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Kaizen Guide by BSC Designer


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The Kaizen Method Guide bring out all the aspects and features of Kaizen in full details, with the most comprehensive information.

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Kaizen Guide by BSC Designer

  1. 1. Guide to the Kaizen Method Kaizen denotes continuous improvement. Kaizen aims to eliminate all wastes in business processes through standardization in the processes and activities of a business entity. Change making and result monitoring make Kaizen highly effective. Kaizen Method Guide | Copyright © 2010
  2. 2. KAIZEN Low Cost What is Kaizen? Continuous Improvement Kaizen denotes continuous improvement. Kaizen aims to eliminate all wastes in business processes through standardization in the processes and activities of a business entity. Change making and result monitoring make Kaizen highly effective. Kaizen Method Guide | Copyright © 2010
  3. 3. Assess/Reassess Plan and Design Implement Evaluate What is Kaizen? Kaizen activities that address issues over a period of one week had become the industry norm and they had been named as ‘Kaizen events’. These small models are used to understand problems and issues in the business processes, arrive at solutions, and apply them to improve the processes and eliminate wastes. Kaizen Method Guide | Copyright © 2010
  4. 4. Improvement in productivity and quality Reduction in the cost of operations Enhanced customer satisfaction Common Points between Kaizen and Balanced Scorecard Kaizen and Balanced Scorecard Balanced scorecards are believed to bring in the 3R advantages to every business. Kaizen Method Guide | Copyright © 2010
  5. 5. Finance Education and Growth Balanced Scorecard Strategy Internal Processes Customer Relationship Kaizen and Balanced Scorecard The 3Rs are known as doing Right things, doing them Right, and doing them at the Right time. Balanced scorecards are based on four crucial perspectives related to any business. They are 1) business process, 2) learning and growth, 3) financial, and 4) customer. When balanced scorecards are integrated with Kaizen, business success is ensured. Kaizen Method Guide | Copyright © 2010
  6. 6. Kanban, business process reengineering, and modular function deployment are implemented by expert consultants or cross-functional project teams as alternatives to Kaizen. However, Kaizen is executed by the individual employees that do the actual work. Kanban, BPR and MFD have defined beginnings and ends. Kaizen is a never-ending process with each sub-process repeatedly subjected to Kaizen. The alternatives work in medium-term, repetitive cycles and could involve complex technologies. Comparison of Kaizen to Alternatives and Superiority of Kaizen Kaizen Method Guide | Copyright © 2010
  7. 7. Change in desires and preferences of customers Difference in the activities of the competitors Policy changes by the governments Fluctuation in supply-demand situations Employee turnover within the business Comparison of Kaizen to Alternatives and Superiority of Kaizen Kaizen functions in processes in which the variables are controlled by the individual Kaizen teams with low level technologies, in highly repetitive, short cycles. The speed and degree of change are immediate and measureable in Kaizen and acceptance levels by the employees are quite high. From cost perspective also, Kaizen is the cheapest process. Due to the above reasons, Kaizen is far superior to Kanban, BPR, and MFD .
  8. 8. Day 1 - FOCUS 1. Build a description of the target work process 2. Walk through the target work process 3. Build the mission statement 4. Set goals for the Kaizen event 5. Define the Do’s and Don’ts Day 2 - EVALUATE 1. Gather information 2. Analyze the amounts and sources of waste 3. Summarize the results of the evaluation Step-by-step guide on using Kaizen to solve business problems The major guidelines in execution of Kaizen are 1) A well-defined map of work process for the execution of Kaizen. 2) A detailed guidance on tasks, with explanation on the execution of each single component of every process. This would include the tasks, the steps, the rules for making on-the-spot decisions, and relevant milestones. Kaizen Method Guide | Copyright © 2010
  9. 9. Day 3 - SOLVE 1. Generate improvement ideas 2. Trim improvement ideas 3. Conduct an experiment 4. Select improvement ideas Day 4 - ACT 1. Create action plans 2. Execute improvement ideas 3. Measure results Step-by-step guide on using Kaizen to solve business problems 3) Creation of Kaizen-specific tools such as checklists, role descriptions, announcements, forms, and spreadsheets that define the scope of each event, prepare the people involved in the event to execute it, conduct the event with proper documentation of what had been done, extract results from the event, and prepare follow-up measures for further improvements in processes to sustain the momentum of change for successful contribution to the growth of the business. Kaizen Method Guide | Copyright © 2010
  10. 10. Change in desires and preferences of customers Difference in the activities of the competitors Policy changes by the governments Key success factors of Kaizen Fluctuation in supply-demand situations Employee turnover within the business The main reason for the success of Kaizen is its basic principle that anything and everything could be improved continuously. Kaizen Method Guide | Copyright © 2010
  11. 11. Key success factors of Kaizen The small and incremental changes that are imperceptible accumulate over a period to substantial changes, without the need for major radical changes or innovations. Further, the smaller changes become a way of life for the employees. Instead of resenting such changes, they start appreciating them and participate eagerly in the Kaizen program. Hence, the Kaizen events are employee-friendly and gentle programs that do not disturb the employees or force them to adapt themselves to sudden large changes. Kaizen accepts the fact everything in the world is continuously changing and adopts itself to change. Kaizen Method Guide | Copyright © 2010
