The Role of Target Costing and Quality Function in Improving Product Value

Journal of Social Sciences and Humanities Research Fundamentals

59

https://eipublication.com/index.php/jsshrf

TYPE

Original Research

PAGE NO.

59-77

DOI

10.55640/jsshrf-05-04-13

OPEN ACCESS

SUBMITED

23 February 2025

ACCEPTED

20 March 2025

PUBLISHED

22 April 2025

VOLUME

Vol.05 Issue04 2025

COPYRIGHT

© 2025 Original content from this work may be used under the terms
of the creative commons attributes 4.0 License.

The Role of Target Costing
and Quality Function in
Improving Product Value

Riyam Mohammad Abbas

Najaf technical institute, Al-Furat Al-Awsat Technical University

Abstract:

In light of the economic and competitive

transformations currently taking place in the world,
companies are constantly striving to improve the value
of their products and increase profitability. Among the
practical tools for achieving this goal are the target
costing technique and the quality function, two means
of balancing cost and quality. This study aims to provide
theoretical frameworks for applying the target costing
technique and deploying the quality function to improve
product value and achieve competitive advantage. Data
from plastic and woven bag factories was collected,
along with field visits and observations, interviews with
managers and employees, accounting records, and
financial reports. The study concluded that applying
these techniques contributes to improving product
value and increasing sales, leading to increased
profitability for the company in both the long and short
term.

Keywords:

Target Costing Technique, Quality Function,

Improving Product Value, Production Costs.

Introduction:

The interest in competition on products is

increasing every day, not only because of the large
number of products available in the market, but also
because of the competition of prices, especially with the
increasing capabilities of consumers to distinguish
between products based on the quality and prices of
differences in products. Gradually, the quality of the
product is considered of greater importance.
Companies begin to discover that the traditional
management systems that have been put in place
cannot compete in the development of the quality of
the product. Therefore, a new management approach
such as target costing was proposed to improve the
quality of the product. In the process of increasing
profit, budgets are the foundation by which other plans
and operations are. This may be due to an increase in
price of raw materials, direct labor, and production

Journal of Social Sciences and Humanities Research Fundamentals

60

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

costs unit, which will the inflation rises, or the product
is facing lower than the real to cost price. And as a
result, this leads to the possibility of low profitability of

the company’s product (Abdul Qader Hama

-Amin et

al., 2015). On the contrary, the products may not be
available on the market if the current price is higher
than the cost price in the future. Hence, for all these
reasons, the target cost determines the limits of the
possible cost of the product before starting the
production phase to secure profit from the product.

Quality should be considered in the processes through
which the product passes to be completed. This is due
to the various marketing, production, and quality
stages through which the product moves to finish the
final stage, the factor who's a material is market
marketing, and in other cases may be a factor
production. The product may have a deficiency in the
product (the product does not belong to the material
provided by the customer), or it may be in the quality
of the added materials. But in all cases the solution
should be quality applied analysis. Since quality
problems are related to a particular supplier, it is
necessary to take the necessary action like the
necessary warning second postponement, the most
radical solution is the expulsion of the supplier
completely, a terrorist with the necessary production
requirements, and at the same time has a reputation
in the market for providing high-quality materials at
reasonable prices.

Problem of the Study

The research problem revolves around the following
intellectual questions:

•

Is it possible to apply the techniques of target
costing and quality function deployment in a men's
clothing factory in Najaf?

•

Is it possible to integrate the techniques of target
costing and quality function deployment in light of
the strategic approach to cost management in a
men's clothing factory in Najaf?

Significance of the Study

The research's importance lies in the techniques of
target costing and quality function deployment and
their role in improving product value and achieving a
competitive advantage. Target costing is a strategic
cost management technique that focuses on product
design and the design of all processes associated with
its production, aiming to manufacture it at costs that
enable the desired level of profit. Based on market
price guidance, this technique focuses on profit
planning and cost management within the economic
unit, whereby price drives costs by focusing on the
customer and on both product design and the

functions desired by the customer. Therefore, the target
costing technique is merely an initiative to manage costs
during the early stages of the product life cycle. The
quality function deployment technique meets customer
needs, understands their requirements, and redesigns
the product to meet those needs. By listening to the
customers' voices, this approach enables the economic
unit to improve its products' quality.

Objectives of the Study

The research aims to study the target costing and quality
function deployment techniques and link them by
applying them to improve product value and achieve a
competitive advantage. The sub-objectives of the
research can be explained as follows:

•

Study the cognitive foundations of the target
costing technique and the quality function
deployment technique and demonstrate the role of
their integration in improving product value and
achieving a competitive advantage.

•

Integrate the target costing technique and quality
function deployment in the research sample (a
men's clothing factory in Najaf) in a manner that is
consistent with the requirements of the
contemporary business environment and the
current

conditions of the factory. • Improving

product value and achieving competitive advantage
in the research sample by integrating target costing
and quality function deployment techniques.

Hypothesis of the Study

The research is based on two basic hypotheses:

•

There is a possibility of implementing, first, the
integration of target costing and quality function
deployment techniques under the strategic
approach to cost management.

•

Target costing and quality function deployment
techniques help economic units improve product
value and achieve competitive advantage.

DATA COLLECTION METHODS

This research took a descriptive approach, reviewing the
literature, including studies, research, theses, and
university dissertations related to the research topic.

Understanding Target Costing

From the perspective of traditional target costing
supported by a series of stage models of target costing,
the essence of target costing supported by costing-
knowledge creation activities, and empirical studies and
field studies on this are examined. The knowledge
creation activities are positioned as an essential
element of target costing that takes care of cost
management at the development and design stages of
a new product. The generality of this model is examined

Journal of Social Sciences and Humanities Research Fundamentals

61

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

based on the results of a survey aimed at participants
in the costing process of a manufacturing corporation,
and possible variations in the model are considered.
The conventional target costing is a systematic

approach to cost planning that achieves the product’s

target profit by developing a production system that
matches the target cost set by the market during the
product planning stage, and by using this value as the
cost constraint, transferring the required cost to
supplier at the time of product design.

The supplier performs the processing or assembly task
based on this design and at the same time, supplies the
parts to the corporation. The corporation assembles
watch sets or combines the processed parts, conducts
finishing processes and inspections, and posts the
finished products on the market. Target costing
research, which focuses on these series of activities,
studies the costing activities performed by a series of
tasks (engineering, purchasing, sales, accounting) and
scrutinizes knowledge creation activities that are
intervene (Nobumasa, 2018). The creation of new
knowledge that rationalizes cost estimates (generation
of costing knowledge) is positioned as an essential
element of the production activities of cost estimates
at each development and design phase, and the model
that controls future production activities is presented.

Definition and Overview

Target costing is a highly situational approach in

various firms’ operations. The intuitively sensible idea

that the firm decides on an acceptable cost level for a
product without considering the cost level of the
separately developed product should not be dismissed
out of hand. In general, target costing is regarded as a
management

accounting

system.

Similar

to

management accounting systems such as budgeting,
variance analysis, and activity-based costing, its
technical implementation is such that managers
manipulate deals they already decided to implement
(Nobumasa, 2018). From this point of view, the
diffusion of target costing has been sluggish in the
business world, compared to QFD, the technique with
which it is generally practiced in conjunction. Target
costing is initiated by a new product development
project rather than by cost information from suppliers.
Consequently, the target cost changes little even if cost
information is made available. Target costing is a highly
consultative activity, drawing on cooperative, open
production values. On the other hand, the developer
of a separately developed product typically works
under conditions of secrecy and competition.
Furthermore, developers are not required to invest the
time and resources in target costing research. Thus,
the target cost is informed either in writing or more
often at a face-to-face meeting. The target costing

process must usually be completed by the time the
target cost is informed. To aid the target costing effort,
developers are instructed to be sensitive to the market,
i.e., customer needs, rival products, and the general
market condition. Developers are effectively asked to
analyze marginal costs, take commercial risks, and
perform price-setting.

