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2010

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IMPLEMENTATION
OF KAIZEN IN SMALL
AND MEDIUM
ENTERPRISES
Kaizen is a wonderful tool for all kinds of businesses around the world. But
the thing is that people need to work on this quality system. The most
interesting thing for implementation of Kaizen in Small and Medium
Enterprises is that you don’t need any kind of change of equipments and
technical skills to implement it. It is very cost effective and awesome tool for
SMEs around the world.
Friday, November 29, 2013 Abstract
Quality management system is one of the most important parts in success of any business
and it is generally ignored by many businessmen community. The reason behind the
ignorance of quality management system is that people think it as an extra effort and
customers don’t care what and how manufacturers are manufacturing the products. That
is a big mistake and actually the perspective and logic behind the thinking is really
wrong. One more thing to say is that generally the big companies take part in quality
management system and it also paved the same path that I discussed above. Now the
point is that this paper is going to realize the importance of quality management system
which will be Kaizen in small and medium enterprises. Because SMEs are higher in
overall businesses count in the country and they contribute a large section in GDP or
GNP. Many SMEs are going creative in nature and really want to develop the innovative
culture in the organization and probably it is now the need of the organization. This need
cannot be fulfilled until and unless you are not giving the quality at every level. For this,
we need a Quality Management System. Kaizen is a simple technique which can be very
helpful for small businesses in maintaining their quality of everything that exists in the
business and a part of the business. Whether it is product, plant, machinery, management
or employees. There are a lot of points come under the Kaizen Umbrella in which
Customer Orientation, JIT, Kanban, Quality Circles and TPM are important. The best
thing about implementation of Kaizen in Small and Medium Enterprises is that it doesn’t
require any kind of technical knowledge and skill. It is just the continues improvement in
which every person of the firm is taking part in giving suggestions to improve the
operations and divisions of business. There are some methods in which you can do the
work more effectively and efficiently. (Kailer and Scheff 1999)
Implementation of Kaizen in Small and
Medium Enterprises

A Japanese word “Kaizen” in reality means continuous improvement by making small


changes and doing all the activities efficiently.
The exact translation is:

Kai = Change
Zen = Better

The major emphasis of kaizen is on quality as per the requirements on daily bases, which
deals the quick and steady improvements. The philosophical aspect of Kaizen can be
applied in different situations of businesses, commerce, services, etc. If we look Kaizen
in the perspective of SME’s, bringing creativeness and innovativeness is a major hurdle
for the entrepreneurs. The basic finding of this paper is to figure out that how innovation
is effectively implemented in SME’s.
Total quality control/six sigma: it is basically the implementation of quality
management principles in all areas of business starting from the designing of the product
till its delivery. Six- sigma tends to focus on the improvement on quality of process
outputs by the identification and the removal of causes of errors and ultimately reducing
variability in manufacturing and business processes.

Quality circle: It is basically a team comprising of 4-5 people which monitors the whole
quality system in the organization at every single level from time to time.

Suggestion system: It is a system in which the employees are given the opportunity to
express their ideas and give suggestion. Through this system these suggestions are
communicated from bottom to top management.

Discipline in workplace: This Kaizen concept deals with the discipline that the
employee has to maintain and certain rules and regulations that are to be followed while
under working environment.

Total productive maintenance (TPM): This system relates to the applications of


machinery which includes routine maintenance, time to time check and balance of the
plant overall machinery so that you can get the best out of them. This is to avoid any type
of uncertain situation while the processes are going on in plant.

Kanban: It is the system of movement of inventory where there are high volumes of
orders available with low per unit cost. This type of system works best in the
environment of re-ordering because when your inventory goes below a certain limit, this
system automatically send the order to the supplier to supply inventory for the firm.

Quality improvement: It is a systematic approach to reduce the waste material, rework


and any losses that might incur at work place.

Zero defect: It is the ultimate objective of the business in which you are require to
eliminate waste and the time require to correct mistakes. This type of system if
successfully implemented can lead to healthy business and customer retention, but it can
only be possible with full employees’ participation.