  12. 12. The Secret for Success of Kaizen The chief difference between Kaizen and other business process management systems is that Kaizen takes into consideration all the factors that influence the business environment on a constant basis. Product and process quality Cost of products and processes Technology Employee motivation Safety aspects Logistics Environment Vendors Final Customer Kaizen Method Guide | Copyright © 2010
  13. 13. The Secret for Success of Kaizen Factors that normally impact business processes are product and process quality, cost of products and processes, technology, employee motivation, safety aspects, logistics, and environment. Changes in all these critical factors are reflected upon by Kaizen from the stage of vendors through the business processes inside the organization to the final customer stage. This is the key to the enormous success of Kaizen in modern business process management. Kaizen Method Guide | Copyright © 2010
  14. 14. Canon, Inc. Canon is a multinational corporation with headquarters in Japan. • Canon specializes in optical and imaging products, such as cameras, computer printers, photocopiers, and steppers. Canon was facing heavy competition from several other leading manufacturers of similar products both in Japan and in other foreign countries. In 1975, Canon management decided to set a very ambitious goal for the company. Canon began the pursuit of its mission with a strong commitment to comprehensive elimination of all wastes from its processes. • A unique matrix management system was put in place, which incorporated several small group activities to elimination of waste, revitalization of the workforce, and continuous improvement in all business processes. The ongoing process improvement activity was prominently displayed in every part of the company’s plants. These included status charts that were updated on a daily basis in each work center and riveting handmade posters that promoted the improvement focus targeted for the month displayed in all strategic points in the factories. Kaizen Method Guide | Copyright © 2010
  15. 15. Canon, Inc. The Canon Production System based on Kaizen was a huge success that surpassed all expectations. • The company was able to increase productivity at an overwhelming rate of 3% per month. New products were introduced at unprecedented rates with the latest technologies. • Nine waste categories were identified. They were work-in-progress, quality, facilities, expenses, indirect labor, talent, motion, product design, and new product run-up. • This classification of wastes resulted in employees becoming conscious of problems, recognizing the necessity of their self development, and changing their mindsets from operational improvement approach to systems improvement techniques. Kaizen Method Guide | Copyright © 2010
  16. 16. Fidelity Investments Fidelity manages several mutual funds programs. • It arranges fund distribution, and offers investment advisory services, retirement services, discount brokerage services, life insurance, wealth management, security clearance and execution, and other similar financial services. In Fidelity, Kaizen was introduced by the Chairman and CEO, Edward Johnson III. • He ensured that the top management of Fidelity was fully committed to the implementation of Kaizen techniques and principles at all levels. He set up a separate group totally devoted to the promotion of Kaizen. This was followed by the appointment of the best talent in the industry that was capable of managing the Kaizen process. • Training and education of the employees on a continuous basis on the Kaizen practices was made compulsory. The implementation of Kaizen in Fidelity Investments was achieved by dividing the power in the organization between numerous small divisions. • Each division was named a business unit or a company. Aggressive entrepreneurship and leadership qualities were promoted in these business units. Employees were integrated into the Kaizen programs with a strong sense of ownership in the company and in their work. Kaizen Method Guide | Copyright © 2010
  17. 17. Fidelity Investments The strategies and activities within that company were planned and executed through internal resources and initiatives. • The results achieved by such approach truly benefited Fidelity in its global operations for running each division or company in a smooth and seamless manner. The corporate quality became part of the Kaizen promotion team. • The quality management helped Fidelity in the organization, operation, evaluation, and continuous improvement of all aspects of its business for maximizing customer satisfaction to the highest levels. This led to significant increase in profitability on a long-term basis. Kaizen Method Guide | Copyright © 2010
  18. 18. Gold Seal Engineering Products Ltd. Gold Seal Engineering Products Ltd. • Gold Seal Engineering Products Ltd. is a manufacturer of plastic and rubber components in India with 3 separate plants. The company specializes in rubber and PVC profiles, body trimmings, and seals for automobiles. Gold Seal exports around 15% of its production to European countries like UK, Italy, France, Germany, Portugal, and the Netherlands, apart from Australia, Southeast Asia, East Africa and the Middle East. Started the Kaizen process implementation with world-class manufacturing methods. • Such as like single minute exchange of die, variations of the Kanban system and the most important 5S principles of Kaizen, Sort, Straighten, Sweep, Standardize, and Self-discipline. • The single minute exchange of die method was applied to reduce the production set-up time by about 33%. The engineers of the company were included in a special training program focusing on the standardization of the procedures of changeovers and internal operations streamlining. Standard operating procedures were extended to include all manual work. Kaizen Method Guide | Copyright © 2010
