Japanese Cost Management * This includes the entire product life cycle from research and development (R&D) to product planning, design, manufacturing, sales promotion, physical distribution, operation, maintenance and disposal. * Cost reduction and quality improvements will provide the highest overall benefits * Japan must import all factors of production except labour therefore the company’s cost structure depends on international market prices for commodities * 5 Innovations: * The implicit contract between employer and employee changed. * IKM = Innovation Kaizen Maintenance * Alters the subject of the job and transforms the implicit labour contract between the organization and employee * Changes the culture not the technique * Innovation: is the basic responsibility of an employee to develop innovative changes to product or production processes as a result introducing new technology or investing in plant equipment; result of discontinuous discovery * Kaizen is the employee’s responsibility of improving current activities; includes not only daily, small continuous improvements but also changes in managerial structure * Maintenance means the employee has responsibility to maintain current standards of technology, business and operations * IKM attitudes are necessary for driving force for Japanese cost tools such as JIT, total productivity maintenance (TPM), total quality control (TQC) and value engineering (VC) * None of the U.S. tools have any area in improvement of a business except for planning and control * TQC improves quality * JIT reduces inventory * TPM improves machine availability * Target costing is to reduce product cots * Pervasive use of cross-functional groups. * Provides expertise needed for success * Important because they allow the cooperative work of each area to influence other areas as well as allowing cost trade-offs between areas * Practice job rotations across functional boundaries. * Rotate management through various areas during their career and once they are in mid-career,