a review on operations diagnosis to identify operational

A Review on Operations Diagnosis to identify Operational Improvement Opportunities

Edly F. Ramly Certification Director

EFR Certification Sdn Bhd, Malaysia e.ramly@efrcertification

Musli Mohammad, Mohd Shahir Yahya Department of Manufacturing and Industrial Engineering, Faculty of Mechanical and Manufacturing Engineering,

Universiti Tun Hussein Onn Malaysia (UTHM), Batu Pahat, Johor [email protected], [email protected]

Abstract— Operational improvement is a fundamental requirement for any organization that wishes to remain competitive. It focuses on improving operational effectiveness and also efficiency to drive growth and profitability. In order to identify the opportunities for improvement, organizations need to diagnose their contemporary operational performance. This paper sets out to review the available prior frameworks related to operation diagnosis to identify improvement opportunities and discusses these opportunity. Finally the prior framework gaps and future focus are presented.

Keywords— Operational Improvement, Quality Audit, Self-Assessment, Business Excellence, Six Sigma, Lean, Manufacturing industries, Performance improvement

I. INTRODUCTION

The need to diagnose and improve operational performance has been a major discussion due to competitive pressure in any industries [1]. In order to stay competitive, the organization needs to focus on improving their operational effectiveness and also efficiency to drive growth and profitability.

In order for organization to embark on activities that are able to further enhance operational, it is therefore crucial for the management of these organizations engage in exploration of their weakness and gaps in their operation through performance evaluation. The process of identification of weakness, gaps and opportunities can be considered as “Diagnosis” process [2]. This diagnostic process allows the organization to have a sound understanding and recognize the improvement opportunities by helping identify any deficiencies or shortcomings that need rectification. Once the organization uncover the improvement opportunities, hence it becomes easier to quantify them and select the available improvement initiatives that will be required to address opportunities.

The main purpose of this paper is to explore the common practices and framework to diagnose their operational practices and identify the improvement opportunities, and discuss the prowess and limitations of each framework. Finally, the gaps of current framework are identified and recommend the future focus in operation improvement diagnosis approaches.

II. EVOLUTION OF OPERATIONAL IMPROVEMENT

The term “Operations and Operational” define from 2015-2016 Baldrige Excellence Frameworks and the latest version of ISO9001:2015. Operation covers the work processes that cover the input and output to deliver customer value [3][4]. In ISO9001, operation is described in clause 8 and the interaction of operation and other element of quality management system shown in figure 1. The process in the operation include sales process, design and development process, production process, delivery process, purchasing and receiving supply.

2982© IEOM Society International

Proceedings - International Conference on Industrial Engineering and Operations Management, Kuala Lumpur, Malaysia, March 8-10, 2016

Fig. 1: ISO 9001:2015 Interaction of Operation clause 8 and Improvement clause 10

Operational improvement is part of operation management and TQM initiative of continuous improvement (CI) [5]. The operational improvement best practice framework such as “Baldrige Excellence Framework”, and standard framework such as ISO9001 quality management system, evolved from TQM element of Continuous Improvement and Process Performance [6] [7]. The theory evolved to best practice and the best practice will evolve to standard depending on the maturity of the practices as shown in figure 2. For example the TQM theory have been adopted in EFQM (European Foundation for Quality Management) excellence model in 1992 and later adopted by ISO as ISO9001/2/3 quality management system standard in 1994 and further improved in year 2000. Another example, the Baldrige Excellence Framework structure and vocabulary have been adopted by latest standard of ISO9001 in 2015. In Japan, the CI referred to ‘Kaizen’. Kaizen best practice concept have been adopted in various organization strategies such as Toyota Production System (TPS) and proven in improving operational performance [8]. Hence Kaizen have been adopted in ISO9001 standard and referred as Continual Improvement.

Fig. 2: Operational Improvement Maturity

At the same time, the terms continual improvement (CI) and quality improvement (QI) have been frequently quote in literatures. In ISO9000 [9], international standard for fundamental and vocabulary for quality management system defined the QI and CI as followed:

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. While 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 [9] .

Hence, the operational improvement can be defined as QI and CI in related to operation processes with the objective to increase the operation effectiveness, efficiency and traceability.



