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CHAPTER 4: ＣＯＳＴ ＭＡＮＡＧＥＭＥＮＴ IN

PRODUCTIVITY IMPROVEMENT

Ⅰ.Ｉｎｔｒｏｄｕｃｔｉｏｎ

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Ｎｅｃｅｓｓｉｔｙ ｏｆ ｃｏｓｔ
ｍａｎａｇｅｍｅｎｔ

１．Ｎｅｃｅｓｓｉｔｙ ｏｆ ｃｏｓｔ ｍａｎａｇｅｍｅｎｔ

Price – Profit = Target Cost

“Profit, not only for car manufacturer but for

any manufacturer in other business
segment, is gained by reducing cost. Cost-
based thinking by setting price with profit
added on to cost is totally alien to a car
manufacturer of today.”
(Taiichi Ohno, Former TMC Vice-President)

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１．Ｎｅｃｅｓｓｉｔｙ ｏｆ ｃｏｓｔ ｍａｎａｇｅｍｅｎｔ

“Price – Necessary Profit = Target Cost”

Price
- To be decided by market
- Excessive price increase by a
manufacturer results in either sales
decrease, or increase in dealer
discounts.

１．Ｎｅｃｅｓｓｉｔｙ ｏｆ ｃｏｓｔ ｍａｎａｇｅｍｅｎｔ

“Price – Necessary Profit = Target Cost”

Necessary Profit
-It is necessary to ensure the profit
per model based on the corporate
profit planning.

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１．Ｎｅｃｅｓｓｉｔｙ ｏｆ ｃｏｓｔ ｍａｎａｇｅｍｅｎｔ

“Price – Necessary Profit = Target Cost”

Target Cost
- The cost that should be achieved
- Quality, performance, specifications and
equipment, all improvements will be reflected
in cost. Not only must these requirements be
satisfied, but the target cost must also be
achieved.
- Cost is to build up.
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２．Ｅｓｔａｂｌｉｓｈｍｅｎｔ ｏｆ ｃｏｓｔ ｍａｎａｇｅｍｅｎｔ8

ｍｅｔｈｏｄ ｉｎ Ｔｏｙｏｔａ

Establishment of “TPS”
（Ｔoyota Ｐroduction Ｓystem）
Toyota attempts to provide to society
1) the highest quality automobile,
2) at the lowest cost possible, and
3) in a timely manner with the shortest lead
time possible.

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 ２．Ｅｓｔａｂｌｉｓｈｍｅｎｔ ｏｆ ｃｏｓｔ ｍａｎａｇｅｍｅｎｔ9
ｍｅｔｈｏｄ ｉｎ Ｔｏｙｏｔａ

Establishment of
“Quality Control” method
Building in quality Standardized
at each process Work

Compatibility between
Quality and Cost
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２．Ｅｓｔａｂｌｉｓｈｍｅｎｔ ｏｆ ｃｏｓｔ ｍａｎａｇｅｍｅｎｔ10

ｍｅｔｈｏｄ ｉｎ Ｔｏｙｏｔａ

Toyota way of
Cost management
①Set up the standard cost
②Find abnormality and take countermeasures
③Eliminate completely
every possible types of MUDA(*)
*MUDA(waste) ： thing and operation that does not create any value added

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Ｄｅｆｉｎｉｔｉｏｎ ｏｆ ｃｏｓｔ

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１．Ｃｏｓｔ＝“Ｇｅｎｔａｎ－ｉ”×Ｒａｔｅ

Cost should be broken down into

“Gentan-i” and Rate.

Usage – Gentan-i：
Usage per unit（material, hour, etc.)

