Cost Management Strategies: Ad Hoc vs. Systematic Approaches PPT
This PPT slide, part of the 27-slide Integrated Cost Management PowerPoint presentation, presents a comparative analysis of 2 strategies in cost management: Ad Hoc and Systematic Application. It emphasizes the implications of using these strategies during the product design phase, particularly focusing on missed savings opportunities.
The left section outlines the Ad Hoc approach, which is characterized by the use of a single strategy applied in an unstructured manner. This method can lead to inefficiencies, especially when product-specific Kaizen costing is applied to products that do not meet their target costs. Despite this, such products may still be launched for strategic reasons, which raises questions about the effectiveness of this approach.
On the right, the Key Considerations section provides insights into how product-specific Kaizen and target costing can facilitate a continuous improvement process aimed at achieving target costs through innovative design. It highlights the potential disruptions that can occur when altering a product’s design during manufacturing, noting that such changes may not justify the expected savings for products that have already missed their target costs.
The slide also points out that product-specific Kaizen costing can be effectively utilized for high-volume products launched above their target costs. However, it stresses the importance of applying this strategy immediately after product launch and only during the early stages of manufacturing to ensure that upfront investments are justified.
This analysis serves as a crucial guide for decision-makers considering the timing and application of cost management strategies in product development. It underscores the need for a systematic approach to avoid pitfalls associated with ad hoc applications, ultimately aiming for more sustainable financial outcomes.
This slide is part of the Integrated Cost Management PowerPoint presentation.
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Cost Reduction Assessment Continuous Improvement Cost Management Disruption Product Development Kaizen Manufacturing
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