Kaizen costing

The presentation is about Kaizen costing that has been used by japan from number of years to control costs.

1. Kaizen Costing PREPARED BY : GURSHARAN SINGH SAINI KHALSA COLLEGE PATIALA , 147001

2. Introduction Kaizen is known as " Genkakaizen " in Japanese companies. It is used in manufacturing stage of the existing products as cost reduction process. Kaizen is derived by Japanese automobile companies

3. Concept of Kaizen Costing KAI CHANGE ZEN GOOD Change for Good

4. DEFINITION Yashihuro Moden defines kaizen costing as "the maintenance of present cost levels for products currently being manufactured via systematic efforts to achieve the desired cost level."

5. KC is applied to product that is already under Production For Cost Reduction Cost Can be reduced through estimation of seven types of waste :- over production Inventory Waiting Defective Motion Transportation Over Processing

6. NOTIONS OF KAIZEN COSTING KAIZEN is Continuous KAIZEN is incremental in Nature KAIZEN is participative

7. 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

8. 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

9. Procedure For Implementation 1.Form small groups from 6-10 persons 2.Give them numbers-Kaizen 1,Kaizen-2… 3.Appoint an evaluator of the group 4,Arrange weekly meetings of group (6-12 months) 5.Submit progress of improvement in writing 6.Allow each member to express 7.No disturbance when others are speaking 8.However Clarifications can be sought instantantly

10. Evaluation - 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 - Marks for extraordinary improvement

11. Kaizen Philosophy Approach to Traditional Organisation Kaizen Environment Attitude Let it go Continuous Improvement Employees Cost Assets Information Restricted Shared Interpersonal Commercial Human Relationship 5 Managerial Belief Routine Chang e 6 Management Culture Bureaucratic Participative 7 Management Function Control Supportive 8 Management Stress Functional Cross Functional

12. Advantages of Kaizen Costing Customer Satisfaction Process Centered Create Work Teams Cross-functional Increasing Employees Moral Reduced Errors Promote openness Acknowledge Problems openly

13. Disadvantages Requires Permanent change of Management System Does not Produce Required Results Difficult to Convince People

14. Lessons for Failure 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

15. Difference Between Target & Kaizen Costing Kaizen Costing is typically based on the following : - Employees are the source of solutions - Cost reduction is achieved by continuous improvement - Cost reduction targets are set every month But Target Costing is estimated selling price - TARGET COST = desired level of profit. It is an integral part of a strategic profit management system.

16. Strategic Based Cost Challenges 1.DETERMINANTS OF ENVIRONMENTAL UNCERTAINTY 2. VOLATILITY 3. COMPLEXITY 4.INCREASING GLOBAL PRESENCE 5.INFORMATION OVERLOAD 6. AMBIGUITY