Proactive cost management: Integrating use phase data to reduce uncertainty

Manufacturing firms need to develop products for competitive markets with a distinct costvalue-ratio in order to stay successful in the long run. Literature provides approaches such as Target Costing, Value Engineering, and Integrated Value Engineering. From a methodic standpoint support is available for cost management, but the approaches depend highly on the information input (e.g., customer needs, market situation). From a strategic standpoint cost management needs to be proactive because a reactive strategy is not successful and sustainable in highly dynamic and competitive markets. Companies are at the same time confronted with challenges that arise due to the advancing servitization and digitalization. Offering such products establishes a feedback loop, which provides the manufacturer with use phase data. The data is valuable for the cost management because it can help to reduce uncertainty and make better informed decisions. However, using such data for cost management requires an adjusted strategy for proactive cost management. This paper analyses the opportunities that use phase data offers for companies and proposes an initial and theoretical process that supports companies in developing a tailored strategy for their proactive cost management.