Chapter 2

Achievements in the Quality andProductivity Improvement(KAIZEN) Project

Based on the request of Prime Minister Meles, the Japan International Cooperation
Agency (JICA) and the Ministry of Industry (MOI) jointly started technicalcooperation for development planning, the Study on Quality and Productivity
Improvement (KAIZEN), hereinafter referred to as “the KAIZEN Project.”The

KAIZEN Project was implemented in close coordination with the industrial policy
dialogue.

The progress and achievements of the Project regularly were reported inthe High Level Forums and dialogues with the Prime Minister and concerned
ministers.

These interactions contributed to the provision of productive policy

advice as explained in chapter 1.
This chapter outlines the KAIZEN Project activities and its achievements.

It also

explains some recommendations for dissemination of KAIZEN in Ethiopia.

Main

contents of the chapter were reported directly to the Prime Minister in May 2011
during the final visit to Ethiopia for the policy dialogue.

The Prime Minister

requested JICA to continuously assist the dissemination of KAIZEN to private
enterprises including both large and medium enterprises (LMEs) and micro andsmall enterprises (MSEs).

2-1. Profile of the KAIZEN Project2-1-1. Objectives of the KAIZEN Project
The KAIZEN Project was implemented by MOI with the assistance of JICA inaccordance with the Scope of Work signed by both parties on June 4, 2009.

TheProject focused on the KAIZEN practice, which had been proved as an effective
23

CHAPTER 2

approach to quality and productivity improvement, not only in Japan but also inmany other countries.
(i)

The KAIZEN Project has the following three objectives:

Pilot Project Performance—to formulate a manual to be used for conducting
KAIZEN activities in Ethiopia, which is prepared based on the results fromverification study through the implementation of pilot activities for selected
twenty eight companies;(ii) Human Resources Development—to transfer relevant skills and techniques
to the staff members of KAIZEN Unit (KU) of MOI; and(iii) National Plan Formulation—to make a plan to disseminate KAIZEN
activities for manufacturing companies in Ethiopia.
The KU is an organization established by MOI for the purpose of implementing theKAIZEN Project.

It is a temporary unit within MOI.

Ten personals wereassigned as KU members from the following five organizations of MOI: Metal
Industry Development Institute; Textile Industry Development Institute; Leather
Industry Development Institute; Agro-processing Department; Chemical Industry
Development Directorate; and Privatization & Public Enterprises SupervisingAgency.

KU members were to acquire KAIZEN-related knowledge and skills

through on-the-job training as well as through other training opportunities available
in the KAIZEN Project activities.

It was also expected that the KU members

become the core group in a future permanent institution, Ethiopian KAIZEN
Institute (EKI), to lead KAIZEN dissemination in Ethiopia.

2-1-2. Implementation and timeframe of the KAIZEN Project
The experiences show that it is possible to apply KAIZEN in countries withdifferent socio-cultural contexts but that application must be conducted under proper
leadership and with adjustments that reflect the uniqueness of the targeted society(GRIPS Development Forum, 2009).

Therefore, the KAIZEN Project aimed atevaluating the effectiveness of KAIZEN in Ethiopian enterprises, based on theresults of the pilot project.

The Project has supported the development andestablishment of basic methodology of the KAIZEN activities in Ethiopia, tailoredto the local context, as well as its nationwide dissemination.
24

The Project has alsoAchievements in the Quality and Productivity Improvement (KAIZEN) Project

supported the development and creation of the manual, to transfer relevant skills andtechniques to the KU members, and the accumulation of findings that will beessential in the formulation of the National Plan.
Table 2-1. Timeframe of the KAIZEN Project
Phase

Project Activities

Phase 1
October 2009 –January 2010
Phase 2January 2010 –December 2010

- Situation analyses of the Ethiopian industrial sector- Preparation of the pilot project (selection of the pilot companies,developing methodological framework for the pilot project, etc.)- Planning of the implementation of the pilot project- Implementation and evaluation of the pilot project with theselected pilot companies- Creation and finalization of the manual based on the evaluationof the pilot project- Drafting of the national plan for enhancing the KAIZEN activities
in Ethiopia- Seminars for demonstrating the pilot project outputs andmethods for a wide dissemination of KAIZEN across the country- Final capacity development activities for KU members to ensure
the transfer of skills and techniques that has taken placethroughout the KAIZEN Project period.

Phase 3January 2011 –May 2011

Source: JICA (2011).

The KAIZEN Project was conducted from October 2009 to May 2011.

The Project

activities are divided into three phases (Table 2-1).

2-2. Achievements of the KAIZEN Project2-2-1. Positive results
The pilot project brought various positive results to pilot companies qualitativelyand quantitatively (Table 2-2).

Qualitative improvements were widely observed.

