Target Costing and Value Engineering,9781563271724

Target Costing and Value Engineering

by
ISBN13: 9781563271724
ISBN10: 1563271729
Format: Hardcover
Pub. Date: 1997-05-31
Publisher(s): Productivity Pr
List Price: $85.00

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Summary

In this book you will learn about the practices of seven companies described via case studies, including insights, lessons for adopters, the competitive context that led to implementation, the design of the systems, and the process used. In today's highly competitive environment, your company must learn to develop low-cost, high-quality products that have the functionality customers demand. Target Costing and Value Engineering represents the missing piece in the puzzle of how lean enterprises can successfully compete. What would happen if everyone in your company followed a disciplined approach to cost reduction? What would it look like? How can it be done? With smart cost management, two powerful strategies-target costing and value engineering, will get you well on your way. You will find both strategies included in this comprehensive book, the first in a series which is guaranteed to increase your profits. Cost management must start at the design stage to be effective. As much as 90-95 percent of a product's costs are designed in and cannot be avoided without redesigning. That is why effective cost management programs focus on manufacturing and design. The primary cost management method to control cost during design is a combination of target costing and value engineering. These strategies will help accounting professionals ensure that the products launched by their company are successful, creating added value for the company as well as the customer.

Table of Contents

Foreword xiii(2)
Preface to the Series xv(6)
Introduction xv(1)
The Series xvi(3)
The Firms xix(2)
Preface xxi(4)
Acknowledgments xxv(4)
About the Authors xxix(4)
Robin Cooper xxix(2)
Regine Slagmulder xxxi(2)
About the Sponsors xxxiii(4)
Institute of Management Accountants xxxiii(1)
Institute for the Study of U.S./Japan Relations in the World Economy xxxiv(1)
Monitor Company, Inc. xxxv(2)
Figures, Tables, Exhibits
xxxvii
Executive Summary 1(20)
Introduction 1(2)
The Confrontation Strategy 3(1)
The Survival Triplet and the Survival Zone 4(2)
Cost Management in a Confrontation Strategy 6(2)
Target Costing and Value Engineering 8(8)
Implications for Western Managers 16(5)
PART ONE: CONFRONTATIONAL COST MANAGEMENT 21(50)
CHAPTER 1: How Firms Compete Using the Confrontation Strategy
21(28)
Introduction
21(1)
Lean Production and Product Development
22(8)
The Three Generic Strategies of Competition
30(6)
Managing the Survival Triplet
36(3)
Surviving the Transition to Confrontational Competition
39(3)
Surviving in a Confrontation Mode
42(4)
Summary
46(3)
CHAPTER 2: The Role of Cost Management in Confrontation Strategy
49(12)
Introduction
49(1)
Managing the Cost of Future Products
50(3)
Managing the Cost of Existing Products
53(4)
Harnessing the Entrepreneurial Spirit
57(2)
Summary
59(2)
CHAPTER 3: The Research Project
61(10)
Introduction
61(1)
The Research Approach
62(1)
Forming the Project Committee and Research Team
62(1)
Site Selection--The Series
62(2)
Site Selection--This Volume
64(2)
Visiting the Sites and Writing the Case Studies
66(1)
Analyzing and Synthesizing the Case Studies
67(4)
PART TWO: TARGET COSTING AND VALUE ENGINEERING 71(168)
CHAPTER 4: An Overview of Target Costing and Value Engineering
71(16)
Introduction
71(1)
Target Costing
71(9)
Value Engineering
80(5)
Summary
85(2)
CHAPTER 5: Market-Driven Costing
87(20)
Introduction
87(2)
Setting Long-Term Sales and Profit Objectives
89(3)
Structuring the Product Lines
92(2)
Setting the Target Selling Price
94(6)
Setting the Target Profit Margin
100(4)
Setting the Allowable Cost
104(2)
Summary
106(1)
CHAPTER 6: Product-Level Target Costing
107(22)
Introduction
107(1)
Setting the Product-Level Target Cost
108(11)
Disciplining the Product-Level Target Costing Process
119(7)
Achieving the Target Cost
126(1)
Summary
127(2)
CHAPTER 7: Value Engineering
129(10)
Introduction
129(1)
The Organizational Context
130(2)
Planning the VE Process
132(1)
VE Techniques
133(4)
Summary
137(2)
CHAPTER 8: Component-Level Target Costing
139(26)
Introduction
139(1)
Setting the Target Costs of Major Functions
140(10)
Setting the Target Costs of Components
150(13)
Summary
163(2)
CHAPTER 9: Factors That Influence the Target Costing Process
165(32)
Introduction
165(2)
Factors That Influence Market-Driven Costing
167(7)
Factors That Influence Product-Level Target Costing
174(7)
Factor That Influences Component-Level Target Costing
181(3)
How the Factors Influence the Target Costing Process
184(2)
How Some of the Factors Influence Multiple Sections of the Target Costing Process
186(2)
Comparing the Target Costing Processes
188(9)
Summary
194(3)
CHAPTER 10: Target Costing and Value Engineering in Action
197(24)
Introduction
197(1)
The Acme Pencil Co. Ltd.
197(3)
Market-Driven Costing
200(8)
Product-Level Target Costing
208(8)
Component-Level Target Costing
216(3)
Summary
219(2)
CHAPTER 11: Lessons for Adopters
221(18)
Introduction
221(1)
Question One: Is profit management becoming more critical to your firm's survival?
222(1)
Question Two: Is satisfying your customers becoming more critical to the survival of the firm?
223(2)
Question Three: Is product design becoming more critical to your firm's survival?
225(2)
Question Four: Are supplier relations becoming more critical to the survival of your firm?
227(1)
Question Five: Is cost management the right place for your firm to expend resources?
228(2)
Question Six: Can you create the right organizational context to support target costing and value engineering programs?
230(4)
Summary
234(5)
PART THREE: THE CASES 239(108)
CHAPTER 12: Nissan Motor Company, Ltd.
239(14)
Introduction
239(2)
Introducing New Products
241(12)
CHAPTER 13: Toyota Motor Corporation
253(16)
Introduction
253(1)
Globalization
254(1)
Supplier Relationships
255(1)
Cost Planning
256(1)
Target Costing
257(1)
Product Planning
257(1)
Retail Prices and Sales Targets
258(6)
Value Engineering
264(1)
Knowing the Effect of Design Changes
265(1)
From Cost Planning to Mass Production
266(3)
CHAPTER 14: Komatsu, Ltd.
269(12)
Introduction
269(1)
Construction Equipment
270(1)
Product Development and Design for Manufacturability Cost Studies
270(4)
Target Costing
274(7)
CHAPTER 15: Olympus Optical Company, Ltd.: Cost Management for Short Life-Cycle Products
281(18)
Introduction
281(3)
Strategic Change at Olympus
284(12)
Appendix
296(3)
CHAPTER 16: Sony Corporation: The Walkman Line
299(14)
Introduction
299(1)
The Walkman Product Line
300(3)
The Domestic Market
303(3)
The Overseas Market
306(2)
The Target Costing System
308(1)
New Product Development
309(2)
Product Costing
311(2)
CHAPTER 17: Topcon Corporation
313(14)
Introduction
313(2)
Ophthalmic Instruments
315(2)
Topcon's Production Control System
317(10)
CHAPTER 18: Isuzu Motors, Ltd.
327(20)
Introduction
327(2)
Cost-Creation Program
329(5)
Cost-Down Program
334(9)
Applying the Techniques
343(4)
Appendix: Company Descriptions 347(8)
Glossary of Terms 355(6)
Selected Bibliography and References 361(12)
Index 373

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