Skip to main content
SpringerLink
Log in
Book cover

Management, Uncertainty, and Accounting pp 153–183Cite as

Palgrave Macmillan

Transforming Cost Design into Environmentally Conscious Cost Design in Japan: Likelihood and Problems for Further Development

  • Chapter
  • First Online:

  • 999 Accesses

Abstract

This chapter clarifies the process by which cost design in Japan becomes environmentally conscious cost design and considers the possibility of its further development and generalization. The chapter first defines cost design as proactive manufacturing of low cost and high quality at the design stage, in contrast to the standard cost system, and enquires into the extension of this process to the global supply chain and product life cycle. Second, it recognizes the development of environmentally conscious cost design as a result of the integration of supply chain costing and life cycle assessment into cost design from the viewpoint of environmental management. Third, it uses corporate social and environmental reports in the Japanese transport equipment and electric machine industries to investigate the state of environmentally conscious products, environmentally conscious design, eco-procurement, and life cycle assessment. To conclude, this chapter makes several proposals for further development of environmentally conscious cost design after analyzing the likelihood of success and some obstacles.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   99.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   129.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   199.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Although cost design in Japan is expressed as target costing in other countries, this book uses ‘cost design’ to focus on its main characteristic—proactive cost management, or ‘proactively manufacturing cost and quality into a product’ (tsukurikomi in Japanese)—from the standpoint of profitability rather than of costing. The distinction between cost design and target costing and its effects needs further discussion. Ito (2006) also points out that cost design is by no means a kind of costing, but is instead cost management to proactively manufacture ‘the conditions of cost occurrence’.

  2. 2.

    ‘Design stage’ in this chapter is used in a broad sense that includes conception, planning, development and design, trial manufacture, and preparation for production.

  3. 3.

    The cost table (cost estimator’s reference manual) sets functions, the characteristic values of specifications, processing characteristics, and volumes of similar articles against the normal actual costs of the similar articles. This is used as a handy and speedy tool for cost estimation (Tanaka 2002).

  4. 4.

    “[T]he actual costs are compared against standard costs for performance evaluation and the deviations are investigated for remedial actions. Cost control is also concerned with feedback that might change any or all of future plans, production method, or both” (Siegel and Skim 2000, p. 106).

  5. 5.

    Toshiba group describes ECP in its environmental report as follows: “We will accelerate the creation of ECPs with high levels of environmental performance in all product areas through ‘Greening of Products’ initiatives aimed at minimizing the environmental impact of products throughout their entire life cycles and ‘Greening by Technology’ initiatives aimed at providing a stable power supply and mitigating climate change worldwide using low-carbon energy supply technology” (Toshiba 2013, p. 23).

  6. 6.

    Here, the amount paid to subcontractors and processing expenses arising from outside manufacturing is simply defined as suppliers’ processing costs.

  7. 7.

    IMDS is a system that collects information on about 30,000 types of parts and chemical substances contained in supply chains (Hewlett Packard 2014).

  8. 8.

    GADSL has the purpose of facilitating communication and exchange of information regarding the use of certain substances in automotive products throughout the supply chain (GADSL 2011).

  9. 9.

    A recycling cost table is used to evaluate environmental costs on the basis of the relation between cost analysis induced by life cycle costing and physical analysis based on the evaluation of product environmental impacts (Kokubu and Nakashima 2003).

Bibliography

  • Beppu, Y. (2005). Environmental Management and Business Strategy: The Case Studies of Japanese Companies in Oceania (3). The Teikyo University Economic Review, 38(2), 25–73.

    Google Scholar 

  • Bhimani, A. (1995, June). Target Excellence: Target Cost Management at Toyota in the UK. Management Accounting, 73(6), 42–45.

    Google Scholar 

  • Cheng, T. C. E., Yip, F. K., & Yeung, A. C. L. (2012). Supply Risk Management Via Guanxi in the Chinese Business Context: The buyer’s Perspective. International Journal of Production Economics, 139, 3–13.

    Article  Google Scholar 

  • Cooper, R., & Slagmulder, R. (1997). Target Costing and Value Engineering. Portland: Institute of Management Accounts, Productivity Press.

    Google Scholar 

  • Cooper, R., & Slagmulder, R. (1999). Develop Profitable New Products with Target Costing. MIT Sloan Management Review, 40(Summer), 23–33.

