Indirect processes are increasingly contributing to the total cost of production in highly competitive and technology-intensive industries. Unfortunately, they are less assessable than direct processes due to the complex organizational management structure. Therefore, companies seeking to make improvements in indirect areas need decision support methods to indicate which indirect process needs to be improved and to what extent. To facilitate this task, the target setting for indirect processes (TSIP) method has been developed following the constructive research approach. TSIP is a combination of process modelling, the analytic network process, activity-based management from managerial accounting research, and the value control chart from target costing research in a kaizen budgeting framework. This new hybrid method is developed and validated in cooperation with a global first-tier automotive supplier.