Rate：
Price（per Kg, hour, etc.）

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◆Sample of Gentan-I × Rate

- Material Cost for Painting Part X
Company a Company b
In Country A In Country B
After Kaizen

Gentan-i 0.9 Kg 1.1 Kg 0.9

Rate 1.0 $/Kg 0.8 $/Kg 0.8

Cost $0.90 $0.88 0.72

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２．Ｃｏｎｔｒｏｌ ｏｆ Ｇｅｎｔａｎ－ｉ
Ｇｅｎｔａｎ－ｉ ｉｓ ｔｈｅ ｉｎｄｅｘ
ｃｏｎｔｒｏｌｌｅｄ ｂｙ ｐｒｏｄｕｃｔｉｏｎ ｓｉｔｅｓ
Ｕｓａｇｅ ｐｅｒ ｕｎｉｔ
(Example)
・Ｃｏｎｔｒｏｌ ｏｆ ｍａｎｐｏｗｅｒ＝「Ｈｏｕｒ」
・Ｃｏｎｔｒｏｌ ｏｆ ｍａｔｅｒｉａｌ＝
EX 「Ｕｓａｇｅ ｏｆ ｐａｉｎｔ ｍａｔｅｒiａｌ（ｋｇ）」

・Ｃｏｎｔｒｏｌ ｏｆ ｕｔｉｌｉｔｉｅｓ＝
EX 「Ｕｓａｇｅ ｏｆ ｅｌｅｃｔｒｉｃａｌ ｐｏｗｅｒ（ｋｗ）」

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３．Ｃｏｎｔｒｏｌ ｏｆ Ｒａｔｅ
Ｒａｔｅ ｉｓ ｔｈｅ ｉｎｄｅｘ ｃｏｎｔｒｏｌｌｅｄ
ｂｙ administration Dep.
Ｐｒｉｃｅ（／ｈｏｕｒ，ｋｇ，ｋｗ，ｅｔｃ）
（Example）
・Labor cost＝「Wage （／hour）」：Personnel Dep.
・Material cost＝「Material price（／ｋｇ）」：
Procurement Dep.
・Utilities cost＝ EX 「Electricity price（／ｋｗ）」：
Procurement Dep.
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４．Ｃｏｎｔｒｏｌ ｏｆ Ｇｅｎｔａｎ－ｉ ｉｎ 16

ｐｒｏｄｕｃｔｉｏｎ ｓｉｔｅｓ

Ｖｉｓｕａｌｉｚａｔｉｏｎ ｏｆ Ｇｅｎｔａ－ｉ
Ｖｉｓｕａｌｉｚｅ ｆｌｕｃｔｕａｔｉｏｎ ｏｆ ｄａｉｌｙ ｇｅｎｔａｎ－ｉ
ａｎｄ kａｉｚｅｎ ａｃｔｉｏｎ

Ｃｏｎｔｒｏｌ ｏｆ ｕｓａｇｅ ｐｅｒ ｕｎｉｔ

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Ｃｏｓｔ ｍａｎａｇｅｍｅｎｔ

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１．Ｗｈａｔ ｉｓ ｃｏｎｔｒｏｌｌｅｄ ｓｔａｔｅ？

A standard is established.
Variance from standard is measurable.

Abnormality control by PDCA cycle

A state under
control
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２．Ｔｈｒｅｅ ｐｉｌｌａｒｓ ｏｆ Ｃｏｓｔ Ｍａｎａｇｅｍｅｎｔ

Cycle of cost management
Development & Design ＜Cost planning＞
⇒Set the standard cost

＜Cost Kaizen＞ Ｐｌａｎ

Further
improvement
from standard Ａｃｔｉｏｎ Ｄｏ Realize the
cost standard cost

＜Cost
Ｃｈｅｃｋ maintenance＞
・Check variance (abnormality)
Maintain the
standard cost from standard cost
・Countermeasures

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３．Ｃｏｓｔ ｐｌａｎｎｉｎｇ
Cycle of cost management
Development & Design
⇒Set the standard cost
＜Cost Kaizen＞ Ｐｌａｎ
Further
improvement
＜Cost
from standard planning＞ Realize the
cost
Ａｃｔｉｏｎ Ｄｏ standard cost

＜Cost
Ｃｈｅｃｋ maintenance＞
・Check variance (abnormality)
Maintain the
standard cost from standard cost
・Countermeasures

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 ３．Ｃｏｓｔ ｐｌａｎｎｉｎｇ 21

Set up the standard cost in the Development and

Design stage (before volume production)

