Strategic Cost Management Techniques for Improvement of Profitability in Manufacturing Sector

Abstract

The manufacturing sector continues to confront significant challenges related to rising operational costs, intensifying global competition, and rapidly evolving market dynamics— factors that collectively threaten organizational profitability. In this context, strategic cost management (SCM) emerges as a critical lever for sustaining competitive advantage and financial performance. This study investigates the deployment of strategic cost management techniques within the Nigerian manufacturing industry, aiming to identify their impact on profitability enhancement. Employing a mixed-methods research design, data were collected through structured surveys administered to 150 manufacturing firms, complemented by in-depth semi-structured interviews with 20 senior management executives. Findings reveal that activity based costing, target costing, kaizen costing, and life-cycle costing are the most widely adopted and effective SCM techniques contributing to profitability improvements. However, the study also uncovers key impediments to successful SCM implementation, including limited technical expertise, inadequate technological infrastructure, and organizational resistance to change. The study offers practical recommendations for overcoming these barriers and underscores the strategic importance of aligning cost management initiatives with broader organizational objectives to drive sustainable profitability in the manufacturing sector.