Historical Context

Cost and Quality Management have become key
considerations given an increasingly competitive
product market and market demand. To maintain

company’s existence, products must have

value in the

sight of the buyers, considering the quality of the
products. Products must be manufactured or at last
presented to the buyers as per estimated cost budget
(Yuksel Pazarceviren & Celayir, 2014). In the marketing
concept, the task of marketing management is to show
customer needs more effectively than the competitors.
This happens through effective product planning and
product development programs. Where the costs of the
products already exist because the goods are presented
to the market, marketing buyers that require a product
at a given price will be prepared planning by the product

developer. In today’s competitive conditions, for a new

product, it is not enough to just have a design
developed, cost budgets need to be realized before the
product is manufactured. If it is impossible to
manufacture a product according to the budget, there
should be flexibility in the product design. The task that
must be reconsidered in cost estimating of the product
is not elimination of so-called excess costs but
determination of avoidable costs on a product changing
price capacity dependent upon product development.
The Product Development Budget is required to
calculate target costs. Activities in the budget are
classified as necessary and unnecessary. From avoidable
costs, Product Guarantees are demanded that the value
of certain characteristics of a product is affected. Two
problems arise, namely the prediction of the level of
activity required to ensure this goal and the effective
use of these activities with a focus on the cost budget.
BASR analysis solves these problems to some extent by
using statistical observations of the expected reactions
of cost elements to changes in some activity
specifications (Abdul Qader Hama-Amin et al., 2015).
There are studies indicating that with basr analysis it is
not too difficult to determine a usable product
guarantee. Movements continue for a common goal,

which is to increase the entire company’s profits by

developing and maintaining the highest quality. The
company should take into account not only the wishes
of the buyer but also of other parties such as employees,
institutions or society.

Importance in Modern Business

Journal of Social Sciences and Humanities Research Fundamentals

62

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

Today's competitive business environment has begun
to increase various modern management approaches
in

manufacturing

companies

and

different

organizations. It is important to focus the integration
of total quality management (TQM) and target costing
(TC) major objectives to improve product value costs.
TQM is a production approach that is directed at
erosion of costs in the production price in delivering
the unmarred quality required by customers. It has
broader start with company about customer
satisfaction. TQM is the production approach of a
customer oriented the focuses of the company to
satisfy clients (Abdul Qader Hama-Amin et al., 2015). In
TQM, customer satisfaction, company's strategy,
financing, and cost objectives are included in the target
cost, and the most important characteristic difference
is examination of variance as well as the focus on
constant enhancement, while also changes are
production processes and in product design are
absorbed and have oriented issued a broader scope.
Target costing system is cost management which
focuses on reducing development and production cost
in which case the product needing to satisfy customers
is produced. While the way they aim is different, TC
which refers the cost of producing products is
determined followed by determination of regional
costs and the pricing can not be done or rearranged in
the market environment, became necessary to make
an equilibrium between possible prices in the market
and cost objectives. It is obvious that as a result of the
production including lower cost and set of objectives
greater profits will be obtained. Meanwhile, cross
functional - product improvement, production
improvement,

cost

improvement,

market

improvement and target cost and life decision areas -
model with additive-using method was proposed. It is
seen that in the proposal the model performance
under the participants, software developers and target
costs of the applications are increase. In the future is
proposed to suggest the application using the model or
alternatives are instead of alternative performances.

Quality Function Deployment (QFD)

Quality Function Deployment (QFD) has proven to be
an effective approach in product design and
development by translating customer needs and
preferences into design elements and process plans.
Absence of a structured approach is one of the
fundamental reasons why successful execution of QFD
is still limited.

Upon the declaration of the war, Japan’s industrial

companies began producing military goods, leading to
competition among the companies. Right after the
war, farmlands and properties were in devastative
conditions. At that time, the founder of Toyota Motors,

Sakichi Toyoda, announced that the company had to
produce cars for the farmers. He also determined to
produce cars using front-engine with rear-wheel drive.
This strategy took a huge hit in sales since the design
was poorly accepted by the consumers. This incident
forced Kiichiro Toyoda, his son, to adopt a different
strategy in order to maintain the company profitable,
otherwise it would have gone bankrupt. As a result, the
first Toyota motor car was designed based on QFD.
Later, Toyota became the portal of Japanese car makers
(Verma et al., 1998). Unlike any conventional QFD tools,
this well-

known “house of tolerance” sets the design

standard of a product by converting the voice of
customers and the company strategy to the process

standard, component quality, and mission. Toyota’s

QFD activities are carried out both through project
management (QPM) and value management (QVM),
which is an economic value engineering for the end
user. Based on this concept, QPM and QVM have been
combined to perform Customer Value Analysis (CVA),
from which the concept and the design standard for the
components and assembly tolerance can be derived.
CVA can further be used in an integrated approach while
QPM is mapping QVM to communicate the

maximization of profit and customer’s satisfaction to

the corporate departments (Frank Liu, 2000).

Concept and Principles

Target costing has become recognized as an important
determinant for conceptual design. There is also a flurry
of worldwide activity about target costing after
(Nobumasa, 2018) introduced it pouring oil on fire.

Successful strategic ‘resource

-

limited’ competitors, and

their suppliers, recognize that the discipline of target
costing should be practised to help ensure effective
cost, and ultimately profit, management. Quality
function deployment has been promoted as a means to
transfer customer requirements to subsequent design
stages and thus to achieve the product that the
customer wants. However research indicates that using
QFD in this way does not ensure that the final design
meets customer needs. (Nobumasa, 2018) introduces a
new approach for target costing and QFD and identifies
appropriate arguments for pre-cost planning for
competitor-based products. It is shown how the analysis
of QFD can inform both the choice of main points to
profit from target costing and target costing decisions.
Additionally it is shown how the analysis of the 5-why
relationships can identify significant margins in cost
terms, which can be linked directly to target cost
planning. It is also stressed that cost planning in the
design stage is crucial to ensure that the product design
performance exceeds that of competitors as required
and that the now cost and margin data can be linked to
performance parameters. Ideas for an open market are

Journal of Social Sciences and Humanities Research Fundamentals

63

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

considered. Ultimately target costing is new the
efficient aspect. In view of value engineering (VE)
activities, understanding the product to be reviewed
(hereafter Product A) is indispensable. The mechanism
of VE is that VE participants share ideas with one
another to improve objects. Indicating the target cost
triggers the blurring of the signified, stimulating the
creative ability of each individual.

QFD Process Overview

This chapter introduces the concept of target costing
and quality function deployment (QFD) and illustrates
how QFD is applied to achieve target costing in
concurrent engineering. Thereafter, FIFO method, a
vehicle routing problem and a target-based model are
discussed.

The formal QFD process contains four phases:
formulation, from function to part deployment,
correlation, and evaluation. In the first phase, the
house of quality (QFD matrix) is constructed with
house configuration and planning control. The
customer needs are categorized into different
customer requirement (CR) items, including 20 CRs A-
opinion and 8 CRs against competitors. The QDF matrix
is used to link the CR items to the design requirements.
The QFD formulation phase can develop product
design according to market requirements.

The Tucose application for new product development
in the notebook computer industry is introduced. Eight
design teams developed independent designs and then
used the QFD to analyze each design (Verma et al.,
1998). This analysis resulted in a product design that
could be achieved within target costs without affecting
overall design quality. The comparison shows that the
proposed QFD method is an effective way to
implement target costing to meet target costing design
directives. By using QFD, the design of the product can
be improved and simplified. Target costing is a key
industry practice in Japan. A general principle in
fulfilling target costing is to create a product in
conformance with design, manufacturing, marketing,
and other user-specified criteria as economically as
possible. Target costing sets price points that the
market is willing to pay and cost of production. To
achieve target cost, a thorough cost subsystem
analysis of the manufacturing processes of the product
is required early in the conceptual stage.

Benefits of QFD

Quality Function Deployment (QFD) uses a series of
matrices to deploy customer input throughout design,
manufacturing, and delivery of products across the
world (Verma et al., 1998). The premise is that
cooperation and communication among marketing,
manufacturing, engineering, and R&D leads to greater

new-product success. When employed, QFD also
ensures the internal communication and cooperation
among functions. QFD connects the voice of the
customer into the design, development, and production
process. The voice of the customer represents a
hierarchical set of customer needs with assigned
priorities. Data collection of the voice of the customer
may be either through direct sources such as focus
groups,

customer

surveys, or

inventories of

compet

itors’ products, or indirect sources representing

the cross-

functional team’s understanding of the voice

of the customer (VOC) (Abonyi & Czvetkó, 2022). The
first QFD matrix, called the house of quality, links the
voice of the customer to the product design attributes.
The second matrix links the design attributes to the
product components or features. The operating matrix,
also called the process decision matrix, links the product
components to process decisions. The control matrix
links the operating processes to production planning
and control decisions. Quality function deployment is
now extensively used in the development of new
products and services across a wide range of industries,
and applications of QFD span almost every business
situation. The customer preferences aspect of quality
function deployment, or quality function deployment
voice of customer or quality function deployment voice
of quality, has received a lot of attention in the
literature. A number of published articles document the
benefits of using the house of quality, and some
publications show how to collect data for constructing
it. A decision support system for quality function
deployment using fuzzy multicriteria methodologies is
proposed, allowing the product designer to consider
tradeoffs among various customer attributes. System
theory-related paradigms are used for developing
quantitative and qualitative QFD models. The research
emphasis is on tracking product/process interactions in
the QFD planning stage between the project team and
the engineering technical service (ETS), thus creating
commonly developed database that spans the process
of technology commercialization within the company.
To successfully integrate the voice of the customer into
the product design and development process, it is
critical that house of quality information is translated
downstream to the other QFD matrices. Both new and
existing products are made of several components, and
those components are manufactured by multiple
processes.

