THE ART OF MANUFACTURING
We make the most of it by enhancing value and reducing non-value activities in an organization, A company that works on increasing the price instead of reducing the operational cost will soon perish and will have no role to play in the market.
TRADITIONAL COSTING METHOD - COST-BASED PRICING.
In general, The main assumption and emphasis in the traditional finance worldview consider as below:
The finance worldview might be illustrated as a traditional cost-plus model. Which is Cost Base Pricing.
COST + MARGIN = SALES PRICE
LEAN COSTING METHODOLOGY
In contrast to the traditional corporate finance worldview, the Toyota Production System (also known as the Toyota Production System, Lean Management, Lean Thinking, Lean Manufacturing), views the model differently and with a different emphasis:
PROFIT = (PRICE - COST)
In the Lean Thinking model, the belief and emphasis are the following:
Mathematically, both calculations are identical, but the difference in assumptions and emphasis have a significant impact on the company mindset, approach towards the market, marketing, and how well the employees and customers are protected.
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