Jurnal Standardisasi Vol. 13, No. 2 Tahun 2011: 128 - 140 128 CASE STUDY OF APPLICATION OF ISO METHODOLOGY TO ASSESS ECONOMIC BENEFITS OF STANDARDS ON PT.WIKA BETON (Bogor Factory) Studi Kasus Penerapan Metodologi ISO untuk Menilai Keuntungan Ekonomi dari Standar pada PT. Wika Beton (Pabrik Bogor) Untari Pudjiastuti and Teguh Pribadi A.N Puslitbang Standardisasi-BSN Gd. Manggala Wanabakti – Jakarta Pusat 10270 email: [email protected] and [email protected]Diajukan: 8 Agustus 2011, Dinilaikan: 9 Agustus 2011; Diterima: 12 September 2011 Abstract In 2009, International Organization for Standardization (ISO) published methodology for assessing the economic benefits of standards (EBS), the assessment based on micro-economic approach. The study on PT.Wika Beton (Bogor Factory) carried out as ISO methodology implemetation pilot project in Indonesia, and running assisted by ISO Central Secretariat. The main objective of this study is to determine in quantitative form, benefits can be gained by a company from the use or the implementation of external standards in their business functions. In the case study conducted on one of 7 factories belong to PT. WIKA Beton’s located in Bogor , the standard impact on the four key business functions: research and development/engineering, inbound logistics, production, marketing and sales, can be identified as much as 9 impacts. Economic benefits of standards give contribution value of IDR 1.051.708.246 or 0,43% of the Bogor factory’s total revenue. Keywords: ISO methodology, PT.Wika Beton (Bogor Factory), External standards. Abstrak Pada tahun 2009, Organisasi Standardisasi Internasional (ISO) mempublikasikan suatu metodologi untuk menilai keuntungan ekonomi dari standar dengan pendekatan mikro ekonomi. Kajian pada PT. Wika Beton (Pabrik Bogor) dilakukan sebagai pilot project implementasi metodologi ISO di Indonesia, dan dilaksanakan dengan dipandu sekretariat pusat ISO. Tujuan utama kajian adalah menentukan dalam bentuk kuantitatif, keuntungan yang didapat perusahaan dari penggunaan standar eksternal dalam fungsi bisnis mereka. Dalam studi kasus di salah satu pabrik yag berlokasi di Bogor dari 7 pabrik yang dimiliki PT. Wika Beton di seluruh Indonesia, dampak standar pada 4 fungsi bisnis utama, yaitu: divisi penelitian dan pengembangan, inbound logistik, divisi produksi, divisi pemasaran dan penjualan, dapat diidentifikasi sebanyak 9 dampak. Keuntungan ekonomi dari standar memberikan nilai kontribusi sebesar Rp. 1.051.708.246 atau 0,43% dari total pendapatann Pabrik Bogor. Kata kunci: Metodologi ISO, PT. Wika Beton (Pabrik Bogor), Standar eksternal 1. BACKGROUND The economic impact of standardization has been assessed extensively in a series of predominantly macroeconomic studies by national standards bodies, academic institutes and other research teams. The methodology for assessing the economic benefits of standards (EBS) was then developed and published by ISO in 2009 (the "ISO Methodology") after a review of existing methods that had been developed independently, but with the consequence that the results of the studies done on the basis of these methods could not be compared to each other. National Standardization Agency of Indonesia (BSN) study entitled Study of SNI Utilization and the Growth in Industries (2009) show the number of industries using Indonesian SNI are 969 (7.6%), industries using the International Standard (SI) are 282 (2.2%), industries using SNI and SI are 354 (2.78%) and industries that not using SNI or SI are 8353 (65.6%), so it can be concluded that use of external standards are still low. In order to develop standardization as contained in government regulation No. 102/2000 and National standardization System to support standard implementation, it is very useful for a Standards Agency to demonstrate to its stakeholders the benefits of participating in standards development initiatives, or at least the advantages of using or implementing standards. In this case, companies will also better appreciate the economic and social impact of
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CASE STUDY OF APPLICATION OF ISO METHODOLOGY TO ASSESS ECONOMIC BENEFITS OF STANDARDS ON PT.WIKA BETON (Bogor Factory)
In 2009, International Organization for Standardization (ISO) published methodology for assessing the economic benefits of standards (EBS), the assessment based on micro-economic approach. The study on PT.Wika Beton (Bogor Factory) carried out as ISO methodology implemetation pilot project in Indonesia, and running assisted by ISO Central Secretariat. The main objective of this study is to determine in quantitative form, benefits can be gained by a company from the use or the implementation of external standards in their business functions. In the case study conducted on one of 7 factories belong to PT. WIKA Beton’s located in Bogor , the standard impact on the four key business functions: research and development/engineering, inbound logistics, production, marketing and sales, can be identified as much as 9 impacts. Economic benefits of standards give contribution value of IDR 1.051.708.246 or 0,43% of the Bogor factory’s total revenue. Keywords: ISO methodology, PT.Wika Beton (Bogor Factory), External standards.
