"Tidak ada kemajuan bila kita selalu

mengerjakan segala sesuatu dengan

cara yang sama“ (Masaaki Imai )

Rindo Wifarsyah
Sine Ismina
 Kaizen
• Kaizen is known as " Genkakaizen " in
Japanese companies. It is used in
manufacturing stage of the existing products
as cost reduction process. Kaizen is derived
by Japanese automobile companies
 Kaizen

Kai = Change

Kaizen: Change For the

Better: Continuous
Improvement
Zen = Good
(for the
better)
 Definition of Kaizen Costing
Yasuhiro & John (1993) commented that kaizen costing works on the
establishment of a cost reduction target amount through continuous
improvement or kaizen activities in operations .

Kennedy & Widener (2008) described the term kaizen costing as

continuous improvement and time improvement by eliminating waste
and reduction of costs.

Kaizen costing is concerned with reducing the costs of existing

products and processes (Hansen & Mowen, 2003).

Kaizen costing method is used in manufacturing stage of the existing

products as cost reduction process. Kaizen costing focuses on
continuous improvement in all processes, customers’ satisfaction and
on involvement of all employees of company .
 What is continuous improvement?
Continuous improvement is the continual examination and
improvement of existing processes and is very different from
approaches such as business process re-engineering (BPR), which
seeks to make radical one-off changes to improve an organisation's
operations and processes.The concepts underlying continuous
improvement are:
• The organisation should always seek perfection. Since perfection
is never achieved, there must always be scope for improving on
the current methods.
• The search for perfection should be ingrained into the culture
and mindset of all employees. Improvements should be sought all
the time.
• Individual improvements identified by the work force will be small
rather than far-reaching.
 Kaizen Principles
• Kaizen has 3 main principles
– Consider the process and the results.
– The need to look at the entire process of the job
at hand and to evaluate the job so as to find the
best way to get it done.
– Kaizen must be approached in such a way that
no one is blamed
Kaizen Costing – Cost Reduction
 Kaizen’s Concept
• Eliminating three enemies
3M
1. Muda (Waste)
2. Muri ( Overburden)
3. Mura (Unevenness)
Kaizen’s Concept- 5s
Kaizen’s Concept
The Kaizen’s Cycle- The Never Ending
Process
Kaizen’s Cycle
Plan: Definition of the problem,
documentation of the current situation,
visualization of the ideal situation, definition
of the measurement targets, brainstorming
of solutions to the problem

Do: Development and implementation of

kaizen plans

Check: Measurement, recording and

comparison of results compared to targets,
preparation of summary documents

Act: Creation of short term action plans and

on-going standards
 Kaizen Costing-Costs related To
Manufacturing stage
Kaizen costing takes into consideration costs
related to manufacturing stage, which include:
a) Costs of supply chain;
b) Costs of product redesign;
c) Legal costs;
d) Manufacturing costs;
e) Waste;
f) Recruitment costs;
g) Marketing, sales and distribution; and
h) Product disposal.
 Eliminating waste
Kaizen costing has been developed to support the continued cost
reduction of existing components and products. One of the main
ways to reduce costs is through the elimination of the seven main
types of waste:
• Over-production - produce more than customers have ordered.
• Inventory - holding or purchasing unnecessary inventory.
• Waiting - production delays/idle time when value is not added to
the product.
• Defective units - production of a part that is scrapped or requires
rework.
• Motion - actions of people/equipment that do not add value.
• Transportation - poor planning or factory layout results in
unnecessary transportation of materials/work-in-progress.
• Over-processing - unnecessary steps that do not add value.
 Kaizen cost targets
In order to achieve cost reduction, variable as
well as fixed costs are considered. However, since fixed
costs are needed to maintain continuous growth,
Kaizen cost is achieved mainly by reduction in the
variable costs, direct material and direct labor costs. In
non-manufacturing departments, reduction is achieved
through fixed cost items. Targets for kaizen costs are
set monthly based on following procedure:

• Kaizen cost target for the current year = Estimated

amount of total current year actual cost x Ratio of
cost reduction target
• Kaizen cost target for each plant = Kaizen cost target
for the current year x Assignment ratio
 Benefits Of Kaizen
• Kaizen reduces waste - like inventory waste,
time waste and workers motion.
• Kaizen improves space utilization and
product quality.
• Results in higher employee moral and job
satisfaction.
• Teaches workers how to solve everyday
problems. Advantages of Kaizen Costing
•Customer Satisfaction
 Disadvantages
• Requires Permanent change of Management
System
• Does not Produce Required Results
• Difficult to Convince People