Introducing target costing means comprehensively changing the product development management approach. The following key questions arise:
- Methodological approach: which procedures should be used to identify, break down and achieve the target costs?
- Reporting concept: which metrics are relevant for managing the development project and have to be tracked to identify target/plan/actual deviations?
- Systems: how can the target costing approach be integrated with existing tools and systems used for investment budgeting, cost accounting, planning and reporting?
- Organisation: how should the roles and responsibilities of the units involved in target costing – controlling, product development, procurement, production, distribution, corporate planning etc. – be defined?
- Change management: how should the change process and its communication, training and further education activities be managed to ensure that target costing will sustainably reinforce a focus on costs?
When introducing target costing, care has to be taken to harmonise it with the existing management concept.