ABC

Pengekosan Berdasarkan Aktiviti: Langkah Kehadapan Untuk Mengekalkan Daya Saing Syarikat-Syarikat Malaysia.

Pertumbuhan ekonomi Malaysia bagi dekad yang lalu tidak boleh dipisahkan dengan pertumbuhan sektor pembuatan. Sebagai tulang belakang ekonomi Malaysia, sektor ini menwujudkan lebih 853.700 pekerjaan (2006-2010), berbanding dengan lain-lain sektor (perdagangan, hotel dan restoran yang semuanya hanya menyediakan 810.400 pekerjaan) seperti yang dilaporkan dalam Rancangan Malaysia ke 9 [1]. Walau bagaimanapun, kebanyakan syarikat-syarikat pembuatan kini sedang menghadapi cabaran yang lebih hebat untuk mengekalkan daya saing mereka. Bagi menyahut cabaran ini, mereka telah memulakan pelbagai inisiatif penambahbaikan proses seperti program TQM, pembuatan Lean, JIT, CIM, MRPII dan lain-lain. Namun, satu aspek yang mampu dikaitkan secara langsung kepada keuntungan syarikat, iaitu kos, mungkin telah menjadi faktor yang paling penting untuk kelangsungan perniagaan dalam jangka panjang, belum berjaya ditangani. Isu ini jelas ditonjolkan dalam “Relevance Lost: The Rise and Fall of Management Accounting”oleh Profesor Robert Kaplan dari Harvard Business School, Amerika Syarikat. Beliau dengan jelas menyatakan masalah yang dihadapi oleh kebanyakan syarikat-syarikat pengilangan termasuk yang berada di Malaysia [2],

“Today’s management accounting information, driven by the procedure and cycle of organization’s financial reporting system, is too late, too aggregate and too distorted to be relevant for managers’ planning and control decision”  

Oleh itu, adalah penting bagi syarikat-syarikat pembuatan tempatan pada hari ini untuk memahami, mengenal pasti dan seterusnya mengambil jalan penyelesaian baru bagi mengurangkan kos pengeluaran mereka. Sesungguhnya, keupayaan untuk memperolehi dan menggunakan maklumat kos yang tepat telah menjadi terlalu mendesak pada hari ini. Ianya tidak mungkin boleh diabaikan oleh syarikat-syarikat Malaysia jika mereka ingin memastikan kelangsungan perniagaan di dalam jangka masa panjang. Kaedah ini juga amat perlu dilaksanakan bagi mengekalkan daya saing samada untuk menarik pelanggan-pelanggan baru yang berpotensi atau pun bagi mengekalkan kesetiaan pelanggan mereka yang sedia ada. Malangnya, kebanyakan syarikat-syarikat pembuatan di Malaysia khususnya masih tidak dapat mengambil kesempatan ini. Mereka masih terus menghadapi masalah yang biasa dihadapi oleh syarikat  tradisional yang masih menggunakan sistem pengekosan lama yang telah dibina sekian lama, iaitu semasa sistem pengeluaran masih menggunakan buruh secara intensif. Oleh itu, syarikat-syarikat ini dikhuatiri tidak mampu menghadapi cabaran semasa operasi pembuatan sebagaimana yang dibimbangi oleh guru pengurusan moden, Peter Drucker [3].

“Traditional cost accounting in manufacturing – now seventy-five year old – does not record the non-producing, such as the cost of faulty quality, or of the machine being out of order, or of needed parts not being on hand. Yet these unrecorded and uncontrolled costs in some plants run as high as the costs that traditional accounting does record:”

Sudah tiba masanya, syarikat-syarikat tempatan untuk mengkaji semula dasar dan strategi operasi mereka serta mengambil langkah untuk maju ke hadapan dengan menerima pakai penyelesaian yang lebih baik dan berkesan. Ianya boleh dilakukan jika mereka sanggup mengambil kesempatan daripada inovasi dalam bidang perakaunan pengurusan yang telah diwujudkan sejak 20 tahun yang lalu yang dikenali sebagai Pengekosan Berasaskan Aktiviti (ABC). Dengan membuat keputusan strategik ini, syarikat-syarikat tempatan telah memulakan langkah yang bermakna kepada usaha pembaikan proses secara lebih berkesan. Ia juga bermakna mereka telah mempunyai alatan yang lebih efektif bagi membuat keputusan yang menjanjikan hasil perniagaan yang lebih baik [3],

