Target Cost Exercise in Paper Plant
Target Cost Exercise in Paper Plant
Shank & Fisher (1999) gave an example of application of target costing in the case of Montclair Paper Mill abd showed how the target costing principle could be applied even at a later stage of the product life cycle. The situation of Montclair Mill was gloomy. The mill was making $700 loss per every ton of paper sold. The management believed that the standard cost of $2900 per ton was thought to be based on a solid analysis and was taken for granted.
The target costing gave a target of $1162 per ton, which equals a 60% cost reduction. The management accepted the challenge, and after rigorous analysis, four major reductions were accomplished:
1. Fiber cost: 60% cost reduction. 2. Paper machine cost: Yield from 47% -> 75%. 3. Dye costs: material savings of $250 per ton incorporated in the yield improvement at the paper machine resulted in an amazing $769 reduction per ton. 4. Conversion costs: Based on benchmarking, a reduction from $303 to $150 was challenged with the risk of possible outsourcing. During 18 moths, the cost dropped to $240, and the continuous improvement seemed to gain even more.
Together, these produced the desired level of costing and a dramatic turnaround in the mind set. (Shank & Fisher 1999.) http://herkules.oulu.fi/isbn9514264509/html/x1194.html
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Ergonomics Cost Benefits Case Study in a Paper Manufacturing Company
Dan MacLeod, www.danmacleod.com and Anita Morris, Ergonomics Coordinator, Crane & Co., Dalton, Massachusetts.
Original publication: Proceedings of the Human Factors and Ergonomics Society, September, 1996.
Total investments in ergonomics over a five-year period is estimated at about $2.5 dollars, including cost of new machinery and equipment. Total benefits over the same five-year period are estimated at $3.5 million, based primarily on workers compensation cost savings plus improvements in
Shank & Fisher (1999) gave an example of application of target costing in the case of Montclair Paper Mill abd showed how the target costing principle could be applied even at a later stage of the product life cycle. The situation of Montclair Mill was gloomy. The mill was making $700 loss per every ton of paper sold. The management believed that the standard cost of $2900 per ton was thought to be based on a solid analysis and was taken for granted.
The target costing gave a target of $1162 per ton, which equals a 60% cost reduction. The management accepted the challenge, and after rigorous analysis, four major reductions were accomplished:
1. Fiber cost: 60% cost reduction. 2. Paper machine cost: Yield from 47% -> 75%. 3. Dye costs: material savings of $250 per ton incorporated in the yield improvement at the paper machine resulted in an amazing $769 reduction per ton. 4. Conversion costs: Based on benchmarking, a reduction from $303 to $150 was challenged with the risk of possible outsourcing. During 18 moths, the cost dropped to $240, and the continuous improvement seemed to gain even more.
Together, these produced the desired level of costing and a dramatic turnaround in the mind set. (Shank & Fisher 1999.) http://herkules.oulu.fi/isbn9514264509/html/x1194.html
______________________________
Ergonomics Cost Benefits Case Study in a Paper Manufacturing Company
Dan MacLeod, www.danmacleod.com and Anita Morris, Ergonomics Coordinator, Crane & Co., Dalton, Massachusetts.
Original publication: Proceedings of the Human Factors and Ergonomics Society, September, 1996.
Total investments in ergonomics over a five-year period is estimated at about $2.5 dollars, including cost of new machinery and equipment. Total benefits over the same five-year period are estimated at $3.5 million, based primarily on workers compensation cost savings plus improvements in