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Diajukan: 8 Agustus 2011, Dinilaikan: 9 Agustus 2011; Diterima: 12 September 2011
Abstract
In 2009, International Organization for Standardization (ISO) published methodology for assessing the economic benefits of standards (EBS), the assessment based on micro-economic approach. The study on PT.Wika Beton (Bogor Factory) carried out as ISO methodology implemetation pilot project in Indonesia, and running assisted by ISO Central Secretariat. The main objective of this study is to determine in quantitative form, benefits can be gained by a company from the use or the implementation of external standards in their business functions. In the case study conducted on one of 7 factories belong to PT. WIKA Beton’s located in Bogor , the standard impact on the four key business functions: research and development/engineering, inbound logistics, production, marketing and sales, can be identified as much as 9 impacts. Economic benefits of standards give contribution value of IDR 1.051.708.246 or 0,43% of the Bogor factory’s total revenue.
Keywords: ISO methodology, PT.Wika Beton (Bogor Factory), External standards.
Abstrak
Pada tahun 2009, Organisasi Standardisasi Internasional (ISO) mempublikasikan suatu metodologi untuk menilai keuntungan ekonomi dari standar dengan pendekatan mikro ekonomi. Kajian pada PT. Wika Beton (Pabrik Bogor) dilakukan sebagai pilot project implementasi metodologi ISO di Indonesia, dan dilaksanakan dengan dipandu sekretariat pusat ISO. Tujuan utama kajian adalah menentukan dalam bentuk kuantitatif, keuntungan yang didapat perusahaan dari penggunaan standar eksternal dalam fungsi bisnis mereka. Dalam studi kasus di salah satu pabrik yag berlokasi di Bogor dari 7 pabrik yang dimiliki PT. Wika Beton di seluruh Indonesia, dampak standar pada 4 fungsi bisnis utama, yaitu: divisi penelitian dan pengembangan, inbound logistik, divisi produksi, divisi pemasaran dan penjualan, dapat diidentifikasi sebanyak 9 dampak. Keuntungan ekonomi dari standar memberikan nilai kontribusi sebesar Rp. 1.051.708.246 atau 0,43% dari total pendapatann Pabrik Bogor.
Kata kunci: Metodologi ISO, PT. Wika Beton (Pabrik Bogor), Standar eksternal
1. BACKGROUND
The economic impact of standardization has been assessed extensively in a series of predominantly macroeconomic studies by national standards bodies, academic institutes and other research teams.
The methodology for assessing the economic benefits of standards (EBS) was then developed and published by ISO in 2009 (the "ISO Methodology") after a review of existing methods that had been developed independently, but with the consequence that the results of the studies done on the basis of these methods could not be compared to each other.
National Standardization Agency of Indonesia (BSN) study entitled Study of SNI
Utilization and the Growth in Industries (2009) show the number of industries using Indonesian SNI are 969 (7.6%), industries using the International Standard (SI) are 282 (2.2%), industries using SNI and SI are 354 (2.78%) and industries that not using SNI or SI are 8353 (65.6%), so it can be concluded that use of external standards are still low. In order to develop standardization as contained in government regulation No. 102/2000 and National standardization System to support standard implementation, it is very useful for a Standards Agency to demonstrate to its stakeholders the benefits of participating in standards development initiatives, or at least the advantages of using or implementing standards. In this case, companies will also better appreciate the economic and social impact of
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consensus-based standards, the awareness of policy-makers may increase as well as of decision makers, business leaders on the importance of standardization. Such studies may also result in providing further insights to the company about how to achieve and increase benefits from implementing the standard in the company's operating processes.