Mohammad [10] reported that, there are four main concepts and/or theories that can be used for the selection of organizational improvement initiatives, which are: (1) Systems theory, (2) Contingency theory, (3) Total Quality Management and Business Excellence concept, and (4) rational decision making concept. The related operational improvement theories/ concept are further derived to different type of initiatives. Initiative has been define by oxford dictionary [26] as “An act or strategy intended to resolve a difficulty or improve a situation; a fresh approach to something”. Initiative is all about taking charge and is the first in a series of actions. For example, the system approached has been adopted in ISO9001 Quality Management System and Business Excellence framework initiatives. While lean and six sigma improvement initiatives can be consider as the contingency approaches theory. The relationship between improvement initiatives and theory is shown in figure 3.

Fig. 3: Example of relationship between theories and initiatives However, there are hundreds of improvement initiatives available to assist the organization in improving their operational process [11]. The operational improvement initiative should be further divided, derived or categorized into approaches, management system, techniques and tools [12]. Approach and management system can be considered in one category. An approach needs resources, senior management commitment, strategic planning, and an "intellectual effort in term of its deployment and adoption [12]. Likewise, the management system also need resources in order to direct and control some form of operation. The Six Sigma, Lean, Benchmarking (BSC) and Knowledge Management (KM) are example of improvement approaches that have significant increasing trends. At the same time the number of organization certified to ISO9001 have increase significantly [13] and Business Excellence Model (BEMs) is one of the popular improvement approaches [14]. The technique is defined as “a way of carrying out a particular task, especially the execution or performance of an artistic work or a scientific procedure” [26]. Hence, the improvement technique can be defined as a procedure to carry out the improvement approaches. A technique may even view as a collection of tools [12]. Finally, tools can be defined as “Things used to help perform a job” [2] and improvement tools are the tools that assist the organization to implement the improvement technique. Table I provided some example of operation improvement approaches, techniques and tools.

TABLE I: EXAMPLE OF IMPROVEMENT APPROACHES, TECHNIQUES AND TOOLS

Approaches/ Management System Example “Techniques” within the approaches

Example “Tools” within techniques

ISO9001 Quality Management System

Quality Objectives (Establish-monitor-improve)

Balance Scorecard

Business Excellence Framework Assessment Questionnaire/ Checklist Six Sigma Define-Measure-Analyse-Improve-

Control (DMAIC) Supplier-Input-Process-Output-Customer (SIPOC)

Lean Pull/ JIT Kanban

III. OPERATION DIAGNOSIS

Some of operation improvement approaches may have unique technique to identify the opportunities for operational improvement. Example of common improvement approaches and diagnosis techniques are shown in table 2. Quality audit is one of the most widely used techniques for operation diagnosis [15]. Each of organization that certified to ISO9001 need to



undergo the certification audit and internal audit as describe in the requirements. Another prominent technique is assessment based on Business Excellence Framework. Self–assessment and external assessment against the Business Excellence Framework (BEF) are applied by the organizations in order to identify improvement opportunities and qualify for quality / Business Excellence award [16]. Both of the audit and assessment can be consider as gap analysis techniques that identify the gap within the organization against the set criteria such as ISO9001 standard and BEF. On the other hand, most of operation approaches does not have standardized method to diagnose their operation. For example for six sigma and lean improvement approaches, decision making techniques were utilised to select the improvement project. Selection of Six Sigma projects are one of the most frequently discussed in Six Sigma literatures and various approaches proposed [17] [18].

TABLE II: COMMON OPERATION IMPROVEMENT DIAGNOSIS TECHNIQUE

Improvement Approaches ISO9001 Quality Management System

Business Excellence Framework

Six Sigma Lean

Diagnosis Technique Quality Audit/ Gap analysis

Assessment/ Gap analysis

Project Selection Project/ Kaizen selection

Based on the common diagnosis techniques in table II, study on the trend in literature was conducted in three databases which are Science Direct, Emerald and Google Scholar. The procedure to conduct the search as followed: 1) Boolean search of exact phrase i.e. “Quality Audit”, “Business Excellence Assessment”, “Six Sigma Project Selection” and “Lean Project Selection”; 2) Filter by year; 3) Filter by relevant. The result of literature trend is tabled in table III.

