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 :-
oover production
oInventory
oWaiting
oDefective
oMotion
oTransportation
oOver Processing

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

7. Implementing Kaizen-
few rules
o List your own Problems
o Grade problems as to minor, difficult and
major
o Start with the smallest minor problem
o Move on to next graded problem and so on

8. o Remember improvement is part of daily
routine
o Never accept status quo
o Never reject any idea before trying
o Eliminate tried but failed experiments
o 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
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
> 75 - Marks for extraordinary improvement

11. Kaizen Philosophy
Approach to Traditional Organisation Kaizen Environment
1 Attitude Let it go Continuous
Improvement
2 Employees Cost Assets
3 Information Restricted Shared
4 Interpersonal Commercial Human
Relationship
5 Managerial Belief Routine Change
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