  19. 19. Gold Seal Engineering Products Ltd. Through the implementation of Kaizen, Gold Seal achieved substantial benefits within 6 months. The lead time went down by 25%, the production space increased by 45%, scrap reduction reached 75%, response time was reduced by 42%, and machine down time was reduced by 60%. • Numerous improvements in time and space utilization were attained, such as leveling, and repainting of the workspace. This led to improved material flow and safety in the shop floor. The increase of 45% production space was mainly due to the implementation of the 5S principles. All these improvements were achieved by Gold Seal without resorting to any extra capital investment. Apart from the above benefits, the standard operating procedures increased 50% and workforce flexibility got enhanced by nearly 57%. The awareness among the employees on productivity improved dramatically. Staff motivation and quality awareness also went up significantly. Kaizen Method Guide | Copyright © 2010
  20. 20. Shwee Shwian Food Co. Shwee Shwian Food Co. is a medium-sized factory situated in northern Thailand. • The company has a got a factory for production of preserved ginger, which is mainly exported. Fresh ginger is procured from various forms and washed in machines. • The biggest problem for Shwee Shwian was the high soil content in raw ginger, with nearly 12% of the total weight of the raw ginger consisting of soil coating. This required large quantities of water for washing the ginger in the factory, leading to lot of waste in water volumes. Further, the lower net ginger weight after washing resulted in considerable financial loss. The company categorized the suppliers into three groups. • The first group consisted of those who were not provided any awareness and incentive programs. The second group was presented with a soil content reduction awareness program. • The third group was offered an incentive for supplying raw ginger with lesser soil content. The performance of each group in output quality of ginger with amount of soil content was measured and tabulated. Based on the results, the awareness and incentives programs were fine-tuned to improve the knowledge of the farms in producing better quality ginger, reducing soil content, and increasing overall productivity. Kaizen Method Guide | Copyright © 2010
  21. 21. Shwee Shwian Food Co. After observing the success achieved through the incentives and awareness programs with the two groups, these programs were extended to include all the farmers in the three groups. In the factory, the water that was used for washing was reduced by 20%. • The consumption of electricity due to lesser pumping of water came down by 7.8%. This resulted in cutting down the operating costs by 55%, a substantial savings for the company. • In the year 2000, the company invested $4,835 in incentive and awareness programs but achieved a huge savings of $76,522. This was mainly due to the higher quantities of raw ginger received by Shwee Shwian with lesser soil content by applying the Kaizen techniques and principles in an innovative manner. Kaizen Method Guide | Copyright © 2010
  22. 22. Rojee Tasha Stampings Ltd. Rojee Tasha Stampings Ltd. • Rojee Tasha Stampings Ltd. is a manufacturer of stamped metal components and critical sub-assemblies for automobiles. • The company is established in India and is catering to the manufacturers of passenger and commercial vehicles in India. However, one of the major concern areas for the company was frequent machinery breakdown. • The company needed to improve its time utilization and reduce rejections and reworking volumes, along with decrease in maintenance down times. Rojee Tasha Stampings •Rojee Tasha Stampings decided to implement important Kaizen principles such as the 5S activities and single minute exchange of die methods. •The first step was taken by the recruitment of a highly qualified maintenance engineer. The engineer was able to bring down the machinery breakdown response time and implemented a comprehensive preventive maintenance program in the company. •The other engineers identified ten major issues that affected quality output and remedies for taking action that covered all the production areas were undertaken, based on the recommendations of the engineers and the workers. Kaizen Method Guide | Copyright © 2010
  23. 23. Rojee Tasha Stampings Ltd. When the suggestion of the two workers of the press machine was implemented, the changeover time was reduced from 62 minutes to a mere 13 minutes, a reduction of around 80%. • This was successfully implemented in the second press machine also. This huge reduction in changeover time was combined with a 30% increase in time management led to a net decline of 50% in through-put time. • Thus, the Kaizen technique implementation increased the production space in Rojee Tasha Stampings by 43%. Machine down time was reduced by 100%, a stunning feat in any organization. • The production lead time came down by 50%, the changeover time for the main press machines was cut down by 80%, and the product rejection by customers dropped by 50%. All these factors resulted in a 36% increase in turnover for Rojee Tasha Stampings. Kaizen Method Guide | Copyright © 2010