The study on PT.Wika Beton (Bogor Factory) carried out as ISO methodology implemetation pilot project in Indonesia, and running assisted by ISO Central Secretariat.
2. OBJECTIVES
The main objective of this study is to determine in quantitative form in which benefits can be gained by a company from the use or the implementation of external standards in their business functions. The term "external standards" refers here to all standards that are publicly available developed on a consensus principle and in which the participation for their development is open to interested parties, such as national standards, international standards, standards of other standards development organizations or consortia in as far as the criteria of public availability, consensus-based and open participation are met. Excluded from this study are company-internal specifications and specifications that are developed and shared only between a number of cooperating companies.
3. METHODOLOGY
The first step of the methodology is to determine the value chain of an industry. The value chain is a chain of activities. Products (or services) move through all the activities in a prescribed order, gaining value in some way at each stage of the chain. Then industry boundaries need to be clarified. The industry value chain is then defined and the scope of the value chain for the assessment is selected (according to the particular company). The industry boundaries are determined by starting with an initial definition which will be refined iteratively through desk research, preliminary expert interviews and during the value chain analysis. Finally, the scope of the value chain is selected by evaluating and estimating the section most influenced by standards and where the highest impacts are expected. The scope, however, can also be selected arbitrarily based on the requirements of the specific study.
The second step is to assess impacts of standards used to the value drivers (crucial organizational capabilities that give a firm a competitive advantage, specific to an industry need to be determined and they need to be refined for the company under investigation). The third step is to quantify the impacts of standards to the value drivers with at least one adequate operational indicator has to be identified. For final, all relevant impacts are aggregated to give an overall EBIT (Earning Before Interest and Tax) or revenue contribution from the use of standards (in percentage). The option to compare of contribution to EBIT or revenue depend for the company disclosure of the financial data.
4. RESULTS AND DISCUSSION
4.1 Industry Value Chain
The construction industry value chain can be described in the following scheme:
Figure 1 Construction Industry Value Chain In the scheme of construction industry value chain, PT. WIKA Beton operates on the supplier segment for construction companies. 4.2 Company Value Chain
The general value chain model of M.Porter for manufacturing companies consisting of 9 business functions can represent the company value chain in PT. WIKA Beton, but modifications are made to adjust things that are found in the PT. WIKA Beton in the way of conduct production base on order and engineering process conducted after the sales. The result of the company's value chain diagram of PT. WIKA Beton can be described as follows:
Figure 2 General Value Chain Model For Manufacturing Companies from M.Porter, Modified for
PT.WIKA Beton
4.3 Key Value Drivers PT. Wika Beton
Based on interviews, PT. WIKA Beton has several core values that became the key value of a successful company in accordance to core business processes, that are:
Table 1 PT WIKA Beton core process and value
drivers
4.4 Scope of the Assessment on The Pilot Project
The scope of the case study conducted in PT. WIKA Beton is limited to the following key business functions: (1) Research & Development; (2) Inbound logistics, (3) Production and (4) Sales & Marketing, limited to the main factory in the city of Bogor.
The selection of the business functions are based on the core processes of PT. WIKA Beton namely: engineering, production, and sales.
