The innovation in cost management in the ERP environment

As competition becomes increasingly severe domestically and overseas, enterprises are exposed to greater market competition. Companies must adopt effective management tools to improve their overall operations. Enterprise Resource Planning (ERP) systems are recognized as successful systems and the most effective computer applications in today´s modern manufacturing industries. It is widely used in Chinese business as an effective tool for controlling organizational costs. This article briefly introduces the ERP cost management system commonly implemented in Chinese enterprises and analyzes its drawbacks. It also presents two models (Activity-based Cost Management and Target Cost Management) in ERP environment and discusses their advantages and disadvantages. The article concludes by putting forward a new cost control model - the integrated and innovative model of cost management in the ERP environment-with a brief explanation of its design. Studying cost management models is of significant importance to enterprises aiming for an elevation in their cost control management.