Cost and savings when introducing Kaizen in your SME business

The objective of this article is to establish a business case for the introduction of Kaizen in the SME business. That it is beneficial by bringing cost reduction is taken to be visible. Still, in reality, it is not so because of explaining it to the cost-conscious business owners who always have competing requirements for the deployment of scarce resources. A persuasive piece of writing is required to convince them that a decision to introduce Kaizen makes the business stronger in the long run, especially when Kaizen becomes the way of life.

Why is the introduction seen as difficult?

While discussing the merits and limitations of Kaizen from the deployment of resources point of view, the traditional argument that goes in favor of it is that it offers savings that could translate into dollar terms. The underlying difficulty is convincing management for the reason that savings are seen as paltry when compared with the budgetary allocation in terms of capital expenditure (CAPEX). Moreover, much of the savings in the initial stages are not directly tie down to the bottom line. The reason that there are a plethora of other factors within the business systems that suppress these numbers.

It is necessary to put in a case based on the sound setting. That there indeed evidence exists for its introduction into your SME business on account of its ability to bring about cost reduction over a while, which then stays forever. It can happen in the form of a simple cost/benefit consideration.

Cost/Benefit

What is the real benefit introduction of the Kaizen offer for you? It’s of common knowledge that the profitability of an industrial process links to its design, that is to say, the technology and organization, which structure the process that would deliver a product at a targeted unit cost. Where the target is in the form of output with a certain amount of volume. The glitch is while it is easy to draw an ‘ideal’ plan to do this, in reality, it is not achieved because there are many unforeseen problems and barriers, which can hamper the ‘ideal implementation.’ Some such restrictions and not so favorable conditions can see in the uneven use of software, handling of equipment, materials, vagaries in supply, etc.

Above all, all these are subject to the degrees of the training your team. Could have undergone and fluctuating motivation they may experience from time to time. These problems, when get accumulated, lead to your incurring costs that do not directly figure in the accounts as additional costs. Due to the lag time involved, it takes time for you to gauge the dissatisfaction that emanates from the customers due to missing or late deliveries. These eventually result in the lowering of the sales and denting of your bottom line.

The Benefit of introducing Kaizen

It is here Kaizen acquires its critical significance due to its ability to bring about significant benefits that matter for you, which explained hereunder.

Running the processes to achieve targeted performance is a function of making the operators learn the tricks of methods and customize the use of the tools in a real-time environment. The core principle of Kaizen is driving ‘continuous improvement,’ which has to understood as the constant and relentless efforts to close the gap between the actual performance of the existing processes and targeted performance of operations as it initially envisaged.

How does Kaizen work to your benefit?

With Kaizen, it is possible to benchmark the ‘best day’ performance of your process. And apply it to every day of the month. After that, when you analyze the data that compares the real day-to-day performance with the benchmark. You would see the benefit for yourself.

Why is the Introduction of Kaizen inevitable?

It offers a unique training method. Which is in the form of frequent iterations, which is superior to any other training. The best way to learn to do something nearer to perfection is by doing it again and again until we get the hang of it. Kaizen aptly applies this to solve specific process problems to achieve, ultimately, the desired result. Not only that, it is further embedded in the principle of continuous improvement.

No doubt, costs are associated with iterations. But this can be kept to the minimum when the team puts up their minds together. The starting point can be no investment and after that with as minimum as possible with. Which it is possible to get the operators under supervision to use mock-up. And apply the simple trick to test the Kaizen ideas in the workplace during their shifts. It would eventually lead to the drawing of the Kaizen document. Which would contain explanations of the problems they had faced, how they solved, and savings generated?

Key Take Away

The key take away of this article is Kaizen is the best-known route to make your customers satisfied. By delivering them what you have promised. And to generate the revenues and profitability, which is the purpose for which you are into the business. The benefits it offers by way of cost reduction. And revenue maximization may not be visible unless or otherwise they are articulated. Which is what this article has done.

Keywords: KAIZEN, COST REDUCTION, PROCESS, BENEFIT, BUSINESS, SAVING, PERFORMANCE, INTRODUCTION, PROBLEM, TARGET

 

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