Kaisen Costing Concept

The expression Kaisen Costing designates a support system to the cost reduction process during the production phase of an already existent product through the introduction of continuous improvements in the production processes. This way is implemented a traditional costs control system, measuring the difference between the defined standard costs (or target costs) and the costs effectively verified.

The continuous improvement activities can be divided in two distinct types, namely:

- Activities implemented to improve the current performance whenever there is a substantial difference between the verified cost and the target cost; these kinds of activities usually consist on the called Value Engineering activities.

- Activities implemented continuously to reduce differences between estimated profit and established target profit for thereafter be achieved the target cost.

 

 

Translated from Portuguese by Susana Saraiva, Portuguese-English and English-Portuguese translation specialist. Contact: spams@sapo.pt.