International Journal of Purchasing and Materials Management

Target Pricing - A Challenge for Purchasing Members Only Content

One of the most controversial aspects of purchasing operations is proving cost reductions and cost savings. Target pricing and its adjunct, target costing, solve this problem. Coming from Japan where the concept is used extensively, these tools allow the buyer to set the price of materials-and using ESI and value engineering, the target price reduces the cost of materials in the product. In addition, other areas of waste are identified and eliminated.

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