    Google Scholar 

  • Denso Corporation. (2010). Supplier CSR Guidance, April, 6.

    Google Scholar 

  • Denso Corporation. (2014). Product-Environmental Management. http://www.denso.co.jp/ja/csr/environment_report/management/product/index.html/. Accessed 9 Apr 2014.

  • Ellram, L. M. (2000). Purchasing and Supply Management’s Participation in the Target Costing Process. The Journal of Supply Chain Management, 36(Spring), 39–51.

    Article  Google Scholar 

  • Ellram, L. M. (2006). The Implementation of Target Costing in the United States: Theory Versus Practice. The Journal of Supply Chain Management, 42(Winter), 13–26.

    Article  Google Scholar 

  • Gabriel, M., Tschandl, M., & Posh, A. (2014). Sustainability-Oriented Lifecycle Costing. International Journal of Engineering, 12(1), 33–40.

    Google Scholar 

  • GADSL. (2011). Global Automotive Declarable Substance List: Guidance Document, 2011–2012. http://plastics.americanchemistry.com/Stand-Alone-Content/Global-Automotive-Declarabble-Substance=Document/. Accessed 14 Mar 2014.

  • Goldbach, M. (2010). Organizational Settings in Supply Chain Costing. In S. Seuring & M. Goldbach (Eds.), Cost Management in Supply Chains (pp. 89–108). Heidelberg: Physica-Verlag.

    Google Scholar 

  • Grigore, S. D. (2007). Supply Chain Flexibility. Romanian Economic and Business Review, 2(1), 66–70.

    Google Scholar 

  • Gungor, A., & Gupta, S. M. (1999). Issues in Environmentally Conscious Manufacturing and Product Recovery: A Survey. Computers & Industrial Engineering, 36, 811–853.

    Article  Google Scholar 

  • Henri, J.-F., & Joumeault, M. (2010). Eco-control: The Influence of Management Control Systems on Environmental and Economic Performance. Accounting, Organizations, and Society, 35(1), 63–80.

    Article  Google Scholar 

  • Hewlett Packard. (2014). International Material Data System to Automotive Industry. http://h50146.www5.hp.com/solutions/industry/manufacture/sol/imds/. Accessed 14 Mar 2014.

  • Horváth, P., & Berlin, S. (2012). Green Target Costing; Getting Ready for the Green Challenge! Cost Management, 26(3), 25–36.

    Google Scholar 

  • Hunkeler, D., Lichtenvort, K., & Rebitzer, G. (Eds.). (2008). Environmental Life Cycle Costing. Florida: CRC Press, Taylor & Francis Group, and the Society of Environmental Texicology and Chemistry.

    Google Scholar 

  • IBM Japan. (1999). Environment & Well-being Progress Report 1999. Environment & Safety/Sanitation/Health, 10–11.

    Google Scholar 

  • IBM Japan. (2000). Environment & Well-being Progress Report 2000, 16–17.

    Google Scholar 

  • IBM Japan. (2001). Environment & Well-being Progress Report 2001, 24–25; As for the Relation Between Product Development and ECP Based on Integrated Product Development Plan, and Green Supply Chain, See the Released Documents on Green Supply Chain: IBM Environmental Conscious Product Design (Green PLM). http://www-06.ibm.com/services/bcs/jp/solutions/sc/menu/green_plm.html. Accessed 17 Feb 2014.

  • Ilgin, M. A., & Gupta, S. M. (2010). Environmentally Conscious Manufacturing and Product Recovery (ECMPRO): A Review of the State of the Art. Journal of Environmental Management, 91, 563–591.

    Article  Google Scholar 

  • IMA. (1994). Implementing Target Costing. Statements on Management Accounting, Institute of Management Accountants (Canada).

    Google Scholar 

  • Ito, Y. (2006). Subjects of Environmentally Conscious Cost Design. Accounting, 170(4), 485–499.

    Google Scholar 

  • Ito, Y. (2007, May). Investigation and Research on Environmentally Conscious Cost Design, Report to Japan Society for Promotion of Science, pp. 37–40.

    Google Scholar 

  • JAMS. (2005). The Situation and Subjects of Cost Design in Japanese Leading Companies, Research Report to Japan Society for Promotion of Science, 2004–2005: Japanese Association of Management Researchers (JAMS).

    Google Scholar 

  • JAMS. (2009). The Situation and Subjects of Cost Design in Japanese Leading Companies, 2008–9’s Survey by JAMS.

