First, the target costing
In order to more effectively achieve the goal of supply chain management, the maximum to meet customer demand, the cost of management and business management the whole process of resource consumption and coordinate the allocation of resources, a new method of adapting supply chain management - objectivesCost appeared.
Target costing is a whole process of comprehensive, full-staff cost management.The whole process is the supply chain from production to after-sales service of all activities, including suppliers, manufacturers, distributors, including all aspects; full range of management from the production process refers to the logistics support, quality control, business strategy, stafftraining, financial supervision, and other functional departments within the enterprise in all aspects of the work and assess the competitive environment, internal and external value chain, supply chain management, knowledge management, etc.; all staff from senior managers is to middle management, basic servicefirst-line production staff.Target costing in the operating cost method, based on the efficiency of test operations, personnel performance and cost of the product, figure out the ins and outs of each resource, the overall objective of each job on the contributions.In comparison, traditional cost limited to reflect the cost of post, but there is no cost to monitor the whole process of formation; operating cost of existing operations limited to cost control, there is no link in the supply chain operations closely with customer needscombination.The target cost corporate law to ensure that members of the supply chain of products to specific functions, cost and quality of production, then a specific price, and get a satisfactory profit.
Target costing is composed of three aspects of a close contact of the closed-loop cost management system, that is, ① identifying the target, every level; ② the implementation of goals, monitoring performance; ③ Evaluation of goals, rewards and punishments honored.Compared with the traditional cost management, target costing is not limited to the supply chain within the enterprise to calculate the cost.Therefore, it needs more information, such as the competitive strategy, product strategy and supply chain strategy.Once you have this information, companies can from product development and design stage to manufacturing stage, and the entire supply chain logistics for the various aspects of cost management.In the early use of target costing, companies must first gather information through market research to understand the customer willing to pay the price for the product, and the desired features, quality, should also grasp the situation of competitors to offer products.According to market research company the price received, net profit and the need to continue to develop products for the research funding needed to calculate the products in the manufacturing, distribution and product processing in the course of the maximum allowable cost, the target cost, withformula is:
Product target cost = Price - Profit
Once the target cost, the application of supply chain value engineering (VE) and other methods, redesigning products and manufacturing processes and distribution logistics service system, trying to achieve the target cost.Once the supply chain to find the point in the target cost approach to meet customer needs, or their products to be eliminated after the process of target costing work will end.Target costing to customer demand placed on supply chain strategy development and implementation of products, the center will meet and exceed the product quality, functionality and price and other aspects of customer needs to achieve and maintain products as key to competitive advantage.
Second, three types of target costing
Supply chain cooperation between members of different companies, the choice of target costing is not the same.In general, target costing are the following three forms.
(1) cost-based price target.This method is most suitable for contract-based supply chain relationships, customer demand and the supply chain is relatively stable.In this case, the supply chain of products or services provided by small changes, it rarely introduce new products.The main task of target costing is to obtain accurate market information, based on the clear market acceptance of products, prices and profits can be, and the interests of members of the supply chain to provide a more reasonable distribution of the program.
Price based on the implementation of target costing process, the supply chain member companies of interest between the level and distribution of time to reach consensus is the most effective and most critical step, that should make all members of the supply chain to benefit,But the interest shall not exceed the maximum cost of licensed products; agreed price shall enjoy full protection of the supply chain, the long-term interests of member enterprises and sustainable development.
(2) value-based target costing.Typically, rapid changes in market demand, there is considerable need for supply chain flexibility and agility, especially in the trade supply chain relationships are often using this method.In order to meet customer needs, the supply chain companies to market with a difference of high-value products, these products are probably not a long life cycle, which increases the risk of supply chain operations.Therefore, we must reconstruct the supply chain, to make them members of the company's core supply chain capabilities and needs of our customers exactly match the reality.Effective implementation of target costing, value-based, through rapid response to customer needs, can substantially enhance the overall competitiveness of the supply chain.However, member companies to achieve supply chain to minimize conflict and reduce the resistance involved in the supply chain collaboration, the chain members of the enterprise must always maintain an equal partnership.
Value-based target costing can achieve the value-oriented, the target cost management, that is, the supply chain in accordance with a variety of work activities create value for the ratio of target cost-sharing, such as the prorated share of the cost paid to the supply chain membersbusiness prices.Once the supply chain, the price or cost of work activities to this target costing can be used to select the permission level of cost to complete work activities of the members of the supply chain enterprises, most have the ability to complete the operation by the activities of member enterprises build supply chainwork together until further change in customer demand supply chain needs of reconstruction so far.
Many companies find that their supply chain to customer demand is always in a changing environment, the replacement cost of the supply chain members is very high.For the survival and development of supply chain members companies must find to meet the always changing needs of customers approach.Under such environmental conditions, based on the value of the target costing method can still be apportioned according to the value of work activities in the supply chain between the distribution of costs.However, the supply chain members companies must participate in reconstruction activities to ensure the value contribution of each member of the target coincided with the cost of licensing is consistent.
(3) operating cost management objectives based on cost.This method is suitable for compact or integrated supply chain relationships, customer demand the supply chain is consistent, stable and known, the supply chain through collaborative arrangements between the long-term stability.For the effective use of this method, the supply chain to control and reduce the total cost, and allows member companies can benefit from this.Therefore, the supply chain members companies must do our utmost to create a cross-enterprise supply chain operating cost model, and through the operation of the whole supply chain analysis to identify which parts do not add value, then the supply chain from the net operating cost model does not add valueoperations, to design joint programs to improve the operating cost management, total cost of the supply chain rationalization.
The role of target costing is to stimulate and integrate the efforts of member companies to continuously enhance the cost competitiveness of the supply chain.Therefore, based on operating cost management, target costing is a cost-plus pricing is essentially the way the operation of the supply chain member companies by the removal of waste between the price after the completion of the supply chain work activities constitute a cost-plus market profits.This pricing method to promote supply chain member companies eliminate jobs based on the invalidity of self-interest activities.Indeed, supply chain member companies through the "shared interests" must be sufficient to gain from their commitment to the relationship between supply chain improvement and development, rather than to optimize the power of the local cost of about.