2.0 KAIZEN COSTING
2.1 What is Kaizen costing?
Kaizen is a Japanese term that means continuous improvement. Kaizen events can be defined as making improvements through a process that emphasize small incremental amounts rather than large or radical improvement. Therefore in order to achieve this kaizen costing not include only continuous cost reduction but also continuous improvement of performance by increase the efficiency throughout the process.
2.2 Why we need Kaizen costing?
Market prices of a product tend to decrease over the product life cycles, due to this reason in order to maintain a desired level of profit margin Kaizen costing occur.
2.3 What is the purpose of Kaizen costing?
The purpose of Kaizen costing is to achieving cost...
It is thus able to identify exactly where things are going wrong and change the processes so that mistakes do not occur. Wasteful processes are reduced, and this in turn reduced waste of resources.
b) All people who participate in it get certain responsibilities, thereby giving them more purposefulness. Further, since it puts people on the forefront, employee morale increases tremendously.
c) There is reduced need for inspection since there is less scope for error.
d) Teamwork increases tremendously as a result of it and people are able to think beyond the needs of their specific department.
e) Customer requirements are placed at the forefront of company efforts and all products and services are geared to the needs of clients.
f) The long term and short term goals of the company are identified easily and there are systems to ensure that these goals are achieved.
2.8 Disadvantages of Kaizen Costing
a) Some companies need to bring about an immense change in their mind set and style of functioning. This is sometimes very difficult and the initial problems created can be very bad for business overall. For instance, companies need to have a very open style of communication in order to put this management style into practice. Also, many employees think very territorially and are unwilling to let go 'their' work...
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