TABLE III: STATISTICS ON HIT OF FOUR COMMON DIAGNOSIS TECHNIQUES

Year range 2010-2014

2000-2015

2000- 2004

2005-2009

2010- 2014

Database Science Direct

Emerald Google Scholar

Google Scholar

Google Scholar

Business Excellence Assessment

0 5 21 13 11

Quality Management Audit 23 20 89 39 30 Lean Project Selection 0 0 0 2 4

Six Sigma Project Selection 15 22 20 87 352 At first, the phrase of “Quality Audit” hit more than 16,000 results due to it is related with quality of accounting audit. Hence the search was change to “Quality Management Audit” and “Quality Management System Audit”. From the search, number of hit for all the diagnosis technique was higher on google scholar. This is due to the google scholar database include the books in comparison with other database. The highest hit for year 2000 to 2015 was on six sigma project selection and follow by quality audit in google scholar, while both in Emerald and Science Direct indicate vice versa. At the same time, there were also high hits (33 hit in google scholar) in quality audit before year 2000.This search hits indicated that the quality audit and six sigma project selections were the most prominent operational diagnosis technique discussed to identify the opportunities for improvement. There were also numbers of hit for BE Assessment in compare to Lean project selection. The Lean project selection only been discussed after year 2010 in which include 2 books and 2 article on concept. Based on result of search, the current trend on literature as followed: 1) decision making on six sigma project selection; 2) issues and modalities of quality audit; 3) issues and modalities of BE Assessment and 4) concept on lean project selection. The selection of Improvement initiative is another diagnosis technique which is significantly discussed in literatures. The selection of improvement initiative may have to evaluate the organization performance and hence leading towards identifying the improvement opportunity for operation.

IV. PRIOR FRAMEWORKS ON OPERATIONS DIAGNOSIS TO IDENTIFY OPERATIONAL IMPROVEMENT OPPORTUNITIES

The framework for operation improvement diagnosis provides the modalities to conduct effective operation diagnosis. There are many frameworks related to decision making especially on six sigma project selections. However most of the framework covers only the concepts of the improvement approaches and decision making tools instead of diagnosis process. Thus, four prior frameworks that can assist the operational diagnosis to identify operational improvement opportunities as shown in



table IV was discussed due to: 1) Generic framework include the improvement approaches and diagnosis techniques; 2) Details of requirements, steps and/or procedures; 3) Academic, best practice and standard framework. The first two frameworks shown in table IV was developed by Thawesaengskulthai [11] in 2007 (Publish paper in 2010[19]) and Mohammad [10] in 2012 as their phD research. The main objective of their framework is to select the improvement initiative. In the process of selecting appropriate improvement initiative, the organization performance needs to be evaluated either by audit, assessment or gap analysis. Hence, during the process of selecting improvement initiative, the operational improvement opportunities need to be identified.

TABLE IV: FOUR PRIOR FRAMEWORK ON OPERATION DIAGNOSIS TO IDENTIFY OPERATIONAL IMPROVEMENT OPPORTUNITIES

# Framework Improvement Approaches

Main Criteria of selection Diagnosis Techniques

1 Thawesaengskulthai’s framework 2010 [19]

Part of selection of initiative TQM, BPR, ISO9001, BEF

Pay-Off, fashion setting, Strategic Fit, Organization Fit

Gap Analysis (organization's weaknesses)

2 Mohammad’s framework 2012 [10]

Selection of improvement

initiative based on TQM and BE concept

Feasibility, Organization fit and Value / Benefit

Provides examples of tools and techniques for gap analysis / diagnosis which include organizational assessment based on BEF, benchmarking, SWOT analysis and business performance review

3. ISO audit framework 2011 [20]

Quality/ Environment Management System

Standard such ISO9001, ISO14001, ISO13485 etc.

Quality Audit

4. Karapetrovic and Willborn 2001 [21]

Business Excellence and quality

management system

BEF and ISO9001 Advance Concept of integrating audit and assessment

The main steps in operational diagnosis should include initiation, diagnosis process and implement the improvement [15]. As shown in Figure 4, the initiation process has been defined as motivation to trigger the improvement, the gap analysis and selection process is the diagnosis process and deploys initiative as the implementation stage. The framework also provides the selection criteria to select the improvement initiatives. At the same time, the selection criteria on fashion setting, pay-off (or results), strategic fit and organization fit can be adopted as operational improvement opportunities selection process. However, the framework only suitable to select limited initiative such as TQM, ISO9001, BPR, Lean and BE model instead of operational improvement. As an alternative, initiatives such as ISO9001 and BE Model can be consider as improvement approaches and best practice that already have the criteria and baseline for operational practice and improvement. In operational improvement, the selected improvement initiative such as ISO9001, BE Model, BPR, TQM should become the criteria for selection of operational improvement opportunities that needed by organization by comparing their current practice against the criteria.



