CIPS Procurement Topic

Kaizen

Kaizen is a management strategy that

focuses on constant, process-oriented
improvement (Imai, 1986)

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Kaizen - CIPS Procurement Topic

Introduction
The challenge of rebuilding Japanese businesses from scratch after World War II, the oil crises
of the 1970s and the resultant economic challenges that ensued in the '80s and '90s (for
example, increases in the cost of raw materials and labour, increased international
competition, changing consumer values and shorter product lifecycles) collectively provided
the impetus for the rise of process-oriented management (and manufacturing) strategy of
Kaizen. Various tools were introduced to Japan in the 1950s and '60s by American experts such
as W.E. Deming and J.M. Duran, such as quality control, but these were subsequently
developed in a very Japanese way so that Kaizen is now an umbrella term encompassing many
management practices such as total quality control/circles, productivity improvement, zero
defects, just-in-time and so on.
Today, Kaizen is seen as a people-oriented management strategy that focuses on constant,
process-oriented improvement involving all levels of the organisation through a concerted
effort at cooperation and involvement - particularly through the generation and consideration
of suggestions by employees (Imai, 1986). Various writers emphasise different key features of
the Kaizen concept, but many focus on three key notions: (1) Kaizen is continuous which
signifies both the embedded nature of the practice and the permanent, working towards
quality and efficiency; (2) Kaizen is usually incremental in nature, in contrast to major
management-initiated reorganisations or technological innovation (e.g. the installation of new
technology or machinery); and (3) Kaizen is participative, entailing the involvement and
intelligence of the workforce, and thus generating intrinsic psychological satisfaction and
quality of work-life benefits for employees (Brunet and New, 2003).
In Japanese manufacturing firms the Kaizen concept is often applied directly to Management
Accounting and Control Systems as well; this is called Kaizen Costing. For example, in the
Japanese automobile industry an annual budgeted profit target is allocated to each plant. Each
automobile has a predetermined cost base that is equal to the actual cost of that automobile
in the previous year. All cost reductions use this cost base as their starting point (Atkinson et
al., 2007).

Definition
Kaizen, as a philosophy, is defined as the spirit of improvement based on the spirit of
cooperation and commitment; equally relevant in personal, home, social and working life
(Brunet, 2000). The specific application of Kaizen to the workplace means continuing (and
relatively inexpensive) improvement involving everyone: top management, managers and
workers alike (Imai, 1986).

Kaizen - CIPS Procurement Topic

Successful Application
The implementation of Kaizen involves everyone - managers and workers - and requires a
permanent commitment to the Kaizen principles. It is not meant to be implemented as a
process, but rather to be lived at all levels of an organisation as a philosophy. In order to
achieve this, management must nevertheless master a set of core elements and systems to
realise the Kaizen strategy such as: plan-do-check-act cycles (PDCA), process versus result,
putting quality first, speak with data and the principle that the next process is the customer
(Imai, 1997). Implementation of particular improvement projects usually passes three stages:
identification of problems (matters for improvement) by employees and formation of a habit
to tackle them; conceptualisation of new ideas to improve the process; and formal submitting
of improvement suggestions. Further there are five principles that must be implemented for a
successful application of the Kaizen concept the so-called 5S. The term 5S comes from the
five Japanese words that translate as: selection, systemic, cleaning, standardisation and selfdiscipline (Karkoszka and Honorowicz, 2009).

Steps to Successful Application

Select a project, understand the current situation and set objectives.
Analyse data to identify the root causes of problems, or inefficiencies.
Establish and implement counter measures.
Imai (1997)

Kaizen - CIPS Procurement Topic

Hints and Tips

Team action orientation, or the extent to which the team focuses on implementation rather
than analysis. Published Kaizen event accounts suggest that events that emphasise handson activities (such as moving equipment to a future stage) will be more effective than
events that focus on planning and analysis (Farris et al., 2009).
Tool appropriateness: the selection and the quality of the tools used (Farris et al., 2009).
Internal processes: Team research has typically suggested that internal team coordination is
related to attitudinal outcomes and to team perceptions of team effectiveness (Farris et al.,
2009).

Potential Advantages
Kaizen, by encouraging the development of smaller, self-managing groups, consolidates
team-working, increases on-the-job training potential and leads to a greater understanding
of change and cooperation in the workplace (Brunet, 2000).
The employee suggestion system is an integral part of the Kaizen management framework
that helps to formally recognise employee efforts, offers workers a worthwhile role in company development and ultimately improves involvement in work (Imai, 1986).
Kaizen, as a lean thinking approach, involves identifying human activities that absorb resources but add no value (muda, or waste, see Lean Production) ultimately facilitating the
correction of problems in the workplace and adding value (Womack and Jones, 1996).

Potential Disadvantages
Kaizen signals a permanent change of management system. Once implemented it is hard to
return to previous management systems should the need or desire arise. Also, since Kaizen
is intertwined with Japanese culture, it may be difficult to apply in other cultural contexts
(Brunet, 2000).
Kaizen can increase the burden on lower level management as they not only have to spend
time on the shopfloor (the front line) facilitating the implementation of the approach, but
they may also have to work after hours to complete their routine administration tasks
(Brunet, 2000).
Kaizen can lead to diminishing returns. The continuous improvement approach leads to a
focus on smaller and smaller details with lower potential returns, without a concurrent reduction in effort (Brunet, 2000).

