shows that improvements in profitability have been far smaller than anticipated, and in many cases product quality has deteriorated and the companies have lost market share. The problem has been that organisations have tended to overlook the loss in value which often accompanies a reduction in cost, i.e. the savings have not always been of 'dead' capital or operational functions, but have included elements which have a high return - if only during abnormal circumstances. This paper will discuss some of the circumstances in which cost saving exercises have been counter-productive and will attempt to present some guidelines to assist in determining the real cost vs. value trade off to assist in more effective decision making.