    Google Scholar 

  • Kajihara, T., Park, K. Y., & Kato, Y. (2009). Environmentally Conscious Design and Cost Design: Preparatory Investigation on Survey Research. Kokumin-Keizai Zasshi (Journal of National Economy), 199(6), 11–28. Kobe University.

    Google Scholar 

  • Kajüter, P. (2002). Proactive Cost Management in Supply Chains. In S. Seuring & M. Goldbach (Eds.) (ibid., 31–51).

    Google Scholar 

  • Kato, Y. (1993a). Target Costing Support Systems: Lessons from Leading Japanese Companies. Management Accounting Research, 4, 37–47.

    Article  Google Scholar 

  • Kato, Y (1993b). Cost Design: Strategic Cost Management, Nikkei Newspaper Office.

    Google Scholar 

  • Kato, N. (2010). Discussion on Impoverished Problems of Suppliers in Cost Design. Oita University Economic Review, 62(1), 23–49.

    Google Scholar 

  • Kato, Y., Böer, G., & Chow, C. W. (1995). Target costing: An Integrative Management Process. Journal of Cost Management, 9(Spring), 39–51.

    Google Scholar 

  • Kobayashi, T. (1996). Life Cycle Cost and Cost Design. Kokumin-Keizai Zasshi (Journal of National Economy), 173(3), 1–13. Kobe University.

    Google Scholar 

  • Kokubu, K., & Nakashima, M. (2003). Environmental Accounting in Ricoh Company. Kokumin-Keizai Zasshi (Journal of National Economy), 188(3), 41–56. Kobe University.

    Google Scholar 

  • Kreuze, J. G., & Newell, G. E. (1994, February). ABC and Life-Cycle Costing for Environmental Expenditures. Management Accounting, 75(8), 38–42.

    Google Scholar 

  • Lavastre, O., Gunasekaran, A., & Spalanzani, A. (2012). Supply Chain Risk Management in French Companies. Decision Support Systems and Electronic Commerce, 52, 828–838.

    Article  Google Scholar 

  • Lichtenvort, K., Rebitzer, G., Huppes, G., Ciroth, A., Seuring, S., Schmidt, W-P., Günther, E., Hoppe, H., Swarr, T., & Hunkeler, D. (2008). History of Life Cycle Costing, Its Categorization, and Its Basic Framework, In D. Hunkeler, K. Lichtenvort & G. Rebitzer (ibid.)

    Google Scholar 

  • Lockamy, A., & Smith, W. (2000). Target Costing for Supply Chain Management: Criteria And Selection. Industrial Management+Data Systems, 100(5), 210–218.

    Article  Google Scholar 

  • METI. (2002, June). Environmental Management Accounting (EMA) Workbook. Tokyo: Japanese Ministry of Economy, Trade and Industry.

    Google Scholar 

  • METI. (2008, June). White Paper on Manufacturing Industry (Monotsukuri) in 2007. Joint Project with Ministry of Health, Labor, and Welfare, and Ministry of Education, Culture, Sports, Science and Technology, pp. 18–45.

    Google Scholar 

  • Mitsubishi Electric Corporation. (2002). Environmental Sustainability Report.

    Google Scholar 

  • Mitsubishi Electric Corporation. (2010). Corporate Social Responsibility Environmental Report.

    Google Scholar 

  • Monden, Y. (1999). Cost Design Schedule of Automobile Industry. In Y. Monden, K. Hamada, & K. Lee, (Ed.), Japanese Cost Management (pp. 115–127), in Japanese, Dobunkan Publisher.

    Google Scholar 

  • Monden, Y., & Hamada, K. (1991). Target Costing and Kaizen Costing in Japanese Automobile Companies. Journal of Management Accounting Research, 3(Fall), 16–34.

    Google Scholar 

  • Nabeyama, T. (2011, September). Examination of Supply Chain Reconstruction after the Great East Japan Earthquake, Joyo ARC, AREA Research Center, pp. 6–11.

    Google Scholar 

  • Nakajima, H. (2004). Treatment of Life Cycle Costs in Target Costing; A Review of Past Research and Examination of Unsettled Subjects. Study of Business Management, 21, 119–139.

    Google Scholar 

  • NEC. (2012). Environmental Activity. Report, 2012: http://www.nec.com/en/global/eco/product/eco_pro/index.html/. Accessed 19 Feb 2014.