By contrast, a new method of cost accounting developed in the past ten years – called ‘activity-based’ accounting – record all costs. And it related them, as traditional cost accounting cannot, to value added. Within the next ten years it should be in general use. And then we will have operational control in manufacturing”

(Peter Drucker, Managing in a Time of Great Change, 1995, pp. 101)

Kaedah ABC seperti yang ditakrifkan oleh Konsortium Pembuatan Termaju- Antarabangsa (CAM-I) adalah satu kaedah menentukan kos produk atau servis, kos aktiviti-aktiviti dan kos sumber-sumber [4]. Kaedah ABC dapat memperuntukkan kos sumber-sumber perniagaan kepada aktiviti-aktiviti operasi berdasarkan penggunaan sebenar sumber-sumber tersebut. Begitu juga kos aktiviti mampu dihubungkan terus kepada produk berdasarkan kadar penggunaan sebenar aktiviti-aktiviti tersebut. Dengan menggunakan kaedah ABC, sebuah syarikat mampu untuk mengenal pasti sebab sesuatu kos itu berlaku kepada produk, kepada aktiviti dan sumber dalam syarikat [8]. Dari perspektif proses pembuatan, pihak pengurusan boleh mengesan setiap jenis kos yang dikenakan kepada produk atau perkhidmatan dalam dua peringkat secara lebih sistemetik: (1) dari kos sumber kepada kolam kos, dan (2) dari kolam kos kepada produk atau servis. Berbeza dengan kaedah pengekosan tradisional, syarikat-syarikat yang menggunakan kaedah ABC mempunyai kelebihan tambahan selain daripada dapat menentukan kos produk atau servis dengan lebih tepat. Kaedah ini bukan sahaja menyediakan data kewangan dengan lebih tepat dan pantas, malah ia juga mampu menyediakan maklumat bukan kewangan yang dapat digunakan bagi menilai prestasi aktiviti dalam setiap tahap operasi pengeluaran [5]. Dengan kelebihan yang didapati sudah sepatutnya kaedah ABC diterima pakai oleh syarikat tempatan masa kini. Maka, persoalan selanjutnya yang harus kita bertanya kepada syarikat-syarikat ini kenapakah mereka belum mampu menggunakan kaedah ABC dalam operasi perniagaan mereka?

Hasil kajian penyelidik sebelum ini dapat menjelaskan alasan utama di atas ketidakmampuan syarikat-syarikat tempatan menerima pendekatan kaedah ABC untuk menyelesaikan masalah operasi dalam perniagaan mereka. Halangan utama yang biasa dihadapi adalah pada peringkat memulakan inisiatif program ABC. Ini tidak dapat dielakkan memandangkan kaedah ini masih baru dan belum meluas digunakan serta kurangnya pendedahan di atas kejayaan pelaksanaannya. Di sebalik alasan utama yang boleh dikaitkan dengan halangan yang dinyatakan ini, masalah sebenarnya adalah disebabkan kerana kurangnya pengetahuan, kemahiran dan sikap yang kurang sesuai untuk terhadap kaedah ini. Bagi mengatasinya, syarikat-syarikat tempatan boleh mengikuti saranan yang dikemukakan oleh kebanyakan pakar dalam proses pembuatan agar kakitangan teknikal seperti jurutera, eksekutif pembuatan atau ketua organisasi pembuatan diberikan peranan utama untuk memulakan projek ABC. Ini kerana golongan ini perlu berurusan terus dengan aspek operasi pengilangan. Walau bagaimanapun, syarikat mungkin menghadapi dilema kerana berkemungkinan belum mempunyai  jurutera yang bersedia untuk mengambil cabaran baru ini. Sebagai seorang jurutera yang terlibat dibidang kualiti dan kos atau operasi pembuatan beliau seharusnya bersedia untuk berhadapan dengan tugas baru ini disamping terus melaksanakan tugas-tugas hakikinya. Antara tugas-tugas biasa seorang jurutera adalah berkaitan pentadbiran (yang melibatkan isu kakitangan operasi), tugas-tugas perakaunan (yang berkaitan belanjawan, perolehan dan inventori), pengurusan loji (seperti kawalan, penyelenggaraan dan pembaikan proses) dan pembangunan dan kebajikan staf. Sebagai tambahan, pakar-pakar pembuatan telah mengesyorkan agar para jurutera pembuatan pada zaman ini harus melengkapkan diri mereka dengan pengetahuan dan kemahiran untuk melaksanakan kaedah ABC [6]. 

