Integrated Target Costing with Supply Chain Management: A Strategic Perspective

Target costing is a design approach in which a company designs a product to achieve a desired profit while satisfying customers' expectations for quality and product features. Supply chain management is a logistic network which consists of suppliers, manufacturing centers, warehouses, distribution centers and retail outlets as well as raw materials, work-in-process inventory and finished goods that flow between the facilities. Strategic cost management contains supply chain analysis, strategic positioning analysis and cost driver analysis. Cost driver analysis decides what processes or transactions create costs in the supply chain. After deciding on the strategic positioning, the firm can integrate cost driver analysis along with supply chain analysis to achieve sustainable competitive advantage.