Fig 4: Thawesaengskulthai’s framework [19]

Thawesaengskulthai’s framework [19] focusing on the triggers for adoption, selection views and criteria, processes involved after selecting the initiatives, critical success factors and barriers. Selection only focuses on six initiatives: TQM, Six Sigma, ISO 9001, Lean, Business Process Reengineering, and BEM. Some of limitations of Thawesaengskulthai’s framework have been refined by Mohammad [10], such as provide clearer step-by step procedures to select improvement, include create, review and/or understand organizational profile as one of the steps for selection of improvement initiatives and use BEM as an overarching framework for managing and aligning multiple organizational improvement initiatives [10][27]. As shown in figure 5, Mohammad’s framework [19] uses the acronym ‘GUIDE’ which represents the five key steps to select improvement initiatives: (1) Goal setting, (2) Understanding relevant improvement initiatives, (3) Identifying decision criteria, (4) Deciding on the appropriate initiative, and (5) Evaluating the decision. The proposed multilayer guidance model focuses on the holistic processes to be used in selecting improvement initiatives whereby its contents are explicitly aligned to the BEM. Diagnosis and identify improvement opportunities are part of step 1 ‘Goal setting’. Step 1 also provides examples of tools and techniques for gap analysis / diagnosis which include organizational assessment based on BEF, benchmarking, SWOT analysis and business performance review. Additional diagnostic tools and techniques can be added in GUIDE model which includes audit based on ISO9001, and brainstorming.



Figure 5: GUIDE model for selecting organizational improvement initiatives [19]

The third framework discussed here, made reference to framework by ISO [20]. Framework by ISO was selected for discussion based current international standard available for quality audit. The ISO 19011:2011 assumed special importance and significant due to the standard was accepted worldwide as the guideline for quality auditing and the framework shown in figure 6. The ISO framework was developed based improvement of previous version in 2002 and ISO10011-1,2,3 in 1991. The contents of ISO10011 were mainly based on ASQC guideline developed in 1986 which can be considered as the first framework in quality auditing. Gardner [22] complimented that the ISO framework allowed the auditor to implement audit program with the auditing framework. The framework considered by Gardner as audit program, audit interview concepts, lateral-view of auditing concept, and the audit criteria or requirement have provided a new perspective and a greater awareness of organizational requirements. However, in order to further improve the framework, Gardner [22] suggests that the organizational self-assessments and organizational tool kits should be used as tools for effective audit. Even, the ISO framework was develop to suit any type of audit, the guideline were biased toward compliance audit [23]. The ISO framework was found to be over emphasis on ethical, professional conduct which unable to utilize the improvement type of audit. It was found that the ISO framework does not discussed the tools and techniques such as process approached audit as per Hutchin suggestions. The dynamics auditing as suggested by Barthelemy and Zairi [24] and tools suggested by Gardner [22] were not been presented by ISO framework. However, the ISO framework can provides Mohammad’s framework the guideline on establishing and implementing the operational diagnosis process. Meanwhile, Mohammad’s framework can provides the ISO framework with relevant tools and decision making techniques in identifying the operational improvement opportunities.



Fig. 6: ISO standard framework [20]

Finally, the framework by Karapetrovic and Willborn presented the advanced concept on integrating the quality audit and assessment technique. The framework is shown in figure 7. This framework is generic for quality audits and assessment. It clearly defined where operational diagnosis either audit or assessment can be integrated. The Karapetrovic & Willborn framework provide the initiation of diagnosis process with multiple criteria such ISO9001requirement and BEM. However the framework is still in conceptual framework and need further development. The framework does not provide clear step in diagnosis and decision making techniques to select operation improvement opportunities. In compare with Thawe and Musli framework, there was no real case study to validate both the ISO standard framework and Karapetrovic&Willborn framework.

Fig. 7: Karapetrovic & Willborn framework [21]



As per discussion above, the summary of the strength and limitation of each framework is shown in table 5. The main strength of each framework can be used to develop the effective operation diagnosis framework focused on baseline organization performance improvement. This strength could be utilized to compliment the limitations in other framework especially on ISO and Karapetrovic & Willborn frameworks. However, all the prior frameworks were not focus on operation process.

TABLE V: PRIOR FRAMEWORKS STRENGTH AND LIMITATION

# Framework Strengths Limitations 1 Thawesaengskulthai

2008 [25] Clear factors on motivation and

selection criteria for selection of improvement initiatives

Provide decision making matrix

Focus on selection of approach that normally the set as audit/ assessment criteria

Does not focus on operation process No clear step by step approach

2 Mohammad 2012 [10] Focus on the holistic processes to be used in selecting improvement initiatives whereby its contents are explicitly aligned to the Business Excellence Models (BEMs), such as Baldrige Excellence Framework and European Foundation for Quality Management (EFQM) Excellence Model.

