Kaizan Costing

Kai Change Zen Better Change for Better

Indian Connection

Small Drops of Water together Ultimately result in a lake

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

Kaizen Philosophy

Approach to 1 Attitude
Improvement 2 Employees 3 Information 4 Interpersonal Relationship 5 Managerial Belief 6 Management Culture 7 Management Function

Traditional Organisation

Kaizen Environment

Let it go


Cost Restricted Commercial Routine Bureacratic Control

Assets Shared Human Change Participative Supportive

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


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



Attitude Safety Productivity Energy Saving Money Saving

Other factors

Change in Attitude

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

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

Kaizen Costing

Kaizen Costing Cost Reduction in 
Design of the Product  Development of the Product  Production Of the Product

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

Product Specification Product Planning Phase Price Targets Profit Targets Cost Targets Life Cycle Costing Major Product/Process Changes
Does Design Meet Target Costs?

Estimated Life Cycle Cost
Are Life Cycle Costs Acceptable ?

Start Production Minor Product/Process Changes Product Scrapping

Production Phase Scrapping Phase

Cost Reduction by 5%

Kaizen Costing Calls

Establishment of cost reduction target amount and its accomplishment through Kaizen activities---continuous improvement

Kaizen Costing
Product Development, Design & Manufacturing

Target Costing

Kaizen Costing

Training, Learning Before goal of Target Costing or Kaizen Costing is imposed on the Organisation

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