Proceedings

Performance optimization is translated through optimization of the life cycle that
becomes a management object. The cost is obtained as a “measure of value”, or what
the client is willing to pay for the product. As a result, the enterprise doesn’t have to
manage the cost reduction, but the optimization between cost and value. The switch
from cost management to strategic cost management represents the actual step in the
concept development. In the product life cycle there are three important phases:
planning phase, production phase and abandon phase.
Cost
Abandon
80%
Figure1. LIFE CYCLE
Decided cost
20%
20% of the carried out cost is similar with 80% of the decided cost
~ 1137 ~
Cost carried out
In the ’70`s, following the methods previously used in the USA, a new cost
calculation method is developed in Japan which meets the following requirements:
• Target-Costing (TC) developed at Toyota
The target cost represents a negotiation basis between the different functions of the
enterprise in order to assure the long term viability of the new product and also it
represents the product’s competitiveness. The target-costing method is part of a global
approach, which targets cost reduction along the process of continuous improvement
of technology and fabrication process implying, in the same time, a new human
resources management and better competencies. Specifically, we are talking about the
following issues:
� mastering different phases of the product life cycle;
� cost analysis starting with the birth of the products, according to the
characteristics and the selling price;
� assuring, progressively that the new products will be profitable during their
life cycle;
� reducing the time it takes to conceive products;
� diminishing the development costs and assuring a faster depreciation;
� assuring a better relationship organization between the company and the
suppliers and collaborators;
� mobilizing and motivating all competencies from within the enterprise through
an transversal approach which favors an enhanced competitiveness.