Integration and Challenges for Cost Analysis

The preceding description of lean manufacturing and its potential for cost savings provides some insight into the complexity of the system. Further complexities arise when lean manufacturing results (either actual or predicted using pilot programs and initiatives) must be somehow incorporated into formal cost analysis. Some of the challenges cost analysts face are estimating costs and savings when efforts in one particular cost category have results that flow through other cost categories, assessing the effects of lean on historical cost improvement curves, deciding what adjustments are required to incorporate lean into historical CERs, and judging how DoD and the USAF should give credit (i.e., reduce estimated costs) for lean implementation. In this chapter, we discuss these specific issues.