Cost Management Process Research Articles

The Steps of Implementing Target Costing

Target costing has a history of more than 40 years in the Japanese industry. In 1959, Toyota developed the preliminary target costing approach. Although many manufacturers in Japan use target costing, the system used at Toyota Motor Corporation is the oldest and considered by many the most technically advanced. While the idea of systematic cost reduction had existed at Toyota since it was founded, the process was first codified in the mid-1960s, when the firm set itself the objective of producing a $1,000 car (Cooper, 2002). Most managements in the United States and the world, however, do not know enough about target costing to understand its importance and often underestimate the power of target costing as a serious competitive tool. When general managers read the world 'costing' they naturally assume it is a topic for their finance or accounting staff. They misunderestimate that target costing is really a systematic profit and cost management process. This article begins with the role management accounting, definition of target costing and an overview of the target costing process. It than describes the steps that are necessary to implement target costing.

Process view and cost management of a new surgery technique in hospital

PurposeThe purpose of this paper is to analyze the potentiality in the application of process analysis and activity‐based costing (ABC) in a healthcare setting to produce usable, useful and correct information on resource consumption and processes. The paper aims to analyze changes applied to the traditional costing model in order to represent the work flow of the organization and the related additional information usable by decision makers at different levels. In particular, the paper is focused on economic analysis related to the introduction of a new surgical technique in healthcare.Design/methodology/approachAn empirical case study is developed in a Tuscan hospital from September 2005 to March 2006, data being collected through interviews to employees and direct observations.FindingsSeveral factors are found to be critical in such a process analysis and in an ABC implementation in healthcare. First, the need to ground the development of the model structure on the specific characteristics of the organizational setting and the clinical work performed. Second, a problem of culture and language, because professionals have difficulties in understanding the language of activities, and they cannot accept a model designed to measure their work; therefore, some resistances may occur. Third, the constraint of information; in fact more precise estimation may be limited by the information available, as in this case.Research limitations/implicationsThe paper provides a framework for future research. The replication of the methodology in other hospitals, in order to test the validity of the model and to compare results, can be interesting and another can be the analysis of benefits that the application of the system can provide (in terms of improved efficiency) through a longitudinal analysis.Originality/valueThe paper contributes to the field study of ABC and process analysis in healthcare. The original contribution of the model lies in the classification of activities in a hierarchy across the organization, which allows a more precise identification of cost driver; and in the “hybrid” nature (a combination of cost centres and activities) of the model. The latter allows one to identify a “full cost” of the patient.

Petroleum Industry 2020: People First: Excellence and Fairness - Part 1

It is amazing how all people are attracted to excellence and fairness, reflecting a human unity without regard to colour, race, gender, or religion. However, as much as people are united in admiring fairness and excellence, they sometimes differ in understanding their true meaning and application in real life. This can explain why some people live isolated in their thinking and feelings despite today's fast-growing means of communication. Let's explore an understanding that I hope can be universal and practical. We will then try to apply this understanding to individuals and corporations in our industry. Let us start with the idea that excellence and fairness are twins; they rise and shine together. This principle applies to individuals, corporations, and industries. Individuals, aspiring to be excellent, can be a change agent within their corporations and the industry at large. Background In my November JPT column, I talked about how healthy organizations enjoy an evolving process of technology innovation, cost management, and high productivity. They engage the workforce and utilize their employees' full potential. Healthy organizations also exhibit a very high degree of character and competency at both the individual and corporate levels, as demonstrated in Fig. 1. The increasing challenges of higher demand and stretched human resources will drive organizations to do a better job of engaging their workforce. A corporation's workforce is its foundation for future survival. Industry's focus on research and technology spending will build on this foundation. Genuine efforts to enhance character and competency must be at both the individual and the corporate level. This month's column focuses on the individual. Individuals at all levels collectively form the character and competency of the entire corporation. Furthermore, it is essential to plant the seeds and anchor high standards of character and competency at the individual level, where ownership and accountability reside. Let's now discuss how SPE can help enhance the individual's character and competency. Broaden SPE Focus to Cover People Issues SPE's historical focus has been mostly on technical competencies. Very few SPE papers have discussed ethics, values, organizations, and leadership. Only one in 100 Distinguished Lecturers over the past few years spoke about ethics with regard to reserves booking. Engineering curricula are almost void of courses on character, values, and ethics. While industry training offers courses and information like Seven Habits of Highly Effective People by Stephen Covey, in general there is a dire need for an immediate focus on this critical area. This explains why 95% of the respondents in the December 2005 SPE survey of members' job satisfaction were in favor of a more SPE focus on people issues.

A survey of the adoption and use of target costing in Dutch firms

This paper reports the results of a survey among Dutch firms listed at the Amsterdam stock exchange on the adoption and use of costing practices that resemble the Japanese target costing concept. Nineteen out of thirty-two manufacturing firms claimed to use these practices, although they used different names for them. The study suggests that these practices were developed independently of the Japanese practice. Adoption is highest among assembling firms and is related to a competitive and unpredictable environment. Cost reduction is the main objective and benefit of these practices. The product development and design departments are leading in the target cost management process, which is mainly performed in team structures.

Strategic positioning and cost management along various quality dimensions

The traditional view of quality treats it as an economic good which can be developed by incurring costs. Proponents of total quality management have rejected the traditional view and stress the complementary nature of cost and quality. Reconciles these two views as different manifestations of the same underlying phenomenon within the same strategic framework. This requires precise definitions of quality concepts such as conformance and performance quality. The organization first examines its current position within this framework. The definitions of quality help sharpen the formulation of strategic objectives and the framework helps in mapping out a policy for moving the firm from the current position to the desired position. In addition, also determines the operating systems of quality management by how quality is defined in the organization. In conjunction with the strategic direction, the operational management procedures facilitate the process of cost management.

Engineering Education and the Social Sciences: A Criticism

D URING the last war the people of this country asked the engineer to bring about a miracle. Production of the vast quantity of war materials to specification was this miracle. The engineer was adequate for this specific task. But can society rely upon him for intelligent and similar useful service in the future? The training that the engineering student receives in our technical colleges provides a partial answer to this question. From the point of view of a friendly critic it is doubtful if his studies in engineering curriculums give him the basic training essential for the performance of necessary social services. In certain respects his present training would seem to a social scientist to be at fault. In the average engineering college the amount of money that has to be spent and the amount of time consumed on the teaching of applied sciences make it almost impossible for the student to study the most fundamental ideas and problems of the humanities or the social sciences. The emphasis put upon professional attainments in the engineering curriculum is both necessary and exclusive in character. The engineer is taught to use the forces of nature in the service of society. His present academic training teaches him a great deal about the services and very little about the society. Preparation of the young engineer is professionally excellent. Very few engineering graduates install or manage bad light plants or leaky sewers. Thousands of them carry on research in such fields as industrial development, quality control, and the design of new and useful machinery. The engineer differs in his collegiate training from the student of physical sciences in the amount of time he is asked to give to applied mechanical studies and design. His curriculum includes such basic sciences as chemistry, physics, and mathematics. Here his course parallels that of the scientist. It differs most in the study of the applied sciences such as stress, design of materials, and applied mechanics. Recently he has added to these, studies of cost accounting and management processes. Throughout his college career he is held to high standards of professional attainment. The professional engineering societies and the engineering faculties in co-operation are able to produce engineers who compare favorably in the quality of their professional training with graduates of medical or law schools. The ethical standards of