To

document

and

track

critical

product/process/product

interactions

requires

extensive coordination across multiple interfaces and
functions. Two communication network-based models
are developed: one for formalizing the concerns,
opportunities, and constraints defined by the project
team, marketing, and world class manufacturing during
product design; the other for the ETS to interface with

Journal of Social Sciences and Humanities Research Fundamentals

64

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

world class manufacturing, regulatory, safety, health
and environment, and corporate quality. Both
quantitative and qualitative information sharing occurs
along the nodes and links of the networks.

The Interrelationship between Target Costing and
QFD

Target costing and QFD provide a straightforward
method to assign available resources to effectively
reach customer and stakeholder objectives. It seems
that all necessary customer needs might be included
for an engineering problem. At this time it should be
enough for engineers to focus on the customer
requirements that are affecting the decision of setting
design attributes. These, somewhat simplified, five
customer requirements better represent product
design attributes. This interpretation agrees with the
design team's understanding. For example, the color
was usually discussed in the previous meetings, and its
importance was indicated by the buying rate for the
subcompact cars produced on the same platform
(Verma et al., 1998). A simple customer requirement
can be further decomposed into more generic
customer requirements. It is referred to as multi-
tiering, further layers intended to widen the gap
between the customer and the means of production.
Customer requirements as in the case have been
already discounted, to trade-off between customer
needs and design attributes. This shall improve the
ability to set more precise design goals which are
easier to handle in the framework of shapely
negotiations (Abonyi & Czvetkó, 2022). This usually
means that the development team must continuously
refine the customer requirements, adding important
details or new elements, in order to better understand
the customer; this also sets the basics for a more
effective response of the company to the market. But,
numerous attempts to introduce additional customer
requirements at previous meetings have shown that
the design team lacks the capabilities to design
features properly related to these unexplored
customer requirements.

It further trades off customer requirements against
lesser hierarchical notions, but one does still remain
with the problem that the decomposition tree of a
single customer requirement can be obtained only
after the negotiation pertaining with the means of
production is completed. These clarification-linked
elements are by products of the whole development
process, should not heavily be on the shoulders of the
engineering team that at the onset of the development
process has still to take the above-mentioned
decisions.

Synergies in Product Development

The new product venturing strategy with a strong long-
term perspective must take into consideration the
competitive arena and the possible future evolution of
the products and packages. The analysis should start
from the definition of what the customers want or may
want. The design should be based on what the
customers need or may need, looking ahead 5 to 10
years

considering

the

socio-economical

and

demographic changes. In the long run the technical
advances will ensure that the product will operate
efficiently without any consumer or distributor
intervention. When this will be achieved the quality will
definitively mean the intrinsic reliability and durability
of the product. At the moment, the quality (indeed the
total quality) has both intrinsic and perceived
components ( (Robotham & Guldbrandsen, 2000) ). The
design phase of a new product should be based on the
capabilities of the selected packaging solution,
adequately adapted. The package or the panier should
be like a proclamation of the quality of what it contains
and has to be reusable, visible, hygienic, sustainable, re-
sealable, easily restorable, storable, even transportable,
and potentially recyclable. These capabilities must be
reached by the transformation of materials suitable to
thermoforming by contact or by air, realized through a
quite rapid, reliable, and flexible stamping technology.
This last requirement is of crucial importance, as at the
moment, the old stamping line is heavily used because
of the higher demand of easy opening packages and the
trend of the market goes for a continuous increase of
this type of packaging. The essential requirements are
cleanliness, transparency and both lineBoard and
plastics resistance to deformation at the welding zones.
In this way, the package will show the high respectability
character of the product contained. However, there are
still defects of shape or welding, and impurity due to the
contact materials that adversely affect the consumer
total quality perception. This does not happen for
multiple products commercialized from the same line,
but with standard not refurbished pans; in this last case,
in fact, the perception of an unwanted quality is
referred to the pan (e.g. an oil stain or a dent) and not
to the product. Some of the bad-mouthing, earned by
the difficulty to correctly handle and store the package,
goes to the old delivery store solution of pans and
package without any protection of the product
contained. These solutions, however, uniquely combine
the low cost of the equipment, the low value of the
package breaking during delivery and the rotation of the
air linked to the higher twelve than the volume
measured at the div wall level. On the contrary, the
new air high pan solution linked to a rotating shut, in a
single piece and design to avoid over-cooking and to
guarantee uniform cooking, would not guarantee the
optimal cooking result and would cost too much.

Journal of Social Sciences and Humanities Research Fundamentals

65

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

Although the synergy in terms of time and energy
saving following a common cooking schedule is
recognized. The image deals with higher product
quality perception.

Case Studies Demonstrating Integration

Many companies in the world are beginning to
implement target costing and to improve quality
control functions in product development. One
company uses target costing as an active control tool
through the product development project. The lack of
interconnection between quality features and target
costing can also be noted by the House of Quality.
Several case studies, however, have reported
implementing the integration of QFD with target
costing so as to have better product real values. These
are outlined in the following sections. Several success
stories demonstrate the benefits of using target
costing in the control of expenditure during the project
life cycle. Each case study shows that the application of
target costing will reduce the possibility of a budget
overrun. Furthermore, all case studies indicate that
with the better understanding of cost impacts, a
wavier cost target can be set up in the early stage of
development, when there are still many degrees of
freedom present. Even though many publications
stress the usefulness of the House of Quality as a
consolidated documentation of the design to meet
customer

requirements;

its

design-versus-

requirements format

–

which represents quality

characteristics compared to technical notes

–

does not

show a connection of quality features with target
costing. Furthermore, none of the well-cited articles
offer an example of the complete QFD process linking
the four QFD matrices. To implement the translation of
the House of Quality, it is important to realize the

following: The ‘this implies that’ phrases in the House

do not represent any formal relationship between
customer requirements and the quality characteristics.
These two matrices have been created by different
development teams. Moreover, the Voice of the
Customer team may not include team members
attending the target costing meetings. The majority of
the quality improvements result from the downstream
matrices without any link to the House of Quality.

Improving Product Value through Target Costing

The organization produces product A using material,
processing, and designing Product A. There are
functions peculiar to product A. Products provide
added value to customers with functions. Material,
processing, and design parts are provided with
functions that are combined and integrated to give
Product A with functions. The substance of product A
is analyzed from the perspective of its functions. Target

costs for specific cost-down are set at this stage. Can
determine that certain costs are required when giving
specific functions to Product A. Such costs are
unavoidable costs, and if such costs cannot be avoided,
reduces the cost rate of unavoidable costs. In order to
reduce unavoidable costs, design work reform is carried
out from the present design. The target cost for specific
cost-down is set at this stage. The target cost is an index
indicating the direction of design reform. In the future,
design will be directed to decrease the necessary labor
hours. The role of target cost information at the stage of
setting the target cost is important. Designers who
throw Product A have to think about the basic design
structure. Design is a fairly individual thing. The
substance of product A is analyzed from the perspective
of its functions and the target cost is set at this stage.
Thus, consideration starts from the basic design. To
achieve the target cost, Product A must be remodeled.
In the design advising process, the model of Product A is
left to the each individual. This triggers a psychological
phenomenon referred to as the blurring of the signified.
It stimulates the creative ability, not just the rationality,
of the each individual. This is because target cost
information becomes information that cannot be
processed under the existing knowledge system.
Defense mechanism appears. Target cost information
becomes information that cannot be dealt with as
rational information adjusted by a mechanistic
management system. The target cost information
becomes represented information in the form of
numbers.

