See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/370777695
Operational Excellence (OE) Management Systems Requirements, guidance,
and assessment criteria
Book · May 2020
CITATIONS
READS
0
317
1 author:
Edly Ramly
EFR Certification, Malaysia
19 PUBLICATIONS 57 CITATIONS
SEE PROFILE
All content following this page was uploaded by Edly Ramly on 16 May 2023.
The user has requested enhancement of the downloaded file.
Operational
Excellence (OE)
__________________________________________________________________________________________________________________
Management Systems
Requirements, guidance, and
assessment criteria
Edly Ramly, PhD
Operational Excellence (OE)
Management Systems
Requirements, guidance, and
assessment criteria
EDLY RAMLY, PhD
OPERATIONAL EXCELLENCE MANAGEMENT SYSTEMS
EFR Certification Sdn Bhd (1098616-A)
2909B, Jalan Merbau 3,
Bandar Putra,
81000 Kulai,
Johor Darul Takzim
MALAYSIA
www.efrcertification.com
eISBN 978-967-17036-6-3
Copyright © 2020 EFR Certification Sdn Bhd (1098616-A)
First published May 2020
All rights reserved.
No part of this e-book may be reproduced, stored in a retrieval
system, or transmitted by any means without the written permission
of EFR Certification Sdn Bhd (1098616-A)
Disclaimer
The information and material presented in this book is for general information. Whilst
the author and publisher endeavor to ensure the information reliable, up to date and
correct, the author and publisher do not assume and hereby disclaim any liability to
any party for any loss, damage, or disruption caused by errors or omissions, whether
such errors or omissions result from negligence, accident, or any cause. Name,
characters, businesses, places, events and incidents are either the products of the
author’s imagination or used in a fictitious manner. Any resemblance to actual
persons, living or dead, or actual events is purely coincidental.
.
i
Dedication and Acknowledgement
Dedication and Acknowledgement
‫الرحيم‬
‫الرحمٰ ِن ه‬
‫اَّلل ه‬
ِ ‫سم ه‬
ِ ‫ِب‬
"In The Name of Allah, The Most Beneficent, The Most Merciful".
With all the praise to Allah swt, I managed to compile the knowledge
and best practice in Operational Excellence.
As we face a monumental challenge to business toward a
competitive and productive organization, we have the great potential
ahead with “improvement culture”. The future is on its ways, with the
right thinking and efforts, we would be able to gain more and provide
more values to our business.
I was first introduced to Operational Excellence, 20 years ago
in year 2000 at Lucas automotive (Ini by TRW Automotive). At that
time, TRW operational excellence followed 5 phases of Womack and
Jone “Lean Thinking”. I attended several rounds of training including
Lean Mentor, and Six Sigma Black Belt. At the same time, we
embarking to ISO9001 version 2000 and later to ISO/TS16949
version 2002. Then, I realised that any improvement activities that can
link to operation either from product innovation, shopfloor
improvement, quality control circle, six sigma project, Lean workshop
(Blitz Kaizen) should have the same platform, which is “Operational
Excellence”. And this platform should be managed the same way, as
we managed other management system such as quality management
system that according to Plan, Do, Check and Action cycle. The
platform should be auditable to verify whether it is sufficient to
produce effective improvement activities and result. Hence, this book
is compilation best practice in operational excellence based on my
knowledge and experience as Lean Mentor, Six Sigma Master Black
Belt, IATF auditor, Certification Director, and Business Owner.
ii
OPERATIONAL EXCELLENCE – Management Systems
I dedicated the book to:
•
•
•
•
•
•
To my parents, who show me the way;
To my family, who inspire me;
To my teachers, who share their knowledge;
To my staff, who support me all the ways;
To my friend, who assist their thought;
To all the business owner, who care for their business and
employees
• To all people in this world, who cherish the colourful and
peaceful life.
Thanks to Malaysia Productivity Corporation (MPC), Asia
Productivity Organization (APO) for providing the trust and
continuous support to me. Not to forget to all my clients and friend
who share their taught. Thank you very much.
Dr. Edly Ramly
EFR Certification May 2020
iii
OPERATIONAL EXCELLENCE – Management Systems
Introduction
Victors Inc. (not a real company name) is a vibrant organization that
always striving for the best, especially in their operational process.
However, Victors Inc. struggle to determine which of the approaches
that they need to start with and what is the maturity point for their
continual improvement and operational excellence initiatives. For
past ten years, Victors Inc. have been approaches by several quality
and productivity consultants to improve their operational performance
including lean production system and several type of ISO
certifications. Most of the program bring minimum impacts. At one
point, Victors Inc. was hounding to recover several million dollars of
debt due to operational inefficiency.
However, based on the most recent visit, Victors Inc. had no
outstanding debts, won gold medal in “Team Excellence” event, and
increase of sales. The growth is evidences from normal shop-lot
operation to proper factory building and facilities.
What are the approaches that Victors Inc. adopted?
They call it systematic and measurable “Operational Excellence”
approaches.
"Operational Excellence" is about effective and efficient
principles in operation. It is about organization trying to improve their
operation so that they can make it better. Operational excellence can
simply be described as a philosophy that embraces problem-solving
and leadership as the key to continual improvement. It is logical and
consistent process to tackle operational problems by determining the
"cause” and take action to eliminate or minimised the occurrence of
1
Introduction
cause and effect. The process required some basic principles to make
the initiative successful, hence the organization can consistently
maintaining the continual improvement culture in all aspect of their
operation.
Operational excellence, however, is not just a set of
improvement activities that you perform. It is an improvement
mindset that should be present within you and your employees. You
are probably thinking, “that sounds nice in theory, but how can we
translate this into actionable steps?” Continuous improvement is the
on-going effort to improve an organization’s processes, products, or
services. It usually takes place incrementally over time. Some
improvement may require breakthrough innovation. By pursuing
continuous improvement, an organization has a greater likelihood of
continuing to maintain and build on these improvements. Even
continuous improvement is important, it is not enough on its own. As
the organization continues to refine its process, product, or service, it
needs a way to continue to grow. This is where operational excellence
comes in.
Operational excellence is a mindset that embraces certain
principles and tools to create sustainable continual improvement
within an organization. To put it more simple, operational excellence
is achieved when every member of an organization can sees the flow
of value to the customer and actively try to improve both the value, as
well as its delivery. Operational excellence reduce operational costs
and increasing productivity in the workplace. Ultimately, it is about
creating the company culture that will allow you to produce valuable
products and services for your customers and achieve long-term
sustainable growth. Operational excellence is a journey that involves
applying the right tools to the right processes. When this happens
successfully, the ideal work culture is created. Employees are
provided with knowledge that enables them to stay empowered and
2
OPERATIONAL EXCELLENCE – Management Systems
motivated. To start the journey, the organization may require the
operational excellence management system (OEMS).
There are three elements of operational excellence (OE)
management system that the organization should consider. The first
element is the “minimum requirements” or the structure of the
operational excellence management system. The second element is
the “operational excellence approach and guidance” and the third
element is “operational excellence assessment criteria”.
Hence, this book is divided into three parts. The first section,
focuses on background of operational excellence and proposed the
minimum requirements of operational excellence management system
that the organization should develop, implement and maintain the
operational excellence initiatives. This requirement is adopted from
ISO9001 version 2015 that emphasised on the PDCA (Plan – DoCheck and Action). These minimum requirements provide baseline
for the organization to adopt the operational excellence. At the same
time the requirement is auditable to ensure the compliance to the
minimum requirements. While third party external body can provide
the operational excellence certification service to organization, and
client can ensure their suppliers are embarking on operational
excellence.
The second part of the book provide the intent and guidance
for use of the operational excellence management system. There are
several techniques and tools recommended for organization to
adopted and implement. Over the years, numerous methodologies
have been introduced to the mainstream business culture as a method
of achieving operational excellence. In this book, blended
methodology that aligned and integrate several methodology
including kaizen, lean, six sigma, 8-Discipline is introduced through
I-D-E-A concepts
3
Introduction
The third part of this book provide the assessment criteria of
operational excellence. The assessment criteria blended several
principles such as based on business excellence category, Shingo
Model and industry revolution 4.0 concept. The assessment criteria
can be used to determine which level of operational excellence
adopted and implemented in organization.
4
OPERATIONAL EXCELLENCE – Management Systems
Table of Contents
Dedication and Acknowledgement ................................................... ii
Introduction ........................................................................................ 1
Table of Contents ...............................................................................5
List of figures ...................................................................................10
List of Table .....................................................................................11
PART I .............................................................................................. 12
Background and Recommended OE requirements ..........................12
Chapter 1 .......................................................................................... 13
Background of Operational Excellence.......................................... 13
1.1 OE Overview...........................................................................14
1.2 Concepts of OE .......................................................................14
1.3 Evolution of OE Management System ....................................18
1.4 Approaches, Tools and Techniques within OE .......................20
1.5 OE Diagnosis ..........................................................................22
1.6 OE Management System- requirements and assessment criteria
benefits .............................................................................................28
1.7 Operational excellence management principles ......................32
Chapter 2 .......................................................................................... 33
Operational Excellence Management System Requirements....... 33
2.1 Introduction .............................................................................34
2.1.1 Model of operational excellence ..........................................34
2.1.2 Applicability and goal of OE management system ..............35
2.2
OE leadership ..........................................................................35
2.2.1 Leadership and commitment................................................35
2.2.2 OE Policy .............................................................................36
5
Table of Contents
2.2.3 OE context ............................................................................37
2.2.4 OE objective and operational excellence strategic plan .......37
2.3
OE planning ............................................................................38
2.3.1 Determining the scope of the OE.........................................38
2.3.2 OE and its processes ............................................................38
2.3.3 OE risks and opportunities ..................................................39
2.3.4 OE infrastructure ..................................................................39
2.3.5 OE knowledge ......................................................................39
2.3.6 OE communication and documented Information ...............40
2.4
OE teamwork ..........................................................................41
2.4.1 OE roles, responsibilities, and authorities ...........................41
2.4.2 OE team ................................................................................41
2.4.3 OE competency ....................................................................41
2.4.5 Motivation for OE process ...................................................41
2.5
OE implementation process ....................................................42
2.5.1 OE program ..........................................................................42
2.5.2 Determine and select OE projects........................................42
2.5.3 OE projects approach ...........................................................43
2.5.4 Reporting OE project ...........................................................44
2.5.5 Assessing OE project ...........................................................44
2.5.6 Changes initiate from OE project ........................................44
2.6
2.7
OE management system performance evaluation ...................45
OE management system improvement....................................46
PART 2 .............................................................................................. 47
OE management system adoption guide ..........................................47
Chapter 3 .......................................................................................... 48
OE MS requirements – Intents and guidance for use ................... 48
6
OPERATIONAL EXCELLENCE – Management Systems
3.1
Main Intents ............................................................................49
3.1.1 Chapter/ clause arrangement ................................................49
3.1.2 OE principles intent and source............................................52
3.1.3 Applicability of OE intent ...................................................54
3.2
OE leadership intent ................................................................56
3.2.1 Leadership and commitment intent and guidance ...............56
3.2.2 OE Policy intent and guidance .............................................57
3.2.3 OE context intent and guidance............................................59
3.2.4 OE objective and OE strategic plan intent and guidance .....60
3.3
OE planning intent ..................................................................60
3.3.1 Determining the scope of the OE intent and guidance ........61
3.3.2 OE and its processes intent and guidance ............................62
3.3.3 OE risks and opportunities intent ........................................62
3.3.4 OE infrastructure intent and guidance ..................................63
3.3.5 OE knowledge intent and guidance ......................................64
3.3.6 Communication and Documented Information intent and
guidance ........................................................................................65
3.4
OE teamwork intent ................................................................66
3.4.1 OE roles, responsibilities, and authority ..............................66
3.4.2 OE team intent and guidance................................................68
3.4.3 OE competency intent and guidance ....................................69
3.4.4 Motivation for OE process intent and guidance ...................70
3.5
OE implementation process intent ..........................................72
3.5.1 OE program intent and guidance .........................................72
3.5.2 Determine and select OE projects intent and guidance .......74
3.5.3 OE projects approach intent and guidance ..........................74
3.5.4 Reporting OE project intent and guidance...........................75
3.5.5 Assessing OE project intent and guidance...........................77
7
Table of Contents
3.5.6 Changes initiate from OE project intent and guidance ........78
3.6
3.7
OE performance evaluation intents and guidance ...................79
OE improvement intents and guidance ...................................80
Chapter 4 .......................................................................................... 81
Guidance for OE project selection.................................................. 81
4.1 I-D-E-A techniques..............................................................82
4.2 I - Initiation of operational excellence .................................82
4.3 D - Diagnosis process ..........................................................84
4.4 E - Evaluation process .........................................................91
4.5 A- Action for project selection ............................................98
Chapter 5 ........................................................................................ 105
Operational excellence approaches .............................................. 105
5.1 Introduction ..............................................................................106
5.2 Project planning .......................................................................109
5.3 Cause Analysis/ Process Analysis ............................................112
5.4 Implementing improvement action ..........................................113
5.5 Verify effectiveness .................................................................114
PART 3 ............................................................................................ 116
OE assessment criteria ...................................................................116
Chapter 6 ........................................................................................ 117
Operational excellence – Assessment Criteria ............................. 117
6.1 OE assessment model ...............................................................118
6.2 OE assessment methodology....................................................121
6.3 OE scoring criteria ...................................................................124
6.4 OE assessment criteria .............................................................134
6.4.1 How to use the OE assessment criteria ..............................134
6.4.2 Operational Profile .............................................................136
8
OPERATIONAL EXCELLENCE – Management Systems
6.4.3 Category 1 – OE leadership ...............................................138
6.4.4 Category 2 – OE planning .................................................140
6.4.5 Category 3 – OE teamwork ...............................................142
6.4.6 Category 4 – OE implementation ......................................143
6.4.7 Category 5 – OE result ......................................................146
Glossary, Abbreviation and Vocabulary...................................... 147
References ....................................................................................... 148
Bibliography ................................................................................... 151
9
LIST OF FIGURE
List of figures
Figure 1.1 Overall interaction of operation process ........................ 15
Figure 1. 2 ISO 9001:2015 Interaction of Operation clause 8 and
Improvement clause 10…………………..........……….…………..17
Figure 3.1 OE model in comparison with
ISO9001(2015)arrangement……………………………..……..….50
Figure 3.2 Shingeo model guiding principles .................................. 53
Figure 3.3 A3 Reporting (Example) ................................................ 76
Figure 3.4 Example of judging criteria ............................................ 78
Figure 4.1 Step 1 Operational Diagnosis……..……….…………....85
Figure 4.2 Value Stream Mapping Process Zone ............................ 86
Figure 4.3 Performance Criteria Tool Box ...................................... 88
Figure 4.4 Step 2 - Evaluation process ........................................... 91
Figure 4.5 Ishikawa Diagram .......................................................... 93
Figure 4.6 Recommended Cause Category from Why 1 to 5 .......... 94
Figure 4.7 Step 3 (Action for project selection ) ............................. 99
Figure 5.1 Choice of action vs special and common cause............107
Figure 5.2 Sample of Project Charter ............................................ 111
Figure 6. 1 Level of OE Maturity………………….…………......119
Figure 6.2 OE model and assessment criteria category arrangement
....................................................................................................... 120
10
OPERATIONAL EXCELLENCE – Management Systems
List of Table
Table 1.1 Example of Approaches, Techniques and Tools in Six
Sigma and Lean………………………………………….21
Table 1.2 Example of Techniques and Tools relevant to OE process
and their application…………..............................….....23
Table 1.3 Adoption of approached on OE requirements, assessment
& Tools and Technique……26
Table 4.1 Common operation process and their performance
indicator………………………………………..………...89
Table 4.2 List of Common Issues .................................................... 92
Table 4.3 List of Issues - Opportunities for Improvement ............. 97
Table 4.4 Recommended operational improvement approaches ... 100
Table 4.5 Initial list of Improvement Tools and Techniques by
Cause-category……………………………………......101
Table 4.6 Example of cause category and tools and techniques.... 102
Table 4.7 Pay-off criteria ............................................................... 103
Table 4.8 Organization fit criteria ................................................. 103
Table 4.9 Strategic fit criteria ........................................................ 104
Table 5.1:Project planning stages for different approaches………109
Table 5.2 Cause analysis stages for different approaches ............. 113
Table 5.3 Implementing improvement action stages for different
approaches…………………………………………….114
Table 5.4 Verify effectiveness stages for different approaches ..... 115
Table 6.1 Type of conformity and non-conformity…………..…...124
Table 6.2 Common scoring dimension .......................................... 126
Table 6.3 Simplified A-D-L-I........................................................ 131
11
PART 1 - Background and Recommended operational excellence requirements
PART I
Background and Recommended operational excellence
requirements
Chapter 1
Chapter 2
•OE
Background
•OEMS Requirements
Part I
12
OPERATIONAL EXCELLENCE – Management Systems
Chapter 1
Background of Operational Excellence
13
Chapter 1 – Background of Operational Excellence
1.1
Operational Excellence Overview
It is accepted that one of the most important part of operation
management is operations improvement (Slack et al., 2013).
Therefore, this chapter will explore and provide an overview of the
concept of operation improvement that lead toward the term of
operational excellence which includes the definitions, synonym, and
common application in operational excellence. Miller (2014) defined
operational excellence as relentless pursuit of doing things better.
1.2
Concepts of Operations Excellence
Defining Operation
Throughout this book, the term “Operation”, “Operations”, and
“Operational” will be used interchangeably. According to Oxford
advance dictionary (Hornby, 2005), the term “Operation” is denoted
as a noun and defined as “The action of functioning or the fact of being
active or in effect”. While the term “Operational” is referred to as an
adjective and defined as “ready for use”.
In view of overall operation process with regards to
operations, Figure 1.1 depicts the relationship between operation
management, operation improvement and other processes such as
design, and planning and control. In six-sigma, the operations
normally referred to SIPOC (Supplier-Input-Process-OutputCustomer) and in lean production system, the operation normally refer
to process value stream.