KAIZEN has two key features: “incremental and continuous improvement” and“involvement of the entire workforce” in that process (GRIPS Development Forum2009, p.2).

These characteristics reflected well on the positive qualitative results.

KAIZEN toolkit such as 5S, Suggestion System and Quality Control Circle (QCC)
caused safe and clean environment and facilitated employee participation.

25

CHAPTER 2

Table 2-2. Positive Results Observed in Some Pilot Companies
Qualitative results(i) Clean working environment created(ii) Teamwork and motivation of workers developed(iii) Health and occupational safety of workers improved(iv) Lower level workers accustomed to suggesting improvement ideas tomanagement decisions – Increased Employee Participation(v) Knowledge obtained on how to meet quick delivery and to reduce costs
Quantitative results【Monetary impact】(i) By Reducing costs (a) ETB10,000 per month and (b) ETB78,000 per annum(ii) By generating additional income of ETB1.2 million per year(iii) By just decreasing down time ETB204,000 per day(iv) By rectifying raw materials defect used for manufacturing ETB2.4 million(v) By identifying, repairing and reusing of usable machines & equipment worth ofETB3.25 million【Non-Monetary impact】(vi) Increasing labor productivity, by reducing time loss for searching tools on
average 50%(vii) Reduction of floor space around 50%(viii) Defect ratio improvement in the range of 50 to 70%(ix) Lead time improved in the range of 16 to 90%(x) Labor saved from 15 to 90%
Source: JICA (2011).
Note: 1ETB (Ethiopian Birr) = USD16.65

Quantitative results are divided into monetary impact and non-monetary impact.
The monetary impact is ETB500,000 per company on average, although it ranges
from ETB10,000 to ETB3,259,000, depending on the size of company and its sectorcharacteristics.

The average of ETB500,000 is a large amount of money for an

Ethiopian company, which is typically staffed with 10 to 50 employees.

2-2-2. Highlights of the results of the pilot project
The KAIZEN Guidance Company Assessment was conducted to make assessmentof the companies’ potential future development of their KAIZEN practice, or theirpotential to eventually become “KAIZEN model companies”.

Here, “KAIZEN

model companies” mean those which continuously practice KAIZEN and as theresult, realize achievements that significantly excel other companies in terms ofquality / productivity improvement.

The grading is given in five levels (Table26

Achievements in the Quality and Productivity Improvement (KAIZEN) Project2-3).1
Table 2-3. Grade Point Distribution
Grade54321Total

Possibility to be a KAIZENmodel company
HighGoodSomeLow
No

Number of thecompanies
64
86428

Source: JICA (2011).

Six companies are rated grade 5 and four companies are rated grade 4.

These tencompanies have high or good possibility to become KAIZEN model companies.
These ten companies are expected to continue KAIZEN practices and to accumulatetangible improvements in quality and productivity.
The key success factors identified with respect to companies graded at 5 and 4 are:(i) management’s positive attitude towards KAIZEN including management’s strong
commitment; and (ii) good management-employee relationship where trust andempowerment is ingrained in the management practice, including management’swillingness to communicate with employees and train them.

Another importantfactor for success is the absence of disruptive management conditions, such as
shortage of operating capital or difficulty in procurement of materials, which would
cause suspension of ordinary company operation.
By contrast, six companies are rated grade 2 and three companies are rated grade 1.
The factors behind them are: (i) lack of management commitment to KAIZEN asrevealed by personnel changes that neglect the KAIZEN efforts or by management
priority on production volume and inattention to quality; and (ii) management
problems that jeopardize the company’s operation as a viable going-concern.

1The possibility to be a KAIZEN model company is graded according to various criteria, for example,
model workplace activities (5S, standard operation sheets, layout study), human resource activities(employee training of basic KAIZEN knowledge, workload reduction), organization management(QCC activities, wide dissemination of KAIZEN), management’s leadership (commitment of topmanagement, management-employee relations) and development of KAIZEN activities.

27

CHAPTER 2

Many of the companies in this grading group lack the basic management capabilities
in the area of business planning, cost accounting and operation data, and trust andempowerment.

2-2-3. Assessment of capacity development for KU members
The KAIZEN Project assisted rapid capacity development for KU members. Table
2-4 shows assessment result of capacity development of KU members. It includes
five levels of KAIZEN professionals from Level I (Junior KAIZEN Consultant) up toLevel V (Lead KAIZEN Consultant). It was a fair observation that the KU members
had been at a level below Level I at the very beginning of the pilot project. It is fair
to note, by the end of pilot project, that they have reached at least Level II (Assistant
KAIZEN Consultant) while a few members have reached Level III (KAIZENConsultant).

