Supply chain development for the lean enterprise

Title:

Personal Author:

Cooper, Robin, 1951-

Publication Information:

New Jersey : Productivity, 1999

ISBN:

9781563272189

Subject Term:

Cost control

Industrial procurement -- Cost control

Contracting out -- Cost control

Added Author:

Slagmulder, Regine

Available:*

Library	Item Barcode	Call Number	Material Type	Item Category 1	Status
Searching... PSZ KL	30000005034966	HD47.3 C66 1999	Open Access Book	Book	Searching... Unknown

Four questions determine whether a company is using interorganizational cost management. Does your firm set specific cost-reduction objectives for its suppliers?
Does your firm help its customers and/or suppliers find ways to achieve their cost-education objectives?
Does your firm take into account the profitability of its suppliers when negotiating component pricing with them?
Is your firm continuously making its buyer-supplier interfaces more efficient?

If the answer to any of these questions is "no", your firm risks introducing products that cost too much or are not competitive. The full potential of the supply network can be realized only when the entire supply chain adopts interorganizational cost management practices.

Competitive pressure has led many firms to try to increase the efficiency of supplier firms through interorganizational cost management systems, a structured approach to coordinating the activities of firms in a supplier network to reduce the total costs in the network.

It is particularly important to lean enterprises for two reasons:

Lean enterprises typically outsource more of the added value of their products than their mass producer counterparts.
Lean enterprises usually compete more aggressively and must manage costs more effectively.

Interorganizational cost management can reduce costs in three ways: through product design, through product manufacture and through cooperative approaches between buyers and suppliers to build smoother interfaces.

However, more than just cost management must cross interorganizational boundaries. Suppliers are also a major source of innovation for lean enterprises. Successful supplier networks encourage every firm in the network to innovate and compete more aggressively. Read this book to learn to manage the supply chain to forge competitive advantage while reducing costs.

Author Notes

Regine Slagmulder is a member of the faculty of De Vlerick School voor Management and the School of Applied Economics and Economic Sciences at the University of Ghent, Belgium.