Ｔａｒｇｅｔ ｃｏｓｔ

Ｃｏｓｔ ｒｅｄｕｃｔｉｏｎ ａｃｔｉｖｉｔｉｅｓ（ＶＥ）

⇒Ｐｌａｎｎｅｄ ｍａｉｎｌｙ ｂｙ Dｅｓｉｇｎ Ｄｅｐ．

Ａｃｈｉｅｖｅ ｔｈｅ ｔａｒｇｅｔ ｃｏｓｔ

Ｓｅｔ ｕｐ ｔｈｅ ｓｔａｎｄａｒｄ ｃｏｓｔ

（Ｇｅｎｔａｎ－ｉ×Ｒａｔｅ）
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３．Ｃｏｓｔ ｐｌａｎｎｉｎｇ

What is a standard cost?

Standard cost

Standards of production
Gentan’I Standard Standard layout of
works machines

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４．Ｃｏｓｔ ｍａｉｎｔｅｎａｎｃｅ

Cycle of cost management

Development & Design
＜Cost planning＞
⇒Set the standard cost

＜Cost Kaizen＞ Ｐｌａｎ

Further
improvement

Ｄｏ Realize the
from standard
cost Ａｃｔｉｏｎ ＜Cost
maintenance＞
standard cost

Ｃｈｅｃｋ ・Check variance

(abnormality) from
Maintain the standard cost
standard cost ・Countermeasures
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４．Ｃｏｓｔ ｍａｉｎｔｅｎａｎｃｅ
◆Control abnormality
Cost “Maintenance” = “Daily” Control of Gentan-i at Shop Floor
Abnormality Control
•Defects
•Machine Stoppage
Abnormality
etc.
Cost

Upper Control Limit

Standard(=gentan-i)
Actual Take
Lower Control Limit countermeasure at
once!
Abnormality
Time
Toyota
Toyota Manufacturing
Manufacturing Management
Management

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４．Ｃｏｓｔ ｍａｉｎｔｅｎａｎｃｅ
◆Example of daily gentan-i control in production
－Control abnormality－
９４６Ｎ 塗装工程素材 台当り使用量
Paint material usage per unit
Usage per unit(Anti-chipping primer paint)
７月
May
July Part品番：Y811129039(040)
No.
Condition 管理条件: ３００μ Gentan-i原単位【
Standard Gentan-i
企画原単位：2.55KG/台0.1984
Unit 】

直別 項目 曜日 Mon Tue Wed Thu Fri Total Mon Tue Wed Thu Fri Sat Total Mon
6 7 8 9 10 12 13 14 15 16 17 18 19 20
使用量 Usage 2161
183 2316 204 2346
197 2419 181 2425
214 11667
979 2290
184 2357
208.0 2348
220 2397 214 109594 12669
237 2182 1155 2366
217
累積使用量 Cumulative Usage 2161
183 4477 584 9242
380 6896 765 11667
979 11667
979 2290
184 4647
392 6995
612 9392 1062 12669
848 11574 1156 24336
2135 2366
2351
生産台数 Production Volume
841 901 945 920 940 4547 898 917 903 915 836 426 4895 917
累積台数 Cumulative volume
841 1742 2687 3607 4547 4547 5445 6362 7265 8180 9016 9442 9442 10359
台当り使用量 Usage per Unit 2.57
0.218 2.57 0.216 2.55
0.219 2.56 0.197 2.58
0.228 2.56
0.215 2.55
0.205 2.57
0.227 2.6
0.243 2.62 0.256 2.57
0.259 2.61 2.58
0.220 0.236 2.58
0.236
Cumulative Usage
累積台当使用 per Unit 2.57
0.2181 2.57 0.2173
0.2183 2.57 2.56
0.2121 2.57
0.2154 2.57 0.0338
0.215 2.56 0.0842
2.56 0.0616 2.57 0.1178
2.57 0.1037 2.58 0.226
2.58 0.1224 2.58 0.22698
2.58
0.300
2.65
Usage per
unitUnit
Usage per
台当り使用量
2.6
0.250

0.200
2.55

0.150
2.5

2.45
0.100 Spray pressure up
Spray speed down to 400mm/sec
0.050
2.4
due to insufficient thickness
0.000

