Kaizen Costing

1
Kaizen Costing
2
Kai Change Zen Better Change for Better
3
Indian Connection
Small Drops of Water together Ultimately result
in a lake
4

• 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

5
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
  Change
• 6 Management Culture Bureacratic
  Participative
• 7 Management Function Control
  Supportive
• 8 Management Stress Functional
  Cross Functional

6
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
7
0 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 gt 75 Marks for extraordinary
improvement
Evaluation
8
A Attitude S Safety T
Productivity E Energy Saving M Money
Saving
Evaluation Other factors
9
Change in Attitude
10
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
11
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
12
Kaizen Costing
13
Kaizen Costing

• Cost Reduction in
• Design of the Product
• Development of the Product
• Production Of the Product

14
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
15
Product Specification
Product Planning Phase
Price Targets
Profit Targets
Cost Targets
Major Product/Process Changes
Life Cycle Costing
Does Design Meet Target Costs?
Estimated Life Cycle Cost
Are Life Cycle Costs Acceptable ?
Start Production
Production Phase
Minor Product/Process Changes
Scrapping Phase
Product Scrapping
16
Cost Reduction by 5
17
Kaizen Costing Calls Establishment of cost
reduction target amount and its accomplishment
through Kaizen activities---continuous improvement
18
Kaizen Costing
Product Development, Design Manufacturing
Training, Learning Before
goal of Target Costing or Kaizen Costing is
imposed on the Organisation
Target Costing
Kaizen Costing