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KAIZEN COSTING
GROUP-1Akanksha Bhatnagar-
102Himanshu Kamat-22
Sandeep Singh-12
Japanese word. Literally means
improvement. Kaizen means
continuous and gradual development by small betterment activities.
Continuous improvement is nothing but continuous elimination of wastes.
THE TERM - KAIZEN
MEANING & CONCEPT
Kaizen means continuous and gradual development by small betterment activities.
Process of cost reduction during the manufacturing phase of an existing product.
Rather than large or radical improvement made through innovation or large investments in technology.
Management sets the cost reduction targets for the product.Kaizen is primarily a reactive process where you "check" to see if anything is wrong, then go about fixing it. It is a daily activity and always under the control of a supervisor.Improves productivity by daily monitoring and elimination of wastes.
TYPES OF WASTES
Overproduction
Delays (waiting
time)
Transportation
Inventories Defective product
Waste in the workplace is defined as activities that add cost but do not add value.
TRADITIONAL APPROACH
1. Analyses every part of a process down to the smallest detail.
2. Sees how every part of the process can be improved.
3. Looks at how employees’ actions, equipment, and materials can be improved.
4. Looks at ways of saving time and reducing waste.
In English the term Kaizen is interchangeably
used as Continuous Process Improvement(CPI).
Kaizen aims to improve productivity in the
work place by minimizing and eliminating
waste.
Kaizen helps in standardizing thus making it
better way of operating.
KAIZEN STRATEGYKAIZEN STRATEGY
KAIZEN STRATEGY Contd….
“Better way" of operating involves many elements,
five of which are mentioned specifically. They are:
1) Teamwork
2) Personal discipline
3) Improved morale
4) Quality circles
5) Suggestions for improvement.
KAIZEN STRATEGY Contd….
How to implement kaizen?
To implement kaizen the following steps are followed: Create a work standard for your product. Identify what measure exists that tells how well the
process is currently operating. Learn about your target work process. Identify the various wastes involved. Design a strategic approach, after taking the
suggestion of every worker from the CEO to the cleaners, to avoid the wastes in their respective fields.
Document the scope of the kaizen applied.
HOW ARE KAIZEN COSTING GOALS MET ?
The continual and relentless reduction of non-value-added activities and costs, the elimination of waste, and improvements in manufacturing cycle time all contribute to the effort.
In addition, the improvement suggestions and kaizen efforts of all employees are taken seriously and implemented when appropriate.
The result is a continually more efficient and cost-effective production process.
Toyota production system is known for kaizen, where all
line personnel are expected to stop their moving production
line in case of any abnormality and, along with their
supervisor, suggest an improvement to resolve the
abnormality which may initiate a kaizen.
LONG TERM PROFIT TARGET
SHORT TERM PROFIT TARGET
ESTIMATED VARIABLE COST
BUDGET FOR FIXED COST
KAIZEN VALUE
KAIZEN BUDGET
COMPARISON OF BUDGET & ACTUAL FIGURES
BUDGET – Target Profit and Volume of Production
VARIABLE COST
CONTROLLABLEExample -
FIXED COST
UNCONTROLLABLE
Example – purchased equipment
Metrics of Financial Measurements
Hours per part (HPP)
BudgetVs
Actual Costing
1. Cost reduction targets are
established.
2. Respective work cell is held
accountable.
3. Kaizan process needs to be
consistent and repeatable.
Factors for Successful Implementation
CRITICISM
Works fine for small scale processes which is easy to analyze on a day to day manner.
Difficult to implement in a large scale process where analyzing the process takes a lot of time.
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