Question - Assume that GE Capital, a division of General Electric, has been displeased with the costs of servicing its consumer loans. Assume that it has decided to implement a Kaizen based cost improvement program. For 2012, GE capital incurred the following costs:
Loan processing - $14,500,000
Customer relations - 3,500,000
Printing, mailing, postage - 800,000
For the next two years GE Capital expects an increase in consumer loans of 4% annually with related increases in costs.
a. If the company has a continuous improvement goal of 2% each year, develop a budget for the next two years for the consumer loan department.
b. Identify some possible ways that GE Capital can achieve the Kaizen costing goal.
c. Discuss the potential benefits and limitations of GE's Kaizen costing model.