14
OPERATIONAL EXCELLENCE – Management Systems
The
Operation’
s
performan
ce
Operation
Strategy
Operation
Strategy
Output Product
and/or Services
Improvement
Operations
Management
Planning
and
Control
Design
Transformed resources
• Material
• Information
• Customers
Input
Resources
Transforming
resources
• Facilities
• Staff
Figure 1.1 Overall interaction of operation process (Figure adopted
from Slack et al., 2013, p.1)
15
Chapter 1 – Background of Operational Excellence
Equally, operation is also defined as the input and output to
deliver customer value (ISO, 2015; Baldrige, 2015; Slack et al., 2013;
Yeung, 2009). For example, in ISO9001 (2015) the clause on
operations covers the operation processes which included the
operation planning, marketing (sales) process, design and
development process, production process, handling product/ service
non conformity and complaints, supply chain process that included
delivery, purchasing and warehouse. Hence, the term “Operations”
and “Operational” in this book refers to 2017-2018 Baldrige
Excellence Framework category 6, which cover the work process
(cover input and output) to deliver customer value (Baldrige, 2015),
ISO (2008) clause 7- Product Realization and ISO (2015) clause 8 Operation. Operations are the activities which produce and deliver
products and services. The operation process may include
manufacturing process, delivery process, purchasing and receiving
supply.
Similarly, in the revised version of ISO9001 standard (from
2008 edition to 2015 edition), the term of product realization was
replaced with Operation. The Operation term is appeared in clause 8
of ISO9001 and the interaction of operation and improvement depicts
in Figure 1.2, relationship between operation and Plan, Do, Check and
Action (PDCA) cycle.
16
OPERATIONAL EXCELLENCE – Management Systems
Figure 1. 2 ISO 9001:2015 Interaction of Operation clause 8 and
Improvement clause 10 (Figure adopted from (ISO, 2015, p. viii)
Defining Operational Excellence
On the other hand, operational excellence makes a reference to
continuous improvement as part of component of total quality
management (Slack et al., 2013, p508, 539; Adebanjo et al., 2015).
The concept of continuous improvement was first introduced in
quality management and was then associated with the Japanese
approach called kaizen (Imai, 1986; Thawesaengskulthai & Tannock,
2008a). Kaizen concept has been extensively praised as a proven
approach in improving operational performance (Paul & New, 2003).
So far to date, kaizen have been adopted in various organization
strategies such as Toyota Production System, Operational Excellence,
and Lean Improvement (Olhager, 2013; Pakdil & Leonard, 2014;
Rahani & al-Ashraf, 2012). A part from that, Kaizen was also been
adopted in ISO9001 standard of quality management system.
17
Chapter 1 – Background of Operational Excellence
In ISO9001 version 2000, 2008 and 2015, Kaizen have been
referred as “Continual Improvement (CI)”. The terms CI and quality
improvement (QI) were frequently quoted in literatures. According to
the definition provided by ISO9000 Fundamental and Vocabulary for
Quality Management System (ISO, 2005), QI and CI have been
defines as follows:
“QI is part of quality management focused on increasing the
ability to fulfil quality requirements and the requirements can
be related to any aspect such as effectiveness, efficiency or
traceability.” (p.9)
“CI have been define as recurring activity to increase the
ability to fulfil requirements such as the process of
establishing objectives and finding opportunities for
improvement is a continual process, through the use of audit
findings and audit conclusions, analysis of data, management
reviews or other means and generally leads to corrective
action or preventive action.” (p.5)
Numerous terms are used to describe operational excellence; the most
common are business process improvement, performance
improvement, quality improvement (QI), continuous improvement
(CI), and kaizen. All these terms have the common goal which is to
increase the operational effectiveness, efficiency, and traceability.
1.3 Evolution of Operation Excellence Management System
Reductionism theory and System theory from the field of scientific
management are among the theories that can applied in operational
excellence (Johnson et al., 1964). However, reductionism have been
18
OPERATIONAL EXCELLENCE – Management Systems
challenged by holism in the form of system theory by botanist, Ludwig
von Bertalannfy in 1940s (Simons & Taylor, 2007). Since then, the
system theory has become one of the major theory in operations
management and operations improvement. For the concept of
operational excellence, Johnson et al (1964) stated that;
“The business organization is a man-made system which has
dynamic interplay with customers, competitors, suppliers,
government and many other interested party in order to
produce the desired output and goals. Regardless of specific
adjustments or organizational arrangements, there are
certain subsystems which make up a total informationdecision system. The system concept call for integration, into
a separate organizational system, of activities related to
projects or operations improvements.” (p.383)
The statement “total information-decision system” has been
commonly referred to operation improvements or operational
excellence. In addition to system theory, the contingency theory (Kast
& Rosenzweig, 1985) seeks to understand the relationship between the
“subsystem” that make up the operational excellence. Part of overall
system approaches may include subsystem approaches such as
Business process improvement methodologies (Bendell, 2005), and
performance improvement (Kaplan & Norton, 1996).
While, a management system is a set of policies, processes
and procedures used by an organization to ensure that it can fulfill the
tasks required to achieve its goals. These goals cover many aspects of
the organization's operations (including financial success, safe
operation, product quality, client relationships, legislative and
regulatory conformance and worker management). For instance, for
an operational management system management system enables
19
Chapter 1 – Background of Operational Excellence
organizations to improve to increase the operational effectiveness,
efficiency, and traceability.
Many parts of the management system are common to a range
of goals, but others may be more specific. A simplification of the main
aspects of a management system is the 4-element "Plan, Do, Check,
Act" approach. A complete management system covers every aspect
of management and focuses on supporting the performance
management to achieve the goals. The section 1.4 examine and
describe the common approaches, tools, and techniques in operational
excellence.
1.4
Approaches, Tools
Operational excellence
and
Techniques
within
Based on common terms of operational excellence such as business
process improvement, performance improvement, continuous
improvement, kaizen, QI or CI, there are more than 1000 improvement
initiatives available (Mohammad, 2011). According to Mohammad
(2011), the initiative should be further categorised into approaches,
management system, tools and/or techniques to ease the process of
understanding and selecting the relevant approaches, tools, and
techniques. Approach and management system can be considered in
one category. This is due to the reason that both approach and
management system require resources, senior management
commitment, strategic planning, and an intellectual effort in term of
its deployment and adoption (Van der Wiele et al., 2006). Likewise,
the management system also needs resources to direct and control
some form of operation.
20
OPERATIONAL EXCELLENCE – Management Systems
On the contrary, based on ISO9000:2005 fundamentals and
vocabulary of quality management system defined the improvement
technique as a procedure to carry out the improvement approaches
(ISO, 2005). An improvement technique may even be viewed as a
collection of tools (Van der Wiele et al., 2006). Besides that, tools can
be defined as instruments that are employed to aid in performing a job
(Hornby, 2005). Hence improvement tools are the tools that assist the
organization to implement the improvement technique. The example
of approaches, techniques, and tools within lean and sigma lists in
Table 1.1.
Table 1. 1: Example of Approaches, Techniques and Tools in Six Sigma
and Lean
Approaches
Six Sigma DMAIC
(Define-Measure-AnalyseImprove-Control)
Technique
i.e. Technique with Define are Project
Charter,
Performance
measure,
understand the process, and determine
the potential cause.
Tools
SIPOC,
Ishikawa
diagram, VOC
Lean – Genba Kaizen
i.e. Techniques for visual management
Andon, Seiton
in 5S
Activity Based
Costing
Business
Process
engineering
Re-
i.e. Techniques for identification of
Value-Added process cost
However, in view of process in operational excellence, the
approaches, techniques, and tools can be further categorised into
operational excellence process subsystem by determining their
applications. According Slack et al (2013), the operational excellence
process or subsystem can be categories to:
1) Operation performance measure, evaluation and analysis;
2) Operation diagnosis process;
3) Determine causes of operation issues;
4) Prevention of cause occurrence and recurrence.
21
Chapter 1 – Background of Operational Excellence
The applications of techniques and tools can be specific for
data collection, data display and data analysis. While, other tools and
techniques apply directly to actual workplace improvement
implementation. For describing the applicable tools and techniques in
operational excellence process, Table 1.2 provides some examples of
techniques and tools and application operational excellence process.
Nevertheless, there are more tools and techniques available depending
on their purposes and application.
1.5
Operational Excellence Diagnosis
The operational improvement diagnosis is needed to benchmark what
is the level of organization operational excellence adoption. This led
to the need to develop the minimum requirements as recommend in
chapter 2. This requirement is recommended as management system
requirements to complement the ISO management system model such
as ISO9001 since this model can be lead to certification process.
However the ISO9001 model does not indicated the level of
implementation as such Business Excellence (BE) model does such as
the use of A-D-L-I (Adopt – Deploy – Learn – Integrate). Hence the
discussion below provides some insight of the reason why ISO9001,
Business Excellence Model and also Lean Six Sigma model is been
used for diagnosing the operation excellence.
The field of operational improvement diagnosis evolved from
of Continuous Improvement and Process Performance.
Thawesaengskulthai (2007) reported that the improvement
approaches of Six Sigma, Lean, Benchmarking, Balanced Scorecard
(BSC) and Knowledge Management (KM) showed a significant
increasing trend from year 2000-2006.
22
OPERATIONAL EXCELLENCE – Management Systems
Table 1.2: Example of Techniques and Tools relevant to operational excellence
process and their application
Steps
Eg. Techniques & Tools
1.
Operation
- Balance Score Card
performance measure,
evaluation, analysis
- Benchmarking
Method to set the performance target
- Hoshin plan
To link the performance measure
with action plan
To display the performance measure
- Graph, scoreboard
2.
Applications
To outline the balance performance
measure and link with organization
strategy.
Operation Diagnosis - Value stream
Process
mapping
To visualise the operation process
linkage and identify potential waste
To provide aide memoir
- Checklist
- Observed-Question- Method to collect evidence
Check
- Product family and
process matrix,
3.
4.
Determine cause
of operation issues
Prevention of cause
- Design of
Experiment
Method and display of linkage
between product and operation
process
Method to determine the common &
special cause.
Method to determine the main
effect/ interactive effects
- Brainstorming &
Ishikawa Diagram
Method to determine potential cause
and display the potential cause
- Poka yoke
To prevent the human error
- TPM
Method to ensure the overall
equipment effectiveness.
Method to provide visual techniques
in JIT system
- SPC Control chart
- Kanban
While, TQM, Business Process Re-engineering (BPR) and
ISO9001 reported a slight decrease in the hit and trend. Nonetheless,
23
Chapter 1 – Background of Operational Excellence
since 2003 the six sigma and lean approaches attention were
amplified, and by year 2015 and 2016 there were ample number of
literatures.
Psomas and Fotopoulos (2009) indicated that the application
of ISO9001 escalated with the increasing number of certificates
issued. These findings are supported by the statistic survey published
by Internal Organization for Standardisation. Based on the report
published by ISO, in year 2011 itself, more than 1 million
organizations worldwide certified to ISO9001 and continues up to
2015 with over 1.3 million organizations certified. At the same time,
Dahlgaard et al (2013) indicated that the TQM and Business
Excellence Framework (BEFs) were the most popular approaches for
the past two decades and produce significant benefits for organization.
In 2011, more than 80 nationals and state/regional awards which were
based on their frameworks upon the Malcolm Baldrige National
Quality Award (MBNQA) criteria or the European Foundation for
Quality Management (EFQM)/European Excellence Award criteria
(Mohammad et al., 2011). On basis of popularity of operation
improvement approaches, three categories were further investigated to
determine their “diagnosis” approaches to select operation
improvement opportunities. The three categories of approaches were:
1) Quality Management System;
2) Business Excellence Model; and
3) Lean Six Sigma.
For the organization to maintain their quality management
system based on ISO9001 standard, the organization was required to
undergo series of diagnosis process named as quality audits. Quality
audit is one of the approaches that have been found to be useful to
identify the current quality performance by diagnosing the
opportunities for improvement and plan for improvement action. The
24
OPERATIONAL EXCELLENCE – Management Systems
structured quality audit approach based on established ISO19011
(ISO, 2011) was used to govern and provide guideline to identify gaps
against the audit criteria. As reported by Karapetrovic & Willborn
(2001), the quality audit is one of the approaches that have been found
to be beneficial in providing manager with useful information in
decision making through identification of past/current quality
performance by examining relevant criteria. These findings were
supported by Menda (2004) and Rajendran & Devadasan (2005)
which showed that quality audit determines the organizations’
strength, weaknesses, opportunities and threat of their operation by
diagnosing the opportunities for improvement and plan for
improvement actions.
Second prominent operation improvement diagnosis is
organizational assessment using Business Excellence Framework
(Mann, Mohammad, & Agustin, 2012). Ritchie & Dale (2000)
indicated that the organizations need to monitor and diagnose the
performance to sustain the continual improvement. Therefore, the
Business Excellence (BE) framework can be used by organizations to
improve organizational performance. This is done through a thorough
assessment of organizational performance based on the internationally
recognized BE framework to obtain external perspectives of
organization’s strengths and areas for improvement (Dahlgaard et al.,
2013). External BE assessments by external examiner provide an
outsider’s view on the health of the organization and enable the
organization to be considered for a quality/ BE award. Achieving BE
certification or winning a quality / BE award provides public
recognition. BE assessments enable organizations to compare their
performance against others both domestically and globally. (Mann,
Mohammad, & Agustin, 2012)
The third diagnosis approaches are six sigma and lean project
selection. Recently, six sigma and lean approaches have received
25
Chapter 1 – Background of Operational Excellence
much attention in the literature and significantly increase number of
articles since 2003. In six sigma improvement initiatives, the first step
is to conduct diagnosis through strategic analysis driven by customer
requirements and identify improvement opportunities (Chakravorty,
2009). This is to satisfy the famous “D” in DMAIC (Define-MeasureAnalyze-Improve-Control) process in six sigma and identification.
The concept of Six Sigma has been frequently aligned with lean. Clegg
et al (2010) indicated that the continuous improvement project
selection will lead toward either selecting the Lean or Six Sigma
approaches for improvement. Selection of either Lean or Six Sigma
projects are one of the most frequently discussed issues in the Six
Sigma literatures today and various approaches proposed (Padhy &
Sahu, 2011; Kornfeld, 2013).
The three most popular operation improvement initiatives,
which are: 1) Quality Audit; 2) Business Excellence Assessment
according to Business Excellence Framework (BEF); 3) Project
Selection for Six Sigma and Lean project. Based on these operation
improvement initiatives, the operational requirements and assessment
criteria are developed as shown in Table 1.3. The development also
considered operational improvement project such as Kaizen, Small
Group Activities (SGA), Quality Control Circle (QCC), Team
Excellence, and Innovative Creative Circle (ICC).
Table 1.3: Adoption of approached on operational excellence requirements,
assessment & Tools and Technique
Criteria
QMS
Standard i.e
ISO9001,
IATF16949
26
Quality/
Business
Excellence Award
-BEFs
Lean ,
Six Sigma
OPERATIONAL EXCELLENCE – Management Systems
i.e Baldridge
Diagnosis
Approaches
Quality Audit
BE Assessment
Project Selection
Operational
Excellence
Adoption
Developed
requirements
that can be
audited
Develop OE
criteria that can
be assessed
Integrate the
approached in
the requirements
and assessment
criteria
27
Chapter 1 – Background of Operational Excellence
1.6
Operational Excellence Management Systemrequirements and assessment criteria benefits
Operational Excellence Management System is a “System to establish
policy and objectives, to achieve those objectives and to direct and
control an organization with regard to Operational Excellence.” The
base for management system is
• P lan
• Do
• C heck
• A ction
With regard to Operational Excellence.
Since there are too many approaches in implementing
operational improvement, the operational excellence management
system may assist the organization to select and adopt the suitable
improvement approaches that meet the organization staretegic needs.
Even kaizen itself have four type of kaizen i.e. Kaizen Teian, Kaizen
Events, Kaikaku, and Kakushin. That do not include other fashion
setting improvement approaches i.e. lean, six sigma, Toyota
Production System, and many more.
28
OPERATIONAL EXCELLENCE – Management Systems
The adoption of an “Operational Excellence” management
system (OEMS) is a strategic decision for an organization that can
help to improve its overall operational performance and provide a
sound basis for sustainable development initiatives.
The potential benefits to an organization of implementing an
operational excellence management system based on recommended
requirements in chapter 2 of this book are:
a)
b)
c)
d)
Initiate the continual improvement culture and
performance, which leads to long-term sustainable growth;
facilitating an Operational Excellence implementation in
early stage;
assist to adopt standard management system model of
operational improvement;
the ability to demonstrate conformity to interested party in
Operational Excellence implementation through
certification process.
29
Chapter 1 – Background of Operational Excellence
This operational excellence management system recommended
requirements employs the approaches of ISO9001 version 2015
operational excellence requirement of process approach, which
incorporates the Plan-Do-Check-Act (PDCA) cycle and riskbased thinking including the following terms are used:
— “shall” indicates a requirement;
Some of the term below is used that normally will refer to
assessment criteria);
— “should” indicates a recommendation
— “may” indicates a permission;
— “can” indicates a possibility or a capability
While the benefits of operational excellent assessment criteria are:
a)
ability to benchmark the current continual improvement
culture and performance, which leads to long-term
sustainable growth through self-assessment;
30
OPERATIONAL EXCELLENCE – Management Systems
b)
c)
d)
facilitating an Operational Excellence implementation
further improvement;
assist to adopt various forms of improvement in additional
to correction and continual improvement, such as
breakthrough change, innovation, re-organization, and
industry revolution 4.0.
Use the score for award purpose and distinguish the best
operational excellence organization.
31
Chapter 1 – Background of Operational Excellence
1.7 Operational excellence management principles
This Operational Excellence principle includes:
•
•
•
•
Cultural Enabler
Leadership
Engagement of People
Continuous Improvement
Improvement
Evidence-based decision making
Enterprise Alignment
Process Approaches
Customer Focus
Risk Based Thinking
Results
Detail explanation of the operational excellence principle is discussed
in chapter 3.1.3 Operational excellence principles – Intents and source
and chapter 5 – Recommended Operational Excellence Assessment
Criteria.