Cost Reduction Strategies

There are many studies in the literature included in
traditional cost management systems applied in plastic
firms. Within the practices of these systems, target
costing and quality function deployment concepts
created in a new approach in the competition age have
an important role on the reducing costs and raising the
product value (Yuksel Pazarceviren & Dede, 2015).

The target cost in the product development period
formed with the plans are determined for the desired
product quality; after the consumption of the decided
resources, it is targeted to sell the product at the fixed
profit margin. It is the difference gained from the
expenses of the resources consumed while producing
the product, selling it at the to the fixed amount.
However, according to the concept appears in the
literature, it includes some implicit definitions applied
to these practices. The target cost begins with the
purpose of producing products, at specified prices and
costs that are required and useful for the market,
threatening the eliminated competition. In conjunction
with the Value Engineering, notified by the approach in
USA, in Japan reducing costs through competition and

Journal of Social Sciences and Humanities Research Fundamentals

66

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

customers-based corrections made on the design after
the market launch and forcing improvements on the
innovative perspective have come into the forefront.
On this stage the products have been of some
advantages

against

their

competitors

by

simultaneously gaining the desired quality and cost
targets. In order to be able to hold its improvements
on this stage, a number of standardized principles have
formed in a organized manner with the target costing
concept. Therefore, an approach useful to understand
this philosophy is to see the applications of target
costing within the frame of this strategies.

Aligning Costs with Customer Expectations

Joining the event, a user and the company meet
customer expectations by producing innovative and
high-value products with customer comments.
Producing a new-generation shovel, this comment is
taken into account and product planning is started
accordingly. In the first stage of product planning, the
customer segment interested in shovels is determined,
and this product is divided into features that this
customer segment desires. The sample shovel
produced within the scope of planning is the top
product perceived the highest value that will be
produced. Analysis of the top product top is made. It is
seen that the total cost of features integrated into the
shovel is high. However, upon further analysis of the
market, it is understood that its price will not be paid,
even if its sale is produced at the highest possible sales
volume. In this case, target cost will be set according to
the value that will be paid by the customer. In this way,
it is decided to design the top product cost based on
the target cost. The market is analyzed again and the
lowest product that the customer will perceive as a
reasonable price is determined. The financial and
design team meet to determine the cost targets for all
the equipment. The equipment price and facilities are
first investigated and the price level is found using the
price band with other competitor products. After
determining the value of the equipment that can be
taken, it is decided to use aluminum in the equipment
in order to provide a lightweight and stylish
appearance for the user. Value analysis based studies
are initiated with this direction. The top product top is
reanalyzed according to target cost (Yuksel
Pazarceviren & Dede, 2015). The total cost of the top
product top is required to decrease by 41%, the top
product 2 is 35% and the sample top product is 23%
lower in order to provide the toll value of the service.
Engineering, procurement, manufacturing, and design
departments are considered, value analysis studies are
intended to be made according to the functions of the
departments. However, the activities in the production
and assembly departments deemed impractical. Given

this, the scope is narrowed and studies are carried out
at the level of the mechanical and sheet metal design
section in the design department. In this context, it is
intended to make value analysis studies without
compromising the quality and usability of the material,
instead of aluminum material (Nobumasa, 2018). The
impact of the quality function on product value will be
analyzed. Instead of changing from traditional to the
industrial approach and from sellers to buyers market
approach, customer needs and expectations were
considered rather than the product. Conversely, it is
aimed to focus on products by increasing competition,
especially through marketing units. Today, each product
has more than one equivalent product and many
markets are reached. While aiming to meet the
expectations of customers in these conditions requires
improving the product step by step. On the other hand,
there is emotional consensus between design and
consumer groups. Various benefits will be provided as a
result of the development of products by engineers
about the structure, function, and usage of the project
and the transfer of many goods. However, it is stated
that there are not many good ideas as a result of the
present product feedback from the production sector. It
is stated that there are no for falls of production and
conceptualization in design engineers. The formation of

a weak design is another reason for the product’s

problems in the series program. Such problems will be
experienced less in a product where production
engineers have a say in the concept phase. The design
deviations of late changes have the opposite effect.
From all these elements, it is also aimed to show the
importance of carrying out target costing studies in
concurrence with the sales efforts of the project for an
industrial facility. To this end, the target cost
determination phases of fuel tanks for tractors were
revealed, and it is planned to follow the process until the
target cost is achieved. So far, the importance and
management approach of target costing have been
described. It is time to plan and implement target cost
activities that are necessary along with the emergence
of a new product idea or marketing request for a
systematic approach to target costing.

Impact on Profit Margins

The increased competition of the market environment
and the changing needs and aspirations of the
consumers have made firms aim to create quality
products with cheaper costs. In line with that, firms are
trying to find useful methods to improve the value of
their products and portfolios. Consequently, the roles of
Target Costing and Quality Function Deployment are
seen in the foreground to improve the product value.
The aim of this study is to investigate the mutual effect
of linking Target Costing and Quality Function

Journal of Social Sciences and Humanities Research Fundamentals

67

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

Deployment in a well-known company in Turkey
producing elevators.

In order to improve the product value, various
improvements were observed in the company.
Thereby,

it

is

expected

that

proposed

recommendations could be useful for them. Target
Costing and QFD together are an effective approach for
designing the ideal product. As a result of the
applications in the company, it is beneficial to start the
project with a cost reduction rate of 45%. This project
should be to improve technology and a good multi-
disciplinary team. At the same time, since the market
is quite sensitive to cost, the fastest market
introduction time has been established as a principle.

The aim is to ensure that the selling price of the lift and
the elevator control system to be produced with the
new project will be below the determined target price,
to keep the life-time cost low, to improve
technologically, to manufacture the customers desired
lifts and elevator control systems, to prevent
competitors to enter the sector and to capture a
competitive superiority. Target cost computation is
made. The minimum profits that can be obtained from
the investment are calculated according to the
continuously falling locked interest rates on the loans
during a period. After determining the elements of the
product, studies on reducing the costs are carried out.
The target cost calculation is made by way of reducing
the cost of the expensive parts, which constitute the
greatest cost. In this way, the gap between the target
cost and the final cost is reduced to a minimum. R&D
studies are done on the manufacture of cheaper parts
to replace expensive parts and alternatives. It is active
in six sigma studies for the production and design
departments. It is promised to finish the product
design and release speed tower lift and elevator
control system ready for production within an average
of 12 months. The aim is to create a quality product
with a faster and efficient design. Following the release
of the product design, the start of production is the
highest quality of the fields followed by the research
and development unit used products.

Enhancing Quality through QFD

Software industry has experienced and will be more
and more concerned with the quality of information
what we provide. The term information refers to data
and process data. Now most companies collect data
using database system then analyze quantitative
analysis using statistic technique, quality viewpoint is
necessary to consider also. The quality of information
is the probability that the information provide what

the users need and its accuracy. It’s spoken how target

costing and QFD can be used to improve the

information quality and how target costing help us to
develop a cost-effective Product Information System
(Verma et al., 1998). The process of product
development focuses on a new economic entity with
attributes such as high and low price. It could be based
on a specification of corporate strategy, which presents
target, after considering market segments and creating
policy. Nevertheless, in practice, costumers are
concentrated on simple product and ignore attributes
due to costly and/or time consuming. The new product
development process focuses on the visible attributes
and some hidden features of the product are ignored is
costly. In addition, customers consider the cost of the
product and the affordable price is well below the
afforded price of the product developed without
concern to its price (Frank Liu, 2000). By applying target
costing to the new product development process,
customer needs, importance of hidden features and
cost of the product are analyzed correctly from the
viewpoint of resolution. A basic mechanism results for
the process of new product development, whose focus
is a new economic entity. Until recently, such process
has been seen and used in terms of suppliers and
customers. The business system presented several
attributes peculiar to the entity such as order volume,
payment conditions and complaints. The present
approach means an intensive analysis of those entities
attributes like the hidden features.

