Associate Professor GRADUATE SCHOOL OF BUSINESS OSAKA CITY UNIVERSITY Sugimoto, Sumiyoshi, Osaka 558 JAPAN TEL +81 6 605 2201 FAX +81 6 605 2200
Draft for 1996 IMVP Sponsors Meeting Figures included at the end of the document.
Target cost management (TCM) is an innovation of Japanese management accounting system and by common sense has been considered with great interest by practitioners. Nowadays, TCM related dissertations, papers, articles are widely being published in special journals both in North America and Europe; this may explain why seminars and workshops about TCM are so frequent1. Even in the academicians' seminars and other meetings of research organizations, TCM related articles have a high probability to be accepted and reported. Last year for example, the American Accounting Association's seminar held in Boston about "Japanese cost management"2 was focused on the formulation of TCM (Okano-Shimizu, 1994; Kato, 1995). The above situation shows that the attention put on TCM is very different from that one put on JIT- "Japanese production system"- in the 1980s. So far, there were debates concerning the a priori that "The competitiveness of Japanese industries" is the outcome of the management system excellence. With many problems facing Japanese industries recently, the originality in the research and development system prior to the introduction of a new product becomes a point of great importance. Nowadays' fiery competition is likely to speed up the TCM system. Nevertheless, many of the published cases about TCM system have been made in special journals. Academic journal publications are few in comparison. Academic researches about TCM are now in the embryonic stage3. In the light of that situation, this paper seeks to examine the importance of the relationship between strategy, organization, and TCM. Three directions of TCM are also presented, as well as the intertwines between Product Manager Allowance, ABC/ABM. Then future TCM research orientation is made4.
II. TARGET COST MANAGEMENT EXTENSIONS
1. Multiple Target Cost Management Until now, the focus on TCM was only made for a single product. This is mainly because attention was put on product manager for the development of a single model in the automobile industry. In Toyota, there was a big restructure in product development center in 1992. There are now four development centers: Rear Wheel Driver Center, Front Wheel Driver Center (FWD), Commercial and Recreational Vehicle Center, and Advanced Technology Center. This transformation has changed the responsibility of product manager. Clark and Fujimoto (1991) described the Japanese product manager as a "heavyweight" product manager. However, prior to Toyota's product development organizational change, product manager' task was "less heavier", due to the multiplicity of models. With the change, they have really regained their responsibility (Okano, 1995; Nobeoka, 1995). Under the new organizational design, while the product manager is independent for the development innovation and specificity of a model, cooperation and collaboration with others in the center become strong since the system enforces the commonality of parts and multi-project orientation (Nobeoka, 1993). This is the other main reason for the restructuring of Toyota's product development center. The outcome is that now, TCM activities are performed for each development center. In each center, information sharing between product managers, cost estimators5, and other design team members is now very smooth6. This shows that the previous concept of TCM is no more relevant. TCM activities have to be performed for multiple projects. TCM innovation that fits with multi-projects product development has to be made. 2. Technology Focused Target Cost Management Innovation on core technology is becoming very important in many...