Kaizen and Kaikaku
This is true for almost all manufactured products:
- About 80% of the cost of manufactured products is due to materials. The rest is divided between labor and indirect costs.
- Once the design of a product or component has been decided, almost the entire cost is already committed. That is, since it was decided that a piece is made of a certain material and a certain size, even the process's cost is committed and there is very little left of where to reduce costs.
- Therefore, R&D and design teams "cast the biggest shadow" in products. And this is true for construction as well.
At AVG we encourage change based on two approaches according to the Japanese Target Costing model:
- Kaizen (改善) (or continuous improvement) and
- Kaikaku (,改革) (we call it discontinuous improvement)
Kaizen is well known in most organizations. The culture of Kaizen covers the best practices that achieve, mainly, STABLE AND STANDARDIZED PROCESSES, with the least amount of resources. Total Productive Maintenance (TPM), Just in Time (JIT), Statistical Process Control(SPC), 6 Sigma; all have in common the achievement of stable and predictable processes.
Production is a network of operations and processes. Kaizen focuses on improving connections among those processes and improve operations' stability.
If your goal is to reduce operation costs, or improving quality and process control, then focusing on processes and operations will help your organization to boost productivity trough Kaizen.
Western Industry has only moderately applied the principles of Kaikaku. Kaikaku can be translated as "radical change"; or to be more specific, "changes with radical impacts in short periods of time". In a language comparable to kaizen, in AVG we call it "Discontinuous Improvement".
After more than 900 projects of experience, we are certain that Value Engineering and Tear-Down Analysis are the best practices to achieve these radical changes in a short time; and therefore became our core methods to perform Kaikaku.
If your goal is to reduce the cost of your product (without sacrificing quality or performance), the best opportunity for your organization is to generate design improvements trough Kaikaku.