Identifying Customer Needs

(1) Today’s world economy has opened the era of a free

competitive market, and international economic
relations are increasingly intertwined. Japanese
enterprises, in particular, are facing a sharp rise in
competitive intensity due to the high value of the yen
and high labor costs. Under these circumstances, there
is a growing global trend toward developing cost-down
products, with cost and quality as the main elements, to
meet the needs of consumers in labor-market global
competition. This trend reinforces the product life cycle
shortening, making refining designs essential. (2)
Because products will not sell without consumer
demand, market-needs analysis must be performed. As
a basic step, the needs of the market attributed to the
consumer will be analyzed. Given that satisfaction in

consumer’s evaluation of a product is evaluated on a

utility basis, creating new things to satisfy the utility that
is not currently available is equivalent to creating new
demand. A product is the result of processing of raw
materials, therefore the utility values of the processed
products are allocated and the price is expressed. And

the user’s bid price is compared, the demand line is

divided into the section where demand exists and does
not, and the amount of raw materials used are decided
for each part and the market demand for the supply

Journal of Social Sciences and Humanities Research Fundamentals

68

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

product is decided. (3) In the value engineering stage
of the next step, performance is given to
commercialized products and the development of
processing technology to satisfy them. The operations
that will be performed would be setting the target cost
values obtained from the demand line and the cost
planning of the function, and make review design the
appointment right after.

Translating Needs into Technical Requirements

The success of an engineered product depends on how
well it meets the needs of its customers. Therefore,
determining these needs is a vital step in product
development, and the process of need determination
must be systematic, using tools and methods that can
lead to quantifiable and measurable performance
indices. This chapter explains in detail how to translate
the customer competitive assessment needs into

engineering terms (the ‘voice of the customer’ into the
‘voice of the engineer’). It introduces theory and two

alternative ways to perform the development of
technical requirements based on customer needs for
products and services: using a table and a diagram.

The Theory of Technical Requirements Generation
explains what a good set of technical requirements
should look like and how these will arise from need
determinations. A number of different technical
requirement types are suggested and strategies for
creating them involving multifunctional teams and
affinitizing them. Up to now, a major concern during
product development has been the design of a product
for which there is a perceived market need, but 20-25%
of developed products never reach the market.
Meanwhile, there is an increasing number of
competitors, so launching a successful product may
not result in the expected profit. ISC tools support
capturing systematically the voice of the customers
and new market trends (Ahmadipourroudposht, 2017).

Measuring Quality Improvements

Target costing is widely recognized as a competitive
weapon to supply more acceptable quality values of
both goods and services at decreasing costs. Enhanced
profits result in this fashion from the mix of higher
rates under stress from industrial development from
regular sales. This positions a structured framework
that combines target costing and quality function
deployment, leading to product value improvement in
the design phase. Comprehensive development of new
items consistent with client specifications is the most
influential aspect of the framework. The framework
suggests rearrangement of the product features from
target prices and these client specifications.
Conformance quality is progressed by the utilization of
quality characteristics of both elements. Measurement

of quality enhancements is usually implemented
through client contentment metrics. Display procedures
for handling the framework attentive demand product
development at a commercial vehicle producer in
Turkey. Support for the successful application of the
framework is found by the outcomes of the study
(Neyestani, 2017).

Quality improvement initiatives such as quality costing
practice, target costing, and quality function
deployment are among the most salient tactics
employed by numerous thriving organizations. Target
costing is a method that identifies probable forthcoming
expenditures and then for a potential product sets a
target for its entire existence span. Quality costing can
be used as a valuation metric to develop and evaluate
the performance of production processes intended for
usage to increase product quality. Quality function is a
statistical strategy used to construct new consumer
goods that are configured to minimize quality

characteristics and utilize consumer’s utility functions.

As noted and as reflected, that a great deal of past work
has been the research statement is when feedback on
the superior performance of the process is made
available. And, it is credited with fine-tuning and
enhancing.

Challenges in Implementing Target Costing and QFD

4. Analysis of the Challenges in Implementing Target
Costing and QFD 4.1 Introduction The implementation
of target costing and a quality function deployment
(QFD) system calls for understanding of customer needs
and satisfaction in the earliest stages of designing a
product. This is particularly important per the
Framework Method presented here in such applications
as contract bidding. 4.2 Analysis The analysis is
exemplified by an investigation of a Japanese
electronics company. The coherent structure of the
Method, emphasizing the close interaction between
engineering, production and sales domains, highlights
the forces pushing towards both formal renewals of
policy and technological improvement that are
frequently met when target costing and QFD are first
implemented. 4.3 Development Suggestions are made
for the development and the growth of competitive
advantage in new markets for companies first
implementing a target costing and QFD system. These
firms must structure production so that highest-quality
products can be made at the lowest cost and sell
profitably. Many Japanese and American firms have
successfully applied target costing systems; similar
results can be transferred to Russia. 4.4 The QFD Quality
Function Deployment (QFD) was first developed in

Japan in the 1966 by Dr Yoji Akao. It is known as “QFD
house of quality” and is still widely used today. Based on

the concept that a product should be designed focusing

Journal of Social Sciences and Humanities Research Fundamentals

69

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

on customers’ requirements, QFD is widely accepted

by both manufacturing and service-oriented markets
around the world. The purpose of QFD is to focus all
members of the company on customers, provide an
environment where problems can be seen easily and
facilitate the company overcoming them quickly and
efficiently. The principles of competitive advantages,
customer focused and best technical solutions can be
facilitated by the QFD process (Verma et al., 1998). This
technique uses a simple approach to guide a product
planning team through the process in a logical and
research-based method (Abonyi & Czvetkó, 2022).

Organizational Barriers

Fiat Auto carried out a benchmarking against the new
Japanese competitors. The differences (especially
timing differences) in the release date to market are

reported as an “identification of the breath

-behind

axis”.

Ahead of the product launch, the styling of some div
components of a new vehicle must be changed. The
stylist has always maintained that the new
configuration is aesthetically more successful than the
previous one even if it is also aware that these changes
would pose significant problems to all the technical
offices which have to define the specifications for the
production. The styling process includes the creation of
prototypes without mechanical constraint but also the
determination

of

precise

dimensions

and

specifications, that can only be cues for the pre-series
and industrial production and, necessarily, involve a
high modification effort.

This configuration is equivalent to a bus where the
documents at the intervention are identical to the
draft ones. A comparison of the different methods
should reveal that the model analysis is able to suggest
what are the areas where the competitors are more
advanced, thus enhancing the efficiency of the

reorganisation, and that the “inverse” use of t

his

second methodology - waste the identification of each
criticality - is a valuable contribution for a further
benchmarking. The ex ante cost-benefit analysis made
by the firms in the match spiral. The cost estimation of
organizational changes includes both the time and
money spent in transformation activities and the profit
loss due to the time required to reach the top-level
efficiency performance after the introduction of
deviations (Calabrese, 1997). Any reorganisation
should therefore decrease the percentage of problems
in the intermediate phases of at least 20% to make
profitable the effort spent in term of time and
investments.

Resistance to Change

General resistance to changes and approaches to

managing and reducing it are considered to be a
function of the specific activities of an organization,
taking into account the influence of both external and
internal factors. In general, the success of realization of
intends depends on what changes are planned, for
whom, how they are implemented, and under the
influence of which situation they occur. The relevance
of selected aspect is evident in light of the fact that
existing aims processes play an important role in the life
of any organization, and the efficiency of functioning of
the latter directly depends on the ability to timely adapt
to changing external and internal conditions. Changes
cover all spheres of human activities, starting from
everyday life and ending with global processes. In the
economic sphere, changes occur at a different pace and
are stimulated by a set of external and internal factors,
the major of which is market relations. Changing market
conditions are the reason for the need to constantly
refine the supply requests and better the quality of
products. Resistance to changes is one of main barriers
to successful change programmes. For these reasons,
the question of reduction to the resistance to changes is
of great importance and should be taken in attention
both during planning and during implementation of any
programmes regarding change (Chernova et al., 2018).
High-quality and properly prepared product is the basis

of a company’s competitiveness. However, is it not a

secret that time does not stand still, market conditions
are changing quite quickly and the company must have
the flexibility necessary to respond to these changes.
Also in conditions of fierce competition with any given
time to maintain the quality and timeliness of deliveries,
the company must be satisfied and the cost of
manufactured products. How then can the company
maintain the level of product quality and scope, while
simultaneously seeking to reduce costs?