32
OPERATIONAL EXCELLENCE – Management Systems
Chapter 2
Operational Excellence Management
System Requirements
33
Chapter 2 – Operational Excellence Management System Requirements
2.1
Introduction
2.1.1 Model of operational excellence
The model for operational excellence management system adopted
plan, do, check and action (PDCA) cycle with additional leadership
block on top of PDCA cycle and team work at bottom of PDCA cycle
as shown in figure 2.1. The term “Do” is change with
“implementation” in the recommended requirements.
LEADERSHIP
Clause 2
Action
Plan
• Clause 7
• Clause 3
Check
Do
• Clause 6
• Clause 5
TEAMWORK
Clause 4
Figure 2.1 Operational excellence model and interaction clause
arrangement
34
OPERATIONAL EXCELLENCE – Management Systems
2.1.2 Applicability and goal of operational excellence management
system
All the recommend requirements from this chapter are generic and are
intended to be applicable to organization, regardless of its type or size,
or the products and services it provides. This operational excellence
recommended requirements can be used by any organization either
public or private sector, profit, or non-profit organization from various
industries. The requirement starts from next section.
The main goal and potential benefits to an organization of
implementing an operational excellence management system are:
a)
b)
c)
d)
Initiate the continual improvement culture and performance,
which leads to long-term sustainable growth;
facilitating an operational excellence implementation in
early stage;
assist to adopt standard management system model of
operational improvement;
the ability to demonstrate conformity to interested party in
Operational
Excellence
implementation
through
certification process.
2.2
Operational excellence leadership
2.2.1
Leadership and commitment
Top management shall demonstrate leadership and commitment with
respect to the operational excellence by:
a) taking accountability for the effectiveness of the operational
excellence;
35
Chapter 2 – Operational Excellence Management System Requirements
b) ensuring that the operational excellence policy and operational
excellence objectives are established for the operational excellence
and are compatible with the context and strategic direction of the
organization;
c) ensuring the integration of the operational excellence requirements
into the organization’s business processes;
d) promoting the use of the process approach and risk-based thinking
in operational excellence process;
e) ensuring and provide resources needed for the operational
excellence are available including time, knowledge and expert to
guide the operational excellence process;
f) communicating the importance of effective operational excellence;
g) ensuring that the operational excellence achieves its intended
results;
h) engaging, directing and supporting persons to contribute to the
effectiveness of the operational excellence;
i) promoting operational excellence culture;
j) periodically review the effectiveness of operational excellence
process;
k) Provide reward and recognition of operational excellence project
(s).
2.2.2 Operational excellence Policy
The organization shall establish (or integrate to other policy i.e.
Quality Policy) operational excellence policy. The operational
excellence policy shall include the commitment to:
a) Implement the operational excellence project;
b) Involve teamwork in operational excellence;
c) Support and provide resources for operational excellence activities;
36
OPERATIONAL EXCELLENCE – Management Systems
d) Continually improve the operational excellence management
system.
The operational excellence policy shall be available as documented
information and communicate throughout organization.
2.2.3 Operational excellence context
The organization shall determine the strength, weakness,
opportunities, and threat (SWOT) that is relevant to the organization
continual improvement process, and operational excellence policy and
process. The organization shall maintain documented information of
SWOT.
2.2.4 Operational excellence objective and operational excellence
strategic plan
The organization shall develop the operational excellence objectives
and develop the strategic plan to achieve the objectives.
At minimum, the operational excellence objective shall include the
number of improvement project per year and number of team involved
in improvement projects.
37
Chapter 2 – Operational Excellence Management System Requirements
2.3
Operational excellence planning
2.3.1
Determining the scope of the operational excellence
The organization shall determine the boundaries and applicability of
the operational improvement initiatives.
The scope of the organization’s operational excellence initiatives shall
be available and be maintained as documented information. The scope
shall cover all the operational process.
2.3.2
Operational excellence and its processes
The organization shall determine and document the operational
excellence processes and the process shall include:
a) determine the inputs required and the outputs expected from
operational excellence processes;
b) determine the sequence and interaction of operational excellence
processes;
c) determine and apply the criteria and methods (including monitoring,
measurements and related performance indicators) needed to ensure
the effective operation and control of operational excellence
processes;
d) determine the resources needed for operational processes and
ensure their availability;
e) assign the responsibilities and authorities for operational excellence
processes;
f) address the risks and opportunities of operational excellence
processes (see 2.3.3)
g) evaluate operational excellence processes and implement any
changes needed to ensure that these processes achieve their intended
results (see 2.5);
h) improve the operational excellence process (see 2.6).
38
OPERATIONAL EXCELLENCE – Management Systems
2.3.3
Operational excellence risks and opportunities
The organization shall determine the risk and opportunities that
relevant to operational excellence process and determine the action to
address the risk and opportunities in operational excellence process.
The risk shall include the effect of uncertainty to achieve the
operational excellence objective, the weakness, and the threat
determine in the SWOT analysis (See 2.2.3).
The opportunities shall include the enhancement of the strength and
opportunities determine in SWOT analysis (See 2.7).
2.3.4 Operational excellence infrastructure
The organization shall determine, provide, and maintain the
operational excellence facilities for the purpose of team meeting and
visual display of operational excellence results.
2.3.5 Operational excellence knowledge
The organization shall provide necessary information and knowledge
to the operational excellence team to implement operational
excellence project.
At minimum, the organization shall share the lesson learn from
successful projects; capturing and sharing knowledge and experience;
the results of previous improvements in processes, products, and
services.
39
Chapter 2 – Operational Excellence Management System Requirements
2.3.6 Operational excellence communication and documented
Information
The organization shall communicate:
a) operational excellence policy and objectives;
b) operational excellence processes;
c) operational excellence results;
d) operational excellence lesson learns;
The organization’s operational excellence documentation shall
include:
a) operational excellence policy and objectives;
b) operational excellence scope;
c) operational excellence processes sequence and interaction;
d) operational excellence results;
e) operational excellence lesson learns.
40
OPERATIONAL EXCELLENCE – Management Systems
2.4
Operational excellence teamwork
2.4.1 Operational
authorities
excellence
roles,
responsibilities,
and
The organization shall establish and maintain documented information
that described the organization structure, responsibilities, and
authority of operational excellence process.
2.4.2 Operational excellence team
The organization shall establish and develop the team for operational
excellence project (see 2.5).
2.4.3 Operational excellence competency
The organization shall determine the necessary competency and
awareness for each role and responsibility that involve in the
operational excellence. The competency can be achieved by training,
or experience. Evidence of competency shall be retained.
2.4.5 Motivation for operational excellence process
The organization shall determine, provide, and maintain the
operational excellence process that recognised and reward the
operational excellence projects.
41
Chapter 2 – Operational Excellence Management System Requirements
2.5
Operational excellence implementation process
2.5.1 Operational excellence program
The organization shall plan, implement, and control the operational
excellence program. The program shall include the schedule to:
i) initiate the operational excellence project,
ii) operational excellence project review and meeting,
iii) operational excellence project submission and assessment.
To support the operational excellence program, the organization shall
determine the criteria to set the:
a) operational excellence project objectives;
b) establishing criteria for;
1) the operational excellence processes;
2) the acceptance of operational excellence projects;
c) determining the resources needed to achieve operational excellence
objectives and requirements;
d) implementing control of the operational excellence processes in
accordance with the criteria;
e) determining, maintaining and retaining documented information to
the extent necessary to have confidence that the operational excellence
processes have been carried out as planned.
2.5.2
Determine and select operational excellence projects
The organization shall have a documented process to determine,
document and select the continual improvement for operational
excellence projects. The organization operational excellence project
42
OPERATIONAL EXCELLENCE – Management Systems
identification and selection shall include methodology and criteria for
project prioritization.
The organization shall develop the operational excellence project
charter for selected project. At minimum, the operational excellence
project charter shall include:
a) statement of the scope,
b) project goals,
c) team involved in the project
Operational excellence project charter shall be update and retained.
2.5.3 Operational excellence projects approach
The organization shall maintain a documented information for
operational excellence project approaches. The approaches shall
include:
a) determine operational excellence approaches for various types
operational excellence improvements;
b) team approaches;
c) cause analysis or process analysis (see note);
d) the use of appropriate error-proofing methodologies for
nonconformity or failure cause due to human error.
e) implementation and risk analysis of improvement actions (see
2.5.7),
f) verification of the effectiveness of improvement actions (see 2.5.4
and 2.5.5),
Note: The operational excellence approaches can be divided to solve
the common cause (by using six sigma DMAIC methodology) and
special cause (by using 8-Discipline team approaches) type of
43
Chapter 2 – Operational Excellence Management System Requirements
nonconformity. While process analysis is more common for lean
(eliminate or minimise waste) related project.
2.5.4
Reporting operational excellence project
The organization shall determine and develop the methodology to
report operational excellence project that include:
a) reporting format;
b) presentation format;
c) operational excellence project results including tangible and
intangible benefits;
d) operational excellence lesson learns and future project;
Note: The format should be kept to minimum to promote the
innovative and creative reporting and presentation of operational
excellence project.
2.5.5
Assessing operational excellence project
The organization shall determine and develop the method to assess the
operational excellence project effectiveness that include;
a) operational excellence project selection;
b) operational excellence teamwork;
c) operational excellence project level of innovation and creativity;
d) operational excellence project impact;
2.5.6
Changes initiate from operational excellence project
Any improvement action initiated from operational excellence project,
the organization shall determine the risk, and their potential
consequences.
44
OPERATIONAL EXCELLENCE – Management Systems
2.6
Operational excellence management system
performance evaluation
The organization shall monitored, measured, analysed and evaluated
and review, at planned interval to ensure its continuing suitability,
adequacy, effectiveness of the:
a) operational excellence objectives;
b) operational excellence project results including the benefit and
impact to organization’s goal, policy and objectives;
c) the level of employees participations and satisfactions in
operational excellence;
The organization shall evaluate the performance and the effectiveness
of the operational excellence. The organization shall retain appropriate
documented information as evidence of the results.
45
Chapter 2 – Operational Excellence Management System Requirements
2.7
Operational excellence management system
improvement
The organization shall continually improve the suitability, adequacy
and effectiveness of the operational excellence system and processes.
The organization shall consider the results of analysis and evaluation,
and the outputs from management review, to determine if there are
needs or opportunities that shall be addressed as part of continual
improvement.
The organization shall determine and select opportunities for
improvement and implement any necessary actions to enhance the
operational excellence system and process.
These shall include:
a) Take action from the lesson learned;
b) expanding the scope of operational excellence process to nonoperational processes;
c) increase the target for operational excellence objectives;
d) improving the performance and effectiveness of the operational
excellence management system.
46
OPERATIONAL EXCELLENCE – Management Systems
PART 2
Operational excellence management system adoption guide
Chapter 4
Chapter 3
OE Project
Selection Guidance
OEMS Intents &
Guidance
Chapter 5
OE Approaches
Guidance
Part 2
47
Chapter 3 – OE MS requirements – Intents and guidance for use
Chapter 3
Operational excellence management
system requirements – Intents and
guidance for use
48
OPERATIONAL EXCELLENCE – Management Systems
3.1
Main Intents
Recognizing that questions of intent on the requirements may arise
from time to time, this chapter is to provide the purpose and intent for
each of the operational excellence management system recommended
requirements. The main intents of adopting an operational excellence
management system based on recommended requirements from first
part of this book are:
a) improve company operational performance;
b) sustain company operational improvement initiatives;
c) facilitating an Operational Excellence implementation.
Apart from that, the intent of the operational excellence requirements
is for organization operational excellence iniative can be certified by
second party (i.e. client or potential client) of thir party certification
body.
3.1.1 Chapter/ clause arrangement
This operational excellence recommended requirements chapter
arrangement is based on ISO9001 version 2015 to ease the
understanding and audit of the requirements for those that is familiar
with the most popular management system requirements. However,
the top-level structure have modified from the 10 top level ISO Annex
SL system structure to only 7 top level structure. The top-level
structure include Plan-Do-Check-Act (PDCA), Introduction,
Leadership and Teamwork as shown in figure 3.1.
The first section is introduction. The introduction provides
information about the operational excellence model and applicability
of the operational excellence management system including the
49
Chapter 3 – OE MS requirements – Intents and guidance for use
purposes or the benefit of adopting the operational excellence
management system.
LEADERSHIP
Clause 2 (ISO clause 5)
Action
Plan
• Clause 7
(Clause 10)
• Clause 3
(Clause 6)
Do
Check
• Clause 5
(Clause 7
& 8)
• Clause 6
(Clause 9)
TEAMWORK
Clause 4 (Additional)
Figure 3.1 Operational excellence model in comparison with ISO9001
(2015) arrangement
The second section of operational excellence management
system requirements is operational excellence leadership. The
requirement starts from second section while the In ISO9001 (2015),
leadership requirement is in section 5. In comparison with ISO9001,
the strategic related requirements such as determining internal and
50
OPERATIONAL EXCELLENCE – Management Systems
issue that related with strategic direction and setting up objective and
strategic plan have been add to leadership clause as the strategic plan
shall be develop by organization leader. This is also to complement
with operational excellence assessment criteria which is discuss in
chapter 6 of this book.
The third section of operational excellence management
system is operational excellence planning. The requirement starts with
determining and documenting the operational excellence process. In
other word, the requirement is to prepare the procedure of operational
excellence process. Since each of process step may have risk and
opportunities, the requirement of risk and opportunities is followed.
The planning process shall include the preparation of infrastructure to
ensure that the operational excellence process can be implemented
effectively. Additional planning requirements include preparation of
knowledge to be used and disseminate with the team, infrastructure,
communication and documented information.
The fourth section of operational excellence management
system is operational excellence teamwork. This the essential
requirement for operational excellence to work effectively and build
the culture. The requirement starts with determining the roles,
responsibility, and authority in operational excellence process. Then
followed with the requirement to develop the procedure to set-up the
team for operational excellence projects, including the operational
excellence facilitator and operational excellence leader. Each of the
roles, responsibility shall have the competency determine and fulfil.
The final part of operational excellence teamwork requirements is to
have the process for motivating the operational excellence team.
The fifth section of operational excellence management
system is operational excellence implementation. This the core
requirements in operational excellence. The requirement starts with
51
Chapter 3 – OE MS requirements – Intents and guidance for use
planning and control of operational excellence activities, followed by
determining and select operational excellence project. The
organization also shall determine the common approach to be use in
the operational excellence project and reporting, such as DMAIC six
sigma approaches or other approached the deem suitable to
organization context. The operational excellence requirement on
assessing the operational excellence project shall be determined.
Additional requirement is added to ensuring the change is stable and
minimised the side impact to the organization.
The sixth and seventh section of operational excellence
management system is operational excellence performance evaluation
and improvement. This operational excellence requirement is the
macro part of operational excellence program/ initiative performance
evaluation in comparison to project evaluation (micro). This is to
ensure that the operational excellence initiative program/ initiative has
been evaluate and continually improve as required by the operational
excellence requirement section seventh.
3.1.2 Operational excellence principles intent and source
The main intent operational excellence principles are to provide the
framework to develop the:
i.
ii.
iii.
operational excellence requirements (minimum);
operational excellence best practices guiding principles;
operational excellence assessment criteria.
Sources of operational excellence principles
The operational excellence principles are based on the Shingo Model
guiding principles as depicted in figure 3.2 blended with quality
52
OPERATIONAL EXCELLENCE – Management Systems
management principles from ISO9000 standard and Baldrige business
excellence criteria. The four Shingo guiding principle as followed:
-
Cultural Enabler
Continuous Improvement
Enterprise Alignment
Results
Figure 3.2 Shingeo model guiding principles
At the same time, the quality management principle can be adopted as
followed:
-
Customer Focus
Leadership
Engagement of People
Process Approaches
Improvement
Evidence-based decision making
53
Chapter 3 – OE MS requirements – Intents and guidance for use
-
Relationship management
The Baldrige business excellence category adopted as followed:
-
Leadership
Strategy
Customer
Measurement, analysis, and knowledge management
Workforce
Operations
Result
Hence the operational excellence principles as followed:
• Cultural Enabler
- Leadership
- Engagement of People
• Continuous Improvement
- Improvement
- Evidence-based decision making
• Enterprise Alignment
- Process Approaches
- Customer Focus
- Risk Based Thinking
• Results
3.1.3
Applicability of operational excellence intent
The recommend requirements from the first part of this books is a
minimum requirement on “what” organization shall develop,
implement, and maintain. Hence the requirements are generic and can
be applied even to small enterprise. This requirement can used as the
audit criteria to provide operational excellence certification.
54
OPERATIONAL EXCELLENCE – Management Systems
However, to measure the level of implementation and
operational excellence maturity should base on operational excellence
assessment criteria discussed in third part of this book, instead of
implementation of audit on operational excellence management
system.
55
Chapter 3 – OE MS requirements – Intents and guidance for use
3.2
Operational excellence leadership intent
3.2.1
Leadership and commitment intent and guidance
Leadership is about establishing and unify the purpose and direction
of organization operational excellence management system. It also
involves creating and maintaining an environment where people can
be fully involved in achieving the organization’s operational
excellence objectives. Therefore, organization leader must get
operational excellence started, set the direction, strategize, plan,
implement the improvement idea, and to provide the resources.
In managing operational excellence performance, leadership
is crucial because leaders are purposeful and result oriented. They are
oriented towards achieving desired targets in the operational
excellence.
A good leadership is important to influence and motivate
others to follow him/her into areas of uncertainty. What it means here
is that the crucial leadership role is concerned with change especially
on operational excellence improvement project. As changes bring
anxiety to employees, a good leader must help the people to know the
organization through its values, guiding principles and underlying
philosophy in such times. Therefore, the top management holds five
key responsibilities in operational excellence and further detail as
requirements:
- Communicating to all employees on the importance of
operational excellence
- Setting direction through an operational excellence policy
- Defining expectations and monitoring results through the
established operational excellence objectives,
56
OPERATIONAL EXCELLENCE – Management Systems
- Reviewing the organization’s overall performance by
conducting management reviews,
- Providing resources to achieve desired outcomes.