Just in time (JIT): JIT is a strategy which deals with the inventory of any organization.
It focuses on improving business’s return on investment by minimizing in-process
inventory and the carrying cost associated with it. It is also known as Toyota production
system. (Wittenberg 1994)

Quality is the key element that is necessary to sustain in any kind of competitive
environment. All of the above mentioned elements of Kaizen plays a vital role in all
SME’s and are essential on every step to maintain the quality, in order to remain in
competition with the big guns. Total quality management holds a significant place in
making the SME’s more productive to have an edge over its rivals. Today’s competitive
market is no more a world of dreams. Whatever your decision is, it must have the logical
practicality. So in this research paper it has been mostly emphasized that the quality
practices which these SME’s are following must have the real outcome and return. SMEs
are now adopting the creativity in their businesses to get the edge from other. Now the
SMEs need to bring innovation in their businesses. To run their business effectively the
SMEs should not only relay on Continues Improvement strategy. They must work on
Process, People, Culture, System and the most import is Technology.
There is a reasonably vast literature available on Kaizen philosophy, which gives a broad
view of past practices and researches carried across the globe. But as Kaizen is a widely
accepted philosophy in manufacturing and small-medium industries, more research work
is required in this field. The authors feel that Kaizen philosophy can also be applied to
different areas like business, service, commerce, etc. Quality is the main and the most
important ingredient in any organization to capture the maximum market share and to
flourish in the competitive market. For the last two decades, there has been massive
research done on the Quality Initiatives like ISO, total quality management, lean,
Kaizen and its application within small and medium-sized enterprises (SMEs). But
another point is about the myths which are associated with Six Sigma and its implication
in SME’s. As a result there are very few SME’s which have implemented Six Sigma and
they are in very less number only because of the myths associated with Six Sigma to be
implemented in SME’s. (Kumar and Antony 2008)
It’s important because those SMEs who Develop Innovative culture in their businesses
they will attain greater competitiveness. SMEs must introduce Innovative culture with in
their business. The SMEs which had string competitive position usually they had more
innovative culture.

• The most important thing is the competition in term of quality. As the quality is
becoming more important concern for the multi-national companies day by day,
so the SME’s must also keep improving their quality standard to avoid
diminishing.
• Secondly these SME’s have to strive hard and implement Quality Initiatives at
their best to at least save them from failure to keep having the market share to
survive.
• All these SME’s must also practice good and effective management practices to
compete their competitors which are also of their level and have an edge on them.
There is a study conducted by the Ramasuwami in 2000 about the implementation of
Kaizen in SMEs. But we will be discussing further in next coming pages in appropriate
details. From the study of Ramasuwami (2000) conducted, he identified the best elements
of Kaizen implementation in SMEs that is given below:

