Effective cost management in a manufacturing entity: The case of Delta Beverages (2011 - 2012)

Abstract

This research evaluated the cost management procedures in the Manufacturing sector. The study explored the existing cost management methods at Delta Beverages Southerton plant and also the literature review relevant to the study. It was prompted by the trend in total cost of manufacturing, measured in dollars per hectolitre ($/HL) at the plant relative to other comparable breweries regionally. The main objectives in this case study were to verify impact of manufacturing way (MANWAY) in cost management, optimisation of spares availability, managing variable costs and overtime costs, sustainable development improvement opportunities and the use of IT in implementing effective cost management. The study was both a qualitative and quantitative survey research method conducted on the case of Delta Beverages. Both the managerial and non-managerial employees made up the population for the study and were the recipients of the questionnaire. The main instruments used were the questionnaire and follow up interview questions. Primary and secondary data were used for analysis. The conclusions of the study were based on 66% response rate of the questionnaires. The main results of the research were that there were some opportunities across the value chain which if utilised can help to effectively address cost management. The recommendations that can be implemented include urgent implementation of autonomous maintenance, full utilisation of COSWIN 7i, implementation of problem solving action plans, thorough supervision of contracted services, price negotiations in spares procurement, overtime reduction and use of IT services such as commitment accounting. The areas for further study were suggested as; to explore more on cost management in sales and marketing and also to benchmark with other performing breweries in the region so as to get an anatomy of their operations in relation to cost management, like the Mbeya and Nile breweries in Tanzania and Uganda respectively.