Manufacturing Cost Policy Deployment (MCPD): from target and actual cost to ideal cost

Abstract

It is obvious that the gap between the need to reduce manufacturing costs and the level that manufacturing companies can achieve is large and often companies do not know how to cope with this situation, especially against the background of increasing competitiveness. Moreover, this gap is widening for many companies even if they use different pathways such as: Total Quality Management (TQM), Total Productive Maintenance (TPM), Industrial Engineering (IE), Just-In-Time (JIT), Lean Manufacturing (LM), Six Sigma and World Class Manufacturing (WCM). However, these approaches do not necessarily guarantee a reduction in unit costs at the level required by the market and the expected profitability, even if they have been successfully implemented. Except for publications on the Manufacturing Cost Policy Deployment (MCPD) system, there have been no published articles or books addressing a methodology for setting targets and means of reducing unit costs, regardless whether sales are up or down. MCPD system establishes competitive cost targets and expected profit targets, breaks down cost improvement targets at the level of products, processes, departments and individuals and aligns systematic (KAIZEN) and systemic (KAIKAKU) improvement activities accordingly. The three phases and the seven steps of the MCPD system and an example of applying the MCPD system are provided below.