Figure 3 Core Process Diagram of PT. WIKA Beton
Sales is part of activity of marketing and sales. Research and development and engineering cannot be separated and are considered to be part of one business function. In this study R&D is chosen due to R & D function provides results for long-term use. As a results for development of engineering functions. inbound function included in the study because of the prior process of production may affect/determine the quality of final product
Figure 4 Selected Business Functions
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4.5 Use of Standards in the Value Chain of PT. WIKA Beton
External standards used in PT. WIKA Beton in general can be divided into 3 types: (1) standard for raw materials, (2) standard for the final product, (3) and standards for management
processes. The use of standards that were identified in the selected business functions and its relationship in supporting the company's value drivers are described in more detail into macro diagrams as follows:
Figure 5 Relationship Between Type of the Standards, Business Functions,
Types of Impacts and Value Drivers
Table 4 Standards Used in the Selected Business Functions
NO
STANDARDS BUSSINESS FUNGCTION
Standard Number
Title Type Sales R&D Inbound Log
Prod
1. ISO 9001:2008 Quality managemenent system -- requirement
CS X X X X
2. Document from Ministry of Labour
Safety, health and environment
CS X X X X
3. ASTM C33 - 2999
Standard specification for concrete aggregates
PdS X
X
X
-
4 SNI 15-2049-2004
Portland Cement PdS
X
X
X
-
5. ASTM C494-1985
Standard Specification for Chemical Admixture for Concrete
PdS
X
X
X
-
6. JIS G 3536-1999
Uncoated Stress-Relieved Steel Wire and Strand for Prestressed Concrete
PdS
X
X
X
-
7. JIS G 3137-1994
Small Size Deformed Steel Bars for Prestressed Concrete
Recommendation for design loading of highway bridges
PcS X X - X
13. JIS A 5309-1981 Prestressed spun concrete poles
PdS X X - X
14. JIS A 5335-1987 Prestressed spun concrete piles
PdS X X - X
15. JIS A 5326-1988 Prestressed concrete sheet piles
PdS X X - X
16. JIS A 5325-1983 Reinforced concrete sheet piles
PdS X X - X
17. JIS A 5332-1980 Core type Prestressed concrete pipes
PdS X X - X
18. EN 642-1994 Prestressed concrete pressure pipes
PdS X X - X
19. ACI 318 - 2002 Building code requirements for structural concrete
PcS X X - X
20. ACI 543R-00 Design, manufacture and installation of concrete piles
PcS X X - X
21. SPLN 93:1991 Prestressed concrete poles for distribution line
PdS X X - X
22. PD No.10 Perumka
Railway design PcS X X - X
23.
American Railway Engineering Association (AREA) Chapter 10 – 1996
Manual for railway engineering
PcS X X - X
24. GOST 10629 – 1988
Prestressed concrete sleepers for railway wide 1520 mm
PdS X X - X
25. TB/T 3080 - 2003 - - X X - X
26. BMS 7 - 1992 Bridge design code PcS X X - X
27. AASHTO - 1992 Standard specification for highway bridges
PcS X X - X
Ket: X � used - � not used CS � compliance standard PdS � Product Standard PcS � Process Standard
4.6 Operational Indicators to Calculate the Impacts Of Standards
To calculate the economic benefits of the standard impact, we have to carry out a certain approach in the form business functions mapping correlated to the standards used. To do this we need to identify the standards impacts on the activities, then define operational indicators so
that finally economic benefits of the impacts from standards can be measured.
In cases when the operational indicators applied could not be calculated due to lack of data or limitation of the project duration, but if there was an impact from the standards felt by the company, the operational indicators and the impacts were still inventoried.
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Table 5 Approach of Quantifying Impacts of Standards With Analysis to the Activities in the Business Functions and Identifying Operational Indicators
Business functions
Related business function activities
Value drivers
Standards used
Impacts Operational Indicators
Explanation
1 2 3 4 5 6 7
Research and Development
Information collection about suppliers (in the product development process)
Product leadership
Raw material product standards, end product standards, Quality Management System Standard
a. Easy to gain suppliers information
b. Easy to assure raw materials comply to technical specification
Savings on labor costs because the information of capable suppliers is already available. If there is no information available on capable suppliers, the collection of information may take 2 days with a team of 3 people. With reliable information about the existence of capable suppliers, only 1 person is required for a period of 15 minutes. These savings are due to the influence of information technology such as email, phone and websites and also due to the consistency in using standards. Standard benefit is assumed to be 25% of the total savings.
By applied QMS ISO 9001, the organization is able to make lists of suppliers so the information is available immediately Suppliers are able to accommodate the company needs quickly and easily, because the product specifications are based on external standards that are agreed between producers and customers and may already be used by suppliers
Product development research process
Efficient product development
With standardized research and result of research, time and labor efficiency were reached. For example: 1. the company determines that a certain activity should be done within 15 minutes that applies for each plant.
2. the company produces the old product piles which have 600 mm diameter and would like to create new product piles with 1000 mm diameter. In this case, the company just used the 600 mm diameter basic research to develop 1000 mm diameter technology. Standardization assumed to cut 25% of actual costs
Under the standardized basic research, therefore the cost used for research are below actual cost.
Dissemination of research results and transfer of
Better submission of information
Standard Quality Management System ISO 9001 demanding all documents and
The saving of time consumed to transfer information is identified as a standards effect, an effect due to the use of
specifications should be standardized and should be applied consistently. Due to this standard implementation, technical specs provided by R&D such as material specification, process specification and standardization of the product furthermore transformed into working Instructions, operational procedures, brochures etc that have a significant effect for the production process and marketing. These processes are needed by the 8 plants in order to provide a similar process and result for each plant. This standardized process saved time consumed for the transfer of information from 1 day to 15 minutes Assumed that the standard benefit is 25% of the total savings
new technology and innovation as well as due to other factors.
