CAIV Tools and Processes

Improvement tools Cost estimating and analysis balance cost and performance reduce problem to manageable level identify cost reduction opportunities

9 trade space
adjust balance

Design trades

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Risk analysis

Requirements analysis quantify performance

quantify cost

Pareto analysis

Supplier partnerships

enterprise

expand cost reduction opportunities

Allocation

reduce problem to manageable level

10

Value Engineering/ Design To Cost Value Analysis (DTC) realize cost (VE/VA) 7 reduction opportunities PBraxton@ar.navy.mil (703)
633-8300 x4327

expand cost reduction opportunities

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Target Cost Best Practices (TCBP) Study AKA Phase I (1998)

Co-sponsored by:
American Institute of Certified Public Accountants (AICPA) The University of Akron, Ohio

Researchers:
Dr. Shahid Ansari, California State University Northridge Dr. Jan Bell, California State University Northridge Dr. Il-Woon Kim, University of Akron Dr. Dan Swenson, Idaho State University

Statisticians:
Peter Braxton, Richard Coleman

Final Report published March, 1999

PBraxton@ar.navy.mil (703) 633-8300 x4327

Cross-functional teams (IPTs) for problem solving

Single most used tool Correlated with all other tools

Multi-year product & profit planning DTC (cost objectives, goals, and thresholds throughout) DFMA (optimize interactions) Continuous Improvement activities (Kaizen) TQM Benchmarking Value Engineering (includes performance trades) Competitor cost analysis QFD (document and understand requirements)

Time C C C C C
C C N C Even with imperfect implementation, Target Costing has yielded benefits to its practitioners!
PBraxton@ar.navy.mil (703) 633-8300 x4327 4

Increased overall profitability Listed from most achieved to least achieved Reduced manufacturing costs Reduced the costs of new products before manufacturing Met or exceeded customer expectations for our products Reduced the cost of purchased materials Resulted in product features and functions that customers value Developed a more profitable product mix Decreased the number of design changes after production begins Reduced the time required for new product introduction