Kaizen: Continuous improvement in companies

Since the 1990s, Kaizen has become a household name, even a philosophy, in business. It is now one of the most frequently sought-after concepts. Kaizen is closely associated with lean management, and not only the management levels of companies, but also the employees appreciate the method.

The Japanese word Kaizen literally means “an action to improve the bad”. In the general language of its representatives, the short form “change for the better” has now become established. However, this does not always mean that the optimization takes place continuously.

The impact of the Marshall Plan on Toyota

In the modern sense, the term originated in the factories of the car manufacturer Toyota. After the end of World War II, American advisers were also sent to Japan in connection with the Marshall Plan, which exerted a lasting influence on Japanese companies. But the entrepreneurs from the “land of the rising sun” also recalled their own traditions. Even today, the Toyota production system is closely linked to the terms Kaizan and Lean Management.

Among other things, the American occupiers introduced new labor laws. The position of the employees was strengthened and the trade unions were able to achieve far-reaching concessions for the employees in negotiations. In the future, workers were no longer distinguished from employees. Redundancies were made more difficult and workers were guaranteed a profit share in the form of a bonus.

Economic development and tradition

Toyota, like the entire Japanese economy, was in a devastating situation and wanted to lay off 25 percent of its workforce. After a hard-fought industrial dispute, the unions and the Toyota family reached an agreement that is still the basis for the relationship between companies and employees in the car industry in Japan. Two guarantees were agreed: lifelong employment and a new way of calculating wages. It was no longer the basis and scale of the company’s work, but the duration of membership of the company.

As a result, the labour force was no longer to be regarded as a short-term cost. Instead, it had to be found that they were more expensive than the company’s machines as fixed costs.
These were written off and scrapped in the end, but the employees had to contribute more than 40 years of profit as human capital. Thus, a climate had arisen that made your constant improvement of the abilities of each one almost imperative. The existing knowledge, experience and work performance were optimally used. And the traditional Japanese combined the new economic requirements with the principles of their own philosophy.

Kaizen in corporate practice

In operational practice, Kaizan is a collection of simple principles. They are intended to help improve the results of the work. But a management philosophy has also emerged over time, which has revolutionized processes in many companies. Every single employee is constantly critically assessed for his or her activities and the environment of his/her workplace and to constantly optimise the way in which he works.

But the entire organization of production and sales structures is also to be rethought. According to the traditional way of thinking, which is closely linked to Asian philosophy, it is not only about orientating results. Rather, it is important to optimise profits. However, a high level of customer satisfaction is a prerequisite for this. So we need to continue to improve processes and ensure customer acquisition through innovation.

Internal and external customers

Customers are differentiated into external and internal customers according to the Kaizen principles. Externalism is the end user, but the various departments are also considered customers in their own company. If a downstream production unit detects defects in a precursor, it informs the originator of the problem. This avoids consequential errors that often occur at the interfaces in companies. This is why quality assurance comes to the fore, also in terms of the satisfaction of the “customers” and the reduction of costs. In order to be able to offer better services and to remedy defects, customer surveys are also an essential tool.

Quality through control

In order to optimize the products and guarantee the satisfaction of the customers in the long term, high demands on the products and a constant control over the realization of the standards are required. In total quality management, companies carry out continuous quality control. Extensive measurement methods are already applied during the ongoing production and the results of the production are constantly monitored. Sophisticated quality standards serve as orientation and are specified in key figures.

Constant criticism as a prerequisite for improvement

If optimizations promote customer satisfaction, criticism of the manufactured products is a prerequisite for the success of the company. Therefore, it is not only simply allowed, it is even desirable. Every single employee in the company is required to submit suggestions for improvement. Management has to use the suggestions constructively and implement them.

The management level checks the proposals for usability. And with a positive overall assessment, the innovation is integrated into the manufacturing process. The result is an ongoing cycle that starts with planning. Then follows the actual activity with subsequent control. Finally, there is improvement, and so the PCDA cycle results from the components Plan, Do, Check, Act. In this way, all processes in a company are analyzed again and again and continuously developed through improvements.

Methodological approach at all levels of the company

All employees of the company are directly involved in the optimization of processes. Each individual should invest a corresponding share of the working time in the method and commit to implementation. According to their function, different tasks are required for the individual employee groups.

The top management defines the principles, promotes their implementation and monitors the results. Its task is to create the necessary framework conditions. In middle management, these requirements are implemented. Compliance with the standards is to be guaranteed, training is offered to establish the critical way of thinking among the employees. Team leaders and masters support their employees when they express criticism and new ideas are proposed by them. Success controlling is their responsibility. The clerks and workers at the operational levels develop suggestions for improvement and cooperate in their implementation, which can also take place in a small group. By taking a responsible approach to the products, the employees improve their expertise and experience. Participation in the offered further training deepens their knowledge.

Daily practice: The 5S principle

In order to apply the principles and ways of thinking in everyday life, the followers of the teaching have developed a whole series of rules of conduct and corresponding tools. Each employee should use these tools and comply with them. The 5S principle is an example of the practical instructions.

• Seiri: Create order: Everything unnecessary should be removed from the workspace.
• Seiton: Love of order: What is still available in the workplace after Seiri must be ordered. Keep things in the right place.
• Seiso: Keep your workplace clean.
• Seiketsu: Order and cleanliness are personal concerns of the employees.
• Shitsuke: Discipline: Set standards to make the 5S principle a habit.

The Ishikawa Diagram

This checklist is another help to optimize the work process. The most important aspects that need to be constantly reviewed are summarized in the 7M list:

• Man
• Machine
• Material
• Method
• Environment, Community, Environment
• Management
• Measurability

Tradition and the new doctrine

Originally developed in the automotive industry and adapted to their manufacturing and assembly processes, the method also became increasingly interesting for other industries. Because there is always a need to improve processes in order to compete. Quality and performance require continuous optimization. Therefore, products and services with their corresponding processes are subject to constant criticism. The doctrine of continuous optimization has become a universal way of thinking in companies of all industries and an integral part of the philosophies of entrepreneurs and their employees.

Usually, according to the hierarchies, the functions are clearly distributed. Only a few managers are involved in thinking about production and processes, proposing changes and developing the company further. With the teaching of continuous improvements, every employee now has the additional task of thinking about the products. His proposals are in demand when it comes to changes to his workplace, whether it can be simplified or optimised.

The superiority of a practical philosophy

In the 1980s, it became increasingly apparent in business circles that Japanese car manufacturers were significantly superior to competitors in Europe and the US. At the end of the decade, three American scientists published a groundbreaking study: “The Machine That Changed the World.”

James P. Womacki, Daniel T. Jones, and Daniel Roos had taken up the moods and conjectures and examined the Japanese method in more detail. The term “lean production” (lean production) was also developed during this time, and was later developed into “lean management“. Both concepts are today paradigms of business science, and the principles have attracted attention not only in industry, but in all industries.

The authors pointed out in their study that the principle of continuous improvement is also an essential element of lean production. And because the Japanese were now leaders and role models, the method became popular worldwide.