Inbound logistic
Raw material selection
Operational Excellent
Raw materials product standards and Quality Management System standard
Efficient preparation of raw materials
In the preparation of raw materials before mixing, PT. Wika Beton implemented all the requirements of external standards to ensure the quality of the raw materials. For example: at first to get concrete with strenght 600 kg/cm
2
(K600) PT. Wika Beton determines the power tolerance of + 50 kg/cm
2. Now,
after using standards consistently, PT. Wika Beton can reduce the power tolerance to just + 20 kg/cm
2
Decreasing of tolerance power is identified as a standard benefit. These savings equivalent to 5 kg cement per 1 ton of concrete mix
Production removing steam curing process
Operational Excellent
Raw materials product standard and Quality Management
Efficient of Production Processes
Removing the steaming process has saved cost for LNG. These savings are identified as a standard effect and technology –innovation effect..
QMS ISO 9001 requires the organization's efforts to improve QMS continuously. PT. Wika Beton develops a production process by eliminating the steaming process and substitute it
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Business functions
Related business function activities
Value drivers
Standards used
Impacts Operational Indicators
Explanation
1 2 3 4 5 6 7
System standard
It is assumed that the standard benefit is 50% of the total savings
with adding non-steam admixture in concrete materials. However, the company has to maintain product quality in accordance with all requirements as specified in the standard.
Production process: wire caging
Efficient of Production Processes
Efficiency of the process also carried out on the wire caging process. This process replaces manual functions by electronic one's. Saves manpower costs by saving 10 workers within 20 minutes to 3 people in 5 minutes. Standard benefit is assumed to be 50% of the total savings
It is assumed these savings are not only caused by the development of technology but also include benefits from the use of standards.
Production process: single stressing to simultant stressing
Efficient of Production Processes
Efficiency occurred due to the replacement of equipment so that the system was changed from singles to simultaneous stressing. With the same Watt consumption, the savings of machine time from 15 minutes to 5 minutes is identified as the standard benefit and technological benefit. Standard benefit is assumed to be at 50% of the total savings.
This efficiency is due to technological change but the factory still maintains its product quality in compliance with the standard setting.
Marketing and sales
sales Customer intimacy
Raw materials product standards and Quality Management System standard
Reduced time in selling
With situation in which the technical specifications in external standards not available, it takes about 3 days with a team of 3 persons to sell the product. Since PT Wika provides clear specifications to the market, it takes only 2 days and 1 person until the contract completed. There are 1500 contracts per year for 7 factories. The Cibinong factory as the object of the study has produced 30% from the total sales. Standard
PT. Wika sells the product by using the technical specifications (that expose the standards used) as a tool to market its products. In this way customers find out their needs easily and PT Wika can find out the requirements of customers immediately. This saving occurred are supported by a marketing method, marketing staff and technology information included standard impact were required to attain cost efficiency.
sales good quality products, comply with the standards consistently
If there was no product rejected, so 0.13% cost allocation tolerance for defect products are achieved as savings. These savings are a result of using standards and appliying the Quality Management System consistently. The economic benefit of standards is assumed to be 50% of the total savings.
Good quality product that is continuously maintained in accordance with the standards agreed upon by both parties between producers and consumers. The important thing that is retained and used as a tool and as a mainstay in selling products. Therefore PT. Wika determine tolerance of the defect product of 0.13% of the profits of production per year
4.7 Calculation of Economic Benefits of
Standards
The method of identifying and calculating the standards impacts with operational indicators
has been explained. The result of the calculation of the impacts of standards with the operational indicators in the selected business functions described below:
Table 6 Calculation of Economic Benefits of Standards by Business Function
1 6 and 7 8
Selected business
functions (FB)
Operational Indicators + Explanation Estimation of economical benefit for operational
indicator
(IDR/year)
FB 1
Research and Development
Savings on labor costs because the information of capable suppliers is already available. If there is no information available on capable suppliers, the collection of information may take 2 days with a team of 3 people. With reliable information about the existence of capable suppliers, only 1 person is required for a period of 15 minutes. These savings are due to the influence of information technology such as email, phone and websites and also due to the consistency in using standards. Standard benefit is assumed to be 25% of the total savings.
