Kaizen Costing—Exercises

Basic Data Setup

Prepare for Kaizen Costing

Purpose: The purpose of this exercise is to show you how to set up the basic data required for running Kaizen costing.

Windows:
Costing Basic Data

  1. Adjust the predefined parameters. 
  2. Assign the reduction type.

Kaizen Costing

Purpose: When costs do not fit, it is time for rationalization. Kaizen costing enables you to record activities that will bring down your part costs. You will perform Kaizen in the activities below.

Windows:
Part Cost

Plan Kaizen Costing

  1. Click the Kaizen Cost tab. Enter required Kaizen cost in the Kaizen Cost field or set kaizen cost. To set kaizen cost, right-click and click Cost Calculations and then click Set Kaizen Cost. The Set Kaizen Cost dialog box will be opened. In the Reduction Rate field, enter the reduction rate as a percentage. When you query for the part, the Kaizen cost gap will be calculated and displayed in the Kaizen Cost Gap field.
  2. Create a new record in the table. Enter values in the Activity Description, Reduction Type, Kaizen Status, Planned Due Date and Cost Reduction Potential fields. If the reduction type is defined as DTC (Design to Cost), perform cost value analysis to find out whether cost reduction on the part or component can be made without removing any customer features (see the next chapter).
  3. Assign a return on investment (ROI) method. Possible values are Payback, NPV (Net Present Value), or MIRR (Modified Internal Return Rate).
  4. To calculate your investment, right-click and point to Cost Calculations then click Calculate - ROI Part Kaizen Items. TheROI Part Kaizen Items Calculations dialog box will be opened. You can enter the required values and perform simulations until you have an approved ROI calculation. 
  5. Repeat with additional activities to close the Kaizen cost gap.

Evaluate Kaizen Costing

  1. Update the Kaizen status from Initial to Preliminary. When the activities are completed, change the Kaizen status to Final. The sum of potential reduction considers all cost savings except verified and canceled activities. 
  2. Verified cost savings consider the verified status with verified date.
  3. On the planned due date, update your costing data, calculate, and copy the cost set into Cost Set 1.