The word Kaizen is defined as continuous improvement in personal, home, social, and work life. Kaizen is a Japanese word composed of the words kai and zen in which kai means change and zen means good or better. When Kaizen is applied to the work life, it involves everyone in the organization from workers, to managers then supervisors, and to top management. In the workplace, the term kaizen refers to continual and gradual improvement. The kaizen approach is not only about improvement, but also getting specific outcomes.
Kaizen costing was originated in Japan as a new cost management concept to help survive struggling businesses after World War II. Due to the rise in oil prices, Japanese companies were looking for new ways to reduce costs. Kaizen costing is a process that focuses on reducing the costs of existing products and processes
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In addition, wasteful processes are reduced, and thus reduce the waste use of materials. With kaizen costing, customer requirements are placed at the forefront of the company. Each product and service is focused on the needs of the customer instead of the company.
Since the concept of Kaizen requires everyone in the company to participate, teamwork and purposefulness increase tremendously as a result of people being able to think and contribute beyond their needs of their specific department. But most importantly, long and short term goals of the company can be easily identified to ensure that employees, systems, and products achieve these goals.
Even though kaizen costing has numerous advantages, it also has a few disadvantages as well. These disadvantages can be serious if the company does not fully understand how this concept works. Without fully understanding kaizen costing, it can become every disastrous to the company and ultimately cost the company thousands of dollars instead of saving the company
Everyone in the organization should be involved in the training process at the end of the case it says a management process that involves all the employees explain this. Kaizen means a “good change“, standardizing the operations, evaluating it and innovating a better option or solution and continue the process. The training process would be different for different groups depending on their roles and responsibilities. When it comes to the training design we have to consider the different levels of operations and their roles and responsibilities. We have to differentiate the trainees depending on their experience, abilities and trainee population. The first line managers and all the employees in the same department should go through
Problem solving becomes systematic and horizontal as discussed in the process oriented section of the previous week (Taylor, 2013). Problem solving becomes preventative instead of reactive. The delivery of products and services are value driven and customer focused. The elimination of non-value added activities and waste improve the quality of products and services. Using a pull system reduces costs because of low inventories, using a JIT methodology (Russell & Taylor, 2011). Continuous improvement should be pursued, improving the quality of products and services to customer.
In the John Deere case, they were calling a lot of things overhead that weren't truly overhead (e.g. scrap, which is probably proportional to the amount produced). We discussed with my group how the internal transfer pricing arrangement probably encouraged the managers to think this way, since it awarded contracts on the basis of direct costs but, by the books, the actual transfer price was supposed to be the full price. In summary, the John Deere case was an exercise in thinking about how not to make pricing decisions.
Hannah make the decision, the comparison between ABC and traditional method is very important. First of all. ABC is the best setting with no asymmetric information not like the traditional method. (Mishra, B. and Vaysman, I, 2001) Cost under a ABC approach are classified as different activities. However, indirect overhead under a traditional method is distributed to cost object according to some percentage. (Collier, 2006) ABC uses company’s actual reachable level as standard, so that this standard is reachable and stable. While the traditional method uses the optimal cost as standard, which does not consider the actual low rate or technical fault or many other reasons. Then talk about the incentive system. As the standard of ABC is reachable, it is more possible to get an award and will encourage the employee. However, the standard of traditional method is optimal cost which means unreachable, manager need to continue to eliminate the waste in order to achieve near-optimal level as a performance standard. ABC compares to the traditional method is more suitable to these companies that have a large percent of indirect overhead, various products, and complex production and operation activities. There is affection in part a while using ABC method. As ABC classified the cost as different activities and it is more accurate than using traditional method. This leading to the calculated product cost more
Intense global competition, rapid technological changes, advances in manufacturing and information technology and discerning customers are forcing manufacturers to optimize manufacturing process, operations, and all the possible nodes of supply chains that enable them to deliver high-quality products in a short period of time (Karim et al. 2013). The origins of lean thinking can be found on the shop-floors of Japanese manufacturers and, in particular, innovations at Toyota Motor Corporation (Shingo, 1981, 1989; Monden, 1994; Ohno, 1988). These innovations, resulting from a scarcity of resources and intense domestic competition in the Japanese market for automobiles, included the just-in-time (JIT) production system, the Kanban method of pull production, respect for employees and high levels of employee problem-solving/automated mistake proofing. This lean operations management design approach focused on the elimination of waste and excess from the tactical product flows at Toyota (the Toyota "seven wastes") and represented an alternative model to that of capital-intense mass production with its large batch
“Quality of lean systems is based on kaizen, the Japanese term for “change for the good of all” or continuous improvement” (Russell & Taylor, 2013, pg. 737). Continuous improvement involves “every employee at every level” (Russell & Taylor, 2013, pg. 737). It is the process of employees identify “quality problems, halt operations when necessary, generate ideas form improvement, analyze processes, perform different functions, and adjust their working routines” (Russell & Taylor, 2013, pg. 737). “The idea focuses on improving processes and products while using employee creativity to help define the way procedures and systems can be improved” (Wagner, N., 2015). The kaizen approach encourages an organization to achieve better operational excellence and improve their productivity. The key component to achieve a successful kaizen “is finding the root cause of a problem and eliminating it so the problem does not reoccur” (Russell & Taylor, 2013, pg. 738). One of the techniques for achieving the root cause of a problem is asking the “5 Why’s”: “repeatedly asking “why?” until a root cause is identified” (Russell & Taylor, 2013, pg. 738). Kaizen is that big results from many small changes accumulated over time. This does not mean that kaizen means small changes. What is does mean, is that everyone involved is making improvement for a more streamline process. Kaizen is part of the quality of source that involve; visual control,
Since more than 40 years, Toyota Company was thinking how to develop the traditional process costing system and the production system. Some of the companies believe that the increasing of the production is a big profit, while Toyota proved the opposite. The more you increase the products out of the need of the market, the more losses you are going to gain. This kin...