1. Lot size reduction


2. Reduction of setup time
3. Group technology
4. Dedicated production lines
5. Cross trained workers
(Ramaswamy, Selladurai et al. 2002)
Today’s competitive market is no more a world of dreams. Whatever your decision is, it
must have the logical practicality. So in this research paper it has been mostly
emphasized that the quality practices which these SME’s are following must have the real
outcome and return. The management strategy should be practically stable because it will
help the SME to manage all their main factors like time, resources, capital, man power
and their product/service image so that they can have an edge on their competitors.
All this can be possible only when these SME’s follow the most suitable Quality
Initiatives which are mentioned in this research paper.
SMEs are now adopting the creativity in their businesses to get the edge from other. Now
the SMEs need to bring innovation in their businesses. To run their business effectively
the SMEs should not only relay on Continues Improvement strategy. They must work on
Process, People, Culture, System and the most import is Technology. (Kaye and
Anderson 1999)
These findings and the interviews indicate that the main barrier to innovation in the
SME’s across all the industrial sectors is related to cultural issues (e.g. “Building a
creative culture”). The interviews discovered that less attended areas were difficult to
address by mechanistic change programmers, and involved deep-rooted change with
relatively long time frames. Some of the SME’s had allowed their continuous
improvement programmers to become a barrier to further progress towards innovation.
The confusion between continuous improvement and that of more fundamental
innovation was underlined by local government agencies, which failed to distinguish
effectively between these issues, leading to a lack of targeted funding for innovative
practice. The practice significance indicates the awareness of SME’s managers that
resources are generally scarce, and decisions, which usually involve capital expenditure,
must be taken carefully. If small firms in these locations are to compete in niche or global
markets, they must increase their levels of innovation, where innovation is broadly
defined as including both technological and organizational perspectives. The barriers or
weaknesses were found to be culturally based issues that required considerable effort and
time to overcome. Key to this approach is recognition of employees as sources of
innovative ideas with an appropriate supporting organizational structure and management
team. (McConvery 2004)
There is always a well-built relation between quality tools and Innovation for SMEs.
Companies now working not only the CI but also on the bringing innovation in their
businesses. Now the SMEs are getting more benefit by adopting Innovation in their
business.
TQM
“Comprises of TOTAL QUALITY MANAGEMENT”.

By Total we mean 100% complete in:

1) All areas and functions 2) All employees empowerment

3 )All time sustainable 4) All activities

Here complete 100% means that all areas should be properly Functional and all the
functions should be run efficiently and productively. All the activities taking place should
be up to the standard. Similarly all the employees should be empowered in participating
in the decisions of the organization. This concept basically gives them the quality of job
and environment within the organization. And most important, this total implication
should not be for the limited time period but it must sustain for a long period of time.
(García-Lorenzo, Prado et al. 2000) (Douglas and Judge Jr 2001)

Quality involves:

It is related to the products that in all aspects satisfy customer needs and their
expectations on continuous basis. In other words, it is in fact to delight our valuable
customers. Small and medium enterprises have this tool very effective for the business
operations.

All these products or services must be designed and reached to the customer in such a
way that the customers become loyal to your organization and to your product or service.
Because this is the only tool from which you can capture maximum customers and
ultimately result in increase in the market share and capturing it.

Management Means:

Quality does not happen at its own. It must be organized and planned in a most effective
manner. It is a management function in which everyone is involved. Therefore it needs a
systematic approach. But if you think that there isn’t enough role of management in
SMEs then it would be wrong to say. Even the proprietor is the management of the single
entity business. (Douglas and Judge Jr 2001)

Bases of Total Quality Management

Top Management assurance

The role of top management in implementation of TQM are Management answerability,


Carry all TQM actions, management spokesperson, Customer response and complaints,
Quality examinations, Shareholder attractions.

The top management is required to cover all these areas in order to maintain the Total
Quality standard within the organization.

Delighting the Customers:

The second role of TQM is Customer fulfillment that will be done by customer pleasure,
Customer meeting point and customer direction.

As in business terminology, customer is considered as a King, so it is also one of the


most important and beneficial element of TQM for any organization.

People based Management:

By this we mean total employee interest, employee satisfaction, Group work, People
create value, learning and guidance, important communication, inside audits, study of
non conformities. (Gorska and Kosieradzka 2007)

Employees are considered to be the working hands for any organization because all the
activities are performed and are being executed by these employees, so People based
Management should also be entertained in all these dimensions.

Continuous Improvement:

Continuous improvement involves Continuous improvement cycle that is PDCA, Kaizen


and hindrance of monotonous happening.
Continuous improvement is also most vital element of TQM because improvement never
ends at any one point but there is always remains a room for improvement. So the
organizations must keep this fact in their Mission to succeed in the Market.

Benchmarking:

It is a continuous process of measuring your company’s products, services and practices


against your competitors in quality and management point of view.

Customer expectations are highly liquid that is they are easyly changeable. Any product
or service just below these standards that is stander of benchmarking will not catch the
eyes of customer.

