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Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
Section b group8 (1)
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Section b group8 (1)

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  • 1. KAIZEN COSTING: BOEING Group No:8(Sec B) Deepinder Singh Advait Bhobe Vineet kumar Richanshu Verma Kanumuri Rajashekhar
  • 2. BOEING The Boeing company is an American multinational aerospace and defence corporation. Founded in 1916 by William E. Boeing in Seattle, Washington, the company has expanded over the years, and merged with McDonnell Douglasin 1997. A top U.S. exporter, the company supports airlines and U.S. and allied government customers in 150 countries. Its corporate office is in Chicago, Boeing employs more than 170,000 people across the United States and in 70 countries.
  • 3. INTRODUCTION In the past decade due to increasing global competition US firms have radically changed their manufacturing practices to improve their competitiveness Many firms are discovering that standard cost systems are inadequate to identify costs associated with modern manufacturing process objectives.
  • 4. KAIZEN COSTING Kaizen costing is a method for ensuring that a product meets or exceeds customer requirements for quality, functionality, and prices to sustain product competitiveness. Standard costing systems focus on meeting cost standards and avoiding unfavourable variances. Kaizen costing, in contrast, stresses continuous cost reductions
  • 5. TARGET COSTING Increased pressures within supply chains, coupled with new pressures from capital markets are forcing firms to adopt Japanese cost management systems. In Japanese firms, cost management is proactive in planning, managing, and reducing costs. Japanese firms believe the consumer will only buy the product if the price is less than the perceived value of the product.
  • 6.  Only two ways to make this happen—  increase the perceived value of the product  lower the price of the product by lowering the costs required to produce it The key to target costing is the principle in which a product price is developed based on what the market is willing to pay for it, not on what it actually costs to produce the product.
  • 7.  The target cost with a customer price of 80 cents and a profit margin of 20% becomes 64 cents (0.80*0.20=0.16) and (0.80-0.16=0.64). The target cost is then used to control design and manufacturing costs. Kaizen costing and value added analyses are methods used to lower prices in the target costing approach.
  • 8. KAIZEN COSTING Kaizen costing activities focus on continual small incremental product cost improvements in the manufacturing phase, as opposed to improvements in the design and development phase. In kaizen costing, management will set the cost reduction targets for the product. In Boeing, for example,  the overall cost reduction for the division is set during a six-month time interval.  kaizen costing at the work cell group level is subsequently established based on negotiation and agreement between management and the work cell
  • 9. KAIZEN COSTING  Once reduction targets are finalised, the work cell has complete freedom in coming up with ways to achieve these targets.  Interim results are measured after three months to evaluate.  If the work cell fails to meet progressive targets, the reasons are investigated.  Costs must be subsequently reduced in each successive period in order to meet the target profit
  • 10. KAIZEN COSTING Target finalized Cost should be Previous cost reduced in YES product use as successive baseline periods Ways toachieve target NO Investigate
  • 11. KAIZEN COSTING Key factors in successful implementation of kaizen costing:  After the cost-reduction target is established, then the work cell should be held accountable to these.  The kaizen process needs to be consistent and repeatable.
  • 12. VALUE ADDED SERVICES OF BOEING Value-added analysis quantifies the level of waste existing in a given production process. Value added time is the time in the process transforming materials into the product which adds more value to the product. Boeing has launched many products in the world in the defense market. Value Added Services is defined as the cost of implementing product and process innovations, technological flexibility provided Boeing with a number of long term benefits. Specifically, it made the design process more efficient, reducing both the time it takes to create the "blue print" for the aircraft and the number of errors in its production.
  • 13.  This information is usually expressed in percentages of a work cell’s time Ideal situation is when non value added time is equal to the lead time of product. (e.g. 20% value added v. 80% non-value added time for a given period). To begin the analysis, each production activity must be studied & a determination made as to whether or not it adds value to the product. Re-sampling is then performed at predetermined intervals to track the change in proportion of value added time. As this process continues, the work cells becomes more attuned to what non- value- added time is & find it easier to come up with ways to eliminate waste
  • 14. IRC(INTERIORS RESPONSIBILITY CENTRE) Design and production responsibility of aircraft interiors for the Boeing Commercial Airplane Company. Products include overhead stowage bins, ceiling panels ,sidewall panels, class divider partitions etc. The production area was organised into product groups broken out by stow bins, closets and partitions, ceilings and sidewalls. Two metrics are used to measure the work cells in terms of financial performance.  hours per part (HPP)  budget v. actuals.
  • 15. THANK YOU !

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