Kaizen budgeting takes the concept of continual improvement and applies it to budgets and budget forecasting.
Explanation :
Kaizen refers to the Japanese philosophy of continuous improvement. This concept focuses more on improving slowly and continuously over time than gigantic changes and fast improvements. Kaizen stresses finding little areas that can be made better or improved. This concept is very useful in business. Companies like GM use the kaizen budget strategy to cut costs in product. Basically, they look for small areas in the production process that can either be eliminated or that can be done more efficiently. This idea forces GM to constantly rethink its approach to production.
In a nutshell :
- Kaizen is a Japanese business philosophy that focuses on gradually improving productivity by involving all employees and by making the work environment more efficient.
- Kaizen translates to "change for the better" or "continuous improvement."
- The small changes used in kaizen can involve quality control, just-in-time delivery, standardized work, the use of efficient equipment, and the elimination of waste.
- Changes can come from any employee anytime and don’t have to happen slowly, although kaizen recognizes that small changes now can have big future impacts.
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