Resource Allocation Issues

Target costing is an adaptable costing method which can
be used at any stage of the product life cycle. In this
model, target cost to be achieved for the product and
customer satisfaction to be obtained through function
and quality have been taken as the main objectives. In
those objectives reached, it will lead the determination
of the life cycle cost, the sales price that will be set,
provide a guide on the time to enter the market and
develop the product. Achievement of these main
objectives will be followed by the determination of most
suitable target cost, to signal the necessity for reducing
unit costs to this level and it will establish that the effort
spent on developing the product from design to
production is well targeted. The proposed model aims
for the consideration of cost concerns throughout the
product life cycle resolving towards development,
manufacturing and cessation stages. The models have

Journal of Social Sciences and Humanities Research Fundamentals

70

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

been tested in three case companies, one in the
domestic appliance industry and two in the car-parts
sector. As a result of using this model, it has been
determined that the chosen design alternatives will
reduce present cost by 6.0%, 13.5% and 5.2%,
respectively. Furthermore, a decrease in most unit
production costs was observed, leading to a rise in
profitability in other projects.

The essential feature of target costing system is that
the cost to be achieved is set at the design stage of the
product. Quality Function Deployment, a method
widely used for customer satisfaction, is the first
information

concept

that

accurately

reflects

customers' wants. As a result of the integration of
these two techniques, the Quality and Cost
Deployment method, which establishes a relationship
between customer requirements and product
components, has been developed. In this study, QCD
matrix was prepared by using the QFD matrix prepared
with the data of the company manufacturing the air
conditioning unit and the automobile sector supplier.
In this case, a concrete method has been established
to determine the targets costs that should be achieved
at the design stage within the framework of the target
costing approach.

Best Practices for Successful Implementation

A theory accompanied by numerous practices for the
successful implementation of target costing as well as
quality function and improvement is provided. By
comparing various theoretical considerations, this
paper provides a pool of best practices in the form of
success factors and critical conditions. Theoretical and
empirical research conducted since 1990 on the
implementation of target costing, QF/CI, and function
deployment is examined. Comparing practical cases of
the implementation of target costing and QF/CI
identifies a core of best practices for both concepts,
thus

enhancing

the

prospects

of

effective

implementation.

Target costing and quality function and improvement
have become popular in recent years. They are
powerful methodologies for designing new products or
processes at an early stage of product development to
achieve the target cost without sacrificing quality and
market attractiveness. Because the success of target
costing and QF/CI is generally agreed to depend on the
success of their implementation, much research has
been conducted on how to implement these concepts,
mostly concentrating on the explanation of concepts,
methods,

and

prerequisites

for

successful

implementation. Unfortunately, there is no universally
agreed upon understanding of these prerequisites.
This apparent lack of consensus may be due to the

multiple paths that can be pursued in implementing
target costing and QF/CI, often referred to as customer-
driven vs. cost-driven target costing and strategic vs.
tool-based QF/CI. On the other hand, implementing
target costing and QF/CI is expected to involve
overcoming many barriers and applying a large number
of best practices. Since there is a lack of such practices
in the literature, this may deter efforts to implement
them.

Cross-Functional Teams

There is a strong attempt, in the Italian automotive
industry, to improve car value through the involvement
of C&C activities on the development process. This study
shows the difficulties arising in Fiat Auto and how a
better integration among different functions should
overcome some of these problems, taking into account
the results of a case study. Since prices of new models
are defined on the basis of their value to the customers,
the reduction of the product tangible and intangible
costs must be combined with an improvement of the
customer perception of the difference between the
product benchmark and the own product. In
consideration of a product already defined technically,
the cross-functional comparison must point out the
absence of some technical characteristics that are
normally present in products of a group of competitors
that are recognised as benchmark. It is the function of
the product designer to introduce in the product these
characteristics, assuring they will be coherently present
along the different sub-assemblies. This is the aim of
development activity: to assign to the product proper
components and 'over' them with the mandatory
procedures, avoiding cost overruns in the productive
phase. As from a certain phase of development, there
are two ways to increase the product costs. The first
consists of adding technical characteristics to the
product in such a way that no relevant savings in other
sub-assemblies can be done. The product designer
receives and incorporates in the product characteristics
of regionalisation from benchmark components. The
target costs of these components rise excessively. If
they are realised, it is impossible to get back to the
regional cost without dropping the characteristic
(Calabrese, 1997). So it is ended up carrying the costs of
these characteristics.

Continuous Improvement Culture

The study aims to analyze the role of target costing and
quality

function

deployment

in

Indonesian

manufacturing companies to enhance product value.
Causal design has been applied. The respondents are
139 companies listed on the Indonesian Central
Statistics Institute in the years 2016 and 2017.
Multilevel Partial Lease Square has been applied in the

Journal of Social Sciences and Humanities Research Fundamentals

71

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

analysis. The results of the study show that product
value is affected by knowledge management, target
costing, and quality function deployment. The culture
of continuous improvement has an influential role in
increasing the value of products through knowledge
management, target costing, and quality function
deployment. There are also knowledge management,
target costing, quality function deployment, and the
culture of continuous improvement that have the most
influential role on the value of a product.

The main theme of this issue is concerned with the role
of target costing and quality function deployment in
the manufacturing sector in Indonesia, particularly in
terms of producing competitiveness of industry after
liberalized. The crisis in 1998 and the crisis in 2000 have
shocked the economies, including Indonesia. There
have been significant changes facing Indonesian
manufacturers such as lower economic growth,
inflation rate, increasing domestic market demand,
slow industrial recovery, and increasingly high levels of
corporate debt. Additionally, political instability has
also created an uncertain investment climate. To the

authors’ perception pursuing a high level of

competitiveness, particularly for the manufacturing
industry, has never been more difficult. On the other
hand, liberalization that started after the crisis in 1998
might have propelled Indonesian companies to actively
search for superior methods in producing their
products. Thus, to face the fierce competition after
liberalization they have to be more creative and more
efficient.

Training and Development

Employee training and development is an important
part of every organization. It can be done in an efficient
way if done systematically. The contents of training
should be specified, the method of training should be
specified, time and location of training should be
specified, and who will provide the training should be
specified.

The

training

program

should

be

implemented in an organized manner. An agency
should be established to evaluate how well the training
program is implemented. Professional trainers should
be invited to give training directly. Currently, much
work has been done by the , which falls under the
heading of employee training. This research will
investigate what training is conducted within the ,
especially the development of target costing related
concepts, and why employee training is needed. The
proposed hypothesis of measuring these items
mentioned above in the by using a survey.

Employees are an essential part of any organization.
The performance of the organization depends on the
performance of its employees. Thus, Employee training

is a must in every organization. Training is a learning
process that involves the acquisition of knowledge,
sharpening of skills, concepts, rules, or changing of
attitude and behaviors to enhance the performance of
employees. It involves planned programs undertaken to
improve employee knowledge, skills, attitude, and
social behavior. Employee training and development
activities help in achieving pre-determined goals.
Therefore, training plays a crucial role in improving the
organizational performance and the quality of
employees. Employee training is a part of the life-long
learning to enhance their career progression. Employee
training creates flexibility in career movements in an
organization. Employee training and development are
also tools to set specific criteria for performance
improvement. Training and development help people
grow and knowledge sharing about the skills and
functional areas of a job. In additional terms, this
training is for developing the minimum managerial skill
to get promoted and for further management job
targets.

Measuring Success: Key Performance Indicators (KPIs)

The problem addressed in this article was initiated as
few parts with the Manufacture Engineering
fluctuations in the part price compared to projected
cost versus actual cost. It was found that there is no
process in place to verify the actual cost of a part from
the supplier (Abdullah et al., 2008). A new procedure for
costing and quoting a part from a supplier was initiated
and the supplier agrees to the actual cost and quote cost
up front. A part model was created in Access that has all
machine time and hourly wages on the model to verify
the cost is being charged at the quoted cost. Once the
part is created and quoting a supplier, the actual cost of
the part is verified before the order was being placed.
Also, the purchase order must have the quote cost and
the terms and conditions identified on the actual quote.
Furthermore, the supplier then agrees to the cost and
the parts are delivered at the quoted cost. To catch
wrong charges or prices, the actual cost compared to
the projected cost is done.

As part of the continual improvement, a new procedure
targeted the Manufacturing Engineering. The problem is
related to fluctuations in the part price compared to
projected cost versus actual cost. After realizing the
problem, several steps were taken to improve both the
actual process as well as the future process if this
problem happens again. A new procedure for costing
and quoting a part from a supplier was initiated. Once
the part is available to be quoted, a part model was
created within the database. This model has all the
machine time, hourly wages, etc., on the model to verify
cost is being charged at the quoted cost. Once the cost
is verified with the shop, the estimating department

Journal of Social Sciences and Humanities Research Fundamentals

72

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

gets the cost verified over the phone with the supplier.
If the supplier has never done business with the plant,
the supplier is required to send a fax either on
company letterhead or a formal quote showing the
cost as being the quote cost. After the supplier agrees
to cost and quotes the actual parts, the purchase order

is then placed. Rich text format (RTF) “tool tips” were

created to put the quote cost on the purchase order
when the order is placed. Furthermore, the purchase
order then matches the PO with the terms and
conditions identified on the actual quote.

