Target Costing Workshop

This is a three-day workshop for management and development personnel responsible for establishing and using a target costing process and managing the achievement of a target cost.

1. INTRODUCTION

  • Target Costing Introduction and Definition
  • Comparison with Traditional Product Cost Management
  • Target Costing & Design to Cost

2. PRODUCT ECONOMICS

  • Economics of Product Development
  • Relationship of Price, Product Costs, Development Costs & Volume
  • Elements of Costs and Life Cycle Costs (LCC)
  • Nonrecurring Development Costs and Recurring Production Costs
  • Tradeoff’s Between Recurring & Nonrecurring Costs
  • Obtaining & Using Manufacturing and Supplier Cost Data

3. STRATEGY AND PRICING

  • Product Strategy as a Basis for a Pricing Strategy
  • Assessing Customer Affordability & Competitive Implications
  • Obtaining Customer Feedback on Affordability & Value
  • Establishing Market-Driven Prices or Price-to-Win
  • Pricing Strategies: Cost-Based Pricing, Competitive Pricing, Value-Based Pricing, and Experience Curve-Based Pricing
  • Offensive and Defensive Pricing Strategies
  • Demand Elasticity and Considerations in Pricing
  • Pricing Exercise
  • Maximizing Value
    • Value Innovation Concept
    • Value Innovation Case Study
  • Determining Which Features Customers Value
    • Voice of the Customer Investigation
    • Conjoint Analysis
    • Conjoint Analysis Example
    • Conjoint Analysis Exercise
  • Maximize the Customer Value Proposition with Quality Function Deployment (QFD)
  • Consider Customer Needs vs. a Target Price
  • Setting the Target Price

4. ESTABLISHING A TARGET COST

  • Determining a Target Cost From the Target Price
    • Determining Supply Chain Margins, Distribution Costs, Warranty Costs, Corporate Allocations & Profit
    • Target Cost Worksheet & Example
  • Using Quality Function Deployment (QFD) to Balance Requirements and Cost
    • Identify Cost Drivers with QFD
    • Using QFD to Balance Specification Values and Cost
  • Customer Function Diagram to Abstract Requirements and Assess Completeness
  • Using Quality Function Deployment to Balance Requirements and Target Cost
  • Allocating & Tracking Target Costs
  • Developing the Overall Business Case for a New Product
  • Exercise – New Product Business Case

5. ESTIMATING & TRACKING COSTS

  • Using Product Cost Models and Cost Tables to Achieve Target Costs
  • Basic Product Cost Models – BOM Cost Roll-ups and Spreadsheets
  • Creating and Refining a Predictive Cost Model
  • Commercial Cost Model Tools
  • Validating Cost Projections
  • Cost Tracking and Performance Monitoring
  • Target Cost Tracking Worksheet

6. TARGET COSTING DURING CONCEPT DEVELOPMENT

  • Use of Function Analysis to Explore Concept Requirements and Reduce Costs
  • Value Engineering & the Function Analysis/Value Analysis Methodology
    • Function Analysis Exercise
    • Function Cost Matrix & Value Analysis Matrix
    • Function Analysis System Technique (FAST)
    • Function Analysis Exercise II
  • Importance of Exploring Concept Alternatives – The Seven Alternatives Approach
  • Brainstorming and Other Creativity Techniques
  • TRIZ and Theory of Inventive Problem Solving
  • Trimming and Simplification
  • Optimizing Concept Design
  • Concept Evaluation and Concept Selection Matrix
  • Simplification and the Impact of Architecture on DTC

7. TARGET COSTING DURING ASSEMBLY DESIGN

  • Function Analysis with Assembly Design
  • The Power of Considering Assembly Design Alternatives
  • Design for Assembly (DFA)
    • DFA Principles & Guidelines
    • The Key DFA Principle – Simplification
    • DFA Exercise
    • Avoiding Non-Recurring Costs with Standardization
    • Mistake-Proofing Assembly
    • Assembly Process and DFA Principles
      • Handling and Orientation
      • Location a ndInsertion
      • Joining and Fastening
      • Adjustment & Finishing
  • Design for Test – Developing an Economic Test Strategy

8. TARGET COSTING DURING PART DESIGN/SELECTION

  • Function Analysis with Part Design
  • Evaluating Material and Process Alternatives
  • Trade-offs of Nonrecurring and Recurring Costs with Tooling Near Net Shape Parts
  • Standardization and Simplification
  • Design for Manufacturability (DFM)
    • Evaluating Material and Process Alternatives
    • Production Rate & Cost Trade-off’s: Materials, Manufacturing & Tooling
    • DFM Principles & Guidelines – Machining, Sheetmetal, Injection Molding & PWB’s
    • DFM Exercise
  • Reducing Costs with Early Supplier Involvement & Effective Supplier Partnership
  • Purchasing Actions to Reduce Cost
  • Minimizing Supply Chain and Logistics Costs

9. TARGET COSTING DURING PROCESS DESIGN

  • Principles of Process Design for Low Cost
  • The Role of Value Engineering in Process Design & Improvement
  • Cost Reduction through Automation and Integration
  • Re-engineering the Development and Production Processes
  • The Production Preparation Process (3P)
  • Considering Process Design Alternatives – The Seven Ways Approach
  • Eliminating Non-Value-Added Activities
  • Minimizing Cost Through Maximizing Process Capability
  • Centering the Mean and Establishing Realistic Tolerances
  • Optimizing Tolerances for Low Cost

10. ACHIEVING TARGET COSTS

  • Challenging Your Assumptions
  • Target Cost Exercise
  • Achieving Target Cost – Summary by Development Phase

11. PROCESS, MANAGEMENT & ORGANIZATION

  • Establishing a Target Costing Program
  • The Target Costing and Design-to-Cost Process
  • Avoiding Local Optimization and Global Suboptimization – Organizational Issues
  • Use of Product Development Teams to Achieve Cost Targets
  • Roles and Responsibilities
  • Establishing a Target Costing Program
  • Essential Metrics to Track Target Cost Achievement

12. IMPLEMENTATION & SUMMARY

  • Questions to Consider During the Five Stages of Development
  • The 10 Steps to Target Costing/Design-to-Cost
  • Deploying a Target Cost Program to Your Business/Project
  • Overcoming Impediments and Applying Lessons Learned
  • Developing an Action Plan to Close the Gap
  • Sources of Further Information
  • Questions and Answers