Research On Product Target Cost Management Of Y Company

The target cost management method is so important for the enterprise because ofthe current industrial environment. The competition of the automobile industry isbecoming increasingly fierce, the enterprises have not only to face the increaseddomestic competition, but also face the pressure of global competition from abroad,and have to adapt to the fast changing market. As the traditional competitive strategy,through advanced technology to achieve high quality of products has been unable toprovide long-term competitive advantage for the enterprises, because the level oftechnology and the quality difference are shrinking, in this case, the enterprises muststrive to gain cost advantage through more effective method. The enterprise must startthe planning and control of product cost from early product design phrase andcombine with the market and customer needs. That is exactly what the target costmanagement brings.The target cost management, refers to the cost target, defined in the process ofdesign and development phrase of a new product, to achieve the profit target, i.e. themaximum allowable cost in life cycle of a new product. For company Y, the targetcost management will ensure the cost planning and management in an early timephrase and it offers the guidelines for product development to meet user requirementsand cost requirements, saving the unnecessary expenses, and ensure the enterprise toachieve the business objectives, to enhance the enterprise in the market pricecompetitiveness. In addition, the implementation of target cost management needs thecooperation of the cross functional team, which is responsible for productdevelopment cycle and for the final product cost; and also the value chain memberssuch as users, suppliers, dealers should be considered to. This would be an importantmeasure to improve the whole system capacity and the enterprise culture. Therefore,the effective target cost management is of great significance to improve andstrengthen the competitiveness of the enterprises. The target cost management method, which originates from Toyota, helps Toyota maintain "enterprise of thehighest profit” for many years, can also reflect the contribution of target costing in themarket. The target cost management process and the mode will provide beneficialexperience for all car enterprises and manufacturing enterprises, and guide enterprisesto survive and win in the constant competition in the environment, eventually it willspur the progress of the whole automobile industry.From2011there is planning on the economy passenger vehicle product A and itsfamily products in Y company, the cost management thought is implemented in theprocess of design of this product. This article combines the target cost managementtheory and the practical application of product A and clarifies further the goals andthe significance of target cost management. It also explains the process planning oftarget cost management, the rolls and responsibilities of the cross functional in thisprocess. Target cost management as a strategy management method will providestrategic guidance for the subsequent new products in company Y. It will ensure theeconomic of the products and the market acceptance and it will also support to realizethe company sales strategy.