Processes for Reducing total Ownership Cost: CAIV and Target Costing

Abstract This paper will present Cost as an Independent Variable (CAIV) and its analogous commercial practice, Target Costing, as the processes for reducing Total Ownership Cost (TOC) in the acquisition of Department of Defense (DoD) weapons systems, with an emphasis on Department of the Navy (DoN). It will feature an in-depth statistical analysis of the recently completed Target Cost Best Practices survey, conducted by the Consortium for Advanced Manufacturing—International (CAM-I) and co-sponsored by the American Institute of Certified Professional Accountants (AICPA) and the University of Akron. Understanding of Target Costing is essential for practitioners of CAIV, since it is a mature (20+-year-old) practice in Japan and has taken root in Germany and the United States, offering both precedence and guidance in how to deploy a system such as that necessitated by CAIV