THE ROLE OF TOTAL QUALITY MANAGEMENT AND TARGET COSTING IN REDUCING COSTS

Abstract

In the contemporary business environment, organizations continuously seek strategies to enhance efficiency and reduce operational costs. This study explores the synergistic impact of Total Quality Management (TQM) and Target Costing (TC) in achieving cost reduction. Total Quality Management emphasizes a customer-focused approach, continuous improvement, and employee involvement, fostering a culture of quality throughout the organization. Target Costing, on the other hand, is a proactive cost management technique that sets cost targets based on market conditions and customer expectations, ensuring that products are profitable even before they reach the market. By integrating TQM and TC, organizations can achieve significant cost savings while maintaining high-quality standards. This research investigates the theoretical underpinnings and practical applications of both methodologies, examining their individual and combined effects on cost reduction. Through a comprehensive literature review and case study analysis, the study demonstrates how the alignment of TQM's quality-driven philosophy with TC's cost control mechanisms can lead to improved product design, efficient resource utilization, and enhanced customer satisfaction. The findings suggest that the implementation of TQM and TC not only drives down costs but also contributes to competitive advantage and long-term sustainability. The study concludes with recommendations for businesses seeking to leverage these strategies for optimal performance and cost efficiency.