Performance Monitoring
Lead-time (Doolen et al., 2008).
Floor space (Doolen et al., 2008).
Work-in-process (WIP) (Doolen et al., 2008).

Case Evidence
Siemens brought Kaizen to their Belgian plant in 1993 by forming self-managed work teams
emphasising teamwork and participation. Several problems were tackled: The storage area
was reduced by 10% between 1993 and 1994, the ratio of indirect labour reduced from

Kaizen - CIPS Procurement Topic

25.1% in 1992 to 24.8% in 1995 and delivery reliability improved from 78% to 83% by 1995
(Imai, 1997).
Canon, manufacturers of cameras, sought to manufacture better quality products at lower
costs with faster delivery by using Kaizen. Canons management asked its employees to become problem conscious. 100 managers were asked to think of more than 200 tasks for improvement, and foremen 100, which were used to plan monthly activities (Imai, 1986).
Kubota is a Japanese machinery manufacturer. Due to the rapid rise of the yen in the 1980s,
Kubota was forced to cut its fixed and general costs. When the firm started using the Kaizen
approach, it relied heavily on the involvement of the foremen in the management of production operations. The foremen would move workers during slack periods to other operating groups to improve their skills and introduce them to new processes and techniques.
This way Kubota has achieved a continuous improvement environment in which each problem can be tackled by the individuals responsible (Matsumura, 1989).

Further Reading/Reference
Web Resources
Practice your personal Kaizen http://lifehacker.com/207029/practice-your-personal-kaizen
Conditions for successful implementation http://smallbusiness.chron.com/7-conditionssuccessful-implementation-kaizen-strategy-17802.html
The Kaizen Institute, founded by Masaaki Imai, the lean guru http://www.uk.kaizen.com/
Kaizen definition and overview by World Class Manufacturing http://world-classmanufacturing.com/Kaizen/kaizen.html
The Benefits Resulting From Kaizen
http://www.graphicproducts.com/tutorials/kaizen/kaizen-benefits.php

Books
Gemba Kaizen: A Commonsense, low Cost Approach to Management, Masaaki Imai, ISBN
978-0070314467
Kaizen: The Key to Japans Competitive Success, Masaaki Imai, ISBN 978-0075543329
Kaizen For Europe, Roger G. Hannam, ISBN 978-1854231048
Kaizen Strategy for Winning Through People, Sheila Cane, ISBN 978-0273617082
Kaizen Assembly, Chris A. Ortiz, ISBN 978-0849371875

References
Atkinson, A.A., Kaplan, R.S., Matsumura, E.M, Young, M.S. (2007) Management Accounting.
(5th edition) Pearson Prentice Hall, Upper Saddle River, NJ.
Bessant, J., Burnell, J., Harding, R. and Webb, S. (1993) Continuous Improvement in British
Manufacturing. Technovation, 13(4), pp. 241-254.
Brunet, A.P., and New, S. (2003) Kaizen in Japan: An Empirical Study. International Journal
of Operations and Production Management, Vol. 23(12), pp. 14-26.
Bunce, P. (2003) Blow the Budget! Manufacturing Engineer, Vol. 82(1), pp. 34-37.
Doolen, T.L., Van Aken, E.M.,Farris, J.A., Worley, J.M. and Huwe, J. (2008) Kaizen Events and
Organizational Performance: A Field Study. International Journal of Productivity and Performance Management, Vol. 57(8), pp. 637-658.

Kaizen - CIPS Procurement Topic

Farris, J.A., Van Aken, E.M., Doolen, T.L. and Worley J. (2009) Critical Success Factors for
Human Resource Outcomes in Kaizen Events: An Empirical Study. International Journal of
Production Economics, Vol. 117(1), pp. 42-65.
Imai, M. (1997) Gemba Kaizen: A Common-Sense, Low Cost Approach to Management.
McGraw-Hill, New York.
Imai, M. (1986) Kaizen: The Key to Japan's Competitive Success. Random House, New York.
Karkoszka, T. and Honorowicz, J. (2009), Kaizen Philosophy A Manner of Continuous Improvement of Processes and Products. Journal of Achievements in Materials and Manufacturing Engineering, Vol. 35(2), pp. 197-203.
Lee, M., and McDermott, J. (2000) Customer Service Excellence through People Motivation
and Kaizen. Kaizen Management System Audit, London
Matsumura, M. (1989) Kaizen at Kubota Steel. Total Quality Management, Vol. 1(5), pp.299302.
Womack, J.P. and Jones D.T. (2003) Lean Thinking: Banish Waste and Create Wealth in Your
Corporation. Simon and Schuster, London.

Video
Video showing the implementation of Kaizen in a real-life plant.
https://www.youtube.com/watch?feature=player_embedded&v=bZnqWZVEpzs

Kaizen - CIPS Procurement Topic

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