The third example is very similar to the second,
but suggests that value engineering is the primary
technique utilized during the design stage
of the process; kaizen costing is used during the
production stage. Although the difference
between methods I, II, and III of Exhibit 2 may
seem minor, and perhaps confusing, some leading
Japanese companies use them to clearly
establish what is allowable (e.g., highest amount
permitted) and the target improvement required
to reach the allowable cost. As cost improvements
are realized, the current cost “drifts” (as
Sakurai would say) toward the allowable cost.
The target cost needed to be realized becomes
smaller. This guideline uses the latter definition
of target cost.