Cutting costs without affecting employees

The retrenchment saga has unveiled the inventive side of the Indian firms with each of them designing innovative ways to cut cost without affecting the employees and clients.
To cut on electricity bills Kotak Mahindra Bank introduced the 'Kill Bill' campaign under which air-conditioners are set at a particular temperature and computer monitors are asked to be switched off when not in use. For the successful utilization of the campaign, posters elaborating the importance of it are displayed in conference rooms and at various entry and exit points of the company. SBI has begun using the e-mail instead of posts to reduce costs. The bank lures its customers to go for online transaction, by offering reward points to those who use the electronic system. Thus, through each customer, who agrees to follow the practice, the bank saves Rs.40. Taking a cue from SBI, HDFC Securities too is looking at pruning costs sending a welcome kit for every new broking account through mail, instead of courier. The brokerage firm can make a monthly saving of six lakh rupees by following this practice.
Other broking firms are e-mailing contract notes with the consent of their clients, instead of printing and couriering it, saving Rs.20 per contract. Typically, large brokerage houses dispatch a minimum of 5,000 such contracts on any trading day. Another instance is cutting on colored printouts by a foreign investment bank, which used to take 1,000 such everyday, but has now brought it down to 100. This allows it to save Rs.12 lakh annually.

- Condensed from Silicon India’s SI Dailydose [dailydose@sidailydose.com]

OHSAS 18001

Occupational Health and safety assessment Specifi­cation (OHSAS) is an international standard giving requirements related to health and safety management systems in order to enable an organization to control its risks and improve its performance.
Benefits of OHSAS:
Improves your safety culture
Improved efficiency and consequently reduce acci­dent and production time loss
Increased control of hazards and the reduction of risks through devolved responsibility
Demonstrates legal compliance
Increases your reputation for safety and occupational health
Reduces insurance premiums
Is an integral part of a sustainability strategy
Demonstrates your commitment to the protection of staff, property and plant
Encourages more effective internal and external communication
Is a “Business to business contract winner.”
Elements of the OHSAS 18001 standard are:
■ OH&S Policy ■ Planning for Hazard identifica­tion, Risk Assessment and Risk Control ■ Legal and Other Requirements ■ Objectives ■ OH&S Manage­ment Programs ■ Structure and Responsibilities ■ Training, Awareness and Competence ■ Consultation and Communication ■ Documentation ■ Document and Data Control ■ Operational control ■ Emergency Preparedness and Response ■ Performance Measure­ment and Monitoring ■ Accidents, Incidents, Nonconfor­mances and Corrective and Preventive Ac­tion ■ Records and Records Management ■ Audit ■ Management Review.
OHSAS is a systematic practice of identifying poten­tial for loss, assessing the risks, making decisions on appropriate controls, implementing and then monitor­ing the system to control the loss.
How to implement OHSAS
Identify all loss exposure
Evaluate the risk
Develop a plan
Implement the plan
Monitor the system
Identification of loss exposures is helped by
Review of past incidents, including accident investiga­tion work
Brain storming and Task Observation
Checklists
List of hazardous material and processes
Three variables used in the risk evaluation:
Severity - if the exposure were to result in a loss, how severe is the loss likely to be?
Frequency - how often are people, equipment, materi­als, or the environment exposed to the risk?
Probability - considering all pertinent factors, how likely is the loss to occur?
To develop a plan, we have four alternatives:
Termination - Termination of the risk is generally the preferred option
Treatment - Many hazards can be treated to reduce the inherent risk.
Toleration - Either we treat risk in order that it may be brought down to a tolerable level; or the risk does not warrant any treatment at all.
Transfer - Even with the best means of treatment, we may find that we are still liable for consider­able financial risk. Insurance is one way to transfer some risk, but in so doing we do not transfer all fi­nancial and legal liabilities and accountabilities. An­other option is to transfer risk through contracted agreements.
The implementation of the plan involves key aspects of performance management such as goals - objec­tives - responsibilities - accountability - follow-through. Implementation is facilitated by applying proven management principles and tech­niques for success.
Monitoring the plan needs us to measure, evaluate, commend and correct individual, group and organ­izational performance.
- From “An Introduction to OHSAS 18001” by Jentek and http://www.nimbuscertifications.com/services.html?gclid=CJCq27Oi1pgCFQLMbgodXV7odQ