‘All engineers should learn to practice ABC, because the traditional method of allocating overhead uses only high-level information about costs, and the general ledger system does not provide information related to time and resources spent on assignments and activities. In contrast, a well-practiced ABC method offers specific insight that include (a) a clearer picture for management of what generates profits and losses for companies, (b) the ability to tract operating profits for specific cost objects (such as customers, orders, and products), (c) the ability to determine whether a service center is efficient or deficient, and (d) the possibility to externalize the relative profitability among products and customers’

(Chang, C. M., 2005, pp.146)

Penutup.

Penerimaan dan pelaksanaan kaedah ABC sebenarnya merupakan titik tolak yang penting dalam usaha syarikat membuat penambahbaikan dalam operasi mereka. Ia juga sekali gus akan membantu pengurusan atasan dalam membuat keputusan strategik dengan lebih efektif. Langkah ini juga boleh dilihat sebagai satu simbol bersifat dalaman kepada satu usaha yang lebih besar ke arah pembelajaran dan transformasi syarikat mencapai peningkatan prestasi keseluruhan yang lebih gemilang. Oleh itu, pelaksanaan kaedah ABC seharusnya dikaitkan dengan strategi keseluruhan organisasi perniagaan. Pelaksanaannya bukan sahaja patut di fokus untuk meningkatkan kemampuan sistem maklumat syarikat, malah ianya juga perlu mampu memotivasikan semua kakitangan syarikat ke arah mencapai objektif syarikat secara bersepadu. Ini bermakna inisiatif ABC perlu diintegrasikan dengan lain-lain pendekatan yang dilaksanakan sebelum ini. Dalam perkataan lain, kaedah ABC mesti diterima sebagai sebahagian daripada pendekatan holistik  strategi perniagaan syarikat. Pihak pengurusan atasan mesti berusaha untuk memastikan kaedah ABC tidak hanya dilihat sebagai alat penyelesaian berbentuk teknikal, malah harus juga dilihat sebagai alat perniagaan yang mampu memberi penyelesaian kepada kehendak semua pihak yang berkepentingan dalam sesuatu perniagaan.

Rujukan:

1      Ninth Malaysian Plan, Up scaling Manufacturing and Related Services, Nine Malaysia Plan Report, 2006-2010, Government of Malaysia, 2005, pp. 529 and pp. 131.

2      Johnson, H.T. and Kaplan, R.S., Relevance Lost: the Rise and Fall of Management Acounting, Boston Massachusetts. Harvard Business School Press, 1987.              

3      Drucker, P. F., Managing in a Time of Great Change. New York: Truman Talley Books/Dutton, 1995.

4      CAM-I, Consortium of Advanced Management, International (http://www.cam-i.org, 30/4/2010).

5      Sohal A.S. and Chung W.W.C., Activity based costing in manufacturing: two case studies on implementation, Integrated Manufacturing Systems. 9(3),1998, pp. 137-147.

6              Chang, C. M., Engineering Management: Challenges in the New Millennium, Pearson Education, Inc., Upper Saddle River, NJ: Prentice Hall, 2005.

Ergonomics or economies: Cost vs. Quality

Ergonomics or economies: Cost vs. Quality

By Mohd Nasrull Abd Rahman

Tutor, JKPI, FKMP, UTHM

Email: nasrull_83@hotmail.com

Ergonomik ataupun ekonomi? Dan kaitannya dengan kos dan kualiti. Banyak persoalan yang timbul di kalangan para penggiat industri tentang makna sebenar ergonomik dan seringkali disalahertikan dengan kata ekonomi. Ianya memang benar ergonomik seringkali berkait rapat dengan ekonomi tetapi ianya perlu dipandang secara meluas dalam aspek keselematan dan kesihatan pekerjaan (OSH). Objektif utama ergonomik itu sendiri adalah untuk meningkatkan produktiviti serta mengurangkan risiko kecederaan dikalangan para pekerja. Dari segi peningkatan produktiviti terbahagi kepada 2 bahagian iaitu produktiviti pekerja dan produktiviti bahan atau produk itu sendiri. Produktiviti pekerja boleh dihasilkan melalui merekabentuk keadaan di tempat kerja dengan menggunakan prinsip ergonomik seperti mengurangkan faktor risiko ergonomik di tempat kerja seperti keadaan postur badan yang statik seperti membongkok semasa mengangkat beban dan ditambah pula dengan kerja yang berulang-ulang. Dan sememangnya jika produktiviti pekerja menurun disebabkan masalah kecederaan yang dialami akibat dari masalah ergonomik di tempat kerja ianya secara tidak langsung memberi kesan kepada produkktiviti produk atau bahan itu sendiri. Dari segi kosnya, tuntutan pekerja terhadap SOCSO juga semakin bertambah disebabkan masalah kecedaraan yang dikenali sebagai work-related musculoskeletal disorders (WMSDs) dan contoh yang paling ketara sejak kebelangkangan ini di dalam kecederaan WMSDs adalah low back pain (LBP) dan carpal tunnel syndrome (CTS). Disinilah majikan akan mula sedar tentang pentingnya prinsip ergonomic di tempat kerja dan seterusnya jika masalah ini tidak dapat diatasi dengan segera maka peningkatan kos dari segi perubatan, tuntutan insuran, ketidakhadiran pekerja, moral pekerja menjadi rendah dan secara tidak langsung faktor-faktor ini berkait rapat dengan ekonomi didalam kos dan kualiti pekerjaan itu sendiri.