Provide decision making matrix

Focus on TQM and BE concepts Even ‘operations / processes’ is part of

the BE framework, detail on specific operation issues not explicitly covered.

3. ISO audit framework 2011 [20]

Most widely use. Include the PDCA and quality

assurance of the diagnosis process

Does not provide decision making technique

Does not focus on operation process Does not provide the motivation

factors, organizational maturity factors 4. Karapetrovic and

Willborn 2001 [21] Provide the light for integrated

diagnosis technique.

Does not provide decision making technique

Does not focus on operation process Does not provide the motivation

factors, organizational maturity factors

V. CONCLUSION AND FUTURE FOCUS Operational diagnosis utilised to identify operation improvement became a matter of discussion especially after introduction of improvement approaches such ISO9001, BEF, Six Sigma and Lean. It is a known fact that each of the improvement approach needs to have the diagnosis technique before the approaches can implement. The diagnosis technique can be in name of audit, gap analysis, and project selection. It will lead to decision making on selection of improvement opportunities. Even with more than a million organizations certified to ISO9001, and hundreds of thousands of organization embarking award based business excellence, the operation team required a simple framework for them to diagnose their performance and offering a perspective into the enhancement of their operation. Although the availability of prior frameworks which allows them to select improvement initiative, room for modification or alteration for betterment is evident as such this would grant organisations with a better scope and platform thus providing focus on operation issues and enable them to plan for their improvement. Though researchers have been moving in varied directions to attain benefit of operational improvement, the future focus should develop the specific operation diagnosis mechanism with simple decision making techniques and tools. It should utilised all the current best practice in operational improvement approaches such as BEF, ISO9001, Lean, Six Sigma and provide the guideline on selection of appropriate techniques and tools. The generic framework will enable organization to diagnose their operation performance and identify their high impact operational improvement.

ACKNOWLEDGMENT



The authors would like to thank EFR Certification Sdn Bhd and University Tun Hussein Onn, Malaysia for providing the financial and resources support for this research.

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BIOGRAPHY

Edly F. Ramly is an Certification Director for EFR Certification. He is renowned coach, auditor, consultant and trainer. With his excellent technical expert and interpersonal skills, he has conducted various high impact trainings and workshop in the area of operation management, industrial engineering, management system including quality, environment and occupational health and safety, workplace improvement, variation and waste reduction, and practical problem solving techniques including statistical tools. Apart from being trained as Lead Auditor in various management system, he is also qualified auditor for Automative Industry ISO/TS 16949. During his service with Pera Neville Clarke, he is also tutor for QMS lead auditor course. His industrial experience was in the automotive industry. During his stayed with the TRW Automotive, he was tasked with the responsibility of promoting and implementing Lean and Six-Sigma within the Organization. Due to his extensive exposure in Lean and Six-Sigma Management System, he was invited by Malaysia Productivity Corporation (MPC) and Asia Productivity Organization (APO) to conduct public training in the area of Six-Sigma implementation and Lean Implementation. In 2014, he been awarded as one of Malaysia Poductivity Specialist by Malaysia Ministry of International Trade and Industry.

Dr. Musli Mohammad is a Senior Lecturer in Industrial Engineering at the Department of Manufacturing and Industrial Engineering, Universiti Tun Hussein Onn Malaysia (UTHM). Before joining UTHM in 2003, he worked as a Total Quality Management Executive at the UMW Toyota Motor Sdn. Bhd. Musli graduated with a Bachelor of Engineering in Mechanical (Industrial), a Master of Science in Industrial and Systems Engineering, and a Doctor of Philosophy in Engineering and Industrial Management. He has served as an Expert for Asian Productivity Organization project to develop a toolkit on Business Excellence for Asian SMEs. He has also involved as a researcher in a global study on quality / business excellence awards, which was commissioned by the Baldrige Performance Excellence Program, National Institute of Standards and Technology (NIST), USA. His research interests include Total Quality Management, Lean Production and Operations Management. Mr. Mohd Shahir Yahya is currently a PhD student at Faculty of Mechanical and Manufacturing Engineering. Mr. Shahir holds a Bachelor of Engineering in Mechanical (Industrial) degree from Universiti Teknologi Malaysia and a Master of Manufacturing System Engineering degree from Universiti Putra Malaysia. He had also served as lecturer in Industrial Engineering at the Department of Manufacturing and Industrial Engineering, Universiti Tun Hussein Onn Malaysia (UTHM). He has taught courses in industrial engineering, production planning and control and entrepreneurship. His research interests include ergonomics product design, lean production, and production planning and control.



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