The overall purpose of cost accounting is to advise top administration and the management team on the most suitable and cost effective methods and actions to employ based on cost, capability and efficiencies of a given product or service. It can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). Once these numbers are gathered and recorded the information is used to determine a selling price and/or to identify possible investment opportunities. Although the principal aim or function of cost accounting is to help the business administration with their decision making and business planning process, the cost accounting data
For example: with the increase of the number of products produced, the cost of operating a machine also increase. Second we have batch level costs which is associated with batches; producing a multiple units of the same product that are processed together is called a batch. The third type is product level costs which arise from any activity in order to support the production of products. The fourth and the last type is facility level costs, this costs cannot be determined with a particular unit, product or batch; this costs are fixed with respect to batches, products and number of units produced. A single measure of volume is used for allocating costs to each service or product in traditional method for example: direct material cost, machine hours, direct labor cost and direct labor hours. A cost driver is an activity that generate costs, it can be generated by two types of costs the first is a particular machine 's running costs where the costs is driven by production volume as machine hours; the second is quality inspection costs where the cost is driven by the number of times the relevant activity occurs as the number of
The vision of removing things unwanted in the business world, “is to review all areas in your organization, determine where the non-value added work is and reduce or eliminate it.”(Key Lean Manufacturing Principles) This allows business to understand what they need to do work more efficiently. This is also how businesses can effectively increase profitability for there organization through the process of see if a specific thing adds value or is a waste to the production of goods or services that the company is providing. Next is continuous improvement also known as kaizen is another very important principle because without this belief your development for success will
...to course correct for any shortcomings we identify. This would be an excellent time to bring the concept of kaizen into play. “The Kaizen Event is an effective tool for moving past “analysis paralysis,” tying improvements to a larger strategy, and involving all the necessary perspectives to create relevant, measurable, and sustainable improvements” (Martin & Osterling, 2007. p. 20). We would attempt to maintain fresh ideas by adding new members and leaders to the change coalition.
...ions, consensus management and seniority-based reward systems all suitably adapted to the local context, of course, this would force the adoption of Japanese practices such as Kanban(JIT) and Kaizen (continuous improvement), that call for flexible utilization of resourceful humans.
Activity-based costing is used as a supplement of traditional cost accounting in a company to support manager in internal decision making. It focus on assigning the indirect cost to direct costs in order to get a more accurate cost on products. Activity-based costing uses several cost pools instead of one in traditional cost accounting. The system is easy to implement and it provides many benefits, it allows the company to respond to inefficiency by reallocating resources to more profitable activity from areas that absorb too many resources. It also allows the company to respond to manufacturing overhead cost and assumes a more accurate selling price on products in order to make more profits. Company that do not have internal expertise to conduct activity-based costing analysis may think to hire one or ask company that provides this kind of services for help.
Kaizen is the most important concept in Japanese management. It means continuous improvement in every aspect of life, including social life, working life and home life. A wide range of production techniques and working practices must be carried out for it to be effective. This approach argues that a day should not pass without some kind of improvement being made, no matter how small, and achieving the lean goal eliminating all waste that adds cost without adding value.
The ultimate goal of any human being on earth is to be able to live a purposeful life. The human race experiences the restless need to become better from personal level, corporate level, nations, continental associations and the world at large, they all seek to improve at something. Partly this has seen the rise of human development institutions in an effort to try and meet the demand of an emerging market on personal development. Kaizen, a Japanese word that is derived from Kai which means (change) and Zen which means (for the better) has gained popularity and become a common philosophy in the world (Popovich, 2011). It means continuous improvement and in our perspective it stands for the ideal to always seek on improving oneself no matter the level of achievement in life.