Guidance for use
This requirement is general statement and cannot be audit alone. It
should be the guiding principle for top management in organization to
ensure the success of operational excellence program.
3.2.2 Operational Excellence Policy intent and guidance
An operational excellence policy is a brief statement that aligns with
your organization's purpose and strategic direction in adopting
operational excellence management system, provides a framework
for setting operational excellence objectives, and includes a
commitment to meet applicable as well as to continualy improve
operational excellence management system.
In addition, the part of the reason why the organization need
a well written operational excellence policy statement is to
communicate and ensure your employees understand that their role in
operational excellence initiative, and therefore the success of the
operational excellence initiatives.
Guidance for use
The organization can be developed their own or integrate to other
policy i.e. Quality Policy. It can be documented either in softcopy or
hardcopy. At minimum, operational excellence policy shall include
57
Chapter 3 – OE MS requirements – Intents and guidance for use
the intent of commitment but not necessarily to use the exact wording
of the requirement.
Additional statement can include the commitment to adopt
best practices, provide knowledge and information, improve maturity
level of operational excellence, and cover all area in operation and
supporting function.
Example of operational excellence policy as followed:
Victor Inc understand the requirements of the operational
excellence management system and in particular the focus on
cultivating the culture of continual improvement.
In order to achieve this, the company is committed to:
➢ Implement the operational excellence projects;
➢ Ensuing the availability of the resources necessary to fulfil the
requirements of the operational excellence projects;
➢ Communicating the operational excellence management
system, and its importance to all employees;
➢ Have clear defined roles and responsibilities for each company
position in operational excellence program;
➢ Involve all area and functions within organization;
➢ Measurement of operational excellence performance,
monitoring of trends and improvement
➢ Incorporate operational excellence planning, organisation,
control and review with reporting into all the companies’
activities.
➢ Continually improve the operational excellence management
System
This operational excellence policy statement are subject to regular
formal review on a minimum of an annual basis.
58
OPERATIONAL EXCELLENCE – Management Systems
3.2.3 Operational excellence context intent and guidance
The intent of understanding the organization and its context is to
determine the organization operational initiative and continual
improve implementation internal strength and weakness; and any
external opportunities and threat (SWOT). This is to determine the
potential risk of operational excellence initiative, so that it can be
maintain and sustain. The organization can determine what need to be
improve (weaknesses) in their operational excellence initiatives.
This requirement not intent for overall organizational strategic
management in which organization should have their own overall
strategic plan.
Guidance for use
The SWOT analysis cover the internal and external issues in
development, implement and maintain the operational excellence
management system. The internal issues cover under strength and
weakness, while the external issues cover the opportunities and threat.
The strength and weakness category can utilise the 5 or 6 Ps such
as People, Process, Procedure, Place, Promotion, Performance.
Example of Strength and weakness (vice versa of statement below)
can be (not limited to):
-
Availability of expert (People)
Embarking lean improvement (Process)
Embarking in six sigma DMAIC program (Procedure)
While the external opportunities and threat can be (not limited to):
-
National and International level team excellence/ ICC
competition (Opportunities)
59
Chapter 3 – OE MS requirements – Intents and guidance for use
-
Leak of company secret (Threat)
Business Benchmarking (Opportunities)
Availability of technology (Opportunities)
3.2.4 Operational excellence objective and operational excellence
strategic plan intent and guidance
The operational excellence objective set by top management are an
expression and to quantify how the company intends to achieve its
operational excellence policy.
Guidance for use
Operational excellence objectives should be measurable, specific, and
communicated, since employees need to understand how they
contribute to them. These requirements should include the OE
objectives i.e. number of improvement project per year, number of
team involved in improvement projects.
3.3
Operational excellence planning intent
One of the most important principles in any management system is
planning. Far from compromising spontaneity, planning provides a
structure and context for both organization and the team, as well as a
framework for reflection and evaluation. The planning process
provides the information top management and team by determining
the process of operational excellence in advance, determining the risk
and needs to make effective decisions about how to allocate the
resources in a way that will enable the organization to reach its
operational excellence policy and objectives.
60
OPERATIONAL EXCELLENCE – Management Systems
3.3.1 Determining the scope of the operational excellence intent
and guidance
The intent of this requirements is to:
i.
ii.
ensure all the operational processes is cover under operational
excellence initiatives.
Continually improve the operational excellence by extending
scope of operational excellence initiative to other process such as
supply chain process, human resource management, research and
development and etc.
Guidance for use
Even the operational excellence management system requirement
does not require to develop the operational excellence management
system manual, it is highly recommended to develop the manual that
consist the scope of operational excellence, operational excellence
organization chart, procedure of operational excellence
implementation.
However, if the organization decided not to develop the
operational excellence manual, the scope can be defined in the
operational excellence procedure. The scope can include:
- Part of organization that embark in operational excellence;
- Type of improvement i.e. product improvement; technological
improvement;
- Type of project i.e. is it can involve big project i.e. asset acquisition,
or just focus on operational.
61
Chapter 3 – OE MS requirements – Intents and guidance for use
3.3.2 Operational excellence and its processes intent and
guidance
Even the operational excellence process almost generic in any
organization, the intent of this requirements is to ensure that the
organization shall determine operational excellence process and
document the process either as the operational excellence manual or
procedure. This document can be made as reference and review for
improvement.
Guidance for use
The procedure can be developed individually or combine for:
- Planning and control of operational excellence program;
- Operational excellence project identification and selection
- Explanation on how organization operational excellence
management system meet the requirement
- Operational excellence approaches
- Reporting of operational excellence project
- Assessing and grading of operational excellence project
3.3.3
Operational excellence risks and opportunities intent
The intent of this requirements is to further analyse the issues in
internal strength and weakness; and any external opportunities and
threat (SWOT). As the definition of risk is effect of uncertainty to
achieve the objection, the risk (cause) of not achieve the objective can
be determined to eliminate or minimise the failure of operational
62
OPERATIONAL EXCELLENCE – Management Systems
excellence initiative. While the opportunities are referring to continual
improvement opportunities in operational excellence program and
initiatives.
Guidance for use
The risk register can be develop based on operational excellence
objectives set. Each of operational excellence objective potential
failure cause is determine as the risk. Risk assessment is optional to
determine the need for action such as low does not required action
address risk while high may required action to eliminate or minimised
the risk. In addition, through risk assessment can be conducted on each
of the operational excellence process
3.3.4 Operational excellence infrastructure intent and guidance
The intent of this requirement to support the team by having at
minimum the venue for team meeting and discussion, and visual
display of operational excellence results.
This requirement is all about your physical resources such as
facilities, space, equipment, technology, utilities, etc. Most of
organization already have an established place of business and the
appropriate equipment to produce and deliver your products and/or
services. But this requirement is intent to ensure that there is the place
for the team to meet, prepare, display the project report, implement the
operational excellence project and continually maintain and improve
the operational excellence project. The infrastructure may include
buildings, utilities, equipment, technology (hardware & software),
transportation, information, and communication.
63
Chapter 3 – OE MS requirements – Intents and guidance for use
Guidance for use
The best practice is to allocate specific location for operational
excellence activities in which some organization have the morning
market area and meeting room. The environment should be conducive
for idea generation.
The organization may adopt “obeya” concept. At its core,
“obeya” (Japanese for “big room” or “great room”) is a lean
manufacturing tool, in which a dedicated room is set aside for
employees to meet and make decisions about a specific topic or
problem. The narrow definition of the obeya is an open room, typically
an office and not production space. The purpose of it being open is to
improve information exchange via visual means, thereby allowing
better problem solving and performance overall. Typically, the project
room contains the goals/ policy, project timelines, A3s report, etc. and
is used as a work space and/ or daily review space for updating status
and quickly resolving problems. The areas should be good for project
work, but not practical for day-to-day work or repetitive work.
3.3.5 Operational excellence knowledge intent and guidance
The intent of this requirement is to ensure the organization provide the
necessary knowledge for operational excellence team to implement
the operational excellence project. The knowledge at minimum shall
be from the previous project. Book and other reference are highly
recommended.
Guidance for use
64
OPERATIONAL EXCELLENCE – Management Systems
The organization should setup both library and e-library that provide
knowledge gained from experience; lessons learned from failures and
successful projects; capturing and sharing undocumented knowledge
and experience; the results of improvements in processes, products
and services) standards; academia; conferences proceeding, and
presentation.
3.3.6 Communication and Documented Information intent and
guidance
In addition, knowledge sharing from the lesson learn from successful
projects are required to be capturing and sharing undocumented
knowledge and experience in order to improve the operational
excellence initiatives and process and at the same time enhance the
team and employees skills and competency in operational excellence.
The intent of the requirement to establish, implement and
maintain documented information, so that the operational excellence
team can be used to communicate a message, provide evidence of what
was planned has been done, or knowledge sharing. The following are
some of the main objectives of an organization’s documented
information for operational excellence (extracted from ISO/TC
176/SC2/N1286 www.iso.org/tc176/sc02/public)
a) Communication of Information - As a tool for information
transmission and communication. The type and extent of the
documented information will depend on the nature of the
organization’s products and processes, the degree of formality
of communication systems and the level of communication
skills within the organization, and the organizational culture.
b) Evidence of conformity - Provision of evidence that what was
planned has actually been done.
65
Chapter 3 – OE MS requirements – Intents and guidance for use
c) Knowledge sharing
d) To disseminate and preserve the organization’s experiences.
Guidance for use
The organization can adopt ISO9001 documented procedures even
there is no detail requirements on control of documented information.
3.4
Operational excellence teamwork intent
The intent of operational excellence teamwork requirement is for the
organization to establish the operational excellence team (at minimum
1 team for small enterprise), retain competent team, train them
appropriately, and provide clear communication to all levels of your
organization.
Most organizations probably already do the things required by
this clause by defining the competencies required for jobs and
positions within the organization, but seldom define for operational
excellence team, operational excellence facilitators/mentor, and
operational excellence leader.
The organization can either hiring external provider who can
adequately fill those competencies, and where needed, address any
competency gaps through training and employee development
activities.
3.4.1 Operational excellence
authority intent and guidance
roles,
responsibilities,
and
The intents of this requirement is to provides clarity, alignment, and
expectations to those executing the work and keeping the operational
66
OPERATIONAL EXCELLENCE – Management Systems
excellence program run effectively. Roles & Responsibilities enables
effective communications between the various groups, facilitating the
full integration of the department and organization in implementation
of operational excellence program.
Guidance for use
The organization should develop the organization chart for
operational excellence. The organization chart should include the
main sponsor, the champion, operational excellence facilitator, team
leader and team member. Typical role and responsibility as follow:
Sponsor/ Chairman – The top management that provided leadership
and commitment for operational excellence initiative
Champion – The champion’s responsibility is to represent the needs
of the management and to improve the operational effectiveness of the
organization. The champion is typically separated from the
manufacturing or transactional processing functions in order to
maintain impartiality.
Operational excellence facilitator – operational excellence
facilitators are typically assigned to a specific area or function of a
business or organization. It may be a functional area such as human
resources or legal or process specific area. Facilitators work with the
owners of the process to ensure that operational excellence project
objectives and targets are set, plans are determined, progress is
tracked, and education is provided. Process owners and facilitators
work very closely and share information daily.
Process owner (PO) – Process owners are exactly as the name is
normally the departmental manager. They are the responsible
67
Chapter 3 – OE MS requirements – Intents and guidance for use
individuals for a specific process. Depending on the size of your
business and core activities, you may have process owners at lower
levels of your organizational structure.
Operational excellence team leader – Operational excellence team
leaders are the heart and soul of the operational excellence project.
Their main purpose is to lead operational excellence projects. The
team leader is also expected to coach team members on their projects,
and report the progress of project.
Operational excellence team members – Operational excellence
team members are selected employees trained in operational
excellence approaches and spend a portion of their time completing
projects, but maintain their regular work role and responsibilities.
Depending on their workload, they can spend anywhere from 5
percent to 10 percent of their time on their project(s).
3.4.2 Operational excellence team intent and guidance
Operational excellence team, which is a team from the same
department or functional area that's involved in efforts to improve
work activities or to solve specific problems determine in operational
excellence project. This is to ensure that project is involved
participation from more than one person especially in brainstorming
and implementation of the operational excellence projects. This will
facilitate learning and improvement culture in the organization.
Guidance for use
Operational excellence team can temporary or long-term team,
combination of workers who gather to solve a specific operational
68
OPERATIONAL EXCELLENCE – Management Systems
excellence projects. It is recommended based on organization size and
complexity of project, to have a minimum of (3) people from at least
3 different organizational function such as Production, Product
Quality, Product Engineering, Product Marketing, Manufacturing,
Supplier Quality if possible.
3.4.3 Operational excellence competency intent and guidance
The intent of these requirements is the organization operational
excellence processes and procedures must ensure that team are
sufficiently aware and competence to implement and involved in
operational excellence program.
Guidance for use
The organization should organised training and briefing on the
a) operational excellence policy and objectives;
b) operational excellence processes;
c) operational excellence approaches;
d) operational excellence reporting method;
c) operational excellence results presentation;
d) operational excellence lesson learns;
In many organizations this function is often referred to as Personnel
or Human Resources (HR) and deals with attracting and retaining the
talent, skills, and personnel needed to execute and control the
organization’s operational excellence processes. The training program
should also includes everybody from the executive level
administrative personnel to support personnel to the line staff who
produce products or deliver services to the customer.
69
Chapter 3 – OE MS requirements – Intents and guidance for use
3.4.4 Motivation for operational excellence process intent and
guidance
The intent of this requirements is to ensure continuous implementation
of operational excellence program and cultivate the culture of
continual improvement in the organization. This requirement is also
help fulfil some of the leadership requirements and promote
participation of workers in operational excellence program. Additional
intention is that the organization provide at minimum some formal
reward and recognition of the operational excellence projects. When
teams and their work are valued, their satisfaction and productivity
rise, and they are motivated to maintain or improve their good work.
Praise and recognition are essential to an outstanding workplace.
People want to be respected and valued by others for their
contribution.
Guidance for use
The organization should consider operational excellence reward and
recognition criteria. The reward and recognition criteria should be
linked your operational excellence objectives and should include on
values and behaviours. Some examples of operational excellence
reward and recognition criteria include:
-
Best Result
Teamwork
Going the extra mile
Commitment
Flexibility
Innovation and creativity
Professional development
70
OPERATIONAL EXCELLENCE – Management Systems
Once the operational excellence reward and recognition criteria, then
you need to consider the eligibility requirements. All employees
should know what they need to do and the behaviours they need to
demonstrate to be eligible for a reward. Communicating the criteria
significantly increases employees’ determination to display the
operational excellence behaviours.
71
Chapter 3 – OE MS requirements – Intents and guidance for use
3.5
Operational
intent
excellence
implementation
process
While all other requirements focus on building structure of operation
excellence, this requirement focus on the delivery of operational
excellence project. The intent of this requirement is to provide what is
the minimum requirement for operational excellence process. Hence
the requirements will provide the baseline for organization to develop
operational excellence process and documented the process.
At minimum, the operational excellence process shall include:
1)
2)
3)
4)
Process to determine and select operational excellence projects;
Selecting and implementing operational excellence project
approaches (problem solving methodology);
Reporting operational excellence project;
Assessing operational excellence project.
At the same time, each of the process above shall have the documented
criteria for the organization evaluate the conformity and effectiveness
of the process. With the process above, the organization can determine
the resources needed for each process (see operational excellence
planning and teamwork requirements).
3.5.1
Operational excellence program intent and guidance
Unless we schedule it, it will not get it done. The intent of this
requirements is to ensure that the organization prepare the operational
excellence program in schedule form to plan, implement and control
the operational excellence process. The schedule can be use to monitor
the progress and set the due for each phase of initiation phase of the
operational excellence project, operational excellence project
72
OPERATIONAL EXCELLENCE – Management Systems
implementation phase including review and meeting and operational
excellence project submission and assessment phase.
This requirement is also to detail up the planning requirement
on operational excellence and its process on determining the criteria
for each of the process.
Guidance for use
Successful operational excellence program starts with a good project
schedule. Creating a schedule is one of the first tasks in operational
excellence process. The schedule should include:
a)
b)
c)
d)
the required operational excellence process phases, including
applicable reviews. Projects typically go through phases, starting
with an initiation and progressing all the way to launch and
rollout. You should arrange your project schedule in these phases.
the due date or target date for each phase. Adding milestones to
your schedule helps the operational excellence project team stay
focused and motivated. Milestones are the end of certain phases,
the point where work needs completing or where sign-off needs
to be obtained for work carried out. These milestones are how the
team sees and measures progress.
the responsibilities and authorities involved in the operational
excellence process. Now that you have your schedule, it's time to
add your people, either existing or new team members. Once you
have assigned people to the tasks in your schedule, review it for
conflicts. Do you have areas where people are working on two
work streams simultaneously? Is the work allocated evenly across
the team? Be careful not to overload your key people while underutilising others;
the internal and external resource needs for the operational
excellence process;
73
Chapter 3 – OE MS requirements – Intents and guidance for use
e)
the need to control interfaces between persons involved in the
operational excellence process;
3.5.2 Determine and select operational excellence projects
intent and guidance
The intent of the requirement is for the organization to have a
documented process to determine, documented and select the
continual improvement for operational excellence projects is to ensure
consistency in the operational excellence approaches. There are
several methods to identify the projects. Hence the criteria to
determine and select the project will be useful to the operational
excellence team.
Project charter is a statement of the scope, objectives, and
participants in a project. The intent of developing the project charter
is to provide preliminary delineation of roles and responsibilities,
outlines the project objectives, identifies the main stakeholders, and
defines the authority of the project leader. It serves as a reference of
authority for the future of the project.
