Target Costing Workshop

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
  • Brainstorming and Other Creativity Techniques
  • TRIZ and Theory of Inventive Problem Solving
  • Trimming and Simplification
  • 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
  • Eliminating Non-Value-Added Activities
  • Minimizing Cost Through Maximizing Process Capability
    • Centering the Mean and Establishing Realistic Tolerances
    • A Minimum Cost Strategy Cost Inspection & Test
  • 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

Seminar Leader



Kenneth-Crow Kenneth Crow is an internationally recognized expert in the field of integrated product development, a distinguished speaker, and creator of the NPD Body of Knowledge. Ken’s experience includes work in aerospace, automotive, capital equipment, consumer products, electronics and high technology, mechanical machinery, and medical equipment industries. He has conducted hundreds of workshops and trained over 2,500 professionals and managers on subjects related to new product development. (More)

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