Effective Internal Quality Audits

The following are some of the most common pitfalls to ineffective internal auditing deployment:
Pitfall No. 1: Not basing audits on status and importance of the auditee department.
Status and importance can be interpreted differently, but their intent is often misunderstood.
Status can be defined as how a particular department, discipline, facility, or process is performing against established policies, goals, objectives, and expectations. Some questions to ask when considering status include:
What are the performance indicators for an area, group, or department reflecting?
What does the performance history indicate?
Have these indicators been the result of root cause corrective actions? Are they recurring?
Have there been changes in process, equipment, personnel, or management?
Has the area or department been restructured or reorganized?
If the performance history of a given department, process, or group is meeting established expectations, then its status can be considered healthy. Remember, everything needs to be considered on a case-by-case basis, according to the size and type of the organization. The management representative or the process owner of internal audits ultimately makes that determination.
Importance is an entirely different aspect, yet it is still directly linked to status. Assume that those performing a final inspection process have found no nonconforming product, and the goals and objectives of the process are consistently meeting expectations. Therefore, one could ascertain that the status of the final inspection process is operating as expected and all is well. If nonconforming product is distributed, the customer is the next in line to receive it. The importance is with respect to the power to produce an effect—nonconforming products will not ship out.
Therefore, concentrate on the areas that are critical (importance). Increase the internal audit focus on areas that are the root cause or otherwise not performing to expectation (status). This is especially true when companies implement new departments, processes, or initiatives (i.e., lean manufacturing, Six Sigma projects, etc.). During these situations, time is usually a major concern to get things operating as soon as possible. Then it's the auditing of the general implementation and functionality of the new system, area, or process that becomes an importance. (Its status will unfold, as it’s monitored and measured.)
When scheduling internal audits, consider other aspects such as:
What’s been the past performance history?
Are there new employees, equipment, or management?
How effective is the training system?
What do past audit results indicate?
How critical is that area?
Truly effective audit schedules concentrate on potential, not just obvious, shortcomings or weaknesses. Utilizing control plans along with related design or process failure, mode, effect, analysis (FMEA) can also be helpful as a guide to aid in identifying critical areas. The key is to focus the audit schedule on the areas that are or could potentially be a root cause for nonconforming situations as well as areas critical for maintaining product conformity.
The audit schedule is a living document and should be revised as appropriate. The individual responsible for scheduling audits should be fully aware of management review output data; customer, internal, and supplier concerns; and organizational infrastructure changes.
Pitfall No. 2: Ineffective internal audit scheduling. If status and importance aren’t properly understood, then this pitfall is sure to follow.
Audit schedules must reflect the reality of the QMS. A third-party auditor expects to see an internal audit schedule that reacts to the organization’s key performance indicators.
In reference to status and importance, processes that fall below expectations must receive internal audit attention. Processes that meet or exceed expectations do not necessitate audit focus.
When a third-party auditor examines an audit schedule that never changes, is never revised, that neatly lists each process just once with all processes given equal weight, that appears more like a decorative pattern on a calendar rather than a thought-out living document. This is a clue that the internal audit process is probably not understood and not being utilized to its fullest potential.
Perhaps, the worst practice is when a company takes the "granddaddy" audit approach. This tactic generally involves scheduling a full-system audit of the entire QMS just once or twice a year. There is so much ineffectiveness and inefficiency with this practice that it’s easier to just list the few positive aspects. Besides the fact that there is virtually no consideration given to status and importance, this practice of infrequent internal audits is also statistically unsound. It’s not possible for management to conduct an effective management review of the QMS based on the sample of one or two grand-system audits. Conducting only two full-system audits is the equivalent to sitting down at Thanksgiving, eating the entire meal, and then not eating again until Memorial Day. No one, of course, could eat just two huge meals twice in one year and expect to be suitably nourished. It’s the same when developing the internal audit schedule. Audits should be spread out so that audit activity is “digestible” to the organization, not overwhelming it.
