Cost Management
Content
Step 2 :
Identify The Components Of The Product and The Cost Of Each Component.
( We identify the components and cost of each as follows :
Step 3 :
Determine How The Product’s Components Contribute To Customer Satisfaction.
We determine the contribution of each component to satisfying customer criteria. This step usually requires a team of marketing, operations, and cost management analysts.
Step 4 :
Determine The Importance ( Value ) Index Of Each Component.
We determine the importance index for each component, which reflects the value of the component to the customer. It is shown in the right column below.
* For example, the 22.2 percent index for the motor is determined as follows (the index for the
other two components is computed in a similar way):
( 46.3% × 10 % ) + ( 29.3 % × 10 % ) + ( 24.4 % × 60 % ) = 22.2%
Identify The Components Of The Product and The Cost Of Each Component.
( We identify the components and cost of each as follows :
Step 3 :
Determine How The Product’s Components Contribute To Customer Satisfaction.
We determine the contribution of each component to satisfying customer criteria. This step usually requires a team of marketing, operations, and cost management analysts.
Step 4 :
Determine The Importance ( Value ) Index Of Each Component.
We determine the importance index for each component, which reflects the value of the component to the customer. It is shown in the right column below.
* For example, the 22.2 percent index for the motor is determined as follows (the index for the
other two components is computed in a similar way):
( 46.3% × 10 % ) + ( 29.3 % × 10 % ) + ( 24.4 % × 60 % ) = 22.2%
