Cost Tables

from the Perspective of Competitive Advantage

by
Edwin B. Dean

Yoshikawa, T., J. Innes, and F. Mitchell (1990) note that cost tables have been used extensively by Japanese companies to reduce cost. Cost tables were first applied within the manufacturing process to estimate the cost prior to implementation. Today they are used extensively within the design process where there is even more leverage for cost reduction.

A cost table is a computerized multidimensional data base in which cost is captured for several levels of a number of attributes for either the parts or functions of a product. For example, if they wish to improve certain attributes of a function, the cost table is used to estimate the cost of the improved function. It is thus a powerful tool for function cost analysis as used within their value engineering process.

The cost table is an example of parametric accounting which was proposed by Dean (1989c) for used in the USA, obviously, long after it's existence in Japan. If one were to use this data base to derive equations which predicted the data well, the resulting equations could be used for parametric cost analysis.

Although I do not yet have supporting evidence, I strongly suspect that cost tables are a primary tool within cost deployment. They would serve the same purpose as proposed by Dean (1995b).

Bibliographies

Cost Table Bibliography
Parametric Cost Analysis Bibliography

Professional Societies

Mathematical Accounting Association (Japan)

References

Dean, E. B. (1989c). "Cost Analysis: Research Directions," presented at the Second Joint National Conference of the National Estimating Society and the Institute of Cost Analysis, Washington DC, 5-7 July.
Dean, E. B. (1995b). "Parametric Cost Deployment," Proceedings of the Seventh Symposium on Quality Function Deployment, Novi MI, 12-13 June.
Yoshikawa, T., J. Innes, and F. Mitchell (1990). "Cost Tables: A Foundation of Japanese Cost Management," Journal of Cost Management, Fall, pp. 30-36.

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