229 pages | 41 B/W Illus.
With a proven track record for helping companies achieve critical cost reductions without sacrificing customer satisfaction, target costing provides managers and executives with the tools to survive and prosper in today’s increasingly competitive market—without raising prices on customers.
Target Cost Management: The Ladder to Global Survival and Success details the preliminary steps required for a company to institutionalize target costing and the two necessary ingredients of target costing—proper organizational structure and cost tables. It describes and illustrates the interrelationships of the major techniques, tools, and methodologies needed to achieve the ultimate success.
Jim Rains shares powerful insights harvested during his two decades of studying and benchmarking target costing for leading Japanese corporations including Toyota, Nissan, and Canon. Supplying the understanding and the tools to achieve critical cost reductions while maintaining and even improving customer satisfaction, this book explains the steps needed to reap the rewards of constant, consistent, acceptable, and predictable levels of profitability.
This is the tool that links product development to lean manufacturing and supply chain management. Target costing is one of the hidden treasures of companies like Toyota and Honda. Cost is not something you get when you add up the parts, it is an intentional criterion for design. We are very fortunate that Jim Rains is bringing this precious information to us all.
—Jeffrey K. Liker, Ph.D., Author of The Toyota Way
For companies to be great they need target costing. Target costing is essential to understand and manage cost and to reap high levels of profit. It is used by most great companies in Japan. Target costing in conjunction with value engineering is necessary to maintain consistent levels of profitability. This book's concept of climbing a ladder to reach target costing and requiring all the elements on each rung to be in and remain in place during the climb is essential to success.
—Masayasu Tanaka, Ph.D., Professor, Graduate School of Business and Management, Mejiro University; Professor Emeritus, Tokyo University of Science; and Doctor of Cost & Profit Engineering, CVS, FSAVE
…a must read for every business executive interested in global success. His extensive knowledge of Japanese productivity processes including the relationship between value engineering and target costing is evident in the book. This book from a respected world leader in value engineering provides the inspiration and details on how to incorporate target costing in your organization.
—Don J. Gerhardt, Ph.D., Former Director of Value Engineering, Ingersoll-Rand; and President, Gerhardt Engineering
Rungs 8 to 10
The Rails of the Ladder
Focus on Long-Term Profit Goals and Objectives
Respect for Humanity/Employees
Respect for the Environment
Basic Concept of Target Costing
What Are the Characteristics of Strong Enterprises?
Roots of Target Costing
Target Costing Becomes Comprehensive Target Costing
Profit vs. Profit Margin
Engineering Change Requests
Does Your Firm Really Need to Do Target Costing?
Is Target Costing for My Company?
Getting Started on the Target Costing Journey
Myths of Target Costing
Steps to Begin Target Costing
Knowing What to Do
Form Cost Planning Group
Conduct Current State Assessment
Mission and Vision Statement
The Process of Team Building
The Cost Planning/Cost Management Group
What Is the Cost Planning Group?
Mission of Cost Planning Group
What Costs Should You Establish Targets For?
What Is Most Important: Quality, Function, or Price?
Cost Management for Purchased Parts
Where to Begin Collecting Cost Information
The Development of Cost Tables
Shift in Financial Thinking
Three Major Requirements for Cost Tables
Cost Table Sophistication
Material Cost Table Development
Direct Conversion Cost Tables
Product Development Cost Tables
Cost Tables by Process
How to Set the Target Cost
Setting Target Costs by Function
Contingency Cost Allocation
Exceeding the Target Cost
Allocation of the Target Cost
Advanced Applications of Target Costing Concepts
Alpha Brain Background
The Alpha Brain System: An Example
The Model Factory
Benchmarking Japanese Companies
Isuzu (1999, 2003, 2008)
Zexel Corporation (1999)
Cost and Value Engineering Discussion
Toyota Motomachi Vehicle Assembly Plant (1999, 2005)
Aisen Seiki (1999)
Hitachi Machinery Construction Company (2003)
Society of Japanese Value Engineering (SJVE)
Canon (2006, 2008)
Each chapter concludes with a Summary