Institute all Persistent system:

Following are the different institutes which are used to keep check on the quality that are:

 ISO 9001:2000

 TS 16949

 ISO 14000 series, ISO 14001

Any organization is considered as a quality organization if it reaches up to the standard of


these ISO Standards which are made to ensure the quality control and its continuous
management in all aspects.(Douglas and Judge Jr 2001) (Gondhalekar, Babu et al. 1995)

Kaizen
Kaizen is basically a Japanese technique which focuses of the continuous improvement
and improving the standard of organization. Kaizen defined as “Kaizen means
"improvement".(Wittenberg 1994) Kaizen strategy calls for never-ending efforts for
improvement involving everyone in the organization managers and workers”. Their aim
is to improve organization technology, managerial skill and operation of an organization.
Organizations achieve their competitiveness if they are continuously working on
improvement. Kaizen stresses of on improvement rather you worried about the end result
they says just work on the improvement. Improvement in: (Wittenberg 1994)

 Training

 Motivational

 Implementation

 Evaluation

 Financial evaluation

In kaizen they give the authority to their employees that they can give suggest for
improvement and taking small decision on daily bases. They involve their employees in
decisions, focuses on the effective team building. Training is the important part of
developing effective team. No doubt that kaizen is slow process but that will that will
help in improvement of organization structure and helps in achievement of goals.
Motivation of the employees will directly affect the output of the organization. If some
problems occur in the organization first analysis which processes are going on and what
processes is needed improvement. Then analyze the new implementation are giving
benefit in achieving goals. Now we come to TQM that is one of the most important
ingredients of Quality Improvement Process. To give quality is not a big deal but to
sustain the quality is the main thing to do.(Kaye and Anderson 1999)

SMEs:
SMEs (small and medium enterprises) are often regarded as a key essential in any
economy but now days it has been put as a third or second on the priority list of recent
graduates. This is because of low scope as when it comes to the comparison with MNCs
(multinational corporations). When recent graduates compare the job attributes among
both the choices, they find the proposal of MNCs to be more favorable as to SMEs. The
recruiters of SMEs lacks in this area to attract the fresh graduates. The recruiters of SMEs
fail to understand the significance of fresh graduates in terms of innovation, uniqueness
and the comparative advantage that SMEs can gain over the MNCs to strive hard to
achieve their goals to sustain submissively in the corporate arena. (Moy and Lee 2002)

The advantages that fresh graduates seeks while looking up the jobs in corporate world
contributes salary, fringe benefits, opportunities of growth and sustainability issues, job
securities and work environment which includes working conditions. On the other hand it
has a draw back to because nothing comes free in this world. The disadvantage that this
package has is lack of decision making power and involvement in managerial activities
within organization. These types of motivational factors counts as intrinsic benefits and
the previous benefits include extrinsic benefits. Therefore, SMEs should pay more
attention in building their image by offering more favorable package to graduates in order
to grasp a healthy bunch of employees.(Taylor and Murphy 2004)

The implementation of e-commerce in SMEs provides a wide range in promotion of these


small and medium businesses. In terms of considering the elimination of cross border
barriers this e-business provides a convenient method to communicate with overseas
customers and suppliers in order to diversify their businesses in much effective and
efficient manner. The information technology is changing rapidly with the advancement
in every step in business world. In order to sustain in the intensive competitive
environment SMEs should come up with innovate ideas and designs of product on the
sequence bases. To combat these type situations proper training and consultancy should
be provided to SMEs employees by working on proper in-house projects and extensively
conducting research and techniques to upgrade their systems.(Carson, Gilmore et al.
1998) (Marri, Gunasekaran et al. 2003)

The price setting is another key issue that SMEs has to keep under consideration while
trying to survive in the corporate arena in which business is becoming more and more
difficult on the day to day bases and to keep the business in race every aspect has to be
kept in mind. After the cost is determined, pricing is the first most things that is on the
priority list. The significance of price is based solely on the customer awareness issue and
tends to focus how much is know how about the product your customer is, which will
lead towards the flexibility and followed by discount packages. It basically tends to focus
something different from their customers in order to create uniqueness.(Carson, Gilmore
et al. 1998)