After the implementation of the special guidance program done

independently by the KU members in March–April 2011, about two-thirds of the KU
members were graded at Level III. The Level III KAIZEN Consultant is required tobe competent in preparing case materials for training exercises and to have industrial /business management knowledge. The KU members, who are capable of playing
significant roles in the KAIZEN guidance sessions, are now solidly on track todevelop themselves towards further higher levels of KAIZEN consultants.
Table 2-4. Assessment of Capacity Development of KU Members
Level0IIIIIIIVV

Competence

Assignment

No experience of KAIZEN

Beforeproject

Afterproject9Competent to conduct KAIZEN
activities for yourself
Competent to guide KAIZEN
activities
Competent to provide consultancy
services on KAIZEN
Competent to provide consultancy
services on KAIZEN
Competent to provide consultancy
services on KAIZEN

Source: JICA (2011).

28

Junior KAIZEN
Consultant
Assistant
KAIZEN Consultant
KAIZEN
Consultant
Senior KAIZEN
Consultant
Lead KAIZEN
Consultant

36

Achievements in the Quality and Productivity Improvement (KAIZEN) Project

Four types of capacity development activities were undertaken.

They are: in-housetraining; on-the-job training; self-learning; and training program in Japan.

Eachactivity significantly interacts with one another to achieve capacity development
effectively.

For example, in-house training and on-the-job training are inseparable.

The efficacy of in-house training will be recognized only when the contents of
in-house training are relevant to and can be utilized for company diagnosis andguidance (on-the-job training).

Thus, in-house training empowers the KU

members to prepare for the next training.

In other words, in-house training andon-the-job training are intertwined, creating synergistic effects.

2-3. Recommendations for dissemination of KAIZENAs discussed in this chapter, the KAIZEN Project produced various outputs.

Thegovernment of Ethiopia plans to establish the EKI which promotes and disseminates
KAIZEN all over the country.

The EKI will employ new Ethiopian consultants

and conduct consultations with both LMEs and MSEs.

JICA plans to start a new

project to enhance the EKI’s capacity for nationwide dissemination of KAIZEN,
based on the request by Ethiopian government.
In the final section, some critical issues and recommendations for dissemination ofKAIZEN are discussed in line with lessons learnt from the KAIZEN Project.

2-3-1. Further capacity development of KU members
The decisive factor for the success of the KAIZEN Project was the strong leadershipprovided by the capable KU leader together with the excellent team of the nine KUmembers.

All KU members are now capable of developing themselves further as

KAIZEN consultants.

The KU members who have acquired knowledge and skillsof KAIZEN are expected to be the core members of the EKI and continue theiractivities in order to become the trainers in the training of KAIZEN teachers.

Inorder to enhance the excellence of the KU members as KAIZEN consultants, theyshould have continuous exposure to actual workplace experiences.

It is criticallyimportant that KU secures ways in which the KU members expose themselves to29

CHAPTER 2

actual workplace situations as much as possible in order to experience KAIZEN
activities in solving actual problems in the workplaces.

Therefore, KU (or futureEKI) should organize itself to enable the KU members to accumulate workplace
experiences, and at the same time should develop new tools and methods that areneeded in the workplaces they help.

2-3-2. Future expansion of KAIZEN guidance methodology
The KAIZEN guidance methodology established in the pilot project focuses on“workplace KAIZEN” because it is the basis and the common ground of all
KAIZEN activities.

The pilot project was able to formulate a standardized,

common methodology of KAIZEN guidance by focusing on “workplace KAIZEN.”
In the future KAIZEN dissemination in Ethiopia, the present KAIZEN guidance
method should be expanded in two ways.

One is expansion in the entry paths toKAIZEN activities for wider scope of industry sectors by way of customization for
MSEs and possibly for areas of unique types of production.

For example, theKAIZEN manual and the audio-visual materials prepared by the Project should bedeveloped for all Ethiopian industries to introduce KAIZEN.
The other is enhancement in providing support for management capabilities inassociation with the advancement of KAIZEN activities, which are the fundamental
enablers on recurrent KAIZEN agenda: business planning, cost accounting andoperation data, and trust and empowerment.

Thus, a management framework ofKAIZEN guidance should be developed to support companies with their capabilities
in the fundamental enablers.

2-3-3. Dissemination of KAIZEN activities
Mind-set is key factors for dissemination of KAIZEN activities.
Project focused on workplace KAIZEN.
employee motivation.

The KAIZEN

It is in part an answer to improving

However, challenges will lie ahead in more basic parts ofmind-set and attitude that are deeply rooted in the societal norms or culture.

They

may include teamwork spirit that promotes collaboration in creating rules,
30

Achievements in the Quality and Productivity Improvement (KAIZEN) Project

respecting and observing the rules and improving the rules.

These issues related tomind-set and attitude may be pursued in the context of KAIZEN promotion
framework, in collaboration with relevant organizations and KAIZEN nationalmovement.

31