Information Sharing Between Automakers and Suppliers in the Process of Target Cost Management

Abstract

In order to survive in today's business environment characterized by strong competition, it is no longer enough to be an efficient company. The efficiency in the entire value chain of a company is necessary to satisfy today's demanding customer in term of quality-cost-time. One of the tools used by many Japanese companies since the 1960s to satisfy the quality-cost-time requirements is the proactive cost management approach, widely known as Target Cost Management (TCM). While many researches related to TCM have been conducted during this last decade, they are more focused on the TCM process of top companies in a value chain. The importance of suppliers' involvement into the TCM process of their customers is recognized, but it is still under-explored. In this paper, an attempt is made to explore how suppliers in the Japanese automobile industry contribute to the effectiveness of TCM process of the auto-makers through information sharing between the two parties.