KAIZEN COSTING

KAIZEN COSTING: 

KAIZEN COSTING KIA-----CHANGE ZEN-----BETTER CHANGE FOR BETTER

DEFINATION: 

DEFINATION A Japanese term for making improvements to a process through small, incremental amounts rather than through large innovations.

BENEFITS: 

BENEFITS Change in attitude Reduction in Production Time Reduction in Rejection Energy Saving Improved Quality Motivation Team Building Sense of belongingness Environment conservation

PowerPoint Presentation: 

Proactive approach to c TS ost management. Orients organizations towards customers. Breaks down barriers between departments. Foster partnerships with suppliers. Minimize non value-added activities. Encourages selection of lowest cost value added activities.

LIMITATION: 

LIMITATION Effective implementation and use requires the development of detailed cost data. its implementation requires willingness to cooperate Requires many meetings for coordination May reduce the quality of products due to the use of cheep components which may be of inferior quality.

CUSTOMER VALUE: 

CUSTOMER VALUE

STANDARD COSTING V/S KAIZEN COSTING: 

STANDARD COSTING V/S KAIZEN COSTING 1. Cost reduction targets are set and applied monthly. 2. Variance analysis involves target Kaizen costs versus actual cost reduction amounts. 3. Investigation occurs when target reductions are not attained. 1. Standards are set annually or semi- annually. 2. Variance analysis involves comparing actual to standard costs. 3. Investigation occurs when standards are not met.

CONCERNS: 

CONCERNS Often viewed as reactionary not value adding. The system places enormous pressure on employees to reduce every conceivable cost. The product is already in the manufacturing process, thus it is difficult and costly to make large changes to reduce costs. The cost of disruptions to production may be greater than the savings.

RULES FOR IMPLEMENTATION OF KAIZEN COSTING: 

RULES FOR IMPLEMENTATION OF KAIZEN COSTING 􀂃 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