Implementing a Target Costing System in the Digital Fiber Optic Industry
Target Costing is a management technique and comprehensive approach focused on reducing the costs of a new product during product development. It is used in more than 80% of the major companies in the assembly type industries, characterized by a complex product structure. However, what happens—and is the process even applicable—if these conditions are not present? The literature describes in detail how Target Costing has successfully developed for years in assembly-type industries such as the automotive industry. We conducted a case study in a midsize company (INEXIO) in the digital fiber optic industry, because despite cost structure similarities between companies in assembly-type industries and INEXIO, key differences exist. The research is based on qualitative and quantitative data, collected during the collaboration with the company. This paper is of interest because it indicates in detail how Target Costing can be transferred and implemented at INEXIO’s day-to-day business although not being competing in the assembly type industries, and how a tailor-made process can support to achieve more profit and economies of a project. Taking limitations into account, the conclusion of this thesis is that the Target Costing process or at least major components can successfully be implemented in a company in the fiber optic industry and hence create value added for the company and its customer.