Tamat.

Design & Application of Control Chart for Short Production Run By Mr. Jafri Rohani & Mr. Hanipah Ghazali

What is Love without Trust? by Harry Teh

What is Love without Trust?

By Harry Teh

To have love you must have trust,

To have trust you must have faith,

....to have faith you must have hope.

Because if you do not hope to find the faith to have to trust in love... you will not find it. Hope begins with wanting and allowing yourself the chance to be loved when it knocks on your door. There on, with opportunity comes hope, from faith comes trust, and trust blooms into love.

Two greatest things in life to learn are: to fully love, and to allow oneself to be truly loved in return. That completes the circle of giving and receiving in love. Two important factors to the equation are Commitment and Time. Both parties must be willing to put in full effort to commit and allow it to simmer in time.

Too much or too little of anything is abusive and restrictive. Wisdom behind the loving heart will guide one to know the limits of this middle path.

With love, trust and commitment (effort), there is no need to control.

With understanding and acceptance there is no need to demand.

Love is like a little poison sometimes... too much kills u, too little and it leaves no lasting effect... The right amount works when used like a Chinese medicine where poison (love) is used to defeat another poison (loneliness).

Love like any other thing when suffused with kindness and compassion towards ourselves and towards the ones we intend to share it with will reap good fruits.

Love when seeded with jealousy and mistrust towards ourselves and the ones we intend to share it with will harbour only bad and sour fruits.

Both will reap fruits according to how you sow the seeds. With a warm heart, with a sound mind, with love and care, and a little tenderness dropped in.. And a whole lot of understanding towards each other's needs, these will ensure a fruitful labour.

Simply put... Love like every day was the last day of your life, as we do not know when death would come a-knocking. Love with an open heart, as we would want to be remembered as a kind person when it does come...

Should tomorrow be our very last.. at least let us be remembered as a gentle and tender lover. A kind spirit... and one which trust and honesty rests on our headstones.

Captain Harry Teh

How to Stimulate the Economy by Harry Teh

How to Stimulate the Economy

by Harry Teh

Yes yes, times are bad... Indeed but what are u doing to stimulate the economy? A lot of people would say... These are the times to start saving money and securing the egg baskets... (Hide the money at home!!) but alas.... should everyone start thinking like that... let's see the progression from one simple act of not spending.

Vicious Hoarding Cycle

You... do not spend... hoard money... Times are bad... so u stop going to mamak.. Mamak no business coz more ppl are staying home instead.. so he has to cancel order from his supplier coz less business.. His supplier decides to charge more since there are less orders

1.       Prices of goods go up... Supplier decides since he cannot support his fleet because of less orders, decides to cut back on drivers;

2.       Job cuts for poor driver...tells his family, no more job so cannot go shopping for Christmas..

3.       Less people in this category go shopping... shopping malls see no business.

4.       Cannot pay rent... chup lup.. (Bankrupt) lesser imports of goods and movement of goods from factories..

5.       Factories see so little orders... force workers to take early severance package..

They go home and repeat the whole hoarding cycle... but multiply it by hundreds of thousands now the world over and walla...

Your simple act of hoarding money when times are bad has just caused a recession!

So... our country leaders have deemed this the perfect time to start a stimulus by...

1.       Cutting down on Interest Rates... which means your money is better used to stimulate the micro economy, than being hoarded in the treasury...