Implementation of Kaizen in Organizations

According to my point of view, to learn something is always incomplete without any


implementation. One of the most difficult parts of setting up and applying Kaizen
strategy is promise to its continuity. So what we want is how to implement the Kaizen in
SMEs successfully. The main objective is the implementation of the kaizen can be
fulfilled with the proper planning and analysis. If anyone is the part of SME, then first of
all, the management at the top should play the important and vital part in improvement.
The empowerment can be the bold step of the management in order to keep your
enterprise on the track of continues improvement. Without empowerment, your
employees will always say you “Yes Boss” which is not every time good for the business.
At least top management should allow them to share their ideas and encourage them if
they are good and beneficial, never be too late to implement them for the sake of your
quality program. What I think is that improvement strategies should always drive the
business towards the complete satisfaction and prosperity of the customers. Because
businesses do their work for the customers as they are the core stakeholder for any kind
of business. (Freel 2000) But one thing that I must share is that management and
employees are driven towards the higher and higher profits at any cost that might be very
harmful for your quality program. Profits can get boost if you sustain the quality and give
your customers more than satisfaction so that people could trust you and they are able to
pay as much as you ask. There is one good thing in small and medium businesses are that
the team size is very short and it helps in taking quick and good decisions. So the best
way to solve any issue or problem is that you make cross functional team so that
everybody could suggest their ideas as they are expert in their relative field. This is a
wonderful for edge as far as I am thinking about the implementation. I would like to
quote a wonderful saying but don’t know who has just said that is “If your today is not
better than your yesterdays, you earned nothing.” That means like implementation of
quality should not be just for limited time, but it should be like every time. Everybody in
the organization should think like we just work for better today. People in the
organization should always do better than their yesterdays. There should be Process-
oriented thinking (as contrasting to results-oriented thinking) as it must be experienced by
everyone, so that every procedure gets endlessly enhanced from time to time. (Stapley
1996)

There are some steps based on our observation and thinking given below:

• Identify the key points and causes of a problem

• Create alternatives for solution

• Choose that, which saves your time and energy in problem solving

• Use technology as much as you can

• Standardize your operations

• Keep thinking about the improvements

(Gorska and Kosieradzka 2007) (Macdonald 1996)

Let’s talk about the implementation of Kaizen in your university cafeteria. Many
cafeterias have the problem of bad service for the students. There is a problem of quality
services to the students. Students have to wait for their meals that waiter will come and
take my order. It is just the waste of time. The best thing that we can do if we don’t have
the problem of being a luxury type guy is that we can directly buy our meals. Now the
problem is still there that what if students don’t want to buy their meals directly, and how
the service can be improved. For this, if we implement the Kaizen rules, we can say that
the management of cafeteria needs to work themselves if they don’t have a work of cash
management. This can really work and save lot of time and service quality. There is
another option to do the same thing is that there should be a jug with water and glass so
that students can have patience and could wait for their meals. There should be salt pack
placed on the table. I mean like there should be something on the table that could create
some patience so that they could wait for serving while being relaxed.
Recommendation
Small and Medium businesses play a vital role in building the economy and they need
support of the government and the business owners. Proper time, energy, positive
thinking and passion is required to take the business to the large enterprises. But to
maintain the quality of the products and services, SM business owners should keep
thinking about the improvements. For this, Kaizen plays an important role in building the
business success as it is very easy to implement and no technical equipments are
required. The success and improved quality is just as easy as you think. (Chapman and
Sloan 1999)

Based on this, we have some recommendations about the Small and Medium businesses
for improvements.

1. Thinking and good thinking is the starting point. SM business owners should at
least start to think about their businesses. They need to get out from the phase of
general thinking of just selling products.

