1995-02-01

Target Cost Management for Product Safety 950334

This paper presents an application of target cost management (TCM) to the design of product safety in the automobile industry. Product safety occupies a prominent position among corporate strategic plans because safety issues can drive a company to the brink of bankruptcy and even threaten the entire existence of an industry. Safety issues contain legal, marketing, technological, cost and other dimensions, all of which demand ever-greater emphasis on this issue. At the same time, safety has become a moving target whose meaning is subject to court interpretation and societal norms. However, safety cannot be augmented infinitely. A manufacturer is constrained by cost and profitability benchmarks.
Companies can use TCM to optimize their focus on safety issues. This paper shows how value engineering (VE), a TCM technique, can help minimize the costs of safety components, while satisfying engineering, product and customer concerns. After several iterations, the final recommended design of these components brings all of them into the optimal value region.
The contributions of this paper include: (1) developing product safety into three (preventative, protective and failure-effect reductive) safety forms, and (2) simplifying the application of VE techniques to these forms by constructing concrete steps, thereby helping the company to routinize its major safety production processes.

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