11.535.278
With standardized research and result of research, time and labor efficiency were reached. For example:
1. the company determines that a certain activity should be done within 15 minutes that applies for each plant.
2. the company produces the old product piles which have 600 mm diameter and would like to create new product piles with 1000 mm diameter. In this case, the company just used the 600 mm diameter basic research to develop 1000 mm diameter technology.
Standardization assumed to cut 25% of actual costs
186.666.667
Standard Quality Management System ISO 9001 demanding all documents and specifications should be standardized and should be applied consistently. Due to this standard implementation, technical specs provided by R&D such as material specification, process specification
2.807.442
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1 6 and 7 8
Selected business
functions (FB)
Operational Indicators + Explanation Estimation of economical benefit for operational
indicator
(IDR/year)
and standardization of the product furthermore transformed into working Instructions, operational procedures, brochures etc that have a significant effect for the production process and marketing. These processes are needed by the 8 plants in order to provide a similar process and result for each plant. This standardized process saved time consumed for the transfer of information from 1 day to 15 minutes
Assumed that the standard benefit is 25% of the total savings
FB 1
Inbound logistic
In the preparation of raw materials before mixing, PT. Wika Beton implemented all the requirements of external standards to ensure the quality of the raw materials. For example: at first to get concrete with strenght 600 kg/cm
2
(K600) PT. Wika Beton determines the power tolerance of + 50 kg/cm
2. Now, after using standards consistently, PT.
Wika Beton can reduce the power tolerance to just + 20 kg/cm
2 .These savings equivalent to 5 kg cement per 1
ton of concrete mix
341.716.540
FB 3
Production
Removing the steaming process has saved cost for LNG. These savings are identified as a standard effect and technology –innovation effect..
It is assumed that the standard benefit is 50% of the total savings
264.286.500
Efficiency of the process also carried out on the wire caging process. This process replaces manual functions by electronic one's. Saves manpower costs by saving 10 workers within 20 minutes to 3 people in 5 minutes.
Standard benefit is assumed to be 50% of the total savings
135.240.000
Efficiency occurred due to the replacement of equipment so that the system was changed from singles to simultaneous stressing. With the same Watt consumption, the savings of machine time from 15 minutes to 5 minutes is identified as the standard benefit and technological benefit.
Standard benefit is assumed to be at 50% of the total savings.
19.209.680
FB 4
Marketing and sales
With situation in which the technical specifications in external standards not available, it takes about 3 days with a team of 3 persons to sell the product. Since PT Wika Beton provides clear specifications to the market, it takes only 2 days and 1 person until the contract completed. There are 1500 contracts per year for 7 factories. The Cibinong factory as the object of the study has produced 30% from the total sales. Standard impact assumed as 5% from the total savings.
78.750.000
If there was no product rejected, so 0.13% cost allocation tolerance for defect products are achieved as savings. These savings are a result of using standards and appliying the Quality Management System consistently. The economic benefit of standards is assumed to be 50% of the total savings.
Table 7 – Calculation of the Economic Benefits of Standards and the Percentage Contribution to Company Revenue
1 8 9
Related Business Function Calculation Economic Benefit For Operational Indicator (IDR/Year)
The Percentage Contribution To Revenue (% )
FB 1 Research And Development 11.535.278
186.666.667
2.807.442
Total BF 1 201.010.271 0,08 %
FB 1 Inbound logistic 341.716.540
Total BF 2 341.716.540 0,14 %
FB 3 Production 264.286.500
135.240.000
19.209.680
Total BF 3 418.779.020 0,17 %
FB 4 Marketing and sales 78.750.000
11.452.415
Total BF 4 90.202.415 0,04 %
TOTAL Benefit 1.051.708.246 0,43 %
4.8 Qualitative and Semi-Quantitative Impacts of Standards
Impacts of identified external standards application but can not be quantified due to unavailability of data or time duration needed to find out operational indicators and economic calculation, are inventoried as follows:
o More easy to implement external consensus based standards rather than to develop internal standards. (There are no data about the costs for the development of internal standards)
o With the implementation of external standards that are known and widely used, products from the supplier and from the company will be more interoperable, cheaper, faster to produce, and will decrease the variety of product types than it would not be possible by implementing internal standards that are not known and not widely used. If all customers determine their own specifications for the same purpose, then the production will have a high overhead cost. This is due to necessary research and development (from the material, price, production techniques, the need for mold / molds specifically, the final test, and so on). This impact cannot be calculated in detail.
