Developing a Kaizen Scorecard

One of the major contributions of the giant Japanese car company, Toyota Production System to the business world, is the concept of continuous improvement which is the underlying principle of Kaizen including the development of a Kaizen scorecard.

The word “Kaizen” is derived from the Japanese words, “kai” which means change and “zen” which means good. The common English meaning of this term is continual improvement. In the context of management, Kaizen is a workplace quality strategy that was pioneered by the Toyota Production System. The Kaizen revolution in Japan happened during the 1950s right after the World War II. Statistical control method experts were brought in to the country to restore its damaged economy. The War Department's Training Within Industry (TWI) training programs were set in place in line with this objective. These training programs were centered on job instruction and job methods. The bases of the revolution of the Kaizen principle were the Shewhart cycle by W. Edwards Deming and the statistics-based processes developed by Joseph M. Juran. Toyota Production System pioneered and made the Kaizen strategy popular. In this company, line personnel stop all production line activities when an abnormality arises. The employees and their supervisor discuss and exchange suggestions to help resolve a problematic situation.

Through the years, more and more firms worldwide have employed Kaizen to improve their profitability. The Kaizen strategy aims to minimize waste in the organizational processes. Waste refers to those activities that increases cost but do not add value. With the correct implementation, Kaizen can improve organizational performance, prevent employees from experiencing mental and physical exhaustion, and encourage people to do experiments that can eliminate waste in businesses processes. The Kaizen principle is applicable to all levels of the organization from the Chief Executive Officer (CEO) to employees as even to external stakeholders. It may be done either in an individual format, by suggestion system, and by large or small groups.

When implementing the Kaizen strategy, the company needs to evaluate itself through logical and practical metrics. One of the basic Kaizen metrics is the overall duration of a production cycle. By learning how long it takes to finish one production cycle, management will be able to identify in what area there is efficiency and where there is none. When uneconomical processes are eliminated, the overall productivity of a company is improved. Another essential Kaizen metric is task flow. This involves the harmonious working relationships between employees from different ranks and departments. Efficient production could only be achieved when all segments do their respective tasks. Follow up sessions are also essential in Kaizen as this is where operational activities are evaluated and assessed.

Developing a Kaizen scorecard is one of the crucial tasks of management as this indicates and outlines how the concept of continual improvement is integrated into company activities and processes. Kaizen, by its nature, is a continuous process so necessary changes may need to be done from time to time. Nevertheless, with the correct Kaizen implementation, improved organizational productivity and profitability could be expected.