Kaizen Costing

Topics: Manufacturing, Kaizen, Cost Pages: 9 (2990 words) Published: March 5, 2011
Kaizen Costing


Kaizen Costing
The ultimate objective of manufacturing industries today is to increase productivity through system simplification, organizational potential and incremental improvements by using modern techniques like Kaizen. Most of the manufacturing industries are currently encountering a necessity to respond to rapidly changing customer needs, desires and tastes. For industries, to remain competitive and retain market share in this global market, continuous improvement of manufacturing system processes has become necessary. Competition and continuously increasing standards of customer satisfaction has proven to be the endless driver of organizations performance improvement. Kaizen refers to continuous improvement in performance, cost and quality. Kaizen strives to empower the workers, increase worker satisfaction, facilitates a sense of accomplishment, thereby creating a pride of work. It not only ensures that manufacturing processes become leaner and fitter, but eliminate waste where value is added. Kaizen by now is a widely discussed and applied manufacturing philosophy, in a variety of industries across the globe.

Kaizen: - Introduction
Kaizen is a Japanese word that has become common in many western companies. The word indicates a process of continuous improvement of the standard way of work (Chen et al., 2000). It is a compound word involving two concepts: Kai (change) and Zen (for the better) (Palmer, 2001). The term comes from Gemba Kaizen meaning ‘Continuous Improvement’ (CI). Continuous Improvement is one of the core strategies for excellence in production, and is considered vital in today’s competitive environment (Dean and Robinson, 1991). It calls for endless effort for improvement involving everyone in the organization (Malik and YeZhuang, 2006).Kaizen originated in Japan in 1950 when the management and government acknowledge that there was a problem in the current confrontational management system and a pending labor shortage. Japan sought to resolve this problem in cooperation with the workforce. The groundwork had been laid in the labor contracts championed by the government and was taken up by most major companies, which introduced lifetime employment and guidelines for distribution of

benefits for the development of the company. This contract remains the background for all Kaizen activities providing the necessary security to ensure confidence in the workforce (Brunet, 2000). First, it was been introduced and applied by Imai in 1986 to improve efficiency, productivity and competitiveness in Toyota, a Japanese carmaker company in the wake of increasing competition and the pressure of globalization. Since then, Kaizen has become a part of the Japanese manufacturing system and has contributed enormously to the manufacturing success. Kaizen forms an umbrella that covers many techniques including Kanban, total productive maintenance, six sigma, automation, just-in-time, suggestion system and productivity improvement, etc. (Imai, 1986) as shown in Figure.

Activities Performed
Kaizen activities whether individual or group, veer round improvement of work , working environment, process, machine capability (minimum down time) , production aids (jigs, fixtures, tools etc.), service areas – office work, quality Customer service and customer relations new products (ideas), HUMAN individual capabilities. Japanese management believes that managers should spend half their time in making improvements and eliminating waste.

Results Produced
Management – oriented Kaizen should result in achieving maximum efficiency and quality, minimum inventory, eliminating methods that cause fatigue to workmen, maximizing utilization of facilities, tools etc to achieve efficiency an open management, which allows questioning of the existing systems and processes, encouraging learning and providing opportunities for its employees to learn encouraging synergistic teamwork and cooperation,...

Bibliography: 1. Jagdeep Singh and Harwinder Singh (2009) Kaizen Philosophy: A Review of Literature an article published in The Icfai University Journal of Operations Management, Vol. VIII, No. 2, 2009 (Page 52).
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2. An article Kaizen costing and Value analysis (2001) Published in White paper by Industrial and Financial Systems www.ifsworld.com
3. http://afr.kaizen.com; Imai (1986)
4. Financial Management by C. Mohan Juneja and Chawla by Kalyani Publishers.
5. http://www.1000ventures.com/business_guide/cs_efficiency_kaizen_fidelity.html
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