Guidance for use
See chapter 4 for detail recommendation
3.5.3 Operational excellence projects approach intent and
guidance
The intent of the requirement is for the organization to maintain a
documented information for operational excellence project
approaches (or mostly name as problem solving techniques) is due to
several methodology to implement improvement project such as
74
OPERATIONAL EXCELLENCE – Management Systems
kaizen event, six sigma DMAIC, 8-disciplines methodology or lean
methodology. Hence the organization shall define the suitable
approaches for different type of issues to solve. Minimum criteria is
set such as the approaches shall utilised team approaches, cause
analysis (including common and special cause), implementation and
risk analysis of improvement actions, and verification of the
effectiveness of improvement actions.
The organization shall determine and develop the operational
excellence approaches to solve the common cause and special cause
type of nonconformity.
Guidance for use
See chapter 4 for detail recommendation
3.5.4 Reporting operational excellence project intent and
guidance
The intent of the requirements is for the organization to determine and
develop the methodology to report operational excellence project that
include for consistency and ease of assessing the operational
excellence project. At the same time, the process to retain the
documentation from the project can be consistently organization for
the purpose of analyse and disseminating the information from the
projects.
Guidance for use
The common method to report the lean project is through A3 format.
The simple A3 as shown in figure 3.3 may include:
1. Title
2. Background/ Important of the project or problem description
75
Chapter 3 – OE MS requirements – Intents and guidance for use
3. Current condition
4. Root cause or risk assessment
5. Goals and target
6. Target conditions
7. The actions
• Either countermeasure
• Or implementation plan
And of course, the most important is the RESULTS. At minimum, the
reporting format shall include operational excellence project results
including tangible and intangible benefits and operational excellence
lesson learns and future project.
The format should be kept to minimum to promote the innovative and
creative reporting and presentation of operational excellence project.
Figure 3. 3 A3 Reporting (Example)
76
OPERATIONAL EXCELLENCE – Management Systems
3.5.5 Assessing operational excellence project intent and
guidance
The intent of the requirement is for the organization to determine and
develop the method to assess the operational excellence project is to
evaluate the overall achievement of the operational excellence project
start from operational excellence project selection including
operational excellence teamwork, operational excellence project level
of innovation and creativity, operational excellence project impact.
In addition, this requirement intent to support provide the
reward and recognition requirements.
Guidance for use
The most common method to assess the project is to use Innovation
and Creative Circle scoring/ judging criteria as shown in figure 3.4.
Like the reward and recognition criteria, the organization need to
consider appointment of judges and communicate the judging criteria
clearly, so the team understand it - and there are no accusations of bias.
To help you determine your process, consider the following questions
as shown in figure 3.4.
77
Chapter 3 – OE MS requirements – Intents and guidance for use
Figure 3.4 Example of judging criteria
3.5.6 Changes initiate from operational excellence project
intent and guidance
The intent of this requirements is to calculate and minimised the risk
from any improvement action initiated from operational excellence
projects or sometime call as risks associated with change. A risk in an
operational excellence project is an outcome that causes a change
whether that change has a benefit or adverse effect on the running of
a business. Each change made can pose a risk.
Guidance for use
This requirement can be integrated with requirement in assessing the
operational excellence project. Several contexts can use such as
78
OPERATIONAL EXCELLENCE – Management Systems
People, Benefits, Processes, Management. Simple risk assessment can
use for each of the recommended solution by questioning “Is there any
side effect from the proposed solution”. Other detail methodology
such as “What if”, “Failure Mode Effect Analysis (FMEA)” also can
be use. However, the method should be simple and easy for the team
to assess.
3.6
Operational excellence
intents and guidance
performance
evaluation
The intent for the organization to determine the method to monitor,
measure, analyse and evaluated the item below is to ensure that there
is a process of “check” and “improve” the operational excellence
management system. The review shall include the overall annual (even
though the requirements does not specify the interval) operational
excellence objectives achievement, operational excellence project
results including the benefit and impact to organization’s goal, policy
and objectives and the level of employees participations and
satisfactions in operational excellence.
Guidance for use
The simplest method to evaluate the performance is through fix annual
management review that cover the above requirement. To determine
whether the results have been achieved, the organization operational
excellence management review should minute the performance result
and the effectiveness of the operational excellence.
79
Chapter 3 – OE MS requirements – Intents and guidance for use
3.7
Operational excellence improvement intents and
guidance
The intent for the organization to continually improve the suitability,
adequacy and effectiveness of the operational excellence management
system and its processes are to ensure the maintainability and
sustainability of operational excellence initiative.
At minimum requirement intents is to ensure that there are action
for lesson learned, expanding the scope to non operational process and
supplier, increase the target for operational excellence objectives and
continually improve the performance and effectiveness of the
operational excellence processes including operational excellence
project selection, operational excellence project approaches,
operational excellence project reporting and operational excellence
project assessment.
Guidance for use
Hence, the organization need to consider the results from analysis and
evaluation, and the outputs from management review, to determine if
there are needs or opportunities that shall be addressed as part of
continual improvement. Organization is recommended to conduct the
operational excellence assessment based on assessment criteria
recommended in chapter 6.
80
OPERATIONAL EXCELLENCE – Management Systems
Chapter 4
Guidance for operational excellence project selection
81
Chapter 4 – Guidance for operational excellence project selection
4.1
I-D-E-A techniques
The focus of this chapter is to provide guideline through I-D-E-A
technique. The concept of I-D-E-A technique is about simplifying the
logical sequence of an operational excellence project selection process
for operational improvement easy to understand. By adopting the I-DE-A techniques, it help the organization to document and
communicate the operational excellence initiatives, instead of jumping
straight to brainstorming process to determine the operational
excellence project.
The I-D-E-A concept include 4 steps which are:
I - Initiate the operational excellence initiatives
D - Diagnosis process to determine the issues in organization
operation
E - Evaluate the issues and select the operational excellence projects
A - Action to implement the operational excellence projects
4.2
I - Initiation of operational excellence
The initiation process is the process of identifying the goal and
strategic direction of the organization operation operational
excellence. The requirement including requirements on context of
organization and leadership. At this stage, it is not only buy-in from
the top management, but also include the “way forward” plan from the
top management. At this stage, the team have been established and
budget for resources is already table out.
From the recent study (Ramly, 2019), there are common four
enablers of operation excellence initiative which are:
1)
Motivation to adopt operational excellence;
82
OPERATIONAL EXCELLENCE – Management Systems
2)
3)
4)
Top Management commitment
Steering committee
Operational excellence team
Most of the motivation to adopt operational excellence are as the
result from customer and market pressure, or self-initiated as part
organizations quality strategy.
Second enabler is the the organization top management should be
ready to initiate the operational excellence initiative. Hence the
interaction of Top Management with the initiate the operational
excellence and other enablers such as selection of team, selection of
improvement tools and techniques play an important role in successful
implementation of operational excellence.
The third enabler is the committee to manage and facilitate the
operational excellence initiative. This team can focus on the
operational excellence planning process,coaching, facilitating,
evaluating and motivating the operational excellence project team to
determine, implement and report the operational excellence projects.
The final enabler is operational excellence project team to
determine, implement and report the operational excellence projects.
The operational excellence project team should;
(1) The team understand the purpose of operational excellence,
(2) aware the benefits of operational excellence,
(3) aware operational excellence is not fault finding but for
improvement and,
(4) encourage team to solve the real problem that can benefit to
them.
83
Chapter 4 – Guidance for operational excellence project selection
4.3
D - Diagnosis process
The overall step for diagnosis process is shown in figure 4.1. It
is recommended to use Baldrige business excellence (BE) category 6
criteria below:
Product and PROCESS Requirements: HOW do you determine KEY
product and WORK PROCESS requirements? What are your
organization’s KEY WORK PROCESSES? What are the KEY
requirements for these WORK PROCESSES?
If the score is high (4 to 5)*, indicate the organization already
determine their operational process effectively. If the organization not
sure about their operational/ work process, the organization can refer
to VSM methodology to determine their common operational process.
84
OPERATIONAL EXCELLENCE – Management Systems
Figure 4.1 Step 1 – Operational Diagnosis
* Recommended scoring criteria is discussed in chapter 6
As for operational/ work process can be divided to three types of
processes which are:
1) the key process in operation;
2) the support process:
3) and the supply chain process.
85
Chapter 4 – Guidance for operational excellence project selection
These processes can be listed or visualized by using value stream
mapping as shown in Figure 4.2.
4. INPUT
–
SUPPLY
CHAIN
2. ORDER PROCESSING
3. PLANNING
& SCHEDULING
5.OUTPUTSUPPLY
CHAIN
1.WORK PROCESS
Figure 4.2 Value Stream Mapping Process Zone
The second step of diagnosis process is to evaluate operational process
performance. There are several methods available to achieve this. One
of common method is through evaluation of key performance
indicators or objective by conducting objectives review.
The second method is to diagnose the actual operation process
results. The organization can utilised the Baldrige business excellence
criteria 7 below:
What are your PROCESS EFFECTIVENESS and efficiency
RESULTS? What are your current LEVELS and TRENDS in KEY
MEASURES or INDICATORS of the operational PERFORMANCE of
your KEY WORK and support PROCESSES, including
86
OPERATIONAL EXCELLENCE – Management Systems
PRODUCTIVITY, CYCLE TIME, and other appropriate MEASURES
of PROCESS EFFECTIVENESS, efficiency, and INNOVATION? How
do these RESULTS compare with the PERFORMANCE of your
competitors and other organizations with similar PROCESSES? How
do these RESULTS differ by PROCESS types, as appropriate?
IF the score is 4-5, the organization can evaluate the operational
performance results. However, if the organization does not have/ or
not sufficient performance indicator, the organization can consider the
performance criteria toolbox that is extracted from balance scorecard
methodology. Within the balanced scorecard, the common criteria can
be evaluated from the toolbox as shown in Figure 4.3. An individual
who conducts the diagnosis can have the tools to conduct their
diagnosis efficiently through standard performance criteria tools box
(example as shown in table 4.1), thus ensuring a smoother flow
diagnosis process. Most importantly, this kind of standard
performance criteria supports and helps diagnosis process to highlight
additional performance measure needed by operation to build an
improvement culture through effective performance measure, with
result-oriented performance measure.
87
Chapter 4 – Guidance for operational excellence project selection
Performance
Criteria
Financial
Customer
Margin
Operational
cost
Operational
# of complaints
on time
delivery
Learning and
Growth
Product family
performance
Work process
performance
Support
process
performance
Productivity
Index
Supply chain
process
performance
Figure 4.3 Performance Criteria Tool Box
88
# of
improvement
projects
OPERATIONAL EXCELLENCE – Management Systems
Table 4.1 Common operation process and their performance indicator
#
Process Type
Performance Indicators
1.
Work Process •
•
•
•
•
•
Yield/ reject rate
Scrap rate
Complete & Accurate
Lead/ process/ cycle time
Plan vs Actual
Inventory level
2.
Order
processing
•
•
•
•
Planning &
•
Scheduling •
•
•
Supply chain- •
input
•
•
•
•
Supply chain – •
Output
•
On time delivery
Lead time
Complete & Accurate
No of complaints
On time delivery
Planning accuracy
Complete & Accurate
Inventory level
On time delivery
Complete & Accurate
Inventory level
Inventory accuracy
Receiving efficiency
On time delivery
Order picking/packing complete &
accurate
Inventory level
Inventory turnover
Cost of carrying inventory and
logistic
3.
4.
5.
•
•
•
89
Chapter 4 – Guidance for operational excellence project selection
The implication for the performance-based diagnosis, the
improvement opportunities focusing on the operational result as well
on operational management as shown in Figure 4.1. As final output
depicted in figure 4.1, the improvement opportunities divided into:
1. opportunities to improve operational management and,
2. non-performance process (opportunities for operational
excellence project).
The improvement opportunities to improve operational
management can be extracted to ISO9001 findings in quality audit (if
the organization have ISO9001 in place). If the organization not
adopting the ISO9001 or benchmarking to business excellence
criteria, the organization can immediately determine the operation/
work process and include the performance indicator for the process by
adopting VSM as ‘Action’ under section 4.5.
For non-performance process (process that is not achieve the
intended result or required to go beyond the intended results) should
be listed and go to second step (step 2) for evaluation process.
90
OPERATIONAL EXCELLENCE – Management Systems
4.4
E - Evaluation process
Evaluation process is the process to evaluate the non- performance
process and select the issue to implement as operational excellence
project. The step for evaluation process is depicted in figure 4.4. The
intent of evaluation process is to conduct funnelling process to select
the operational excellence project.
Figure 4.4 Step 2 - Evaluation process
As each of operation/ work process that does not meet the
expected result base on target and benchmark against best practice, the
issues should be listed. Common type of non-performance process
observed from all the case organization can be divided into:
1) quality related issues such as excessive variation that may
root to rework/ redo and scrap, and
91
Chapter 4 – Guidance for operational excellence project selection
2) Waste related issues such as excessive movement, waiting
and over processing.
Common toolbox for list of issues can be developed and update as
shown in Table 4.2.
Table 4. 2 : List of Common Issues
Work Process
Order
processing
process
Planning &
Scheduling
process
Supply chaininput process
Quality
Yield/ reject rate;
Scrap rate;
Human error;
No. of complaints;
No. of information
that is not complete
and accurate;
No. of complaints;
No. of information
that is not complete
and accurate;
Excess purchase
variance;
92
Waste
Lead/ process/ cycle time;
Bottleneck process;
Excessive manpower and
labour intensive;
Process required excess
manpower energy and
effort;
Excessive energy usage
(power, electricity);
Excessive material/ raw
material;
Excessive movement
(Distances);
Overlapping of process;
Long processing lead time;
Late delivery of product/
service;
Long processing lead time;
Late delivery of product/
service;
Excess Inventory;
Excess Inventory;
OPERATIONAL EXCELLENCE – Management Systems
Wrong ordering;
Supply chain
– Output
process
Wrong delivery;
Excessive Movement/
Manpower;
Excess Inventory;
Late delivery;
The issues should be evaluated into the cause category. The
intent of this step is to provide information to select the relevant
operational approaches, tools and techniques in next step (Step 3).
Each of the issues listed in Table 4.2 can be relate with the cause
category from the common problem-solving techniques such as
Ishikawa diagram or fishbone diagrams as shown in Figure 4.5.
Reference to ISO 9001 version 2015 requirement, also provide detail
on what to plan, implement, evaluate, and improve.
i.
Figure 4.5 Ishikawa Diagram
ISO 9001 elements could form the basis for setting up the category of
causes of non-performance process that is extracted from ishikawa 4M
93
Chapter 4 – Guidance for operational excellence project selection
(Man, Method, Material and Machine). The common category is
classified as ‘why 1’ to ‘why 5’ as shown in figure 4.6.
Figure 4.6 Recommended Cause Category from Why 1 to 5
Below is the explanation of each of the cause category (element of
ISO9001 version 2015 show in brackets):
As for why 1, the issues have not been addressed or
improve due to no improvement actions (ISO9001 clause
4.4h) take place due to:
o The issues not been determined (ISO9001 clause
10.1),
94
OPERATIONAL EXCELLENCE – Management Systems
o No improvement methodology defined (ISO9001
clause 10.2 and 10.3),
o No structure problem solving techniques (ISO9001
clause 10.2 and 10.3),
o No mechanism on lesson learn (ISO9001 clause
7.1.6).
As for why 2, the issues occurred/ escape due to
methodology (ISO9001 4.4c) related:
o Procedure not/ insufficient address the issues
(ISO9001 clause 7.5.1 and relevant clause 8),
o Knowledge and method ‘not/ insufficient’ to address
the issues (ISO9001 clause 7.1.6),
o Risk not been determined and action to address risk
is not determined and implemented (ISO9001 clause 6.1),
o Documented information not effectively control
(ISO9001 clause 7.5).
As for why 3, the issues occurred/ escape due to
infrastructure and work environment related.
Infrastructure includes utilities, equipment, ICT,
transportation not determined, provided, or maintained
(ISO9001 clause 7.1.3, 7.1.4 and 7.1.5).
As for why 4, people related include:
o Not determine the responsibility and authority
(ISO9001 clause 4.4e and 5.3)
o Not sufficiently determined and provided the people
(ISO9001 clause 7.1.2)
o Lack of competency, awareness, and communication
(ISO9001clause 7.1.2, 7.3 and 7.4)
o Error and Violation (ISO9001 clause 7.3)
o Lack/ insufficient error proofing system (ISO9001
Lean requirements)
95
Chapter 4 – Guidance for operational excellence project selection
As for why 5, input/ Interaction Related. Input related
may include:
o Operation planning (ISO9001 clause 8.1)
o Problem in product design (ISO9001 clause 8.3)
Problem in sales and marketing i.e. not determine,
review the customer requirements (ISO9001 clause 8.2).
The next step, the issues and the cause can be divided into
common cause or special special. The theory is similar with statistical
process control of common and special cause. The special issues are
the issue that it cannot be predicted and seldom occur. While the
common issue is the issue that can be predicted to happen. One of
method to prevent the common issue to escape is by the mean of
rework system and/ or inspection system. Example of output from step
2 is shown in table 4.3. Once the category and type of cause have been
listed, the organization can move to step 3 which is action to select the
operational excellence project.
96
OPERATIONAL EXCELLENCE – Management Systems
Table 4. 3 List of Issues - Opportunities for Improvement (SAMPLE)
Diagnosis Date: _______
Operational Excellence
Project Selection
N°
Issues Description
Type of
Issues
(SC or
CC*)
Cause(s) Category
* SC denoted special cause/
CC denoted common cause
Process
1
Excesive manpower (manual
work )
CC
Why 2 Method, Why 4
Infra, Why 5 Interaction
R&D
Primary Packing
2
Big batch
CC
Why 2 Method and Why 4
Infra
3
Distance between machine
CC
Why 2 Method and Why 4
Infra
4
Long set-up time
CC
Why 2 Method and Why 4
Infra
97
Chapter 4 – Guidance for operational excellence project selection
4.5
A – Action for project selection
The action for selection of operational excellence project shall include
determining the suitable operational excellence project approaches,
relevant improvement tools and techniques and determine the
selection criteria as shown in figure 4.7.