Financial Metrics

In the context of advancement in technology and the
increasing of market competition, the companies
should also put effort towards producing high quality
and value-added products with the best costs to be
more competitive in the market. The process of
starting from considering the value demanded by the
customers and striving to achieve it with the finest cost
through methodical design and accomplishment of the
product is cost-quality-time design or simply target
costing. Target costing is a three-phase process which
can boost and sustain cooperative venture among the
design, production, and marketing department. It is
also praised as a powerful and successful approach to
cost reduction and increasing market share. If target
costing is performed effectively, the companies can be
more glorious and escape from the trouble companies.
However, it is not an easy matter to hold target costing,
cost structure, competitive prices, and profitability. In
order to gain an understanding and install target
costing method, it is important to manage the concept,
development, introducing, application, and dismissing
target costing. In addition to target costing, quality
function deployment is a quality assurance system
which is influenced in modern organisations. Quality
function deployment is a methodical mode to
represent quality setting up requirements, examine
those requirements into the original plan elements,
and feature typical care with methods for assurance
the goals are reached. Hence, this methodology
produces a network of traceability through the design,
marketing, and production aspect of the corporation.
Keeping every division conscious of the initial quality
goals formed by the clients and promoted continuously
might improve result.

Customer Satisfaction Metrics

Customer satisfaction metrics focus on the expected
relationships between plan, quality assurance, and
customer satisfaction. Although this concern with the
outcome of process quality has a long history in
operations management, efforts to define and
measure it are relatively recent, dating to the resource

and policy-making motivations for TQM. At the heart of
total quality management (TQM) is a concern with
metrics for monitoring product quality (Iwankiewicz-
Rak, 2018). Depending on the industry, quality means
the absence of defects, conformance to design
standards, fitness to purpose, or value for money.

Improving the value/quality relationship requires useful
customer

satisfaction metrics.

The operations

management literature on the topic concerns servqual,
the durables analogue to that, and a nested
simultaneous-equations

model

with

revealed

preference data. The servqual approach rests on
developing, field testing, and applying a survey
questionnaire that disentangles the three distinct
quality concepts of Parasuraman, Zeithaml, and Berry.
Transferred to technical services, and reframed with an
investment-customer perspective, these three concepts
become outcome quality, process quality, and price
performance. Outcome quality reflects customer

evaluations of a service’s impact on performance goals;

process quality reflects customer evaluations of the
investment process, such as responsiveness and
reliability; and price performance reflects customer

evaluations of the service’s value in relation to costs

paid.

Quality Metrics

In this part, the total quality cost model (TQCM) as a
quality costing function based on the implementation of
quality function deployment (QFD) is represented as a
new mathematical programming model in the form of a
linear model that maximizes added value for target
customer requirements. Deriving the optimal cost ratio
of internal failure to appraisal and prevention costs of
quality characteristics results in achieving minimum
quality costs with continuous improvement. Internal
failure costs for quality characteristics of all parts are
distributed among factor level costs with a connection
of a significant relationship. Based on the distribution of
the internal failure costs and the modified cost model,
the total quality cost functions of the final and new
linear programming models are transformed in the form
of adaptive models. Finally, a sensitivity analysis with
the cost parameters of TQCM-TCD (TQCM based TQCD
deployment) is provided to assist decision-makers in
improving the product value. This process begins with
market research to find out what customers want
(Neyestani, 2017). In the marketing process, there are
so many methods. Here, focus is on some methods such
as one-on-one meetings, focus groups, and sales
records on the subject, which are collectively called
subjective data. In contrast, surveys and workshops are
used as tools for quantifying this information called
objective data. This method supports the object data
preparation (ODP) in the decision-making process

Journal of Social Sciences and Humanities Research Fundamentals

73

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

(DMP) with a detailed description of the procedures.

Practical Aspect

1.

An Introductory Overview of the Men's Clothing
Factory in Najaf

This section will cover the history of the Men's Clothing
Factory in Najaf, its objectives, organizational structure,
design and available capacities, planned and actual
production, management methods, and focus on men's
suit production. It will also cover the accounting system
used, its current products, the costing system used in
the factory, and the cost calculation of men's suits.

Trial production began in 1985, and the ready-made
clothing factory in Najaf was established in 1987. Actual
production started in 1988 at the General Company for
Textile and Leather Industries. The factory occupies a
distinguished position in the field of design and
production, having achieved qualitative progress in the
ready-made clothing industry using a major electronic
system and obtaining an international quality
certificate.

The factory's products experienced a significant decline
in production levels, with many products either
discontinued or becoming irregular. This decline in
production resulted from the impact of the post-2003
events that the country experienced, the country's
opening up to the world, and the entry of various
competing products. This ultimately led to a decline in

the factory's productivity.

In 2005, the ready-made garment factory in Najaf was
attached to the General Company for Textile and
Leather Industries. In 2010, the Chinese-owned project
for advanced suits was launched, including civilian
(daily suits) with a production capacity of 400 suits per
day. This achievement marked a qualitative
development in the suit industry and its adaptation to
new market trends. A hall for the production of
advanced suits, a hall for div armor and helmets, and
a men's clothing project were also added, which has
been ISO certified by a Danish company and certified by
the Central Organization for Standardization and
Quality Control. More than 1,700 workers work at the
factory, and the factory has directly contributed to
supplying civilian clothing to various segments of
society.

2.

Production capacities of the ready-made garment
factory in Najaf

Despite the development witnessed by the ready-made
garment factory in Najaf, its production levels have
significantly declined in recent years. This is due to the
shutdown of several production lines and the intense
competition from imported products and their high
prices. The factory's design, available, planned, and
actual production capacities are illustrated in the
following table:

Year

Design

Power

(Unit)

Available
Energy (Unit)

Planned
Production
(Unit)

Actual
Production
(Unit)

Actual
Production To
Planned
Production
Ratio (%)

2019

926000

820800

400000

7884

1.97%

2020

926000

820800

400000

168

0.04%

2021

926000

820800

400000

52730

13.18%

2022

926000

820800

400000

68422

17.11%

The table above shows that the actual production of
the ready-made garment factory in Najaf Al-Ashraf
decreased significantly compared to the design,
available, and planned capacity levels due to
production shutdowns caused by the COVID-19
pandemic during 2019 and 2020, with production
being virtually non-existent during most months.
During 2021 and 2022, due to the somewhat stable
health situation, actual production increased to
52,730 units in 2021. Production then increased
further in 2022, reaching 68,422 units during that

year. Despite the increase in production over the
past two years, the factory still needs to develop its
operations and products in order to increase
production and benefit from economies of scale. 3.
The nature of the accounting system in the men's
clothing factory in Najaf al-Ashraf

The accounting system applied in the men's
clothing factory in Najaf al-Ashraf is one of the
pillars upon which the factory's management relies
in making important decisions, such as pricing and
production decisions, reviewing production lines,

Journal of Social Sciences and Humanities Research Fundamentals

74

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

and others, through the information provided by
the accounting system to the management. After
the researcher reviewed the system applied in the
factory, it became clear that there is a cost system
that relies in its application on the unified

accounting system, as the cost elements are
dissolved into seven accounts, starting with
salaries and wages (31) and ending with the other
expenses account (39), as follows:

N

Account

number

Account Name

Cost (dinar)

ratio to total

1

31

Salaries and Wages

2768668000

53.07%

2

32

Commodity Supplies

349109000

6.69%

3

33

Service Supplies

126865000

2.43%

4

34

Interest and Land

Rent

-

-

5

35

Warnings

1971974000

37.81%

6

36

Transfer Expenses

-

-

7

37

Other Expenses

-

-

-

-

Total Cost

5216616000

100%

The table above shows that the total cost of the Najaf
Men's Textile Factory in 2022 was IQD 5,216,616,000.
Salaries and wages amounted to IQD 2,768,668,000,
representing 53.07% of the total cost. Commodity
requirements amounted to IQD 349,109,000,
representing 6.69% of the total cost. Service
requirements amounted to IQD 126,865,000,
representing 2.43% of the total cost. Finally,

depreciation amounted to IQD 1,971,974,000,
representing 37.81% of the total cost. Therefore, it can
be said that salaries and wages are the main
component of the total costs incurred by this factory.
Therefore, management must make the necessary
decisions to increase the number of employees by
opening new production lines or expanding existing
ones. 4. Applying target costing tech

nology in a men’s

clothing factory in Najaf.