2.       They cut down on BLR thus freeing up some few hundred here and there from your housing instalments.

3.       They cut down on your EPF contributions to free up more money..

All these couple of hundred are for what u ask? Not to hoard la.. (See vicious hoarding cycle above)...

So since the season to be merry is here, I am not asking you to PK yourself by shopping till u have no money left to eat... but go to your favourite mamak.. get that mee goreng.. Order that chicken rice... Watch that movie... Go get that Tattoo you've always wanted! And since prices of shares are hitting rock bottom... buy that blue chip and set it aside for your children as this recession cycle comes about only in 10yr cycles!!

Your economy needs u... your people need u. Do the simple things that make the season merry with your family. Move the economy... by stimulating it...one mouthful at a time.

The Vicious cycle... it’s all about the Mamak and the Mee Goreng. It starts from ground up and not the diamonds and fast cars. It’s all about the everyday you and me, the little people.. The small things that slowly make the world turn the way... it does. Hence the term moves the economy.

The Big Rich man is in fact very much reliant on the little person on the street this way... All in the big inter-connected Circle of Life. To keep the money circulating back down.. U just do your parts in eating your Maggi Mee goreng... and the Vicious cycle will revert itself to become a Holy Giving circle back the other way around.

Happy New Year & a Happy Prosperous Dragon New Year ahead.

Harry Teh

ISO50001 Energy Management System By Hood Atan

INTRODUCTION TO ISO50001             by Hood Atan

Energy Management System

Introduction:

ISO 50001:2011, Energy management systems – Requirements with guidance for use, is a voluntary International Standard developed by ISO (International Organization for Standardization). This new standard release in July, 2011 gives organizations the requirements for energy management systems (EnMS).

ISO 50001 will establish a framework for industrial plants, commercial, institutional, and governmental facilities and entire organizations to efficiently manage energy. 

Emergence of ISO standard on Energy Management System

Figure 1: Chronology of Energy Management system standard

The request to ISO to develop an international energy management standard came from the United Nations Industrial Development Organization (UNIDO) which had recognized industry’s need to mount an effective response to climate change and to the proliferation of national energy management standards.

ISO, in turn, had identified energy management as one of the top five fields for the development of International Standards and, in 2008, created a project committee, ISO/PC 242, Energy management, to carry out the work.

ISO/PC 242 was led by ISO members for the United States (American National Standards Institute – ANSI) and Brazil (Associação Brasileira de Normas Técnicas – ABNT).

Experts from the national standards bodies of 44 ISO member countries participated within ISO/PC 242 in the development of ISO 50001, with another 14 countries as observers. The standard also benefitted from the participation of development organizations including UNIDO and the World Energy Council (WEC).

ISO 50001 has been able to draw on numerous national or regional energy management standards, specifications and regulations, including ones developed in China, Denmark, Ireland, Japan, Republic of Korea, Netherlands, Sweden, Thailand, the USA and the European Union.

ISO 50001 — Why is it important

Energy is critical to organizational operations and can be a major cost to organizations, whatever their activities. An idea can be gained by considering the use of energy through the supply chain of a business, from raw materials through to recycling. In addition to the economic costs of energy to an organization, energy can impose environmental and societal costs by depleting resources and contributing to problems such as climate change. The development and deployment of technologies for new energy sources and renewable sources can take time. Individual organizations cannot control energy prices, government policies or the global economy, but they can improve the way they manage energy in the here and now. Improved energy performance can provide rapid benefits for an organization by maximizing the use of its energy sources and energy-related assets, thus reducing both energy cost and consumption. The organization will also make positive contributions toward reducing depletion of energy resources and mitigating worldwide effects of energy use, such as global warming.

ISO 50001 is based on the management system model that is already understood and implemented by organizations worldwide. It can make a positive difference for organizations of all types in the very near future, while supporting longer term efforts for improved energy technologies.

The benefits of ISO50001

ISO 50001 will provide public and private sector organizations with management strategies to increase energy efficiency, reduce costs and improve energy performance. The standard is intended to provide organizations with a recognized framework for integrating energy performance into their management practices. Multinational organizations will have access to a single, harmonized standard for implementation across the organization with a logical and consistent methodology for identifying and implementing improvements.

The standard is intended to accomplish the following :

• Assist organizations in making better use of their existing energy consuming assets

• Create transparency and facilitate communication on the management of energy resources

• Promote energy management best practices and reinforce good energy management behaviours

• Assist facilities in evaluating and prioritizing the implementation of new energy-efficient technologies

• Provide a framework for promoting energy efficiency throughout the supply chain

• Facilitate energy management improvements for greenhouse gas emission reduction projects

• Allow integration with other organizational management systems such as environmental, and health and safety.