  24. 24. Kaizen Advantages and Limitations Kaizen represents the changes for the better in business processes. Kaizen related to all activities that help in the improvement of the business process on a continuous basis. Kaizen is all inclusive, covering the internal and external processes, such as design, production, raw materials, work-in- progress, finished goods, delivery logistics. It is extended to vendors and suppliers, employees at all levels, and customers. Since waste elimination is the fundamental principle of Kaizen, it automatically enhances product and process quality. The constant monitoring of changes, remedies, and results helps the management to implement Kaizen in small experiments that are slowly extended to include all the operations of the organization in a phased manner, with the minimum extra investment in finance, workforce, and inventories. Kaizen involves small changes that are administered in minor increments. Kaizen accepts the basic fact that change is a fundamental factor of human life. Internal and external changes like customer preferences, competitor activities, government polices, raw materials supply and demand, employee turnover, motivation levels of employees, etc. are all taken into consideration when Kaizen is implement. Kaizen Method Guide | Copyright © 2010
  25. 25. Kaizen Advantages and Limitations Kaizen represents the changes for the better in business processes. Kaizen related to all activities that help in the improvement of the business process on a continuous basis. Even when major or large-scale change initiatives are undertaken for huge projects, they should be sustained by continuous changes to suit constantly arising changes in the workplace and elsewhere. This is where Kaizen scores over other business process models. Strategic planning of business processes in any organization is a clever combination of the metrics of balanced scorecards and the subtle principles and techniques of Kaizen. However, certain limitations exist for Kaizen. Kaizen could never work for all kinds of situations or each type of improvement. Certain changes are possible only through substantial financial investments or recruitment of new employees with higher skills. These changes would be beyond the scope of Kaizen and the management should apply other principles and techniques to handle such situations. Kaizen Method Guide | Copyright © 2010
  26. 26. 5S Principles of Kaizen Standardize Sweep Straighten Sort Self-discipline Kaizen Method Guide | Copyright © 2010
  27. 27. Kaizen FAQs What is the exact definition of Kaizen? • In Japanese language, Kaizen means ‘improvement’, ‘continuous improvement’, and ‘change for the better’. Kaizen is usually practiced as Kaizen events to focus on continuous improvement in engineering, manufacturing, management, and all other supporting business processes. How should a Kaizen meeting be arranged? • Each Kaizen meeting should have a set agenda, which should be distributed to the participants before the commencement of the meeting. The objectives of the Kaizen event should be communicated clearly to the participants before the beginning of the session. All successful Kaizen events are conducted with the attendance of employees from various department Kaizen Method Guide | Copyright © 2010
  28. 28. Kaizen FAQs What are the major steps in a Kaizen event? • When the management possesses a clear idea of the direction of the business and strives to streamline the processes, the management is able to distribute projects evenly among the workers. This helps in running the business smoothly. These goals are accomplished by creating and staging appropriate Kaizen events. Kaizen events are usually 3-days or 5-days events. How is the Kaizen event managed in a particular situation? • After the identification of a problem area, a team of persons varying from 6 to 12 is picked up. The team members indulge in a brainstorming session to extract suggestions and ideas for improving the work area and resolve the problem. After deliberation and consultation, a plan for the Kaizen event is selected and a schedule is drawn to implement the Kaizen event and to follow up the event with a review of the result. Based on the result, the event is further modified, if there is a need for further improvement on the plan. Kaizen Method Guide | Copyright © 2010
  29. 29. Checklist for Kaizen Development of clearly understanding the Kaizen process is the first step in successful implementation of Kaizen events. For complete customer satisfaction, the Kaizen principle should embrace the three basic building blocks that are the keys to value addition to the customer. They are known as quality, cost, and delivery (QCD) collectively. The second point in the checklist is to identify the corporate objectives. The top management should carry a SWOT analysis of the business program of the organization. They should assess existing systems and structures for achieving cross-functional goals and for effecting changes in organization, control, planning, and employee practices. Targets for predetermined periods like 3 years, 5 years, etc. should be set and the management should commit itself firmly to the targets. A well-thought-out and planned Kaizen program is usually broke down into three key segments. They are management-oriented Kaizen, group-oriented Kaizen, and individual-oriented Kaizen. Kaizen Method Guide | Copyright © 2010
  30. 30. Checklist for Kaizen The management should allocate adequate resources for conducting the Kaizen events properly. A comprehensive training plan should be developed to help the employees understand the business process continuous improvement, the cross-functional activities, and the techniques for problem solving. The training and development of the employees should focus on the 4P principles related to quality improvement. They are process control, problem identification, problem elimination, and permanence. A suggestion system should be put in place to involve the employees in proactive manner. Good suggestions should be recognized and rewarded. Constant review is the final step in Kaizen. Each step of change should be assessed for further improvement. Kaizen Method Guide | Copyright © 2010