"Make in India" campaign was announced by Prime Minister of India. Make in India to be successful needs market demand in India as well as abroad for Made in India products. Will there be sufficient demand? What parameters will determine demand. The performance of the product will determine demand. But demand is expressed as certain volume of products at a price specified by customers. Unless the manufacturers deliver or supply the product at that price, demand will not be there. To supply the product at a specified price, the cost of production has to be less than the price minus the marketing and distribution costs, and profit margin required.
Target costing is the approach now followed by manufacturing companies to design product as well as production system that supplies the product at the cost derived from the price giving adequate volume of demand.
Industrial engineering was described as profit engineering by Taichi Ohno, the developer of Toyota Production System. Industrial engineers, analyze the resource used in the proposed or existing production systems, identify waste, remove it, make systems more efficient and thus contribute to reduction of cost. Recently an author recommended five iterations of cost reduction. Each cost reduction iteration has to be followed by a prototype whose technical feasibility is established and this exercise helps industrial engineering team as well as the original product and production system design teams to come out with new ideas for the next iteration of cost reduction ideas.
Industrial engineering departments of the companies, industrial engineering professional societies and academies, and individual industrial engineering faculty members have to focus on cost reduction intensely to make Make in India a great success.
The Institute of Cost Accountants of India is also making serious efforts to measure costs and compare them with various types of standards (some of them determined by industrial engineers) to point out areas of potential cost reduction. Industrial engineering profession has to collaborate with the ICMAI to facilitate proper cost measurement and reporting.
ICMAI is presently doing research on Power Sector, Health Care Sector, Higher Education Sector, MSMEs, Infrastructure, Government Services, Manufacturing Sector and Banking Sector to identify cost measurement issues and potential for cost reduction.
Target costing is the approach now followed by manufacturing companies to design product as well as production system that supplies the product at the cost derived from the price giving adequate volume of demand.
Industrial engineering was described as profit engineering by Taichi Ohno, the developer of Toyota Production System. Industrial engineers, analyze the resource used in the proposed or existing production systems, identify waste, remove it, make systems more efficient and thus contribute to reduction of cost. Recently an author recommended five iterations of cost reduction. Each cost reduction iteration has to be followed by a prototype whose technical feasibility is established and this exercise helps industrial engineering team as well as the original product and production system design teams to come out with new ideas for the next iteration of cost reduction ideas.
Industrial engineering departments of the companies, industrial engineering professional societies and academies, and individual industrial engineering faculty members have to focus on cost reduction intensely to make Make in India a great success.
The Institute of Cost Accountants of India is also making serious efforts to measure costs and compare them with various types of standards (some of them determined by industrial engineers) to point out areas of potential cost reduction. Industrial engineering profession has to collaborate with the ICMAI to facilitate proper cost measurement and reporting.
ICMAI is presently doing research on Power Sector, Health Care Sector, Higher Education Sector, MSMEs, Infrastructure, Government Services, Manufacturing Sector and Banking Sector to identify cost measurement issues and potential for cost reduction.
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