The topic of this thesis is Implementation of KAIZEN methodology in production, which consists of a theoretical, as well as a practical section. The theoretical section itself contains a general introduction to Kaizen and its significance. Continuing further, it touches upon the history of the Kaizen methodology, and the principles which should be honored within Kaizen, if one wished to stay true to the methodology. Further sections describe the various tools used within the Kaizen methodology, using which one can apply the methodology. The practical section contains a concrete example of how Koncar, a power transformers manufacturing company, used one of the many available lean tools to improve a manufacturing process, thereby showing how Kaizen is used at a commercial level. In short, the whole concept of Kaizen rests on the application of small, continuous improvements, which help reduce or fully eliminate waste, increase productivity, effectiveness and efficiency of the manufacturing process of the company in question. To conclude, it is an effective method, which is not difficult to implement, and its results are often immediately noticeable.