  • Nikkan Kogyo Shinbun. (2014, February 11). Recall of the Two Types of Cars in Honda: Fit Hybrid Cars, Daily Industry Newspaper, Ltd. http://www.nikkan.co.jp/. Accessed 22 Feb 2014.

  • Nishimura, A. (2003). Management Accounting in Asia: feed forward and Asian perspectives. Hampshire: Palgrave Macmillan.

    Book  Google Scholar 

  • Nishimura, A. (2008). Effect of Management System on Management Accounting: The Case of Chinese Cellular Phone Terminal Unit Manufacturers. Asian-Pacific Management Accounting Journal, 3(1), 87–105. Public Knowledge Project (Open Journal System). http://arionline.uitm.edu.my/ojs/index.php/APMAJ/issue/view/18.

    Google Scholar 

  • Nishimura, A. (2014). Transforming Cost Design Into Environmentally Conscious Cost Design in Japan: Likelihood and Problems for Further Development. Journal of Management Control, 25(1), 55–75. https://doi.org/10.1007/s00187-014-0190-x.

    Article  Google Scholar 

  • Orita, Y. (2012, December). The Whole Company’s Improvement Process of Cost Management: Reexamination of Management Accounting for Manufacturing (Case Study of Fuji Xerox Company). Report Presented in the Third Forum. Tokyo: The Japanese Association of Management Accounting.

    Google Scholar 

  • Otsuka, T., & Ichikawa, Y. (2011). How Is Japanese Supply Chain Judged? Mizuho Research Institute Review, 3, 1–9.

    Google Scholar 

  • Park, K. P. (2007, March). Subjects on Environmental Conscious Development. Economic Review, 79(4), 87–108. Kagawa University.

    Google Scholar 

  • Park, K. P. (2009). Fact Finding of Environmental Conscious Product Issues. Research Report, 49, 73–93.

    Google Scholar 

  • Parker, L. D. (2000). Green Strategy Costing: Early Days. Australian Accounting Review, 10(1), 46–55.

    Article  Google Scholar 

  • PC3R Promotion Association. (2014). Guideline of PC3R Promotion Association. http://www.pc3r.jp/association/index.html/. Accessed 14 Mar 2014.

  • Pondeville, S., Swan, V., & Rongé, Y. D. (2012). Environmental Management Control Systems: The Role of Contextual and Strategic Factors. Management Accounting Research, 24(4), 317–332.

    Article  Google Scholar 

  • Rebitzer, G. (2010). Integrating Life Cycle Costing and Life Cycle Assessment for Manufacturing Costs and Environmental Impacts in Supply Chains. In S. Seuring, & M. Goldbach (Eds.) (ibid., 127–146).

    Google Scholar 

  • Rimienè, K. (2011). Supply Chain Agility Concept Evolution (1990–2010). Economics and Management, 16, 892–899.

    Google Scholar 

  • Road Transport Bureau. (2013). The Analyzed Results of Contents Notified as Recall of Cars, Road Transport Bureau, Japanese Ministry of Land, Infrastructure, Transportation and Tourism, April 19.

    Google Scholar 

  • Sakurai, M. (1989, Summer). Target Costing and How to Use It. Journal of Cost Management, 39–50.

    Google Scholar 

  • Sakurai, M. (1991). Change in Business Environment and Management Accounting. Tokyo: Dobunkan Publisher.

    Google Scholar 

  • Sarkis, J. (1995). Manufacturing Strategy and Environmental Consciousness. Technovation, 15(2), 79–97.

    Article  Google Scholar 

  • Sato, Y. (2009). The Soul of Cost Design (1): Nikkei Monotsukuri (Manufacturing), September, 113–116.

    Google Scholar 

  • Seuring, S. (2004). Industrial Ecology, Life Cycles, Supply Chains: Differences and Interrelations. Business Strategy and the Environment, 13, 306–319.

    Article  Google Scholar 

  • Seuring, S. (2010). Supply Chain Target Costing: An Apparel Industry Case Study. In S. Seuring & M. Goldbach, (Eds.) (ibid., 111–125).

    Google Scholar 

  • Siegel, J. G., & Skim, J. K. (2000). Dictionary of Accounting Terms (3rd ed.). Hauppauge: Barron’s Educational Series, Inc.

