Advantages of Kaizen Costing

Topics: Costs, Cost accounting, Cost Pages: 16 (4912 words) Published: November 28, 2011
There are certain basic principles which are followed in various Japanese companies which are listed below: -

1) Focus on customers: The Kaizen philosophy has only one prime objective of customers’ satisfaction. Kaizen permits no middle ground its either you provide best products and customer satisfaction or not. All the activities should aim at providing customer with whatever he wants and should help the firm long term objective of customers’ satisfaction at the same time building up good relationship. It is a responsibility of each and every person working in a Kaizen company to make sure that the product is up to the mark and it satisfies customers need.

2) Make improvements continuously: There is not a best way to do a thing, there is still a better way. In a Kaizen company, the search for excellence just does not end. We should work on the improvement implemented and see if we can make it even more effective.

3) Acknowledge problems openly: Every company has certain problems related to finance, competition, change in demand etc. Kaizen companies are no exception, but by fostering an appropriately supportive, constructive culture it becomes easier for any team to get its problem in the open. The whole organization works as a team to solve the problem. The problems are openly shared by the management with the employees which avoids rumors. It simply means FIGHT WITH YOUR PROBLEMS DON’T RUN AWAY FROM THEM.

4) Promote openness: There seems to be less functional ring fencing i.e. only the senior managers have private cabins. Otherwise the workplace is generally open and in many companies even the dress code and canteen for everyone is the same.

5) Create work teams: Each individual in a Kaizen company belongs to work team headed by a leader. Working in various overlapping teams draws employees into corporate life and reinforces the mutual understanding.

6) Cross- functional teams: kaizen states that no individual or team has all the required skill and knowledge to complete a task. Cross-functional teams help in getting all the valuable information’s from the view of all the related people. It calls for letting ideas to flow as wide as running on moon.

7) Right relationship process: This principle can be explained in one word as harmony. Harmony means a complete mixture of the best process and also the best results.

8) Develop self-discipline: The most important evidence of existence of Kaizen in a company is the level of self-discipline in an employee.

9) Inform every employee: Kaizen requires all the staff to be given all the information at the time of their induction and throughout their working tenure. This is very important to make sure that the employees have the right attitude and also that they respect their culture and help their co-workers.

10) Enable every employee: Enabling employees gives those skills and opportunity to apply the information provided. In a Kaizen company it is also important to give employees adequate training to sharpen their skills and also incentives should be provided. In case where a workers suggestion is implemented he should be given rewards.

Kaizen involves every employee in making change–in most cases small, incremental changes. It focuses on identifying problems at their source, solving them at their source, and changing standards to ensure the problem stays solved. It’s not unusual for Kaizen to result in 25 to 30 suggestions per employee, per year, and to have bovver 90% of those implemented.

For example, Toyota is well-known as one of the leaders in using Kaizen. In 1999 at one U.S. plant, 7,000 Toyota employees submitted over 75,000 suggestions, of which 99% were implemented. These continual small improvements add up to major benefits. They result in improved productivity, improved quality, better safety, faster delivery,...
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