KAIZEN COSTING IN DAIRY-BASED BEVERAGE MSMES AS A STRATEGY FOR COST EFFICIENCY AND PRODUCT QUALITY (A Case Study)

Abstract

This empirical case study aims to examine the implementation of Kaizen Costing in improving cost efficiency and product quality in micro, small, and medium enterprises (MSMEs) engaged in dairy-based beverage production. Through an in-depth single-case study approach, this research documents the implementation process, challenges, and outcomes of Kaizen methodology application in an MSME setting in Malang City, East Java, Indonesia. The case study focuses on the MSME’s challenges in production cost control, quality consistency, and limited operational resources. A qualitative research approach was employed using a case study method involving participatory observation, in-depth interviews, and document analysis. The findings show that applying the Plan-Do-Check-Act (PDCA) cycle within the Kaizen Costing framework successfully reduced total production costs by 13% per cycle, increased work time efficiency, and reduced defective products. Process innovations such as manual pasteurization tool modifications and the use of quality control tools like the fishbone diagram also contributed significantly to improving flavor stability and product shelf life. This strategy also positively impacted consumer perception, as reflected in an 18% increase in customer satisfaction scores. Therefore, Kaizen Costing proves to function not only as a cost control method but also as a strategic approach to creating added value within the MSME supply chain. The study recommends similar MSMEs to adopt the Kaizen approach systematically to support business sustainability and enhance competitiveness in the functional dairy beverage sector.