Kaizen Approach to Reducing Production Costs and a Case Study

Abstract

Purpose –The purpose of this study is to reduce the costs of a plywood manufacturing enterprise in Orduprovince with the kaizen costing method and achieve the targeted profit.Design/methodology/approach –Kaizen costing method is an approach that aims to reduce the costs of the enterprise through continuous improvement activities.As a result of the interviews with the business managers and the studies carried out in the manufacturing field, it was determined how much cost reduction the business should reduce to reach the targeted profit. Then, the units and amount of this reduction were calculated. Thesecalculations were made using the kaizen costing method, which was developed based on the kaizen philosophy aimed at continuous improvement.Findings–As a result of the calculations, it has been revealed that a cost reduction of 2.1 million TL in production is required for the enterprise to reach the targeted profit. 1.05 million TL, which is half of this cost reduction, should be in the peeling unit, 630.000 TL in the drying unit, 315.000 TL in the pressing unit and 105.000 TL in the storage unit.Discussion –Today, businesses are constantly implementing new methods to cope with the increasing competition all over the world. One of them is the kaizen costing method. This method, which first appeared in Japan, aims to control costs, and reduce these costs to reach the targeted profit. With kaizen costing, continuous improvements are realized by focusing mainly on critical processes. Unlike traditional costing methods, it is a superior method in assigning duties and responsibilities for improvements to theemployees who do the work directly in the production.Purpose –The purpose of this study is to reduce the costs of a plywood manufacturing enterprise in Orduprovince with the kaizen costing method and achieve the targeted profit.Design/methodology/approach –Kaizen costing method is an approach that aims to reduce the costs of the enterprise through continuous improvement activities.As a result of the interviews with the business managers and the studies carried out in the manufacturing field, it was determined how much cost reduction the business should reduce to reach the targeted profit. Then, the units and amount of this reduction were calculated. Thesecalculations were made using the kaizen costing method, which was developed based on the kaizen philosophy aimed at continuous improvement.Findings–As a result of the calculations, it has been revealed that a cost reduction of 2.1 million TL in production is required for the enterprise to reach the targeted profit. 1.05 million TL, which is half of this cost reduction, should be in the peeling unit, 630.000 TL in the drying unit, 315.000 TL in the pressing unit and 105.000 TL in the storage unit.Discussion –Today, businesses are constantly implementing new methods to cope with the increasing competition all over the world. One of them is the kaizen costing method. This method, which first appeared in Japan, aims to control costs, and reduce these costs to reach the targeted profit. With kaizen costing, continuous improvements are realized by focusing mainly on critical processes. Unlike traditional costing methods, it is a superior method in assigning duties and responsibilities for improvements to theemployees who do the work directly in the production.