N

Competitor Product Name

Origin:
China

Unit selling price
(dinar)

1

Apparel China Men's Suit

China

60000

2

Brother Wang Men's Suit

China

65000

3

Privatthinker Men's Suit

Turkey

70000

4

Damat Tween Men's Suit

Turkey

80000

5

Hatemoglu Men's Suit

Turkey

100000

6

Buratti Men's Suit

Italy

105000

7

Ermenegildo Zegna Men's Suit

Italy

110000

8

Luca Faloni Men's Suit

Origin:
China

120000

Total: 710,000

Number of competing suits: 8

Average selling prices of competitors' men's suits = 710,000 ÷ 8 = 88,750

Engineering characteristics to be improved and their cost for the men's suit product

Engineering properties to be

Raw materials

Total

Cost per suit

Journal of Social Sciences and Humanities Research Fundamentals

75

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

improved

needed for it

production

Ease of manufacturing men's suits

Durability and resistance to wear

and tear

Improvement of overall quality

and performance of men's suits

Fabric

372008000

23725

Sheer threads

3857280

246

Plain threads

3763200

240

Fluffy threads

2744000

175

Silk threads

752640

48

Button threads

501760

32

Improvement of the production

process

Embroidery

17248000

1100

Padding for added

proportion

7683200

490

Pocket lining

21952000

1400

Ease of manufacturing men's suits

Durability and resistance to wear

and tear

Cotton thread

3057600

195

Tree paper

7056000

450

Fixing paper

1881600

120

Varied ribbon

980000

625

Improvement of overall quality

and performance of men's suits

Ready-made threads

465617280

29695

Direct T-s

182562240

11635

Improvement of the production

process

1100484802

70184

Cost of improved engineering properties for the 2024 men's suit product

N

Engineering properties to be

improved

Raw materials

needed for it

Total

production

Cost to produce

one suit

1

Ease of manufacturing men's

suits

Fabric

15513

243243840

2

Durability and resistance to

abrasion and puncture

Density

Improving the overall quality

and performance of men's suits

Sheer Lines

172

2696960

Normal Lines

168

6326420

Over Lines

123

1928640

Thread and Silk

343

533120

Smart Beige Lines

(Alarm)

22

344960

3

Engineering properties to be

improved

Textile Cotton

Wadding

1250

1960000

Pocket Lining

500

784000

Lining

750

1176000

4

Ease of manufacturing men's

suits

Fabric

200

3136000

Gauze

475

745600

Covering Paper

125

196000

Strap

600

948000

Durability and resistance to

abrasion and puncture

Buttons

22271

349209280

Directly Attach

9897

155184960

Total 52,150 817,712,000

It is noted from the table above that the cost of
engineering properties after improvement has become
(817,712,000) dinars for total production and (52,150)
dinars per suit, after it was (1,100,484,802) dinars for
total production and (70,184) dinars per suit. This

means that the amount of cost reduction will be
(282,772,802) dinars for total production and (18,034)
dinars per suit during the research year.

CONCLUSIONS

Journal of Social Sciences and Humanities Research Fundamentals

76

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

1.

Improving production costs: Applying target costing
helps reduce costs by determining the optimal cost
of production based on the target market price. This
improves product profitability and avoids resource
waste.

2.

Meeting customer expectations: Using the quality
function, companies can better understand
customer needs and meet them through improved
product design. This increases customer satisfaction
and enhances the product's competitive advantage.

3.

Increasing operational efficiency: Integrating target
costing and the quality function improves
production processes by reducing unnecessary
costs and increasing efficiency across all stages of
production.

4.

Achieving sustainable competitive advantage: By
improving product quality and reducing production
costs, companies can achieve a sustainable
competitive advantage, increasing their market
share and strengthening their position among
competitors.

5.

Improving decision-making: Target costing and the
quality function provide accurate data and
information that helps management make informed
decisions based on reliable information, leading to
improved strategic planning.

6.

Increasing customer satisfaction and productivity:
Improving product quality and reducing costs helps
increase customer satisfaction and improve
productivity, ultimately leading to company growth
and success.

Recommendations

1.

Enhancing Technology Integration: To ensure
maximum benefit, it is recommended that the
integration of target costing technology and the
deployment of the quality function across all stages
of the production process, from design to final
production, be enhanced.

2.

Employee Training: Continuous training programs
should be provided for employees on the use of
modern technologies, such as target costing and
the quality function, to ensure their complete
understanding and practical application of these
technologies.

3.

Focus on Customer Needs: It is recommended that
periodic studies be conducted to better understand
customer needs and expectations and work to
design products that efficiently meet these needs.

4.

Improving Production Processes: Continuously
analyzing and improving production processes to
reduce

costs

and

increase

efficiency

is

recommended. Tools such as SWOT analysis and

failure mode analysis (FMEA) can be used to
achieve this goal.

5.

Effective Interdepartmental Communication: To
ensure the integrated implementation of cost and
quality strategies, it is recommended that effective
communication and collaboration between various
company departments, such as marketing, design,
and production, be enhanced.

6.

Measuring and Improving Performance: Key
Performance

Indicators

(KPIs)

should

be

established to measure the impact of implementing
modern technologies on improving product value
and competitive advantage and work to improve
these indicators continuously.

REFERENCES

Abdul Qader Hama-Amin, O., Abdulaziz Al-Bayati, G., &
Ibrahim Rajab, K. (2015). Quality Analytical Entrance Cost
Applied Study in the Garments Factory of Waladi in
Mosul.

[PDF]

Nobumasa, S. (2018). The Innovation Mechanism in
Target Costing.

[PDF]

Yuksel Pazarceviren, S. & Celayir, D. (2014). TARGET
COSTING BASED ON THE ACTIVITY-BASED COSTING
METHOD AND A MODEL PROPOSAL.

[PDF]

Verma, R., Maher, T., & Pullman, M. (1998). Effective
Product and Process Development Using Quality
Function Deployment.

[PDF]

Frank Liu, X. (2000). Software Quality Function
Deployment.

[PDF]

Abonyi, J. & Czvetkó, T. (2022). Hypergraph and network
flow-based

quality

function

deployment.

ncbi.nlm.nih.gov

Robotham, A. J. & Guldbrandsen, M. (2000). What is the
new paradigm in product quality?.

[PDF]

Yuksel Pazarceviren, S. & Dede, B. (2015). LIFE CYCLE
COSTING MODEL BASED ON TARGET COSTING AND
ACTIVITY-BASED COSTING METHOD AND A MODEL
PROPOSAL.

[PDF]

Ahmadipourroudposht, M. (2017). A product design
framework for one-of-a-kind production using integrated
quality function deployment and operational research
techniques.

[PDF]

Neyestani, B. (2017). Quality Costing Technique: An
Appropriate Financial Indicator for Reducing Costs and
Improving Quality in the Organizations.

[PDF]

Calabrese, G. (1997). Reorganising the Product and
Process Development in Fiat Auto.

[PDF]

Chernova, L., Mazurkevych, O., & Chernova, L. (2018).
THE MODEL OF ASSESSING THE GENERAL INTENSITY OF
RESISTANCE TO CHANGES IN AN ORGANIZATION.

[PDF]

Abdullah, R., Mohamad, E., & Razali Muhamad, M.
(2008). Managing Key Performance Indicators (KPIs): A
Case Study at an Aerospace Manufacturing Facility.

[PDF]

Jain, A. (2016). Design to Cost-Imperatives to Industry

Journal of Social Sciences and Humanities Research Fundamentals

77

https://eipublication.com/index.php/jsshrf

Journal of Social Sciences and Humanities Research Fundamentals

Today.

[PDF]

Eng Lim, J. (2003). Application Of Cost Of Quality System
By Proton Vendors.

[PDF]

Maher AL-Khasawneh, S., Souliman Jrairah, T., Anisah
Endut, W., & Mohd Norfadzilah bin Nik Mohd Rashid,
N. (2019). The relationship between target costing
method and pricing - development of products in
industrial companies.

[PDF]