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Target costing for supply chain management: criteria and selection

Archie Lockamy III (School of Business, Samford University, Birmingham, Alabama)
Wilbur I. Smith (Florida A&M University, Tallahassee, Florida, USA)

Industrial Management & Data Systems

ISSN: 0263-5577

Article publication date: 1 July 2000

Abstract

This article examines the use of target costing as a means to improve the management of supply chains. A discussion of the shortcomings of traditional and activity‐based cost management approaches to supply chain management provides the basis for exploring the use of target costing within supply chains. Customer requirements and supply chain relationships are identified as key criteria for selecting the most appropriate method of target costing for supply chains. Price‐based, value‐based, and activity‐based cost management approaches to target costing are discussed, and recommendations for their use based upon customer requirements and supply chain relationships are offered. Conclusions are provided on the use of target costing to enhance a supply chain’s ability to improve customer satisfaction.

Keywords

Citation

Lockamy, A. and Smith, W.I. (2000), "Target costing for supply chain management: criteria and selection", Industrial Management & Data Systems, Vol. 100 No. 5, pp. 210-218. https://doi.org/10.1108/02635570010304789

Publisher

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MCB UP Ltd

Copyright © 2000, MCB UP Limited