Kaizen Costing For A Restaurant

KAIZEN COSTING FOR A RESTAURANT

ABSTRACT

Kaizen is a Japanese term for “continuous improvement” or “continual improvement”. A philosophy that involves making the work environment more efficient and effective. Kaizen aims to eliminate waste such as “activities that adds cost but does not add value”. It also means “to take it apart and put it back together in a better way”. This is then followed by standardization of this вЂ?better way’ with others, through standardized work. The key objectives are: elimination of waste, quality control, just in time delivery, standardized work and the use of efficient equipments. Implementation of kaizen costing system in a restaurant business would mean to achieve the given objectives. To incorporate this principle in the various operations of the business, to measure it’s effect against requirements and continuously standardize the operations to achieve maximum productivity with respect to cost reduction, profitability, employee’s satisfaction and customer service.

INTRODUCTION

Kaizen can be defined as a means of continuing improvement in personal life, home life, social life, and working life. At the workplace, Kaizen means continuing improvement involving everyoneвЂ"managers and workers alike. The Kaizen business strategy involves everyone in an organization working together to make improvements without large capital investments. To adopt Kaizen means to be ever willing to change. Instead of spending more money in buying machinery or running them for a longer duration, Kaizen veers an organization towards paying attention to small but significant details. Managers are encouraged to improve the efficiency of existing infrastructure instead of investing in more of the same. It requires managers to ensure sustained improvement to continuously improve the organization's ability to meet expectations of high quality, low cost products and on-time delivery. Kaizen can be also called as a holistic approach to management as it requires strict discipline and austerity. Kaizen also eliminates hierarchy in the sense that everybody is involved in the process of change. It brings about equality within the organization. Innovations are usually short-term solutions requiring new technology and large investments, but Kaizen is along-term lasting solution. This is so because small changes are difficult to see in the short-term but necessary in the long-term.

The following content is an example of how the principles of Kaizen can be applied in a restaurant to reduce cost, improve work environment and increase the overall performance of the organization from the manager to the lowest level employee.

PRINCIPLES OF KAIZEN COSTING

Kaizen operates with three principles in place: process and results (not results alone); systematic thinking (i.e. big picture, not solely the narrow view); and non-judgmental, non-blaming (because blaming is wasteful).

Kaizen is a daily activity whose purpose goes beyond improvement. It is also a process that, when done correctly, humanizes the workplace, eliminates over hard work (both physically and mentally), and teaches people how to perform experiments using scientific method and how to learn, spot and eliminate waste in business processes. People at all levels of an organization participate in kaizen, from the highest level down to the lowest level, as well as external stakeholders when applicable. The format for kaizen can be individual, suggestion system, small group or large group. While Kaizen deliver small improvements, the culture of continual small improvements and standardization yields large results of compound improvement. Hence the English translation of Kaizen is “continuous improvement” or “continual improvement”. Kaizen requires managers to develop qualities such as discipline, skills, involvement, participation and communication.

Total quality control or TQC is a very essential part of Kaizen costing management. TQC strictly emphasizes on people in that TQC is not an issue concerned with quality of products but with every aspects of the organization from marketing, finance and human resource management to the most minuscule details of the business. TQC follows a statistical and systematic approach to problem solving. TQC puts quality before profits with the understanding that profit follows quality. TQC defines quality by what customer wants as TQC is known to be customer oriented.

The strategy for kaizen can be broken up into three subgroups: management-oriented, group-oriented and individual-oriented. Management-oriented Kaizen is the most important as it focuses on the overall strategy and logistics involving everyone in the organization. Group-oriented Kaizen emphasizes on QC-circles (Quality, Cost). It is the backbone of group-oriented Kaizen. Individual-oriented Kaizen is the product of worker suggestion system. Improvements are commonly implemented and throughout the organization and a new standard is established. Workers are often rewarded for their valuable suggestion. Another important aspect is the cross-functional management and policy operating each division under its particular focus realizing the overall goal of the organization. Quality, costs and scheduling are the most important in achieving the goals of the organization. The principle of Kaizen also requires an organization to accept changes in the environment and adapt to it. This calls for changes including deliberate action towards turning workplace into a place where employees can pursue life-goals, and support and recognise worker’s Kaizen effort.

Kaizen is more than a set of practices, but a philosophy of cooperation between management and workers, between different departments, between manufacturers and suppliers.

APPLICATION OF KAIZEN PRINCIPLES IN COST MANAGEMENT IN A RESTAURANT

An overview of the organizational divisions in a restaurant business

A restaurant is a service industry involved in serving customers with foods and beverages. Starting from the owner, a restaurant consists of many levels and departments involved in the business. A restaurant consists of restaurant managers who are next to the owner in the hierarchy responsible for all the operations in running the business. This is followed by divisions into various functions. Kitchen function- concerned with all