2. SMEs business owners need more education about technology so that they could
use it accordingly

3. SMEs business owners need to use the technology in their daily life to save time
and energy.

4. No compromise in quality

5. For the maintenance of the quality and good business, they must follow the
standardize accounting system so that they could find the actual figures of where
they are financially standing.

Prepositions No 1:
Government support to SMEs

The journey of thousand miles begins with a single step. Therefore, it is the basic thing
that the support of government should be fully provided to SMEs. In case of any sort of
allowances and subsides that is provided to large businesses, just like the same way back
up should be given to SMEs to keep them motivated all the time. It is also necessary
because it plays a vital role in the domestic market of any country in order to promote
and stay in competition with in outside invaders like many large multi nationals. On
every step the government should be standing right behind the SMEs because as any
business starts especially at the low level its basic and for most requirements is to survive
in market to keep itself in the race. Therefore, from the starting point till the business
stands firmly on its feet the government should safeguard its domestic market. The
example of this sort is also illustrated in the history of India. The Indian industry was
seized for 35 years for outside multi nationals to pop in their market. It was solely to
support their SMEs to grow in big giants and then opening market for the large
corporations to peeps in their country. That was a major role which needs to be done
from any government supporting SMEs.

Prepositions No. 2:
Management alignment:

Kaizen philosophy illustrates continuous improvement in bit and chunks or you can say
in regular improvement at small scales. Therefore, to support this activity and ongoing
process to keep the things at a steady pace management should be properly interrelated
with functional departments and all other departments that play a vital role in the
betterment and advancement of processes. The lack of communication and barriers of
communication should be eliminated completely to regulate the small changes that go on
within the organization at regular bases.

Prepositions No. 3:
Empower employees:

In the implementation of Kaizen, the hierarchal system needs to be eliminated in order to


keep the motivational level of employees up and to the mark at all times. When an
executive suppresses the idea given by junior employees, the de-motivational factor
peeps in from that point and the innovation, uniqueness that is needed get away. On every
step the employees should be encouraged so that they keep on giving unique and
innovative ideas to keep the businesses within the race and competition. There should be
a direct flow of communication between low level and high level employees so that if
any new idea is generated, it readily gets an approval and implemented on the first place.
Conclusion:
Kaizen is the art of making great and lasting change through small, steady increments.
Kaizen is losing weight not by a crash diet (which more often than not crashes) but by
eating one bite less at each meal--then, a month later, eating two bites less. Kaizen is
starting a life-changing exercise program by standing--just standing--on a treadmill for
one minute a day. But here we are concerned with Small and Medium Enterprises. SMEs
play a vital role in building the economy of any country as it is of great significant.
Improvements in SMEs are highly needed in any country and especially in Pakistan
where the core specialty which is agriculture is really disturbed. Improvement of
economy is really depended upon the improvement of SM businesses. In a indirect way,
continues improvement in SMEs is the prosperity of economy. There is a fact that 90% of
the businesses in USA are SMEs and they are contributing more than 50% in the
economy. Same is the case with Pakistan but there is a problem faced by the owners from
the side of government, education and awareness. Small and medium firms should start
taking steps for a change. They have to take themselves out from the ordinary and general
thinking of just selling goods and services.

There are two things that are really important for the improvement.

1. Use of technology
2. Standardize the operations

Small and medium enterprises in Pakistan don't use the technology much as they are in
manual system and inherited way. This thing really affects the businesses as the world is
going forward and they should think beyond their systems. Take the simple example of a
business where bills are being paid by waiting in a queue. Instead of doing this, banks in
the Pakistan offer the online banking where you can pay your bills online. So it would be
better to save your time by doing this rather than wait for your turn. It is just the wastage
of time and energy. Now the change should not be for one or two months. It should be
continues and standardize. So by this way, and some other small changes like opening a
shop five minutes before or sending a short message about the updates to your customer
for better relationship management. (Rodny McAdam 2000) (Raouf 1998)
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