Compatibility with other ISO Standard.

Figure 2: Compatibility

ISO 50001 is based on the ISO management system model familiar to more than a million organizations worldwide who implement standards such as ISO 9001 (quality management), ISO 14001 (environmental management), ISO 22000 (food safety), ISO/IEC 27001 (information security).

In particular, ISO 50001 follows the Plan-Do-Check-Act process for continual improvement of the energy management system.

These characteristics enable organizations to integrate energy management now with their overall efforts to improve quality, environmental management and other challenges addressed by their management systems.

ISO 50001 provides a framework of requirements enabling organizations to :

• Develop a policy for more efficient use of energy

• Fix targets and objectives to meet the policy

• Use data to better understand and make decisions concerning energy use and consumption

• Measure the results

• Review the effectiveness of the policy

• Continually improve energy management.

ISO 50001 can be implemented individually or integrated with other management system standards.

ISO 50001 Certification

Like all ISO management system standards, ISO 50001 can be implemented solely for the internal and external benefits it provides the user organizations and the latter’s stakeholders and customers. Certification by an independent auditor of conformity of the user’s energy management system to ISO 50001 is not a requirement of the standard itself. To certify or not is a decision to be taken by the ISO 50001 user, unless imposed by regulation.

Alternatives to independent (third party) certification are to invite the organization’s customers to verify its implementation of ISO 50001 in conformity with the standard (second party verification), or to self-declare its conformity.

The content of ISO 50001 standard

The content of ISO 50001 is structured as follows:

Foreword

Introduction (extract from ISO 50001)

“ The purpose of this International Standard is to enable organizations to establish the systems and processes necessary to improve energy performance, including energy efficiency, use, and consumption. Implementation of this standard is intended to lead to reductions in greenhouse gas emissions, energy cost, and other related environmental impacts, through systematic management of energy. This International Standard is applicable to all types and sizes of organizations irrespective of geographical, cultural or social conditions.

Successful implementation depends on commitment from all levels and functions of the organization, and especially from top management.

“ This International Standard specifies requirements of an energy management system (EnMS) for an organization to develop and implement an energy policy, establish objectives, targets, and action plans, which take into account legal requirements and information related to significant energy use. An EnMS enables an organization to achieve its policy commitments, take action as needed to improve its energy performance and demonstrate the conformity of the system to the requirements of this International Standard.

Application of this International Standard can be tailored to fit the requirements of an organization — including the complexity of the system, degree of documentation, and resources — and applies to the activities under the control of the organization.

“ This International Standard is based on the Plan-Do-Check-Act continual improvement framework and incorporates energy management into everyday organizational practices.

“ NOTE : This approach can be briefly described as follows.

►Plan : conduct the energy review and establish the baseline, energy performance indicators (EnPIs), objectives, targets and action plans necessary to deliver results in accordance with opportunities to improve energy performance and the organization’s energy policy.

►Do : implement the energy management action plans.

►Check : monitor and measure processes and the key characteristics of its operations that determine energy performance against the energy policy and objectives and report the results.

►Act : take actions to continually improve energy performance and the EnMS.

The basis of this approach is shown in Figure 3.

Figure 3: Energy Management System Model

“ Worldwide application of this International Standard contributes to more efficient use of available energy sources, enhanced competitiveness, and to reduce greenhouse gases emissions and other related environmental impacts.

This International Standard is applicable irrespective of the types of energy used.

“ This International Standard can be used for certification, registration and self-declaration of an organization’s EnMS. It does not establish absolute requirements for energy performance beyond the commitments in the energy policy of the organization and its obligation to comply with applicable legal requirements and other requirements. Thus, two organizations carrying out similar operations, but having different energy performance, can both conform to its requirements.

The document is based on the common elements found in all of ISO’s management system standards, ensuring a high level of compatibility with ISO 9001 (quality management) and ISO 14001 (environmental management).

The organization can choose to integrate ISO 50001 with other management systems such as quality, environment, occupational health and safety, and other.”

