Kaizan Costing

Kai Change
Zen Better
Change for Better

Indian Connection

Small Drops of Water together

Ultimately result in a lake

Implementing Kaizen- few rules

List your own Problems

Grade problems as to minor, difficult and major
Start with the smallest minor problem
Move on to next graded problem and so on
Remember improvement is part of daily routine
Never accept status quo
Never reject any idea before trying
Eliminate tried but failed experiments
Highlight problems rather than hiding

Kaizen Philosophy

Approach to
1 Attitude

Traditional Organisation

Let it go

Kaizen Environment

Continuous

Improvement
2 Employees

Cost

Assets

3 Information

Restricted

Shared

4 Interpersonal
Relationship

Commercial

Human

5 Managerial Belief

Routine

Change

6 Management Culture

Bureacratic

Participative

7 Management Function

Control

Supportive

Form small groups from 6-10 persons

Give them numbers-Kaizen 1,Kaizen-2
Appoint an evaluator of the group
Arrange weekly meetings of group (6-12 months)
Submit progress of improvement in writing
Allow each member to express
No disturbance when others are speaking
However Clarifications can be sought instantantly

Procedure
For
Implementation

Marks for no improvement made

0 to 30 Marks depends upon improvement tried but failed

30 to 50 Marks for small to moderate improvement
50 to 75 Marks for good improvement
> 75

Evaluation

Marks for extraordinary improvement

Evaluation
Other factors

Attitude

Safety

Productivity

Energy Saving

Money Saving

Change in Attitude

Tangible Benefits
Reduction in Production Time
Reduction in Rejection
Energy Saving
Improved Quality

Intangible Benefits

Motivation
Team Building
Sense of belongingness
Environment conservation
Change in attitude

Benefits of
Kaizen

Lack of interest and support

from management
Lack of training of
Listening skills, Presentation Skill,
Communication Skill

Criticism of failure from fellow

members
Ignoring Basic Concept
( Improvement is part of daily routine)

Work Pressure -sidelining

the Kaizen

Lessons
for
Failure

Kaizen Costing

Kaizen Costing
Cost Reduction in

Design of the Product

Development of the Product
Production Of the Product

Kaizen Costing-definition
Kaizen costing is the maintenance of present levels for
products Currently being manufactured via systematic
efforts to achieve the desired cost level

KC is applied to product that is already under Production

Time prior to KC is Target Costing

Product Specification
Product
Planning
Phase

Price Targets
Profit Targets
Cost Targets

Life
Cycle
Costing

Major Product/Process Changes

Does Design
Meet Target
Costs?

Estimated Life Cycle Cost

Are Life Cycle Costs
Acceptable ?

Start Production
Minor Product/Process Changes
Product Scrapping

Production
Phase
Scrapping
Phase

Cost Reduction by 5%

Kaizen Costing Calls

Establishment of cost reduction target

amount and its accomplishment through
Kaizen activities---continuous improvement

Kaizen Costing
Product Development,
Design &
Manufacturing

Target Costing

Kaizen
Costing

Training,
Learning
Before goal of Target
Costing
or Kaizen Costing
is imposed on the
Organisation