Supply Chain Development for the Lean Enterprise: Interorganizational Cost Management »

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.

Booknews

Tells how strategic cost management can drive profits, motivate behavior, and keep an organization on target, and presents nine case studies showing how successful companies transfer cost management pressures across organizational boundaries. Contains sections on confrontational cost management, principles of lean supply, and interorganizational cost management. Cooper teaches at the Peter F. Drucker Graduate Management Center. Slagmulder teaches at De Vlerick School for Management and the School of Applied Economics and Economic Sciences at the University of Ghent, Belgium. Annotation c. Book News, Inc., Portland, OR (booknews.com)

1. Executive Summary
2. How Firms Compete Using the Confrontation Strategy
3. The Role of Cost Management in Confrontation Strategy
4. The Research Project
5. Lean Buyer-Supplier Relations
6. Lean Supplier Networks
7. An Overview of Interorganizational Cost Management
8. Target Costing
9. Interorganizational Implications of Target Costing
10. Chained Target Costing and Functionality-Price-Quality
11. Interorganizational Cost Investigations
12. Concurrent Cost Management
13. Kaizen Costing
14. Interorganizational Implications of Kaizen Costing
15. Increasing the Efficiency of the Buyer-Supplier Interface
16. Interorganizational Cost Management in Action
17. Lessons for Adopters

    Case Studies

18. Citizen Watch Company: Cost Reduction for Mature Products
19. Kamakura Ironworks Company, Ltd
20. Komatsu, Ltd: Target Costing System
21. Miyota Company, Ltd
22. Olympus Optical Company, Ltd: Cost Management for Short-Life Cycle Products
23. Omachi Olympus Company, Ltd
24. Tokyo Motors Works, Ltd: Target Costing System
25. Toyo Radiator Company, Ltd
26. Yokohama Corporation, Ltd: The Yokohama Production