1 Scope

2 Normative references

3 Terms and definitions

4 Energy management system requirements

4.1 General requirements

4.2 Management responsibility

4.2.1 Top management

4.2.2 Management representative

4.3 Energy policy

4.4 Energy planning

4.4.1 General

4.4.2 Legal and other requirements

4.4.3 Energy review

4.4.4 Energy baseline

4.4.5 Energy performance indicators

4.4.6 Energy objectives, energy targets and energy management action plans

4.5 Implementation and operation

4.5.1 General

4.5.2 Competence, training and awareness

4.5.3 Communication

4.5.4 Documentation

4.5.5 Operational control

4.5.6 Design

4.5.7 Procurement of energy services, products, equipment and energy

4.6 Checking

4.6.1 Monitoring, measurement and analysis

4.6.2 Evaluation of legal requirements and other requirements

In addition, ISO 50001 includes informative annexes giving guidance on how to implement the above requirements and a table comparing the requirements of ISO 50001 with other ISO management system standards. ISO 50001 Implementation in Malaysia. Camfil Farr Malaysia Sdn Bhd, Batu Gajah, Perak the manufacturer of industrial air filters and air pollution control equipment is the first in Malaysia certified with the ISO50001 standard. Following a certification audit in October 2011 Camfil Farr Malaysia received the ISO 50001 Energy management system certification by AFNOR in December 5, 2011.  Conclusion With the new International standard for Energy Management System (ISO5001) there is a tool for all kinds of companies to review their energy situation and improve their energy efficiency in a systematic and sustainable way.

4.6.3 Internal audit of the EnMS

4.6.4 Nonconformities, correction, corrective, and preventive action

4.6.5 Control of records

4.7 Management review

4.7.1 General

4.7.2 Input to management review

4.7.3 Output from management review

Hood Atan

hood@efrmanagement.com

Balancing and Alignment of Cost and Quality By Edly Ramly

Balancing and Alignment of Cost and Quality

THE STRATEGIC MANAGEMENT

By Edly Ramly

Which one come first PROFIT or QUALITY

It is not always so obvious though.  Most of profit oriented organization will focus on profit. Ask your top management, what will be the answer. If we doesn’t make any profit, how we can employ you! But for quality practitioner, the argument will be different. Same goes to accountant. So which one comes first? Profit comes from cost. Is the profit also will come from quality? Let discuss the issues in setting the prioritisation.

Defining Cost and Quality

In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing. This acquisition cost may be the sum of the cost of production as incurred by the original producer, and further costs of transaction as incurred by the acquirer over and above the price paid to the producer. Usually, the price also includes a mark-up for profit over the cost of production.

For Quality, there are many definitions of quality, but the actual meaning and concept is same. Hence used of standard definition from ISO9000 (2005) was recommended. ISO9000 (2005) defined quality as degree to which a set of inherent characteristics fulfils requirements. The requirements include need or expectation whether is stated, generally implied or obligatory. Commonly the need or expectation refers to customers. Woodhouse (2003) stated that the quality has been applied to a number of characteristics such as excellence, value for money, conformance to specifications, transformation, and value added. This definition is more related toward the accomplishing the purpose of the organization where it is consider that if the organization has any of these characteristic is believed to has quality if it is performing necessary act to achieve its goals. On the other hand, Goldgberg and Shmilovici (2003) define quality as the ensemble of features and attributes which characterize a product or a service, and indicate its capacity to provide an implicit or explicit need. This explain that quality is about creating desired physical attributes of the products or services.

Important to balance

the cost and quality

Balancing

Customer satisfaction and profit both are required to be achieved and should be balance. But quality cannot be scarifies at the cost of bottom line results. However it is a delicate issue and highly depends on the requirement of organization at that point of time. According to organizational excellence principals, Customer Satisfaction should be the ultimate goal of organizational performance. Logically, and as some mentioned above, you achieve positive financial results through positive quality.

Both are

interconnected

Both are interconnected. In the business world if solely focus on quality and ignore the bottom line, you probably will be out of business sooner or later. And the same will happen if you focus on your bottom line without taking care of your customers.

So, ultimately excellent organizations should achieve "balanced results" in both areas in order to be able to sustain its performance. The other thing, the three principles (1) financial performance (2) customer satisfaction and (3) employee satisfaction and we should not forget our employees and their own satisfaction with the company they work for, the jobs they are doing, the work environment they live in, the career path possibilities they have, and the kind of incentives, Welfare, SAFETY and HEALTH and motivation.