It is felt appropriate that selection of improvement
opportunities can be guided by determining the relevant approaches,
tools and techniques in advance to evaluate the readiness of
organization to implement the operational improvement. Organization
must realize that to stay ahead in business, the organization is required
to adopt the latest available quality improvement tools and techniques
to build continual operational improvement as a working culture
(Mohammad et al., 2010).
The common operational excellence project approaches or
sometime name as problem solving techniques are six sigma DMAIC,
8-disciplines methodology, A3 problem solving or lean methodology
that further discuss their detail in chapter 5. All this approach utilised
team approaches, cause analysis, implementation and risk analysis of
improvement actions, and verification of the effectiveness of
improvement actions.
98
OPERATIONAL EXCELLENCE – Management Systems
From step 2
List of issues (from
step 1)
Determine relevant
tools and techniques
Selection: Pay
-off (A)
Selection:
Organization- Fit (B)
Selection:
Strategic-Fit (C)
Set the % of important
Calculate SAW Score
Select at least top 3
SAW Score
End
Figure 4.7 Step 3 (Action for project selection )
The organization shall determine and develop the operational
excellence approaches to solve the common cause and special cause
type of nonconformity. Continuous and progressive implementation
99
Chapter 4 – Guidance for operational excellence project selection
of tools and techniques are based upon organization fit such as
resources availability and their competency level. Selection of
operational excellence project for the issues determine in step 2,
organization should determine the operational excellence approachbased on special and common issues as recommend in Table 4.4. The
operational excellence approach is also complemented with the cause
category of why 1 as discussed in previous section.
Table 4.4 : Recommended operational improvement approaches
Special
Corrective Action
Request, 8-Discipline,
Common
Kaikaku, Detail Six Sigma
DMAIC methodology, (For
Breakthrough).
Kaizen Event i.e. ICC, Small
group PDCA activities, Lean
workshop
Kakushin i.e. IR4.0 project,
product development, machine
innovation etc.
At the same time, the improvement tools and techniques can
be listed by each category of causes as shown in Figure 4.8. The
organization should develop the list of tools and techniques according
to the caus
e of issues. It was found that most of tools and
techniques are from lean and six sigma related tools and techniques.
For the start, initial list of tools and techniques are list in Table 4.5.
The list can continue on and recommended as organizational
knowledge and database.
100
OPERATIONAL EXCELLENCE – Management Systems
Table 4.5 : Initial list of Improvement Tools and Techniques by Causecategory
Why 2 – Method
- Risk Assessment, quality/
control plan
- Poka Yoke self/successive
check
- Advance Product Quality
Planning
- Heijunka, Kanban
- 5S
Why 4 - People/ Human
Resources
- Error proofing, Jidoka,
Andon
- Team problem solving
- Standardization/ Seiketsu
(from 5S)
- Shitsuke (from 5S)
Why 3 – Infrastructure
- Total Productive
Maintenance (TPM)
- Plant facilities layout
(Cellular layout)
- SMED
- 5S
- Spaghetti diagram
Why 5 – Input/ Interaction
- Cross functional problem
solving to identify why 2-4
Table 4.6 shown the example of interaction between cause
category and available tool and techniques.
101
Chapter 4 – Guidance for operational excellence project selection
Table 4. 6 : Example of cause category and tools and techniques
N°
Issues Description
Cause(s)
Category
Tools and
Technique available
(if any)
Blending
1
Excesive manpower
(manual work)
Why 2 Method,
Why 4 Infra, Why 5
Interaction R&D
Jidoka
Primary Packing
2
Big batch
Why 2 Method
and Why 4 Infra
3
Distance between
machine
Why 2 Method
and Why 4 Infra
4
Long set-up time
Why 2 Method
and Why 4 Infra
5s, lean layout,
spaghetti diagram, one
piece flow, Andon,
Standardised work
5s, lean layout,
spaghetti diagram, one
piece flow
5S, SMED
The final step is to select the improvement opportunities.
Recommended selection criteria can be:
1) Pay-off,
2) Organization-fit,
3) Strategic-fit, and
4) Fashion setting.
The pay-off criteria can include the revenue potential, cost/
Benefit and meet the key performance indicator (KPIs) as shown in
table 4.7. The pay-off selection criteria can be easily determined
through result of diagnosis process in step 1 and evaluation process
step 2.
The organization-fit selection criteria can be determined from
the result of step 3. The adoption of tools and techniques must fit the
102
OPERATIONAL EXCELLENCE – Management Systems
organization characteristics and their constraints such as staff
capability, ease of implementation and fit the size of organization.
Example of organization fit is shown in table 4.8.
Table 4.7: Pay-off criteria
Pay-off criteria
Weight (to be
determine by the
champion)
Revenue
Potential
A1
Cost/
Benefit
A2
Meet
KPIs
A3
10%
10%
10%
Ease of
Implementation
B1
Staff/
Team
Capability
B2
Duration
B3
10%
20%
10%
Table 4. 8 : Organization fit criteria
Organization fit
criteria
Weight (to be
determine by the
champion)
The strategic fit should include ability to gain to management
commitment and support, allocation necessary resource (fund) to
introduce and implement the improvement, and aligned to the vision,
mission and/or purpose of the organization as shown in table 4.9.
Finally, the fashion setting may play important factor in selection of
operational improvement opportunities. As the fashion setting is
closer toward popularity of available tools and techniques. The
organization may able to identify reference, training and support from
103
Chapter 4 – Guidance for operational excellence project selection
external sources easily in compare with less popular tools and
techniques.
Table 4. 9 : Strategic fit criteria
Strategic Fit criteria
Weight (to be
determine by the
champion)
Compliance to
legal C1
Ability to
gain
management
support C2
Ability to get
the resources
(fund) C3
10%
10%
10%
The simple mathematical model of SAW (Simple average
weight) was used in the case organization. The organizations have the
choice to set the weight by the level of important (can be set between
0-100%) on each of selection criteria with the total sum not exceeding
100% on all criteria. SAW score can be calculate according to formula
as shown below.
SAW Score = A1 (% of important) + A2(% of important)…An ((% of
important) + B1(% of important) +… Bn(% of important) + C1(% of
important) +… Cn (% of important).
The highest score will be prioritized as the improvement project
in which organization can plan the annual operational improvement
project.
104
OPERATIONAL EXCELLENCE – Management Systems
Chapter 5
Operational excellence approaches
105
Chapter 5 – Operational Excellence approaches
5.1 Introduction
The operational excellence project approaches commonly utilised the
problem-solving
method.
ASQ
(https://asq.org/qualityresources/problem-solving) defined, problem solving is the act of
defining a problem; determining the cause of the problem; identifying,
prioritizing, and selecting alternatives for a solution; and
implementing a solution. Problem-solving method aims at presenting
the knowledge to be learnt in the form of a problem. Hence the
operational excellence approaches can be summarised into:
1)
2)
3)
4)
Planning,
Cause Analysis,
Implementing improvement action and,
Verify effectiveness
There are several approaches that can be adopted based on current
fashion setting or the popular approaches such as six sigma DMAIC
method, 8-disciplines methodology, A3 problem solving or lean
methodology, benchmarking TRADE that discuss in this chapter. At
this stage, the organization should already adopted the suitable
operational approaches.
During project selection (as discuss in previous chapter), the
organization should determine the issues or problem to solve. The type
of problem is also determined either common cause or special cause
type of problem. This is to ensure that the right action is taken as
shown in figure 5.1. Common Causes of Variance also referred to as
“Natural Problems, “Noise,” and “Random Cause”. Common causes
of variance are the usual quantifiable and historical variations in a
system that are natural. Though variance is a problem, it is an inherent
part of a process. Specific actions cannot be taken to prevent this
failure from occurring. It is ongoing, consistent, and predictable. The
organization must make a fundamental change to reduce the common
106
OPERATIONAL EXCELLENCE – Management Systems
causes variation. Examples of common cause variation in processing
time. Consider an employee who takes a little longer than usual to
complete a specific task. He is given twenty seconds to complete one
item, and instead, he takes in between fifteen seconds to twenty-five
seconds; this is considered as common cause variation. To improve
this, we need to make fundamental change to the system such as
changing the manual work to automated machine in order to improve
this problem.
Figure 5.1 Choice of action vs special and common cause
Special Cause problem or sometime name as “Assignable
Cause.”, on the other hand, refers to unexpected problem that affect a
process. These are problems that were not observed previously and are
unusual, non-quantifiable variations. It can be a result of a specific
change that is brought into a process resulting in unpredictable
107
Chapter 5 – Operational Excellence approaches
problem. It is not usually part of your normal process and occurs
suddenly. Causes are usually related to some defect in the system or
method. However, this problem can be corrected by making changes
to affected methods, components, or processes without changing the
system. Examples of special cause problem i.e. sudden machine
malfunctions, a computer crashes, there is a power cut, and this happen
randomly. But if we can predict it, the problem is considered as
common cause.
Both common and special cause approaches are acceptable in
operational excellence. The operational excellence approaches for
special cause can be 5 steps corrective action ad 8-Discipline problem
solving. While the operational excellence approaches for common
cause problem can be Six Sigma DMAIC methodology, Small group
activities, TRADE benchmarking and lean workshop.
108
OPERATIONAL EXCELLENCE – Management Systems
5.2 Project planning
Once the project has been selected, the project team should plan the
operational excellence project by defining the project. The stages in
can be varies based on the approaches as shown in table 5.1.
Table 5.1 : Project planning stages for different approaches
Approaches
Lean/ Six
Sigma DMAIC
TRADE
Benchmark
8-Discipline
Project
Planning Stage
Define
Term of
reference and
review current
state
D1 team
formation and
D2 problem
description
Example of Tools and
Techniques
Project Charter, VOC,
VSM current stage/
SIPOC
TOR
8D form, 5W2H,
similarity analysis
The planning stage involves selecting the aim of the project,
forming a project team and developing the project charter or terms of
reference. Once the operational excellence project theme has been
selected, the operational excellence project leader drafts a Project
Charter and get the project approval from champion, plots a high-level
map of the process and set the objective and target to achieve for the
operational project.
Project charter is a statement of the scope, objectives, and
participants in a project. It provides a preliminary delineation of roles
and responsibilities, outlines the project objectives, identifies the main
stakeholders, and defines the authority of the project manager. It
109
Chapter 5 – Operational Excellence approaches
serves as a reference of authority for the future of the project. The
project charter establishes the authority assigned to the project leader,
especially in a cross-department project environment (matrix). Project
charter is considered industry best practice and example of project
charter form as shown in figure 5.2 At minimum, project charter
development steps are as followed:
Step 1: Define the problem and project scope,
Step 2: Set the goals and objectives,
Step 3: Select the team.
Step 4: Develop the action plan, start and end time
Step 5: Socialize the charter with the organization top
management and team member.
Project Charter
110
OPERATIONAL EXCELLENCE – Management Systems
Figure 5.2 Sample of Project Charter
Additional tools such as Voice of the customer (VOC) is to
focus and understand feedback from current and future customers
indicating offerings that satisfy and dissatisfaction. While, current
value stream map (VSM) is to provide an overview of an entire
process, starting and finishing at the customer, and analysing what is
required to meet customer needs.
111
Chapter 5 – Operational Excellence approaches
5.3 Cause Analysis/ Process Analysis
This stage involves identifying the cause of the issues. One of the
biggest challenges is for the teams to understanding the true root
causes of process issues. Without proper analysis, teams can
implement solutions that do not resolve the issue and will wastes time,
consumes resources, increases variation and risks causing new
problems. The process may start by identifying the potential cause and
determine the root cause and escape points. Also identify why the
problem was not noticed at the time it occurred. All causes should be
verified or proved. The team can use five whys or Ishikawa diagrams
to map causes against the effect or problem identified.
This can be true for some issues. On other hand, there is
potential cause of not implementing lean system that cause the nonvalue-added process exist. Hence the cause analysis should be replace
with process analysis instead. Process can be analyse either by
drawing the future state value stream map conduct or detail step by
step process analysis.
While for TRADE methodology, analysis can be done by
acquiring the best practices with other organisations that are likely to
have better practices and finding out what they do differently. Various
methods can be used to learn from other organisations such as internet
research, surveys and site visits. Comparison of the different cause/
process analysis stage by different approaches are table out on table
5.2.
112
OPERATIONAL EXCELLENCE – Management Systems
Table 5. 2 : Cause analysis stages for different approaches
Approaches
Six Sigma DMAIC
Lean
TRADE
Benchmark
8-Discipline
Cause analysis
Stage
Measure and
Analyse
Process
Analysis
Acquire Best
Practices.
D4 Root cause
Analysis
Example of Tools and
Techniques
Capability analysis,
pareto chart,
hyphothesis testing,
DOE
VSM, process value
added matrix
Benchmarking
8D form, Cause and
Effect diagram
5.4 Implementing improvement action
Implement the improvement action by addressing and eliminating the
root causes or waste. Once the team have determined what is causing
the problem or source of non-value-added process, it’s time for the
team to implement plans to resolve the root cause(s) or eliminate/
minimise the waste. The implementation can utilise the kaizen event.
List of improvement action should be developed and each of the action
should determine the potential risk or side effect to the process if the
change implemented.
In order to minimised risk, the team should refine their
countermeasure ideas, pilots process changes, implements solutions
and lastly, collects data to confirm there is measurable improvement.
A structured improvement effort can lead to innovative and elegant
changes that improve the baseline measure and, ultimately, the
113
Chapter 5 – Operational Excellence approaches
customer experience. Comparison of the different implementation
stage by different approaches are table out on table 5.3.
Table 5.3 : Implementing improvement action stages for different
approaches
Approaches
Lean/ Six
Sigma DMAIC
TRADE
Benchmark
8-Discipline
Implementation
stage
Improve
Example of Tools
and Techniques
Risk analysis
Deploy
Decision making
D5 Corrective
Action
8D form
5.5 Verify effectiveness
Verify the effectiveness is to ensure the improvement is sustained.
With improvements in place and the process problem fixed, the team
must work to maintain the gains and make it easy to update best
practices. In this Phase, the team develops a Monitoring Plan to track
the success of the updated process and crafts a Response Plan in case
there is a dip in performance. Once in place, the Process Owner
monitors and continually updates the current best method.
In 8- Discipline, in addition to validate the corrective action
in D6, the D7 modify the management systems, operation systems,
practices, and procedures to prevent recurrence of this and similar
problems. The final discipline D8, congratulate the team and
contributors for the success of the project.
114
OPERATIONAL EXCELLENCE – Management Systems
In TRADE, evaluate the benchmarking process and outcomes
to make sure the project has delivered the expected benefits that were
outlined in the project charter or Terms of Reference (TOR). It
involves undertaking a cost and benefits analysis and a review on how
well each stage of the benchmarking project was undertaken so that
this learning can be applied to future projects.
Table 5. 4: Verify effectiveness stages for different approaches
Approaches
Lean/ Six Sigma DMAIC
TRADE Benchmark
8-Discipline
Verify effectiveness Stage
Control
Evaluate
D6: Validate corrective action
D7: Prevent Recurrence
D8: Congratulate team
115
Part 3 – Operational Excellence assessment criteria
PART 3
Operational excellence assessment criteria
116
OPERATIONAL EXCELLENCE – Management Systems
Chapter 6
Operational excellence – Assessment Criteria
117
Chapter 6 - Operational excellence – Assessment Criteria
6.1 Operational excellence assessment model
Operational excellence assessment model is an essentially for the
organization that already develop and implement the operational
excellence management system (OEMS). They are used to assess an
organization’s strengths and determine areas for improvement in the
current operational excellence management system. From this
information, senior management can make sensible decisions on the
actions needed to further improve the operational excellence
management system.
While the operational excellence management system
requirements is suitable for audit to ensure the organization maintain
their operational excellence management system, the operational
excellence assessment model is use for the organisation to constantly
improve its operational excellence performance. As shown in figure
6.1, the organization can assess their level of implementation into 4
level which are:
•
Level 1 – “Approaches operational excellence”. The organization
under this level can be consider as system implementer of
operational excellence management system
•
Level 2 – “Deployed operational excellence”. The organization
under this level can be consider as practitioner operational
excellence management system. The deployment of operational
excellence management system have been spread to nonoperational areas.
•
Level 3 – “Learning operational excellence”. The organization
under this level can be consider as achiever in operational
excellence management system. The organization have
118
OPERATIONAL EXCELLENCE – Management Systems
constantly improve and tested various operational excellence
tools and techniques.
•
Level 4 – “Integrated operational excellence”. The organization
under this level can be consider as best in class in operational
excellence management system. The organization have
constantly integrate with the latest technology, achieved the
excellence result, world class best practice and many more
noteworthy effort.
Level 1
Adopted/
Approach OE
Level 3
Learning OE
Level 2
Deploy OE
Figure 6. 1 Level of OE Maturity
119
Level 4
Integrated OE
Chapter 6 - Operational excellence – Assessment Criteria
The model for operational excellencemanagement system adopted
plan, do, check and action (PDCA) cycle with additional leadership
block on top of PDCA cycle and team work at bottom of PDCA create
the building block of the assessment criteria category as shown in
figure 6.2. However in assessment criteria, the “Check” and “Action”
category is combined as “Result” category.
LEADERSHIP
Category 1
TEAMWORK
Category 3
Figure 6. 2 Operational excellence model and assessment criteria
category arrangement
120
OPERATIONAL EXCELLENCE – Management Systems
6.2 Operational excellence assessment methodology
The operational excellence assessment methodology has been
designed to be effective, practical, easy to use, and affordable to
ensure any organisations can conduct the operational assessment in
order to achieve constant improvement. The operational excellence
assessment tools will enable your organization to:
• Establish the health of your organisation operational
excellence initiatives
• Benchmark your performance against best practices from
around the world
• Help you to determine the actions required that will have
most impact on improving your organization performance
and financial results
• Change your organisation’s work culture to a operational
excellence focussed culture.