o The company success in meeting the required quality from customer based on external standards, increases customer’s trust, and improves the corporate image
o By implementing external standards that have been widely recognized, PT.WIKA Beton products can be accepted internationally
o Promotion of products by using external standards that are widely known also enhance product and company image
o There is better information transfer because communication between units using the same formats for data and documentation. This can reduce misunderstandings in communication that can cause errors or defects. It is also possible to reduce the occurrence of and the costs for rework
o Unified management system. Integrating the standards for quality management, health and safety through one integrated system for key the production stage can provide additional quality control efficiency.
o Quick response on complaints. It decreases repetitive complaints, so no repeat on the same complaint and the answer could be delivered to the customer less than 1x 24 hour
4.9 Sources of uncertainties and assumptions, affect the economic benefits calculation
Some important things that affect the calculation of economic benefits of standards in this study (source of uncertainty, assumptions made) are as follows:
1. Data on the impact of standard for the selected four business functions in the scope of this assessment in PT. WIKA Beton are based on the observations of benefits by key staff and have been agreed by the business development manager as a representative of top management. The quantification of the standards impacts expressed as economic benefits have also been discussed together
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with identifying relevant operational indicators that can be associated with unit costs (monthly salary, materials prices, electricity costs per KWH, and others).
2. Operational indicators in this study are based on a comparison between the normal company operation (standards are being used) with the assumption of a hypothetical situation when standards are not used in the company operations. This comparison has been done due to PT. WIKA Beton has implementing compliance standards (ISO 9001, Health and Safety management), process standards, product standards since the company established, so there is no records before those standards applied.
3. As mentioned in point 2, after an operational indicator impact were found as a result of the application of a standard that can be linked to the unit cost, it is still found that not 100% of the impacts (e.g. of savings) can be correlated with the use of the standard. Therefore we made assumptions about the percentage of the standards contribution, which-in this study-was based on a consensus within the project team and the company rather than a more quantitative method such as a weighting system.
4. There are certain assumptions in this study that we found difficult to judge with regard to their acceptability.
5. Although a declaration of confidentiality has been signed with the company and the company has been willing to participate in the project as the object of the study, the company has an internal policy of non-disclosure of confidential data to the public.
5. CONCLUSION & RECOMMENDATION
5.1 Conclusions
a. The impact of standards can be quantified into economic value using the ISO methodology.
b. In the case study on Bogor factory of PT. WIKA Beton, the standard impact on the four key business functions: research and development/engineering, inbound logistics, production, marketing and sales, can be identified as much as 9 impacts.
c. The standard impact on the four key business functions give economic benefits with contribution value of IDR 1.051.708.246 or 0,43% of the Bogor factory’s total revenue
d. There are more impacts of external standards application that can be identified but can not be quantified due to unavailability of data or time duration needed to find out operational indicators and economic calculation (summarized in point 4.8)
e. Implementation of the study through discussion with a standard user (company) creates awareness of the benefits of standards in their contribution to the company profit.
f. The results from the project can be disseminated as an effort for the promotion of consensus based external standards implementation.
g. There are sources of uncertainties and assumptions which we have summarized in point 4.9.
5.2 Recommendations
a. Disseminating the results of the study for related stakeholders, through seminars or workshops to raise awareness and interest in the use / application of consensus based external standards.
b. Dissemination of the methods to standard users so they can perform their own assessment of the impact of standards, because it is more difficult when the assessment made by parties outside the company.
c. Need to do a similar study by BSN/ISO in the same sector or another sector companies for the dissemination of the methodology implementation, to increase awareness about the economic benefits of standards in other sectors, and to make comparisons from the same sector.
d. Similar studies in the future by BSN/ISO needs to be done with a personal approach to top management and an explanation of the purpose and objectives of the study and the possibility of company data that are needed.
e. Making a pocket book/leaflet/brochure containing key steps about the methodology.
f. ISO Central secretariat needs to conduct workshop on the result of the ISO methodology on EBS in either regional forum or international forum (such as ISO General Assembly) in order to share the outcomes with other ISO members.