COMPLETION REPORT

Implementation of KAIZEN Philosophy and Its Effect on Product Quality Improvement
to Indonesia Manufacturing Industries to Prepare ASEAN Economic Community (AEC) 2015:
A Case Study on Manufacturing Companies in Semarang
Ms. Juli Ratnawati (+2)
Head of Research and Social Service Center
Research and Social Service Center,
Dian Nuswantoro University

Background
Southeast Asia free trade, commonly known as Asean Economic Community (AEC), was establishedin 2015. Along with its easiness in the flow of goods and services, it creates both opportunities andthreats for Indonesian economy. One of the most which gets high impact of this threat is domesticindustries. Indonesia should be ready to compete with other countries that have sturdy industrial such as
Malaysia, Singapore, Philippines, and Thailand. Close to 42,9% the national income of Indonesia comesfrom industrial sector therefore a great chance has widely opened for Indonesia to participate inAEC.
Semarang, the capital city in central java Indonesia has a number of manufacturing industries.
Appropiate strategy is needed to face AEC competition in order to hold out their existence.
Manufacturing industries in Semarang have implemented ISO Standard 9001:2008 by adopting
KAIZEN concept from Japan. The name of KAIZEN derive from two words, Kai means Change andZen means Good. There are five fundamental processes in KAIZEN 5S, i.e. Seiri (sorting); Seiton(straightening); Seiso (shine/cleanliness); Seiketsu (standardization in the workplace); and Shitsuke(sustaining self-discipline and promoting a sense of pride in workers in their work and being owners of
their responsibility). Meanwhile KAIZEN also contains 3M concepts Muda (eliminating the waste);
Mura (eliminating diference); Muri (eliminating tense). KAIZEN concept is continuous improvementthat believed to increase corporate culture, job productivity, and product quality. This research wasconducted in order to measure the performance of manufacturing industries in semarang after
implementing ISO Standard 9001:2008 together with KAIZEN concept. Further more this research also
observed the improvement in corporate culture, job satisfaction, organizational commitment and job
productivity.
Research Method
Following are some activities that have done by the researcher:
1. Visiting to 51 industries, Out of 51, only 12 industries are willing to be the sample and finallygot 256 respondents
2. Observing the circumtances of industries
3. Directly seeing the process of production
4. Interviewing to the staff and management in each industry in order to check their understanding
about KAIZEN, and the implementation of KAIZEN concept.
5. Distributing questionnaire to the respondents containing some variables such as: Corporate
Culture with 5S (seiri, seiton, seiso, seiketsu, shitsuke) and 3M (Muda, Mura, Muri), Job
Satisfaction contains salary, relationship, supervisor, job satisfaction and growth, Organizational
Commitment contains continuance commitment, affective commitment and normative
commitment, Job Productivity contains quality, effective, efficient.
The results from interview and questionnaire were analyzed then processed by Likert scale, started fromlevel 1 (strongly disagree) to level 5 (strongly agree). The data were also processed by SEM approachcombined with Warp PLS 3.0

Research Finding
Research finding shows that manufacturing industries which adopting KAIZEN concept to face AEC
2015 got impacts as follow:
1. In the early of AEC in Indonesia, manufacturing industries depressed to face in because
Indonesia already passed CAFTA (China-ASEAN Free Trade Area) in 2010. Many
industries can not compete with China’s products and finally collapsed. Five next years later, in2015, AEC was officialy implemented in Indonesia and the impact is decreasing industries
product. For industries which adopting KAZEN concept and ISO 9001:2008 continually theirproduction getting stable.
2. By observing the industries circumtances which adopting KAIZEN concept have tidy places.
3. By observing the process of production which implementing Standard Operating Procedure
based on KAIZEN create better performance in their works.
4. Based on the result of questionnaire, statistically, industries got high benefit after implementing
KAIZEN concept. Therefore the improvement of corporate culture increased significantly. In
other hand the concept also be able to encourage staff’s ability, efficiency to their job, and job
satisfaction. The principles and value of KAIZEN gives positive effect for staff. As a result,staff commitment, product quality, effectiveness, and job efficiency increased.
Publication of the Results of Research Project:
Verbal Presentation (Date, Venue, Name of Conference, Title of Presentation, Presenter, etc.)
Date: January 21-22, 2016Venue: Bali, Indomesia
Name of Conference: Bali 5th International Conference on “Business, Economics, Social Science & Humanities(BESSH-2016).
Title: The Implementation of Kaizen Philosophy to Improve Industrial Productivity: A Case Study ofISO Manufacturing Companies in Indonesia
Presenter: Juli Ratnawati, Kusni Ingsih, Imam Nuryanto
Thesis (Name of Journal and its Date, Title and Author of Thesis, etc.)
Journal: International Journal of Applied Business and Economic Research (Scopus Index),
ISSN: 0972-7302 Vol. 14, No. 2 (2016): 1343-1357
Date: 14 May 2016
Title: The Implementation of Kaizen Philosophy to Improve Industrial Productivity: A Case Study of ISO
Manufacturing Companies in Indonesia
Author : Juli Ratnawati, Kusni Ingsih, Imam NuryantoBook (Publisher and Date of the Book, Title and Author of the Book, etc.)-