Integrating strategic cost management with a 3DCE environment: Strategies, practices, and benefits

Abstract The overall objective of this exploratory research was to examine the possible competitive advantages when organizations integrate strategic cost management into the simultaneous design of products, processes, and supply chains. The concept of concomitantly designing products, processes and supply chains is referred to by Fine [1998. Clockspeed. Perseus Books, Reading, MA] as three-dimensional concurrent engineering (3DCE). While many organizations have adopted concurrent engineering to design new products, few have simultaneously considered cost issues related to designing the supply chain. Fewer still were found to integrate strategic cost management with 3DCE. Thus a case study approach was deemed necessary. Based on case studies of five firms, a framework of testable propositions was developed. The initial findings indicated there is a positive relationship between the customer's and supplier's extent of participation in new product development, supplier development practices, and the integration of strategic cost management practices with 3DCE. The integration of strategic cost management with 3DCE should result in a higher level of operational performance in terms of product performance, supply chain responsiveness, and conformance to quality. Integration should also result in lower product and process costs, faster time to market, and fewer product launch problems. The overall result is a higher level of company performance and competitiveness.

[1]  Hau L. Lee,et al.  Product universality and design for supply chain management , 1995 .

[2]  R. Coase.  The Nature of the Firm , 1937 .

[3]  Robin Cooper,et al.  Target costing and value engineering , 1997 .

[4]  R. Cooper,et al.  Strategic cost management: expanding scope and boundaries , 2003 .

[5]  Gregory M. Magnan,et al.  The rhetoric and reality of supply chain integration , 2002 .

[6]  Robert P. Smith,et al.  The historical roots of concurrent engineering fundamentals , 1997 .

[7]  Jan B. Heide,et al.  Transaction Cost Analysis: Past, Present, and Future Applications , 1997 .

[8]  W. C. Benton,et al.  Linking Product Planning and Process Design Decisions , 1992 .

[9]  C. Ernst,et al.  Target costing, co-ordination and strategic cost management , 1999 .

[10]  Lisa M. Ellram,et al.  A Structured Method for Applying Purchasing Cost Management Tools , 1996 .

[11]  R. Kaplan,et al.  The promise--and peril--of integrated cost systems. , 1998, Harvard business review.

[12]  Robert H. Hayes,et al.  CHALLENGES POSED TO OPERATIONS MANAGEMENT BY THE “NEW ECONOMY” , 2009 .

[13]  L. Ellram.  Purchasing and Supply M anagement's Participation in the Target Costing Process , 2000 .

[14]  R. Handfield,et al.  Supplier integration into new product development: coordinating product, process and supply chain design , 2005 .

[15]  M. E. Johnson,et al.  The Supply-Chain Management Effect , 2003 .

[16]  Julie H. Hertenstein,et al.  Developing a Strategic Design Culture , 2010 .

[17]  Daniel R. Krause,et al.  Supplier Development Practices: Product- and Service-Based Industry Comparisons , 2002 .

[18]  Archie Lockamy,et al.  A constraint-based framework for strategic cost management , 2003, Ind. Manag. Data Syst..

[19]  K. Eisenhardt.  Building theories from case study research , 1989, STUDI ORGANIZZATIVI.

[20]  Shahid Ansari,et al.  Target Costing: The Next Frontier in Strategic Cost Management , 1997 .

[21]  Anna Dubois,et al.  Strategic cost management across boundaries of firms , 2003 .

[22]  Stephan M. Wagner.  Cost management practices for supply chain management: an exploratory analysis , 2008 .

[23]  Bruce L. Stern,et al.  Research for Marketing Decisions , 1978 .

[24]  Regine Slagmulder,et al.  Managing Costs Across the Supply Chain , 2002 .

[25]  Vijay Govindarajan,et al.  Strategic Cost Management , 1993 .

[26]  Joseph D. Blackburn,et al.  Concurrent software engineering: prospects and pitfalls , 1996 .

[27]  R. Yin.  Yin, Robert K., Case Study Research: Design and Methods, 2nd ed. Newbury Park, CA: Sage, 1994. , 1994 .

[28]  Charles H. Fine.  CLOCKSPEED‐BASED STRATEGIES FOR SUPPLY CHAIN DESIGN1 , 2009 .

[29]  Amiya K. Chakravarty,et al.  CUSTOMER SATISFACTION THROUGH DESIGN, MANUFACTURING AND SUPPLY NETWORKS: INTRODUCTION TO THE SPECIAL ISSUE , 2009 .

[30]  Andrew Cox,et al.  Managing with Power: Strategies for Improving Value Appropriation from Supply Relationships , 2001 .

[31]  P. Hines,et al.  Demand chain management: an integrative approach in automotive retailing , 2002 .

[32]  F. Wynstra,et al.  Managing supplier involvement in product development:: Three critical issues , 2001 .

[33]  Daniel R. Krause,et al.  An empirical investigation of supplier development: reactive and strategic processes , 1998 .

[34]  Morgan Swink,et al.  A tutorial on implementing concurrent engineering in new product development programs , 1998 .

[35]  A. Strauss.  Basics Of Qualitative Research , 1992 .

[36]  Stefan Seuring,et al.  Cost management in supply chains , 2002 .

[37]  Maria Goldbach,et al.  Organizational Settings in Supply Chain Costing , 2002 .

[38]  S. Dowlatshahi,et al.  Implementing early supplier involvement: a conceptual framework , 1998 .

[39]  A. Link,et al.  THE INDUCE VERSUS PURCHASE DECISION: AN EMPIRICAL ANALYSIS OF INDUSTRIAL R&D* , 1983 .

[40]  Robin Cooper,et al.  Supply Chain Development for the Lean Enterprise: Interorganizational Cost Management , 1999 .

[41]  Denis M. S. Lee.  Management of Concurrent Engineering: Organizational Concepts and a Framework of Analysis , 1992 .

[42]  L. Ellram.  Strategic Cost Management in the Supply Chain: A Purchasing and Supply Management Perspective , 2002 .

[43]  Carol J. McNair,et al.  Cost management and value creation: the missing link , 2001 .