{"id":414,"date":"2016-07-13T12:43:39","date_gmt":"2016-07-13T17:43:39","guid":{"rendered":"http:\/\/blogs.uww.edu\/prasad\/?page_id=414"},"modified":"2016-07-13T12:45:25","modified_gmt":"2016-07-13T17:45:25","slug":"target-costing-for-supply-chain-management-criteria-and-selection","status":"publish","type":"page","link":"https:\/\/blogs.uww.edu\/prasad\/teaching\/independent-study\/target-costing-for-supply-chain-management-criteria-and-selection\/","title":{"rendered":"Target costing for supply chain management: criteria and selection"},"content":{"rendered":"

Archie Lockamy III and Wilbur I. Smith<\/p>\n

Industrial Management & Data Systems<\/h2>\n

2000, Vol 100, Issue 5, pp. 210-218<\/p>\n

 <\/p>\n

1)\u00a0\u00a0\u00a0\u00a0\u00a0 Intro<\/p>\n

    \n
  1. a) 3 components of supply chains<\/li>\n
  2. i) suppliers<\/li>\n
  3. ii) producers<\/li>\n<\/ol>\n

    iii)\u00a0\u00a0\u00a0\u00a0 customers<\/p>\n

      \n
    1. b) Ultimate goals of supply chain management<\/li>\n
    2. i) Delivery of goods\/services<\/li>\n
    3. ii) Creation of customer satisfaction<\/li>\n
    4. c) Conflicts in supply chain management<\/li>\n
    5. i) Cost reduction vs. customer satisfaction maximization<\/li>\n
    6. ii) Traditional costing focuses on cost reduction<\/li>\n<\/ol>\n

      iii)\u00a0\u00a0\u00a0\u00a0 Target costing focuses less on cost and more on customer<\/p>\n

      2)\u00a0\u00a0\u00a0\u00a0\u00a0 Cost Management<\/p>\n

        \n
      1. a) Activity Based Systems<\/li>\n
      2. i) Focuses on achieving customer value and firm profit thru the management of activities<\/li>\n
      3. ii) Firm is viewed as a set of interlinked processes<\/li>\n<\/ol>\n

        iii)\u00a0\u00a0\u00a0\u00a0 Depends on availability of accurate estimates of activity costs<\/p>\n

          \n
        1. b) Target Costing Systems<\/li>\n
        2. i) Focus on ensuring that products are launched with customer valued specifications and at a life cycle price that will result in profit<\/li>\n
        3. ii) Costing is imbedded in the development \/ introduction processes<\/li>\n<\/ol>\n

          iii)\u00a0\u00a0\u00a0\u00a0 Process ends when:<\/p>\n

          (1)\u00a0\u00a0 Firm discovers a way to satisfy customer requirements at the target cost<\/p>\n

          (2)\u00a0\u00a0 The product is abandoned<\/p>\n

            \n
          1. iv) Customer is the focus<\/li>\n
          2. v) Target based costing can only be successful when deployed throughout the entire supply chain<\/li>\n<\/ol>\n

            3)\u00a0\u00a0\u00a0\u00a0\u00a0 Target approaches<\/p>\n

              \n
            1. a) Price Based<\/li>\n
            2. i) Compensation totals no more than set allowable cost<\/li>\n
            3. b) Value based<\/li>\n
            4. i) Responds to changes in customer requirements with increasing value<\/li>\n
            5. c) ABCM<\/li>\n
            6. i) Control and reduce overall costs<\/li>\n
            7. ii) Stimulate continuously improving competition<\/li>\n<\/ol>\n

              4)\u00a0\u00a0\u00a0\u00a0\u00a0 Recommendations<\/p>\n

                \n
              1. a) Adopt a global perspective to consider customer satisfaction<\/li>\n
              2. b) Price based approach is best suited for supply chain relationships are open-market or cooperative relationships<\/li>\n
              3. c) Value based approach is best suited for supply chains who want to work together to simplify supply chain operations<\/li>\n
              4. d) ABCM is best suited for chains who want to work together to improve the supply chain and improve\/develop their products<\/li>\n<\/ol>\n

                 <\/p>\n

                 <\/p>\n

                Key Points<\/h3>\n
                  \n
                1. Target costing results in closer to actual cost being applied to products<\/li>\n
                2. Target costing can only be successful when implemented through the entire chain<\/li>\n
                3. Target costing can help companies select the right products to produce \/ introduce and when to abandon.<\/li>\n<\/ol>\n

                   <\/p>\n","protected":false},"excerpt":{"rendered":"

                  Archie Lockamy III and Wilbur I. Smith Industrial Management & Data Systems 2000, Vol 100, Issue 5, pp. 210-218   1)\u00a0\u00a0\u00a0\u00a0\u00a0 Intro a) 3 components of supply chains i) suppliers ii) producers iii)\u00a0\u00a0\u00a0\u00a0 customers b) Ultimate goals of supply chain management i) Delivery of goods\/services ii) Creation of customer satisfaction c) Conflicts in supply chain […]<\/p>\n","protected":false},"author":3916,"featured_media":0,"parent":118,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"class_list":["post-414","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages\/414","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/users\/3916"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/comments?post=414"}],"version-history":[{"count":2,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages\/414\/revisions"}],"predecessor-version":[{"id":416,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages\/414\/revisions\/416"}],"up":[{"embeddable":true,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages\/118"}],"wp:attachment":[{"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/media?parent=414"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}