1- Financial Performance - what you want to achieve in financial side
2- Customer Satisfaction - where the financial results come from
3- Employee Satisfaction - who get the job done and satisfy the customers

Any unbalanced/short-sighted policies focusing on one thing and not the other two will ultimately fail in sustaining their business

It includes SAFETY AND HEALTH

Now when it comes to the real world, few organizations are able to do both on a continuous base. The balanced score card is the best and the right method to keep your business on the right path towards excellence.

Famous tool is Balance Scorecards

Choosing the right strategy

Strategic thinking has engaged the brains of business leaders for centuries. Organizations always seek to adopt dynamic and effective strategic management to secure proper growth and remain competitive.  Strategic management is necessary to any organisation where there is a rapidly changing environment with adverse competition and surprises which may act as serious threats to organisation stability.  

There are many other different definitions generated from the nature of strategy approach; but they all have one thing in common, which is the aim to maximize the organization performance by enhancing its capability of competition with other organizations functioning in the same competitive environment.

Government sector used

 Classical Approaches

There are many construction

 contractor adopted the survival in th

e jungle strategies

There are different approaches to strategy. Strategists of today must deeply understand the widely used approaches at least, to be efficient in thinking strategically. Whittington (2001) categorized strategy in four basic generic approaches: Classical, Evolutionary, Processual and Systematic which have different perspectives about strategy. In classical approach, the strategy is a rational process of deliberate calculation and analysis designed to maximize long term advantage (Whittington, 2001). Many scholars argued that classical approach is not applicable any more, since classical theory has no mechanism for strategy creation and doesn’t suit the dynamic environments. However, the classical approached still commonly used in government sector.

            WHAT STRATEGY USED BY YOUR ORGANIZATION?

How about this organization?

In evolutionary approach, the situation is different. Competition is not overcome by detached calculation and analysis but by constant struggle for survival (Cuizon, 2009) or sometime called “survival in the jungle”. Evolutionary approach calls that successful strategies only emerge as the process of the natural selection delivers its judgment. When there are opportunities, the organization just grabs it and maximised as much profit as it can. The quality comes second as long the organizaton get the money as soon as possible. According to Whittington (2001), this means it is the market not managers which makes the important choices (Whittington, 2001). The approach considers markets too tough and unpredictable to plan for long term strategies. Many organizations that adopted these strategies on sustain a short term growth and it commonly seen in organizations that grab the government project such as construction.

NESTLE (NESCAFE, MILO) used which strategy?

Processual approach is similar to evolutionary approach in the sense that it doubts the value of rational long term planning but it does not agree of leaving the profit-maximizing outcomes to the market since market is full of mess and confusion (Cuizon, 2009). Processual approach states that strategy is an emergent process of learning and adaptation (Whittington, 2001). It adopts a pragmatic view aiming to make the sophisticated processes simple in light of the fact that the environment is not ideal or perfect.   The approached have been adopted in the ISO9001 Quality Management System. However the approaches separated the social requirements such as on occupational health and safety and environment issues.

Systematic approach has a relativist position. It believes that organisation is able to plan and act effectively. It is much less pessimistic than Processual approach about people’s capacity to carry out rational plans of action and much more optimistic than evolutional approach about its ability to define strategy regardless of market forces (Whittington, 2001). The approach argues that strategies must be sociologically efficient to understand the firm’s environment. This means that there should be no separation between economic activities and social factors to ensure success. Which include employee, branding and loyalty

Conclusion Remarks

ISO9001 adopted the 

process approaches

Is branding and Loyalty Important?

Systemic or Processual

Isn't it is question of priorities rather than implying we do one but rather than the other. The point about quality being where the financial results come from but as in all things, the mission of every business is economic performance, meaning satisfying customers in a way that generates a profit to be invested in creating and satisfying new customers.  Balancing the both required processual and systemic strategy.

However, this strategic approaches offer an insight into the motivation behind the company’s vision and what strategies they most likely implement. Strategists agree on a common point that strategic management process includes analysis, choice, implementation and feedback. Prior to start with strategic management process for any firm, the strategist should ensure that the firm already has a well defined and clear mission and vision statements.  On next issues of CQ Review, the author will explore on organization vision, mission, policy and objectives.

Author: Edly Ramly is also the founder for EFR Group

References  

 Whittington, R. (2001) What is Strategy – and does it matter?, Second edition, Thomson Learning, London. Cuizon, G. (Feb. 2009), Theories of Action in Business Strategy: Classical, Evolutionary, Processual and Systemic Approaches. Retrieved on March 22, 2009 from the world wide web: http://strategic-businessplanning.suite101.com/article.cfm/theories_of_action_in_business_strategy

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