Preface to the Series	p. xv
Introduction	p. xv
The Series	p. xvi
The Firms	p. xviii
Preface	p. xxi
Acknowledgments	p. xxiv
About the Authors	p. xxvii
Robin Cooper	p. xxvii
Regine Slagmulder	p. xxviii
About the Sponsors	p. xxxi
Institute of Management Accountants	p. xxxi
Institute for the Study of U.S./Japanese Relations in the World Economy	p. xxxii
Executive Summary	p. 1
Introduction	p. 1
The Confrontation Strategy	p. 4
The Survival Triplet and the Survival Zone	p. 6
Cost Management in a Confrontation Strategy	p. 7
Interorganizational Cost Management	p. 9
Lessons for Adopters	p. 24
Implications for Western Managers	p. 25
Part 1 Confrontational Cost Management
Chapter 1 How Firms Compete Using the Confrontation Strategy	p. 31
Introduction	p. 31
Lean Production, Lean Product Development, and Lean Supply	p. 32
The Three Generic Strategies of Competition	p. 40
Managing the Survival Triplet	p. 46
Surviving the Transition to Confrontational Competition	p. 49
Surviving in a Confrontation Mode	p. 52
Summary	p. 56
Chapter 2 The Role of Cost Management in Confrontation Strategy	p. 59
Introduction	p. 59
Managing the Cost of Future Products	p. 60
Managing the Cost of Existing Products	p. 63
Harnessing the Entrepreneurial Spirit	p. 67
Summary	p. 69
Chapter 3 The Research Project	p. 71
Introduction	p. 71
The Research Approach	p. 72
Forming the Project Committee and Research Team	p. 72
Site Selection--The Series	p. 73
Site Selection--This Monograph	p. 74
Visiting the Sites and Writing the Case Studies	p. 77
Analyzing and Synthesizing the Findings	p. 78
Part 2 The Principles of Lean Supply
Chapter 4 Lean Buyer-Supplier Relations	p. 83
Introduction	p. 83
Reducing the Number of Suppliers	p. 84
Four Levels of Buyer-Supplier Relations	p. 89
The Nature of Buyer-Supplier Relations	p. 92
Taking Advantage of Lean Buyer-Supplier Relationships	p. 102
Implications for Interorganizational Cost Management	p. 109
Conclusion	p. 112
Chapter 5 Lean Supplier Networks	p. 115
Introduction	p. 115
Types of Networks	p. 117
Taking Advantage of the Network	p. 133
Implications for Interorganizational Cost Management	p. 139
Conclusion	p. 140
Part 3 Interorganizational Cost Management
Chapter 6 An Overview of Interorganizational Cost Management	p. 145
Introduction	p. 145
Interorganizational Cost Management	p. 145
The Domain of Interorganizational Cost Management	p. 147
The Process of Interorganizational Cost Management	p. 149
The Key Questions of Interorganizational Cost Management	p. 151
Summary	p. 160
Chapter 7 Target Costing	p. 163
Introduction	p. 163
The Target Costing Process	p. 165
Summary	p. 179
Chapter 8 Interorganizational Implications of Target Costing	p. 181
Introduction	p. 181
Setting Achievable Component-Level Target Costs	p. 182
Applying Target Costing to Suppliers	p. 191
Rewarding Suppliers for Innovation	p. 196
Target Costing and Internal Suppliers	p. 197
Summary	p. 199
Chapter 9 Chained Target Costing and Functionality-Price-Quality Trade-Offs	p. 203
Introduction	p. 203
The Buyer-Supplier Interface	p. 210
The Customer Interface at the Top of the Chain	p. 211
The Supplier Interface at the Top of the Chain	p. 218
The Buyer-Supplier Interfaces in the Middle of the Chain	p. 221
The Buyer-Supplier Interface at the End of the Chain	p. 227
Summary	p. 231
Chapter 10 Interorganizational Cost Investigations	p. 233
Introduction	p. 233
The Scope of Interorganizational Cost Investigations	p. 235
Initiating an Interorganizational Cost Investigation	p. 239
Conditions Favoring Interorganizational Cost Investigations	p. 240
Interorganizational Cost Investigations in Practice	p. 243
The Implications of Interorganizational Cost Investigations	p. 247
Summary	p. 250
Chapter 11 Concurrent Cost Management	p. 251
Introduction	p. 251
Parallel Engineering	p. 254
Simultaneous Engineering	p. 257
Implications of Concurrent Cost Management	p. 266
Summary	p. 269
Chapter 12 Kaizen Costing	p. 271
Introduction	p. 271
The Kaizen Costing Process	p. 272
Summary	p. 284
Chapter 13 Interorganizational Implications of Kaizen Costing	p. 287
Introduction	p. 287
Setting Cost-Reduction Objectives for Suppliers	p. 288
Applying Kaizen Costing to Suppliers	p. 290
Buyer-Led Initiatives	p. 291
Supplier-Led Initiatives	p. 292
Role of Lean Buyer-Supplier Relations	p. 293
Linked Kaizen Costing Systems	p. 294
Kaizen Costing and Internal Suppliers	p. 294
Summary	p. 302
Chapter 14 Increasing the Efficiency of the Buyer-Supplier Interface	p. 305
Introduction	p. 305
Jointly Initiated Improvements	p. 307
Buyer-Initiated Improvements	p. 313
Supplier-Initiated Improvements	p. 314
Summary	p. 316
Chapter 15 Interorganizational Cost Management in Action	p. 319
Introduction	p. 319
The Acme Pencil Co. Ltd.	p. 320
Target Costing at Acme	p. 324
Interorganizational Cost Management at Acme	p. 335
Kaizen Costing at Acme	p. 349
Improving the Efficiency of the Buyer-Supplier Interfaces at Acme	p. 350
Summary	p. 350
Chapter 16 Lessons for Adopters	p. 353
Introduction	p. 353
Step 1 Identify the parts of the product that are going to be sourced externally	p. 355
Step 2 Determine the appropriate level of the buyer-supplier relationship for each externally sourced item	p. 355
Step 3 Rationalize the supplier base	p. 357
Step 4 Develop appropriate buyer-supplier relationships	p. 359
Step 5 Increase the efficiency of the buyer-supplier interface	p. 362
Step 6 Develop the necessary skills in the techniques of interorganizational cost management	p. 363
Step 7 Extend lean supply and interorganizational cost management both upstream and downstream in the value chain	p. 365
Step 8 Extend lean supply and interorganizational cost management to internal suppliers	p. 367
Summary	p. 368
Part 4 Case Studies
Chapter 17 Citizen Watch Company, Ltd.: Cost Reduction for Mature Products	p. 371
Introduction	p. 371
The Watch Industry	p. 372
Manufacturing Process	p. 374
The Cost Management System	p. 376
The Cost-Reduction Program	p. 378
Chapter 18 Kamakura Ironworks Company, Ltd	p. 383
Introduction	p. 383
Products	p. 384
Corporate Strategy	p. 385
Cost Reduction	p. 386
Pricing	p. 387
Cost Estimation	p. 388
Kamakura's Cost System	p. 389
Expenditure Control	p. 390
Incentive Schemes	p. 391
Chapter 19 Komatsu, Ltd. (A): Target Costing System	p. 393
Introduction	p. 393
The Product Development Process and Design for Manufacturability Cost Studies	p. 394
Target Costing	p. 398
Chapter 20 Miyota Company, Ltd	p. 405
Introduction	p. 405
The Cost-Reduction Program	p. 407
Chapter 21 Olympus Optical Company, Ltd. (A): Cost Management for Short-Life-Cycle Products	p. 413
Introduction	p. 413
The 35mm Camera Market	p. 415
Strategic Change at Olympus	p. 416
Appendix	p. 429
Chapter 22 Omachi Olympus Company, Ltd	p. 431
Introduction	p. 431
Olympus Optical Company	p. 432
Product Mix	p. 432
Relationship with Olympus Optical's Consumer Products Division	p. 433
Target Costing	p. 435
Planning at Omachi	p. 438
Cost System	p. 438
Variance Analysis	p. 439
The Relationship Between Omachi and Tatsuno	p. 439
Chapter 23 Tokyo Motor Works, Ltd.: Target Costing System	p. 441
Introduction	p. 441
Introducing New Products	p. 442
Chapter 24 Toyo Radiator Company, Ltd	p. 451
Introduction	p. 451
Komatsu, Ltd.	p. 453
Komatsu-Supplier Relations	p. 454
Product Development Under the New Approach	p. 456
Cost Management Under the New Approach	p. 457
The Nature of the Komatsu-Toyo Relationship	p. 464
Chapter 25 Yokohama Corporation, Ltd. (A): The Yokohama Production System	p. 467
Introduction	p. 467
Competitive Environment	p. 469
Customer Relationships	p. 470
Yokohama's Cost Reduction Programs	p. 474
Appendix Company Descriptions	p. 481
Glossary of Terms	p. 489
Selected Bibliography and References	p. 497
Index	p. 503

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