Full-system audits pose other problems as well. It absolutely places strain on all resources involved—auditors and audited alike—and it’s also a major disruption to the operation. When such an endeavor is undertaken, the focus of the audit tends to lose itself under the enormity of the task. Full-system audits don’t allow the auditor to concentrate on the specific aspects of the process. The scope of a full-system audit is so wide that inconspicuous and subtle nonconformances may exist and be easily overlooked.
When developing the audit schedule, consider the following:
Focus on the “climate” changes within the QMS (i.e., keep abreast of customer feedback, new employees, new equipment or processes, quality initiatives, new departments, root cause areas of concern, etc.).
Try short-duration, highly-concentrated audits in lieu of long, drawn-out audits where focus is prone to be lost. Consider weekly audits (for 30 to 60 minutes) instead of auditing on a monthly or quarterly basis. This method is much easier to manage, takes less time, increases focus, and is much less disruptive.
Utilize a wide variety of trained internal auditors. In fact, some of the best auditors are new employees or the employees that have no clue of the area, function, or process that they are auditing. These individuals ask simple, childlike questions and aren’t satisfied until they understand the answers provided. These are the types of auditors that ask the “why?” question at least five times, which almost always leads to revealing the underlying root causes.
Use a checklist only as a guide and ensure it’s based on a process approach. Otherwise, if the checklist becomes the basis of the audit, it can become stale in a short period of time. Admittedly, checklists are great for first-time auditors to generate an audit trail. Just be careful not to rely on them solely, as they tend to keep the blinders on and generally don’t allow the auditor to think outside of the box.
Rotate auditors to keep the system fresh. Spread them around. Take advantage of new thoughts, perspectives, and ideas. Share the audit results with the entire organization as a lessons-learned exercise; one person’s corrective action could be someone else’s preventive action.
Consider scheduling additional activities such as corrective action effectiveness validation, customer web site examination (to ensure customer-specific requirements are current), and assessing company statutory/regulatory requirements, if applicable.
Pitfall No. 3: Internal auditors not effectively utilized
Auditing is an acquired skill just like playing a musical instrument, cooking, or playing golf. Simply put, the more one audits, the better and more comfortable they become with the auditing process. Honed auditing skills shortly follow. It’s a wasted opportunity when a company invests time and money to train their audit team and yet uses them on a minimal basis.
Consequently, it’s also equally beneficial for the audited to be engaged in the audit process as well. The more one is exposed to the auditing process, the less intrusive and threatening the process becomes.
Pitfall No. 4: The internal audit and the corrective action process are not timely.
Many audit schedules I’ve assessed allow the internal audit team a wide time allowance to complete a scheduled audit. Typically, if an auditor is given a month to complete an audit, then it will be a month (or more) before that audit is complete. You know the saying, “Give an inch, take a mile.”
Effective audits are scheduled to take place during specific days and conclude within specific weeks, at most. Any time extension only dilutes the effectiveness and importance of the system. Even worse, when corrective action responses are equally relaxed, the timeframe between initial audit schedule, deployment, finding and response can be spread out so far that the audit’s effect is completely nullified.
Pitfall No. 5: Internal audits don’t reflect a process-based approach.
When ISO 9001 was released, there was much emphasis placed on the requirement for conducting audits using the process approach. This requirement’s original intent was to focus the audit on assessing process effectiveness (including interface activities with other processes). This was a departure from focusing solely on element/clause compliance.
Unlike third-party auditors, many companies didn’t pursue formal ISO 9001 training and hence never fully grasped the intent nor understood process-based approach auditing. In fact, some companies still don’t fully understand their process inputs and outputs, process sequences and interfaces, and process monitoring and measuring. As a result, this has created a disconnection between the third-party auditor and the organization. Organizations that are still struggling with the process-approach concept are highly encouraged to pursue formal training or consulting assistance.
The bottom line is that internal auditing is a cornerstone of the QMS—a vital tool to identify and improve the effectiveness of the QMS. With the advent of the process-based approach to auditing and process-layered audits, its value and importance has been significantly raised. Management reviews simply cannot be effective without effective internal auditing and reporting.
The pitfalls mentioned in this article represent only some, not all, ineffective auditing practices. If an internal audit system is disciplined to the point that it’s supported by senior management, carried out as scheduled, and coupled with effective corrective and preventive action in a timely manner (as required by the standard), then the benefits will justly be realized—through continual improvement and customer satisfaction.

- Richard Strouse in Quality Digst article “Improving the Effectiveness of Internal Auditing”