DEFINITION

■ The word KAIZEN come from the combination of Japanese character , Kai (change)
and Zen(good).
■ The term Kaizen was introduced to world by Masaki Imai and became famous through
his book, Kaizen.
■ Kaizen costing is a technique of controlling the cost incurred over unproductive
activities and resources which does not add any value to the organization. In simple
words, it is a practical approach to solving cost-related problems to improve the overall
efficiency of the organization
■ This practice is a continuous improvement that introduce after second world war
■ It is focus on apply small daily changes that result in major improvement over time
OBJECTIVE

■ Quality control reduce cost

■ Reduce waste
■ Improve production cost,
■ Improve safety,
■ Improve productivity,
■ Sort (Seiri)
-The first step in the 5S approach is categorizing the items based on their necessity.
The unnecessary items should be labelled red and needs to be moved out of the
organization. These items can be sold to the staff or as scrap else can be dumped by
the organization.
■ Straighten(Seiton)
-Now, the organization is left with essential items. These have to be arranged in an orderly
manner for simplifying the operations. This step improves the visibility, availability and
accessibility of all the tools and items.
■ Shine (Seiso)
-Shine here refers to maintaining cleanliness in the workplace. It creates a positive work
environment for the employees.
■ Standardize (Seiketsu)
-One of the most vital tasks is to establish standards for cleanliness, usability and maintaining
the placement of items in day to day business operations.
■ Sustain (Shitsuke)
-The final step is to communicate and educate the employees about the changes made. Thus,
developing a sense of self-control and discipline among them to maintain and follow the set
standards.
STEP TO IMPLEMENT

■ Standardize the process

■ Organization may create a flowchart of production process to illustrate how products move thru the process
■ Measure the process as its currently exist
■ Organization can collect data on the process cycle time, defect cases and machine uptime before improvement.
■ Identify area for improvement
■ Measurement uncover areas for improvement in the process.
■ Develop the implementation and measure the improvement
■ Develop a new method to improve the current process.
■ Standardize the new process
■ If improvement of process is a success, the team must standardized the process, monitor it and adjust is as necessary.
CHALLEGE

■ Lack of proper procedure to implement

■ Will make the company not able to see the flow of achievement and get the result that they
are looking for. Therefore, it will cause them to believe that kaizen costing dontt give benefit
to them as well as not one of the best practices
■ Too much suggestion lead to confusion and time wastage
■ Involve infrequent more tricks to cut cost and managers need to micro manage the process
which may lead to communication barrier between the managers and employees as a result
they will have all the opinion to make the improvement
■ Difficult to implement in large of scale of process
■ May effect many area, process and people whereby it requires more time to adjust with those
 Difficult to implement in existing systems
■ As kaizen is implemented in an organization, it is very difficult to go back to old
management systems. Hence, kaizen might be easier to implement in businesses without
already established management systems.
■ However, it is a very difficult task to change the entire management system of a
business. Therefore, it is important that businesses maintain a practice of open
communication for kaizen to be efficient. Employees should be given the opportunity to
open their views without fear. Although, this is not usually the case for many
businesses. Employees usually fear that if they are open to management it would cost
them their chances for promotion or other benefits.
 Change is difficult
■ In implement kaizen, change is difficult because people are always reluctant to change.
Therefore, they have to put up with a certain resistance in businesses. Employees might
not be ready to accept a different system from what they have been used to. On the
other hand, management might be reluctant to implement kaizen because they feel it is
expensive.
■ Summary
■ Kaizen is a method of continuous improvement that helps to eliminate waste and defects
in a business process. Despite the fact that it is beneficial to a business, it is also
beneficial to employees and customers as well. To adopt Kaizen Costing in an
organization, the organization must understand well its principle and the methods to
ensure that the organization can achieve its objective which fits the Kaizen costing
definition. However, it is important for business managers to understand kaizen
advantages and disadvantages before choosing to implement it
Kaizen costing principle

■ Continuous improvements in the present situation, at an agreeable cost.

■ No limits to the improvement level that has to be implemented.
■ Advocates collective decision making and knowledge application.
■ Concentrates on waste or loss elimination, system and productivity improvement.
■ Establishing standards and then continually working on improving them.
■ Participating all employees and covering every business area, i.e. all the levels,
departments and unit
■ Example
■ Nestle is one of the most renowned foods and beverage company producing a wide range of
products including baby food, dairy products, medical food, tea and coffee, snacks,
confectionery, ice-creams, mineral water and many more.
■ The company used the kaizen costing technique for attaining lean production, and the approach
was stated as Nestle Continuous Excellence (NCE).
■ In this process, Nestle addressed its problem of wastage and time consumed in the production to
improve the efficiency of the company. Less wastage means incurring a low cost, better profit
margin, high output and proper utilization of resources.
■ Nestle was able to reduce wastage in the production of FMCG and also successfully decreased
the time consumed in the manufacturing of the products.
Benefits

■ Better safety
■ Improving safety on the work floor is a kaizen advantage for business. Safety is improved when businesses
implement ideas that clean up and organize workspace. By so doing, employees have better control of
business process equipment. Employees are also encouraged to make suggestions to improve safety on the
work floor. This helps to minimize accidents and other related injuries. Hence, employees become more
efficient and manage their time properly. However, safety is a responsibility of management as well.
■ Waste reduction
■ Kaizen reduces wastes in business processes. This is another major kaizen advantage. Kaizen is the
responsibility of everyone. Therefore, management and staff are responsible for identifying areas that
constitute waste in the business process. By implementing constant changes, they can determine the root
cause of wastage and fix them. By so doing, waste is eradicated from the business process and cost is
reduced. Furthermore, resources are used more judiciously, and the business becomes more profitable.
■ Improved employee satisfaction
■ Another kaizen advantage is that it improves employee satisfaction. Kaizen involves the
employees when implementing changes for improvements. Employees can make
suggestions and creative input for changes through a suggestion system like team
meetings. When employees are involved in decision making, it gives them a sense of
belonging and worth. They are eager to 
implement changes and think of new ways to improve the processes. By so doing, the
employees are motivated and productivity increases. Also, employees are more willing
to take ownership of process improvements. Rather than falling back on old methods,
they become advocates of quality improvements.
■ Improved teamwork
■ One of the major kaizen advantages is improved teamwork. Kaizen is a quality improvement
tool driven by teamwork. It does not benefit only a selected few, but everyone involved in the
business process. As the kaizen team solves problems together, they develop a bond and build
team spirit. Thus, employees are able to work with a fresh perspective, an unbiased mind and
without prejudice.
■ In addition, teamwork helps build cross-functional collaborations. Since skilled workers from
different departments implement kaizen, team members are able to refine their skills. Most
often, the biggest opportunities for improvement lies where one process flows into another.
Cross-functional collaborations enable employees with different experiences to learn from one
another and solve problems together. Therefore, this one kaizen advantage is that it improves
teamwork and cooperation amongst employees.
■ Improved efficiency
■ A major kaizen advantage is improved efficiency. Kaizen improvements boost the
quality of services. It helps businesses implement new process improvements, boost
efficiency and enhance time management.  For example, Toyota Manufacturing
Company employs kaizen in its production process. First of all, they deploy muscle-
memory training to train their employees on how to assemble a car. Muscle-memory
training helps them to achieve accurate results. Hence, their employees are able to work
with precision.
■ Also, immediately an automotive plant reaches its peak in terms of efficiency, the
company removes a few workers from that plant. By so doing, Toyota Manufacturing is
able to minimize errors and maximize productivity.