    Google Scholar 

  • Sony Corporation. (2001). Environmental Report 2001: Entertaining the World, Caring for the Future. http://www.sony.co.jp//SonyInfo/csr_report//2001/qfhh7c00000d76pv_att/copy_of_2001_all.pdf. Accessed 15 Aug 2013. (2014). Annual Securities Report, June, EDINE.

  • Sony Corporation. (2017). Sony CSR Report. Retrieved from Sony.co.jp/SonyInfo/csr-report/issues.

  • Steen, B. (2005). Environmental Costs and Benefits in Life Cycle Costing. Management of Environment Quality, 16(2), 107–118.

    Article  Google Scholar 

  • Sumida Group. (2012). Guideline for Green Procurement, July, Sumida Corporation.

    Google Scholar 

  • Swarr, T., & Hunkeler, D. (2008). Life Cycle Costing in Life Cycle Management. In D. Hunkeler, K. Lichtenvort & G. Rebitzer (Eds.) (Ibid., pp. 77–90).

    Google Scholar 

  • Tanaka, M. (1985, July/August). New Approach to the Function Evaluation System in Value Engineering, International Journal of Production Research, 23(4), 625–638.

    Article  Google Scholar 

  • Tanaka, T. (Ed.). (1991). Contemporary Management Accounting System. Japan: Chuou-keizaisha.

    Google Scholar 

  • Tanaka, T. (1992). Field-Study: Contemporary Management Accounting System. Tokyo: Chuo-keizaisha Publisher, Co.

    Google Scholar 

  • Tanaka, T. (1993). Target Costing at Toyota, Journal of Cost Management, (Spring) 4–11.

    Google Scholar 

  • Tanaka, M. (1995). Theory and Practices of Cost Design. Tokyo: Chuo-keizaisha Publisher, Co.

    Google Scholar 

  • Tanaka, M. (2002). Profit Strategy and Value Engineering: How to Implement Practical Cost Design. Tokyo: Sangyo Noritu University Publisher.

    Google Scholar 

  • Tani, T. (1994). Interactive Control in Cost Design: Significance. The Kokumin-Keizai Zasshi (Journal of National Economy), 169(4), 19–38. Kobe University.

    Google Scholar 

  • Tani, T. (1995). Interactive Control in Target Cost Management. Management Accounting Research, 6, 399–414.

    Article  Google Scholar 

  • Tani, T., Okano, H., Shimizu, N., Iwabuch, Y., Fukuda, J., & Cooray, S. (1994). Target Costing Management in Japanese Companies: Current State of the Art. Management Accounting Research, 5, 67–81.

    Article  Google Scholar 

  • The Nikkei. (2014, February 12). Recall of 1.9 Million Hybrid Cars in Toyota in Japan and Abroad, Nihon Keizai Shinbun (Japan Economy Newspaper) Inc. http://www.nikkei.com/article/DGXNASDG1203y_SaA210CR8000/. Accessed 22 Feb 2014.

  • Thun, J., & Hoenig, D. (2011). An Empirical Analysis of Supply Chain Risk Management in the German Automotive Industry. International Journal of Production Economics, 131, 242–249.

    Article  Google Scholar 

  • Toshiba Group. (2013). 2013 Environmental Report. http://www.toshiba.com/csr/docs/env_report13_all.pdf. Accessed 10 Jun 2014.

  • Toyota Motor Corporation. (2011). Toyota Green Purchasing Guidelines, December.

    Google Scholar 

  • Toyota Motor Corporation. (2013). Report for the Planet: Toyota’s Environmental Initiatives, 22–23.

    Google Scholar 

  • Yamamoto, K., & Kokubu, K. (2001). Environmental Management in IBM. Tokyo: Toyo Keizai.

    Google Scholar 

  • Yoshida, E., Fukushima, K., & Senoo, T. (2012). Studies of Japanese Management Accounting, Chuo Keizaisha.

    Google Scholar 

  • Yoshikawa, T. (1994). Some Aspects of the Japanese Approach to Management Accounting. Management Accounting Research, 5, 279–287.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Beppu University, Beppu-city, Oita, Japan

    Akira Nishimura

Authors
  1. Akira Nishimura
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

Copyright information

© 2019 The Author(s)

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Nishimura, A. (2019). Transforming Cost Design into Environmentally Conscious Cost Design in Japan: Likelihood and Problems for Further Development. In: Management, Uncertainty, and Accounting. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-10-8989-3_7

Download citation

Publish with us

Policies and ethics

Search

Navigation