The assessment tools can either be facilitated by consultants or selffacilitated without the need for outside support or verification. The
operational excellence assessment tools are aligned to some of the
criteria in Business Excellence Models and are based on the principles
of Business Excellence. Hence the approaches to assess the
operational excellence management systems and performance against
operational excellence criteria adopted the same principal of business
excellence assessment and the approaches recommended by
Mohammad (2012) which are:
(1) A questionnaire approaches. Consists of a set of questions to
assess an organization’s operational excellence management
121
Chapter 6 - Operational excellence – Assessment Criteria
system for each category item. The results can then be analyzed
to determine appropriate actions.
(2) A pro forma approach. This involves forms being designed
for all of category items. Each form would require the
organization to record how it addressed that particular item, its
strengths, weaknesses, opportunities and threat management
and determine the action system for improvement.
(3) A workshop approaches. This approach usually involves a
senior management team gathering data and evidence to present
to peers at a workshop. At the workshop, performance against
the model is scored and action plans are agreed upon.
(4) A matrix chart approaches. This involves the creation of a
company specific achievement matrix within the framework of
an operational excellence. It typically consists of a series of
statements of achievements for each category using a scale of 15 or 1-10 points. Individuals or teams use the matrix to score
their organization operational excellence process.
(5) An award approaches. This approach involves writing a full
evidence submission for the operational excellence award.
Based on the evidence within the submission document and
supporting evidence from a site visit, internal or external
assessors evaluate the organization and provide feedback.
The decision of which approach to use depends on the
company's objectives and level of operational excellence
maturity. In general, it is recommended that companies in the
first instance use a questionnaire approach and then develop,
once they are more mature, a more sophisticated approach.
Whichever assessment approach is used it is recommended that
122
OPERATIONAL EXCELLENCE – Management Systems
all the senior management team are involved and at least a crosssection of employees so that a consensus view on the state of the
organization and the actions required is obtained. Involving a
wide-group of participants will help everyone to understand the
issues the organization is facing and lead to a greater level of
buy-in to any actions that follow.
123
Chapter 6 - Operational excellence – Assessment Criteria
6.3 Operational excellence scoring criteria
The scoring criteria for each approach discuss in chapter 6.2 can
utilised:
1. Yes of No. Yes or no criteria have been cover under auditing
of operational excellence management system requirement
and the common category of finding as shown in table 6.1.
Yes – indicate conformity, while No – indicate non
conformity.
2. 1-5 score (or 1, 3, 5, 7, 10) score. The score 1-5 is commonly
use in assessment. Example of 1-5 scoring according to
business excellence approach is shown in table 6.2.
3. Simplified A-D-L-I scoring level. As shown in figure 6.1, the
organization can assess the organization level of
implementation into 4 level which are A-D-L-I. The scoring
guide using A-D-L-I is shown in table 6.3. The simplified AD-L-I scoring use:
Option 1:
A (Le) – 1 score
D (T) – 3 score
L (C) – 7 score
I (I) – 9 score
Option 2: Count the numbers of A-D-L-I for each category.
Table 6. 1 Type of conformity and non-conformity
124
OPERATIONAL EXCELLENCE – Management Systems
Findings
Descriptions 1
Description 2
Not Address
Not in place
5
Noteworthy
Documented but not
implemented
Implemented
Effectively Implemeted and
Maintain
Evidence of Improvement
and Knowledge Maintain
Inplace
3
4
Major Non
conformity
Minor Non
conformity
Conformance
Conformance
1
2
125
Partial Effective
Effective
Permanent
Implementation
Chapter 6 - Operational excellence – Assessment Criteria
Table 6. 2 Common scoring dimension
Score Dimension Score Type1
(type2)
Operational Excellence Assessment Criteria (except Result
criteria)
Markoption
Anecdote
Approach
Deployment
Learning
Integration
1
0-5%
Reacting to
the problem
No
SYSTEMATIC
APPROACH to
item
requirements
is evident;
information is
ANECDOTAL.
(A)
Little or no
DEPLOY-MENT
of any
SYSTEMATIC
APPROACH is
evident. (D)
An
improvement
orientation is
not evident;
improvement
is achieved by
reacting to
problems. (L)
2
(3)
1025%
General
improve-ment
orientation
The beginning
of a
SYSTEMATIC
APPROACH to
the BASIC
REQUIREMEN
TS of the item
is evident. (A)
Early stages
of a transition
from reacting
to problems to
a general
improvement
orientation are
evident. (L)
3
(5)
3045%
Systematic
evaluation
and
improvement
An
EFFECTIVE,
SYSTEMATIC
APPROACH,
responsive to
the BASIC
REQUIREMEN
TS of the item,
is evident. (A)
The
APPROACH is
in the early
stages of
DEPLOYMENT
in most areas or
work units,
inhibiting
progress in
achieving the
BASIC
REQUIREMENT
S of the item.
(D)
The
APPROACH is
DEPLOYED,
although some
areas or work
units are in early
stages of
DEPLOYMENT.
(D)
No
organizatio
nal ALIGNMENT is
evident;
individual
areas or
work units
operate
independe
ntly. (I)
The
APPROAC
H is
ALIGNED
with other
areas or
work units
largely
through
joint
problem
solving. (I)
126
The beginning
of a
SYSTEMATIC
APPROACH
to evaluation
and
improvement
of KEY
PROCESSES
is evident. (L)
The APPROACH
is in the
early
stages of
ALIGNMENT with
the basic
organizational
needs
identified
in
response
to the
Organizational
OPERATIONAL EXCELLENCE – Management Systems
Profile and
other
process
items. (I)
4
(7)
5065%
Learning and
strategic
improvement
An
EFFECTIVE,
SYSTEMATIC
APPROACH,
responsive to
the OVERALL
REQUIREMEN
TS of the item,
is
The
APPROACH is
well
DEPLOYED,
although
DEPLOYMENT
may vary in
some areas or
work units. (D)
5
(10)
7085%
Organization
analysis and
innovation
MATIC
APPROACH,
responsive to
the MULTIPLE
REQUIREMEN
TS of the item,
is evident. (A)
• The
APPROACH is
well
DEPLOYED,
with no
significant gaps.
(D)
127
A fact-based,
SYSTEMATIC
evaluation
and
improvement
PROCESS
and some
organizational
LEARNING,
including
INNOVATION
, are in place
for improving
the efficiency
and
EFFECTIVEN
ESS of KEY
PROCESSES
. (L)
• Fact-based,
SYSTEMATIC
evaluation
and
improvement
and
organizational
LEARNING,
including
INNOVATION
, are KEY
management
tools; there is
clear
evidence of
refinement as
a result of
organizational
-level
ANALYSIS
and sharing.
(L)
The APPROACH is
ALIGNED
with your
overall
organizational
needs as
identified
in
response
to the
Organizational
Profile and
other
process
items. (I)
• The APPROACH is
INTEGRA
TED with
your
current
and future
organizatio
nal needs
as
identified
in
response
to the
Organizational
Profile and
other
process
items. (I)
Chapter 6 - Operational excellence – Assessment Criteria
An
EFFECTIVE,
SYSTEMATIC
APPROACH,
fully
responsive to
the MULTIPLE
REQUIREMEN
TS of the item,
is evident. (A)
• The
APPROACH is
fully DEPLOYED
without
significant
weaknesses or
gaps in any
areas or work
units. (D)
• Fact-based,
SYSTEMATIC
evaluation
and
improvement
and
organizational
LEARNING
through
INNOVATION
are KEY
organizationwide tools;
refinement
and
INNOVATION
, backed by
ANALYSIS
and sharing,
are evident
throughout
the
organization.
(L)
Operational Excellence Result Criteria
• The APPROACH is
well INTEGRATED
with your
current
and future
organizatio
nal needs
as
identified
in
response
to the
Organizational
Profile and
other
process
items. (I)
Anecdote
Level
Trends
Comparison
Integration
Reacting to
the problem
There are no
organizational
PERFORMAN
CE RESULTS,
or the
RESULTS
reported are
poor. (Le)
TREND data
either are not
reported or show
mainly adverse
TRENDS. (T)
Comparative
information is
not reported.
(C)
RESULTS
are not
reported
for any
areas of
importance
to the
accomplish
ment of
your
organizatio
n’s
MISSION.
(I)
90100%
Score Dimension Score Type1
(type2)
1
Mark
(optio
n)
0-5%
128
OPERATIONAL EXCELLENCE – Management Systems
2
(3)
1025%
General
improvement
orientation
3
(5)
3045%
Systematic
evaluation
and
improvement
4
(7)
5065%
Learning and
strategic
improvement
A few
organizational
PERFORMAN
CE RESULTS
are reported,
responsive to
the BASIC
REQUIREMEN
TS of the item,
and early good
PERFORMAN
CE LEVELS
are evident.
(Le)
Good
organizational
PERFORMAN
CE LEVELS
are reported,
responsive to
the BASIC
REQUIREMEN
TS of the item.
(Le)
Some TREND
data are
reported, with
some adverse
TRENDS
evident. (T)
Little or no
comparative
information is
reported. (C)
Some TREND
data are
reported, and
most of the
TRENDS
presented are
beneficial. (T)
Early stages
of obtaining
comparative
information
are evident.
(C)
Good
organizational
PERFORMAN
CE LEVELS
are reported,
responsive to
the OVERALL
REQUIREMEN
TS of the item.
(Le)
Beneficial
TRENDS are
evident in areas
of importance to
the
accomplishment
of your
organization’s
mission (T)
Some current
PERFORMANCE
LEVELS have
been
evaluated
against
relevant
comparisons
and/or
BENCHMARK
S and show
areas of good
relative
PERFORMAN
CE (C).
129
RESULTS
are
reported
for a few
areas of
importance
to the
accomplish
ment of
your
organization’s
MISSION.
(I)
RESULTS
are
reported
for many
areas of
importance
to the
accomplish
ment of
your
organization’s
MISSION.
(I)
Organizational
PERFORMANCE
RESULTS
are
reported
for most
KEY
CUSTOMER,
market,
and
PROCESS
requireme
nts. (I)
Chapter 6 - Operational excellence – Assessment Criteria
5
(10)
7085%
90100%
Organization
analysis and
innovation
Good-toexcellent
organizational
PERFORMAN
CE LEVELS
are reported,
responsive to
the MULTIPLE
REQUIREMEN
TS of the item.
(Le)
• Beneficial
TRENDS have
been sustained
over time in
most areas of
importance to
the
accomplishment
of your
organization’s
MISSION. (T)
Excellence
organization
PERFORMAN
CE LEVELS
are reported
that are fully
responsive to
the MULTIPLE
REQUIREMEN
TS of the item.
(Le)
• Beneficial
TRENDS have
been sustained
over time in all
areas of
importance to
the
accomplishment
of your
organization’s
MISSION. (T)
130
• Many to
most
TRENDS and
current
PERFORMAN
CE LEVELS
have been
evaluated
against
relevant
comparisons
and/or
BENCHMARK
S and show
areas of
leadership
and very
PERFORMAN
CE. (C)good
relative
• Industry and
BENCHMARK
leadership is
demonstrated
in many
areas. (C)
•
Organizati
onal
PERFORMANCE
RESULTS
are
reported
for most
KEY
CUSTOMER,
market,
PROCESS
, and
ACTION
PLAN
requirements. (I)
Organizati
onal
PERFORMANCE
RESULTS
and
PROJECTIONS are
reported
for most
KEY
CUSTOMER,
market,
PROCESS
, and
ACTION
PLAN
requirements. (I)
OPERATIONAL EXCELLENCE – Management Systems
Table 6. 3 Simplified A-D-L-I
Score
(Option)
Mark
Level Operational/ Result
0
N
Not adopted yet
1
A
Approached/ Level
3
D
Deploy/ Trend
7
L
Learning/ Comparison
(Benchmark)
9
I
Conformance
131
Chapter 6 - Operational excellence – Assessment Criteria
Simplified A-D-L-I mean that instead of setting A-D-L-I as factors,
the organization can set A-D-L-I for level. The level of the A-D-L-I
or Le-T-C-I (result criteria) on each criterion, can be used uses and
improves to address the item requirements in categories 1–5. The four
levels used to evaluate process are described below:
“A- Approach” refers to:
- the organization have adopted the requirements and best practices
- the organization has developed methods to accomplish the process
- the appropriateness of the methods to the criteria to the
organization’s operating environment
“Le- Levels” refers to:
- your level of performance has been measure
“D- Deployment” refers to the extent to which
- effective implementation of the methods
- the approach is applied consistently
- the degree to which the approach is repeatable and based on reliable
data and information (i.e., systematic)
- the approach is used (executed) by all appropriate work process as
per criteria
“T- Trends” refers to
- the rate of your performance improvements or the sustainability of
good performance have been monitor at least for every quarter for 2
years. Then the trend can be seen.
(i.e., the slope of trend data)
“L- Learning” refers to
- refining the approach through cycles of evaluation and
improvement
- encouraging breakthrough change to your approach through
132
OPERATIONAL EXCELLENCE – Management Systems
innovation and benchmarking
- sharing refinements and innovations with other relevant work units
and processes
“C- Comparisons” refers to
- the performance relative to appropriate comparisons and benchmark
- the performance relative to benchmarks or industry leaders
“I- Integration” refers to the extent to which
- the measures, information, and improvement systems are
complementary across
processes and work units
- the plans, processes, results, analyses, learning, and actions are
harmonized
across processes and work units to support organization-wide goals
- the refine approach that is aligned with your organizational needs
and can be consider as best in class practices
- Other organization can benchmark the approaches.
133
Chapter 6 - Operational excellence – Assessment Criteria
6.4 Operational excellence assessment criteria
6.4.1 How to use the operational excellence assessment criteria
Operational Profile questions.
This is the simple question to describe your organization operational
profile. There are 8 profile with 2 question on each profile. Most of
the answer to the question in this section already available in your
company profile. But if the information not available, just answer the
as not available. The Organizational Profile sets the context for your
answers to the rest of the questions.
Operational excellence category (1-5)
The assessment is against the most important category of operational
excellence. The categories represent seven critical aspects of
managing and performing operational excellence: (1) Leadership; (2)
Planning; (3) Teamwork; (4) Operational Excellence process; (5)
Result. Categories 1–4 each consist of two items (e.g., 1.1, 1.2), with
many of the questions beginning with “how.” In answering these
questions, give information on your key operational excellence
processes whether your organization has:
-
the approach, and
deployed the approached, and
learned and improved, and
already consider integrate the best practice in the approaches.
For the items in category 5 – Result, report on the results that are the
most important to your organization’s success:
134
OPERATIONAL EXCELLENCE – Management Systems
- Levels: Have you measure the performance and what is your
current performance? and
- Trends: Have you monitor the performance and are the results
improving, staying the same, or getting worse? and
- Comparisons: Have you compare your result and how does your
performance compare with that of other organizations and
competitors, or with benchmarks? and
- Integration: Are you using the results in decision making and
consider the result is best in your class?
Assess your answers by using the recommended scoring criteria as
discuss in chapter 6.3 (recommend simplify A-D-L-I approaches) to
assess and score to the questions in each item. Calculate the numbers
of A, D, L and I. Identify your strengths (normally those have score L
& I). For lower score i.e. N, A, and D, look at the next higher level to
see what you might improve. List the action and prioritize your
actions. Celebrate and share your strengths and build on them to
improve the things you do well.
135
Chapter 6 - Operational excellence – Assessment Criteria
6.4.2 Operational Profile
(1) Deliverable
1.1. What are your main product and/ or services family?
1.2. What mechanisms do you use to deliver your products
and/or services?
(2) Customers
2.1 What are your key customer groups and market segment?
2.2 What is the key characteristic of each of the product or
service family to the market segment?
(3) Suppliers supply chain
3.1 What are your key types of suppliers or partners?
3.2 What is your key supply-chain requirements?
(4) Mission, Vision, and Values
4.1 What is your stated mission, vision, and values?
4.2 What are your organization’s core competencies, and what
is their relationship to your mission?
(5) Workforce Profile
5.1 What is your workforce profile?
5.2 What is your workforce or employee groups and segments
i.e. management, direct workforce, indirect workforce?
(6) Organization size and structure
6.1 What are the size of your organization i.e. micro, small,
medium, large or multinational?
136
OPERATIONAL EXCELLENCE – Management Systems
6.2 What are the reporting structure of your organization i.e.
subsidiary or large organization, private limited, franchisee
or sole proprietary, public listed etc?
(7) Strategic Context
7.1 What is your competitive position (Organization strength
and opportunities)?
7.2 What are your key strategic challenges and advantages in the
areas of business, operations, societal responsibilities, and
workforce (Organization weakness and threats?
(8) Operational Excellence strategy
8.1 What are the key elements of your performance
improvement system, including your processes for
evaluation and improvement of key organizational projects
and processes?
8.2 What key sources of benchmarking data are available from
within and outside your industry?
137
Chapter 6 - Operational excellence – Assessment Criteria
6.4.3 Category 1 – Operational excellence leadership
1.1 Top management commitment: How do your top management
lead the organization operational excellence initiatives?
(1) how do top management top management set your organization’s
operational excellence policy?
(2) how do top management communicate with and engage the
operational excellence team?
(3) how do top management’ actions create an environment for
operational excellence success now and in the future?
1.2 Operational excellence strategy development: How do you
develop your operational excellence strategy?
(1) how do you conduct your operational excellence strategic
planning?
(2) how does your operational excellence strategy development
process stimulate and incorporate innovation?
(3) how do you collect and analyze relevant data and develop
information for your strategic planning process?
1.3 Operational excellence Strategy Deployment: How do you
develop your operational excellence strategic plan?
(1) how do you decide which key strength, weakness, opportunities
and threat will be accomplished by your operational excellence team?
(2) how do you set operational excellence objectives and timetable for
achieving them?
(3) how do your operational excellence objectives achieve appropriate
balance among varying and potentially competing organizational
needs?