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４．Ｃｏｓｔ ｍａｉｎｔｅｎａｎｃｅ 26

◆Example of daily gentan-i control in production

－Analysis of causes and Countermeasures －
Situation of Gentan-I (Paint material)
946N Paint material Gentan-i（D40 2.55kg/Unit） Analyze causes
・Man：Skill level was not standardized
(kg/台)
2.70
6.00 Abnormality ・Machine：Pump pressure was not
maintained within standard level
2.60
5.50
2.55
2.50
5.00 Countermeasures
Check results
2.40
4.50
・Man：Education for skill level up
・Machine：Maintenance of pump pressure
2.30
4.00 within standard level and implementation of
'02/10～'03/3 '03/4～'04/3 '04/4～'05/3 '05/4～'05/9
regular inspection

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 ５．Ｃｏｓｔ Ｋａｉｚｅｎ
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Cycle of cost management

Development & Design
＜Cost planning＞
⇒Set the standard cost
Further
＜Cost Kaizen＞ Ｐｌａｎ improvement
from standard
cost
Ａｃｔｉｏｎ Realize the
Ｄｏ standard cost
Further
improvement ＜Cost
from maintenance＞
Ｃｈｅｃｋ
standard Maintain the ・Check variance (abnormality)
cost standard cost from standard cost
・Countermeasures

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５．Ｃｏｓｔ Ｋａｉｚｅｎ
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◆Reduce the standard cost and

carry out new PDCA cycle
Cost Improvements
Cost Maintenance in:
Std 1 •Productivity
•Yield
•Tool life etc.
Cost Kaizen
Actual

Evaluation
Std 2
Cost Maintenance
Time
SOP Ｎ+1 Ｎ+2 …
Toyota Manufacturing Management

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５．Ｃｏｓｔ Ｋａｉｚｅｎ

- Find and eliminate every possible

types of MUDA(*) endlessly.

* MUDA (waste) : thing and operation that does not

create any value added.

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５．Ｃｏｓｔ Ｋａｉｚｅｎ

7 types of Muda in TPS

Muda of waste & repair Muda of inventory

Muda of overproduction Muda of motion

Muda of processing Muda of waiting

Muda of conveyance

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 ５．Ｃｏｓｔ Ｋａｉｚｅｎ
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◆7 Types of Muda in TPS

①Muda of waste and repair
Any disposal and repair is Muda

②Muda of overproduction
Producing too much and too soon

③Muda of processing
Processing for excessive quality, etc

④Muda of conveyance
Any conveyance is essentially Muda
so should be kept to the minimum
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５．Ｃｏｓｔ Ｋａｉｚｅｎ
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◆7 Types of Muda in TPS

⑤Muda of inventory
Any more than the minimum to operate

⑥Muda of motion
Any motion that does not contribute directly to adding value

⑦Muda of waiting
Waiting for parts to arrive or for a machine to finish a cycle, etc

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 ５．Ｃｏｓｔ Ｋａｉｚｅｎ
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◆Example of Kaizen to ②Muda of overproduction

⑦Muda of waiting

Introduction of Jｕｓｔ In Time Production

１．Produce only what has been sold

２．Produce at the pace of sales

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５．Ｃｏｓｔ Ｋａｉｚｅｎ
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Before Flow of parts

Kaizen １ 2 3 4 5
Manual Time = sec
Auto Time = sec
M=5 M=5 M=6 M=18 M=８
A=15 A=18 A=15 A=0 A=15

２ ２ ２ ２ ２

１ ３ １ ３ １ ３ １ ３ １ 3
３

TT = 30sec (Pace of sales)

After Kaizen １ 2 3 4 5
M=5 M=5 M=14 M=18 M=８
A=15 A=18 A=0 A=0 A=15

２ ３ ４ ２ ３

１ 5 １ ４

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 ５．Ｃｏｓｔ Ｋａｉｚｅｎ （Ｂｅｆｏｒｅ Ｋａｉｚｅｎ）
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５．Ｃｏｓｔ Ｋａｉｚｅｎ （Ａｆｔｅｒ Ｋａｉｅｎ）

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