MAF 635

KAIZEN COSTING

WHAT IS KAIZEN?

A Japanese term for improvement.

Derived from two terms
KAI meaning Change
ZEN meaning Good

Improvement in
Manufacturing
Engineering
Business management

First implemented in Japan.

Involves all employees.




When Target Costing & Kaizen
Costing Are Linked
- Constitute the total cost
management system of
Japanese companies
- Implies cost management
in all phases of product life
- Involve all people in all
departments through out
the company
TARGET COSTING
(Genkakikaku) System
to support the cost
reduction process in
developing phase of
entirely new model.
KAIZEN COSTING
(Genkakaizen) System
to support cost reduction
process in the
manufacturing phase of
the existing model of the
product.
Kaizen philosophy
Kaizen encompasses many of the components
of Japanese businesses that have been seen
as a part of their success.

Some of these philosophy inspired by Kaizen
are:
5 S
The Deming or Shewhart Cycle (PDCA)
Quality circles
Kanban

5 S in Kaizen
5 S is a method for organizing a workplace, especially
a shared workplace (like a shop floor or an office space).
1. Seiri (Sort): Tidiness,
keeping only essential items.
2. Seiton (Straighten):
Orderliness, eliminate extra
motion.
3. Seiso (Sweep):
Cleanliness, keep the
workplace clean.
4. Seiketsu (Spread):
Standardize work practices.
5. Shitsuke (Sustain):
Sustaining, maintaining
discipline and reviewing
standards.
The Kaizen Cycle
PDCA (Plan-Do-Check-Act) cycle



Quality Circles
A quality circle is a volunteer group composed of
employees, who are trained to identify, analyse and solve
work-related problems and present their solutions to
management.
This improves the performance of the organization, while
also motivating and enriching the work of employees.
First established in Japan in 1962 in the Nippon Wireless
and Telegraph Company, it quickly became popular and
spread to more than 35 companies in the first year.

Kanban
Kanban in simplest term by better communication through visual
management.
Kanban helps harness the power of visual information by using sticky note
on whiteboard or calendar to create picture of your work.
Seeing how work flows within your teams process let you not only
communicate about status but also give and received context for the work.
The process of constant improvement of the Kanban system is more rapid
and fast.
This is where a Kanban system can help: It works as a communication
system which immediately provides information about changed
demand through the entire supply chain.

Persons Involved
Praise and encourage participation.

People at every level are involved.

The key people involved are;

The subject matter expert
The process owner
Front-line workers
An outside trainee



Kaizen in Toyota
The Toyota Production System is known for it use of
kaizen.

After World War II, Taiichi Ohno was charged with setting
up machine shops for Toyota. He studied the Ford
production systems. He analyzed the various productive
measures and discrepancies in the system.

Based on the analysis, he outlined several production
strategies for Toyota. These production strategies later
became benchmarks for production practices across the
world.

Toyota thus became one of the first companies in the
world to adopt practices such as Kaizen. Analysts however
feel that Kaizen kept TPS, JIT, Kanban and other practices
working smoothly as an interlinked strategic operational
plan.

Toyota use of Kaizen to solve
labor crisis
In the early 1990s, Toyota was facing acute labor shortage.

Toyotas initial management focus was on increasing production
efficiency through higher production levels with less number of workers.
This resulted in increased stress and worker resignation.

The global upsurge in car demand during 1987-1991 led to drastic
increase in demand for labors.

Toyota realized that it would have to rely on Kaizen for modifying its
existing assembly lines to attract workers.

The company decided to change its working conditions to
accommodate workers of more diverse nature.

The management decided to allow plants to set their own annual
production efficiency targets. Production efficiency measurement was
based on workers production time rather than on best production
time.

Kaizen Advantages
Widely applicable
Provide immediate result
Reduce waste
Higher employee morale and satisfaction
Kaizen Disadvantages
Getting people to think in the long term
Difficult to understand the concept
Hard to convince people
Too much suggestion may lead to confusion
and time wastage

Kaizen can also be applied in
real life too
Conclusion
Kaizen or continuous improvement should
be a part of our everyday life.

The concept is simple but if properly applied
can lead to significant efficiency improvements
for organizations.

It has been a success for large organizations
like Toyota, Canon and Nippon.
Thank you