138
OPERATIONAL EXCELLENCE – Management Systems
1.4 Operational excellence performance: How do you measure,
analyse, and evaluate the operational excellence performance?
(1) how do you track data and information on operational excellence
performance?
(2) how do you select comparative data and information to support
fact-based decision making?
(3) how do you ensure that your performance measurement system can
respond to rapid or unexpected organizational or external changes?
1.5 Operational excellence improvement: How do you improve the
operational excellence performance?
(1) how do you review your Operational excellence performance:
How do you measure, analyse, and evaluate the operational
excellence’s performance and capabilities?
(2) how do you project your Operational excellence performance:
How do you measure, analyse, and evaluate the operational excellence
future performance?
(3) how do you use findings from performance reviews to develop
priorities for continuous improvement and opportunities for
innovation?
139
Chapter 6 - Operational excellence – Assessment Criteria
6.4.4
Category 2 –Operational excellence planning
2.1
Scope setting: How do you set the operational excellence
implement scope?
(1) What are your current and future operational excellence scopes?
(2) how do you deploy your action plans for scope expansion?
(3) how do you ensure that financial and other resources are available
to support the achievement of your action plans to meet the scope
extension?
2.2
Operational excellence process: how do you improve your
operational processes?
(1) how do you improve your operational processes to improve
products and performance?
(2) how do you enhance your core competencies, and reduce
variability?
(3) how do you pursue your opportunities for innovation?
2.3 Operational excellence risk and opportunities: How you manage
the risk and opportunities for operational excellence process?
(1) how do you determine the risk (negative and positive) for
operational excellence management system?
(2) how to you assessed the risk?
(3) how do you treat the risk?
2.4 Operational excellence infrastructure: How you manage the
Operational excellence infrastructure?
(1) how do you ensure that financial and infrastructure are available
to support the operational excellence initiatives?
(2) how you maintain the operational excellence infrastructure?
(3) How do you improve the infrastructure?
140
OPERATIONAL EXCELLENCE – Management Systems
2.5 Information and Knowledge Management: How do you manage
your information and your organizational operational excellence
knowledge?
(1) how do you ensure the availability and quality of organizational
operational excellence knowledge?
(2) how do you share the knowledge and best practices in your
organization?
(3) how do you use your knowledge and resources to embed learning
in the way your organization operates?
141
Chapter 6 - Operational excellence – Assessment Criteria
6.4.5 Category 3 –Operational excellence teamwork
3.1 Operational excellence organization structure: How do you
develop an effective and supportive operational excellence
organization structure?
(1) how do you organize and manage your operational excellence
team?
(2) how do you determine team members?
(3) how do you prepare your team for changing capability and
capacity needs?
3.2 Operational excellence team competency: How do you provide
learning and development to operational excellence team?
(1) how do you assess your team capability and capacity needs?
(2) how does your learning and development system support the
organization’s operational excellence needs and the personal
development of your team members, managers, and leaders?
(3) how do you evaluate the effectiveness and efficiency of your
learning and development system?
3.3 Operational excellence team engagement: How do you engage
your workforce to achieve a high-performance operational
excellence?
(1) how do you foster an organizational culture that is characterized
by open communication, high performance, and an engaged
workforce?
(2) how do you determine the key drivers of workforce
engagement?
(3) how do you assess workforce engagement?
3.4 Operational excellence motivation: how does your operational
excellence performance management system support high
performer?
142
OPERATIONAL EXCELLENCE – Management Systems
(1) how do you formulate the motivation factor for operational
excellence team?
(2) how do you assess the high performer?
(3) how you manage career progression for your high-performance
team and your potential future leaders?
6.4.6 Category 4 –Operational excellence implementation
4.1 Process Improvement: How do you map, select, implement and
assessed the operation process improvement from current state
to future state*?
(1) how do you integrate the processes and systems across all
hierarchical levels within a facility to establish a connected,
end-to-end data thread?
(2) how do you integrate the enterprise processes across the
organization and with stakeholders along the value chain?
(3) how do you integrate product cycle (integration of people,
processes and systems along the entire product lifecycle,
encompassing the stages of design and development,
engineering, production, customer use, service, and disposal)?
* future state in this new decade are IR4.0 with higher productivity
and minimum waste and variation
4.2 Technology Improvement: How do you map, select, implement
and assess the technological improvement?
(1) how do you adopt and integrate toward operational process
automation, connectivity and intelligence (the application of
technology to monitor, control and execute the production and
delivery of products and services, within the location where the
production and management of goods is carried out.
143
Chapter 6 - Operational excellence – Assessment Criteria
(2) how do you adopt and integrate the enterprise automation,
connectivity and intelligence (the application of technology to
monitor, control and execute processes, within the location
where the administrative work is carried out. These processes
include, but are not limited to, sales and marketing, demand
planning, procurement, and human resource management and
planning)?
(3) how do you adopt and integrate facilities automation,
connectivity and intelligence (the application of technology to
monitor, control and execute processes within the physical
building and/or premises where the operational process is
located. These processes include but are not limited to the
management of HVAC, chiller, security, and lighting systems)?
4.3 Creativity and Innovation: How do you integrate creativity and
innovation in operational excellence process map, select,
implement and assessed the operation process improvement
from current state to future state*?
(1) how do you determine creativity and innovation in operational
excellence process?
(2) how do you integrate the enterprise processes across the
organization and with stakeholders along the value chain?
(3) how do you pursue your opportunities for creativity and
innovation?
4.4 Health, safety, environment, security and resilience: How do
you integrate health, safety, environment, security and resilience
in operational excellence process?
(3) how do you integrate the processes and systems across all
hierarchical levels within a facility to establish a connected,
end-to-end data thread?
(4) how do you integrate the enterprise processes across the
organization and with stakeholders along the value chain?
144
OPERATIONAL EXCELLENCE – Management Systems
(5) how do you integrate product cycle (integration of people,
processes and systems along the entire product lifecycle,
encompassing the stages of design and development,
engineering, production, customer use, service, and disposal)?
* future state in this new decade is IR4.0 with higher productivity
and minimum waste and variation
4.5 Health, safety, environment, security, and resilience: How do
you integrate health, safety, environment, security and resilience
in operational excellence process?
(1)) how do you ensure the security and cybersecurity of your
operation including the sensitive or privileged data and
information in operational excellence process?
(2) how do you provide a safe and healthy operating environment in
operational excellence process?
(3) how do you integrate protection of environment and organization
preparedness for disasters or emergencies in operational
excellence process?
4.6 Operational effectiveness and efficiency: How do you ensure
effective and efficient management of your operations and
integrate to operational excellence process?
(1) how do you manage, plan, control and improve the overall costs
of your operations and integrate to operational excellence
process?
(2) how do you ensure the quality and reliability of your operation
and information systems and integrate to operational excellence
process?
(3) how do you governed and preserved the integrity in you
operation and integrate to operational excellence process?
145
Chapter 6 - Operational excellence – Assessment Criteria
6.4.7 Category 5 –Operational excellence result
5.1 Operational Results: What are your product performance and
process effectiveness results from implementation of operational
excellence process?
(1) What are your improvement results for your products and your
customer service processes?
(2) What are your process effectiveness and efficiency improvement
results?
(3) What are your customer satisfaction and dissatisfaction
improvement results?
(4) What are your customer engagement improvement results?
(5) What are your supply-chain management improvement results?
(6) What are your health, safety, environmental, security and
resilience improvement result?
5.2 Teamwork Results: What are your workforce-focused
performance results?
(1) What are your teamwork capability and capacity development
results?
(2) What are your teamwork climate results?
(3) What are your teamwork engagement results?
5.3 Financial and Market Results: What are your results for financial
viability?
(1) What are your financial performance results?
(2) What are your learning and growth performance results?
(3) What are you sustainability results?
End of Operational excellence assessment criteria
146
OPERATIONAL EXCELLENCE – Management Systems
Glossary, Abbreviation and Vocabulary
BE
BEF
CI
IE
MPC
OE
OM
PDCA
QM
QMS
QoS
SAW
TQM
-
Business Excellence
Business Excellence Framework
Continual Improvement
Industrial Engineering
Malaysia Productivity Corporation
Operational Excellence
Operation Management
Plan – Do – Check – Action
Quality Management
Quality Management System
Quality of Service
Simple average weighing
Total Quality Management
147
References
References
Adebanjo, D., Tickle, M., Laosirihongthong, T., & Mann, R. (2015). A study
of the use of business improvement initiatives: the association with
company size and level of national development. Production
Planning & Control, 26(7), 507–524.
https://doi.org/10.1080/09537287.2014.927931
Baldrige Performance Excellence Program. (2017). 2017–2018 Criteria for
Performance Excellence. Gaithersburg, MD: U.S. Department of
Commerce, National Institute of Standards and Technology.
http://www.nist.gov/baldrige.
Baldrige Performance Excellence Program. (2015). 2015–2016 Criteria for
Performance Excellence. Gaithersburg, MD: U.S. Department of
Commerce, National Institute of Standards and Technology.
http://www.nist.gov/baldrige.
Bendell, T. (2006). A review and comparison of six sigma and the lean
organisations. The TQM Magazine, 18(3), 255–262.
https://doi.org/10.1108/09544780610659989
Hornby, A. S. (2005). Oxford Advanced Learner’s Dictionary. Oxford
Advanced Learners Dictionary. https://doi.org/10.2307/3586015
Imai, M. (1986). Kaizen: The Key to Japanese Competitiveness Success.
Random House Business Division, New York.
International Organization for Standardization (ISO). (1991). Guidelines for
Auditing Quality Systems; (ISO10011th–1st, 1st ed.). Geneva:
International Organization for Standardization
International Organization for Standardization (ISO). (2005). Quality
Management Systems - Fundamentals and Vocabulary. (ISO9000).
Geneva: International Organization for Standardization.
International Organization for Standardization (ISO). (2015). Quality
management systems – Requirements (5th ed.). (ISO9001:2015).
Geneva: International Organization for Standardization.
International Organization for Standardization (ISO). (2015a). Quality
management systems - Fundamentals and vocabulary.
(ISO9000:2015). Geneva: International Organization for
Standardization.
International Organization for Standardization (ISO). (2011). Guideline for
management system audit. International Organization for
Standardization (ISO19011:2011, 2nd ed., Vol. 2). Geneva:
International Organization for Standardization.
148
OPERATIONAL EXCELLENCE – Management Systems
International Organization for Standardization (ISO). (2008). Quality
Management System: Requirements (ISO9001:2008, 4th ed.). Geneva:
International Organization for Standardization.
Johnson, R. A., Kast, F. E., & Rosenzweig, J. E. (1964). Systems Theory and
Management. Management Science, 10(2), 367–384.
https://doi.org/10.2307/2627306
Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard Translating
Strategy In Action (Kaplan & Norton, 1996, Harvard Business School
Press).pdf. Proceedings of the IEEE.
https://doi.org/10.1109/JPROC.1997.628729
Karapetrovic, S., & Willborn, W. (2001). Audit and self-assessment in
quality management: comparison and compatibility. Managerial
Auditing Journal, 16(6), 366–377.
https://doi.org/10.1108/02686900110395505
Kast, F., & Rosenzweig, J. (1985). Organisation and Management: A
Systems and Contemporarv Approach. 4 1 h Edition. McGraw-Hill,
New York.
Mann, R., Mohammad, M. & Agustin, M. T. (2012). UNDERSTANDING An
awareness guidebook guide book for SMEs.
Menda, R. (2004). The role of a manufacturing audit in crafting the
production system. International Journal of Operations & Production
Management, 24(9), 929–943.
https://doi.org/10.1108/01443570410552126
Miller, A. (2014). Redefining Operational Excellence: New Strategies for
Maximixing Perforamnce and Profits Across the Organization.
AMACOM.
Mohammad, M., Mann, R., Grigg, N., & Wagner, J. P. (2010). The Right
Improvement Initiative for the Right Situation - A contextual and
systems approach. In T. N. M. G. & S. S. In H. Ishii (Ed.), Proceedings
of the 40th International Conference on Computers and Industrial
Engineering (pp. 1–6). Hyogo: Institute of Electrical and Electronics
Engineers (IEEE).
Olhager, J. (2013). Evolution of operations planning and control: from
production to supply chains. International Journal of Production
Research, 51(23–24), 6836–6843.
Pakdil, F., & Leonard, K. M. (2014). Criteria for a lean organisation:
development of a lean assessment tool. International Journal of
Production Research, 52(15), 4587–4607.
Paul Brunet, A., & New, S. (2003). Kaizen in Japan: an empirical study.
149
References
International Journal of Operations & Production Management,
23(12), 1426–1446.
Psomas, E. L., & Fotopoulos, C. V. (2009). A meta analysis of ISO 9001:2000
research – findings and future research proposals. International
Journal of Quality and Service Sciences, 1(2), 128–144.
https://doi.org/10.1108/17566690910971418
Rahani, a. R., & al-Ashraf, M. (2012). Production Flow Analysis through
Value Stream Mapping: A Lean Manufacturing Process Case Study.
Procedia Engineering, 41(Iris), 1727–1734.
https://doi.org/10.1016/j.proeng.2012.07.375
Rajendran, M., & Devadasan, S. R. (2005). Quality audits: their status,
prowess and future focus. Managerial Auditing Journal, 20(4), 364–
382. https://doi.org/10.1108/02686900510592052
Rigby, D., & Bilodeau, B. (2011). Management Tools & Trends 2011.
Www.Bain.Com, 16. Retrieved from
http://www.bain.com/Images/BAIN_BRIEF_Management_Tools.pdf
Ritchie, L., & Dale, B. . (2000). Self-assessment using the business
excellence model: A study of practice and process. International
Journal of Production Economics, 66(3), 241–254.
https://doi.org/10.1016/S0925-5273(99)00130-9
Simons, D., & Taylor, D. (2007). Lean thinking in the UK red meat industry:
A systems and contingency approach. International Journal of
Production Economics, 106(1), 70–81.
https://doi.org/10.1016/j.ijpe.2006.04.003
Slack, N., Chambers, S., & Johnston, R. (2013). Operations Management.
Operations Management (6th ed.). Prentice Hall.
Thawesaengskulthai, N., & Tannock, J. D. T. (2008). Pay-off selection
criteria for quality and improvement initiatives. International Journal
of Quality & Reliability Management, 25(4), 366–382.
https://doi.org/10.1108/02656710810865258
Williams, R., Bertsch, B., Van Der Wiele, A., Van Iwaarden, J., & Dale, B.
(2006). Self-assessment against business excellence models: a
critique and perspective. Total Quality Management & Business
Excellence, 17(10), 1287–1300.
https://doi.org/10.1080/14783360600753737
Yeung, S. M.-C. (2009). Using Six Sigma-SIPOC for customer satisfaction.
International Journal of Six Sigma and Competitive Advantage, 5(4)
150
OPERATIONAL EXCELLENCE – Management Systems
Bibliography
Dr. Edly Ramly is a Fellow of the "Industrial Engineering Operation
Management Society international" (IEOM) based in Michigan,
United States. He has been a consultant for operational excellence
since 2001. His experience is in the automotive field, where he focuses
on efficiency and operational efficiency through eliminating waste
through VSM and Lean Techniques.
He was born in Batu Pahat, Johor, Malaysia in 1975. He
received an early education at Sekolah Rendah Kebangsaan Limpoon
(1). He received his secondary education at Sekolah Menengah Jalan
Kolam Air, Batu Pahat and Mara Science College, Muar. For A-Level,
he studied at the Banting Mara College Banting and first year dgree at
Mara Institute of Technology, Shah Alam before studying in United
Kingdom. Edly Ramly graduated from University of Bradford, UK
with a bachelor's degree in mechanical engineering specializing in
manufacturing and management systems. He further his studied at
Sheffield Hallam University, UK while working and awarded a Master
degree in Engineering with Management. Dr. Edly has been actively
involved in continuous improvement activities from the beginning of
her career. He was previously a lean promotion officer, six sigma
black belt, and manage several operational departments. He is active
in research and awarded as doctor in philosophy (PhD in Mechanical
engineering) University of Tun Hussein Onn Malaysia.
Dr. Edly is the founder and director of EFR Certification, an
international certification body. With good interpersonal and
communication skills, he conducts a variety of high-impact training
and workshops in the areas of workplace improvement, waste
reduction and variation, and problem-solving techniques. Because of
151
Bibliography
his extensive exposure in various management systems, he actively
involved in the areas of auditing / evaluating, consulting, and training
in business excellence (Business Excellence), Operational Excellence,
lean management systems, quality (ISO9001 and IATF16949),
environment (ISO14001) and occupational health (ISO45001), and
business continuity (ISO22301) to all level of organization including
SMEs and multi-national companies.
His industry experience is in the automotive field. He has
worked for Lucas Automotive and TRW Automotive, and has been
assigned to operational excellence through TQM, QCC, Lean and SixSigma. Therefore, he is frequently invited by the Malaysia
Productivity Corporation (MPC) and the Asia Productivity
Organization (APO) to conduct public training in the field of Lean and
Six-Sigma implementation.
152
“Operational
Excellence (OE)” –
Management System
Requirements, guidances
and assessment criteria
Operational excellence is a mindset that embraces
sustainable continual improvement culture within an
organization. Operational excellence not just about
reducing costs or increasing productivity in the
workplace. It is about creating the company culture
that will allow you to produce valuable and excellence
products and services for your customers and
achieve long-term sustainable growth.
Operational excellence is a journey that involves
applying the right tools to the right processes. There
are three elements of operational excellence
presented in this book. The first elements is the
“minimum requirements” or the structure of the OE.
The second element is the “guidance for use” and
third element is “OE assessment criteria”.
Dr. Edly Ramly is a fellow for Industrial Engineering Operation
Management Society (US). He is an active consultant specializing in
operational management and lean-six sigma. His experience is in the
field of automotive, where this field concerns the effectiveness and
efficiency of operations through waste elimination.
EFR Certification Sdn Bhd (1098616-A)
enquiries@efrcertification.com
www.efrcertification.com
View publication stats