ISO 9001 A Business Management Tool

ISO 9001 A Business Management Tool

Introduction

ISO 9001 is much more than a standard, it should be part of a business’ strategic plan and not simply thought of as a quality management standard for product or service conformance or as a standard to achieve ISO 9001 certification. Many organizations simply look at the ISO 9001 standard as a way to manage the quality of their products or services or as a standard for certification, but I’m here to tell you that it’s so much more than that! I personally have always been of the opinion that business is quality and quality is good business. The quality principles that are included in ISO 9001 are just good business practices.

Throughout my 18 year business career in quality, I have often been amazed by executives, business owners, managers and supervisors that desire to increase efficiency, customer satisfaction and profitability, but have rarely tapped into the pragmatic real power of the ISO 9001 standard. They often think of ISO 9001 as something the Quality Department should be focused on or in many cases it’s an after-thought; rather than a strategic and integral part of their overall business plan. Some organizations only think about it when one of their primary customers ask them are they ISO 9001 certified or they encounter it on a bid questionnaire for a project. These are not strategic decisions. The real value of ISO 9001 has been debated for as long as I can remember, but those organizations that continue to debate rather than take action are resigned to the prospect of poor business, poor business growth and being overtaken by organizations that have moved beyond debating the topic.

Mr. David Levine and Michael Toffel of the Harvard Business School published a paper on January 18, 2010 that summarizes an empirical study performed that researched the benefits realized by 916 companies that adapted the ISO 9001 standard compared to 17,849 non-adapters (2). Some of the benefits noted in the study included: higher rates of survival of organizations, higher rates of sales, higher rates of employment growth and increased wages. In addition to these benefits, others included: reduction in waste generation, enhanced worker productivity, worker improved attention to detail and improvement in health and safety performance. These benefits sound like business benefits, rather than quality benefits. ISO 9001 should be thought of as a business management tool for your organization to drive real value and results.

A Business Management Tool

A business model describes the rationale of how an organization creates, delivers and captures value for anyone or anything that is impacted by the organization. This may be shareholders, employees and customers, including the community and the local and global economy. The business model itself should outline the mission, strategies, infrastructure, organizational structure, operational processes and procedures that will be utilized to execute the business model. Based upon survey responses of managers, a business model is the design of organizational structures to enact a commercial opportunity (1). A business must deliver value to its customers, convince customers to pay for that value, and once they pay, the organization must operate in a manner that will result in profitability.

The business model should address what customers need and how the organization can meet those needs. The more I think about this, it sounds a lot like what the ISO 9001 standard is all about. Too often organizations do not include quality as part of their business model or plan and they continue to struggle in successfully executing their mission, consistently meeting the needs of their customers and delivering value to their internal and external customers. The ISO 9001 standard states that the adoption of ISO 9001 should be a strategic decision by the organization and its design and implementation is influenced by varying needs, objectives, products provided and processes employed (3). If the organization has failed to implement ISO 9001 as part of its strategic business model and plan, the organization may begrudgingly realize some positive benefits, but will not achieve the real value behind the standard. One of the most powerful benefits of the standard is the principle of employing the process approach to managing your business.

Process Approach

I’m often amazed when I ask the question to the employees of my clients’ organizations about their knowledge of their organization’s core processes. I may ask an employee can you explain to me the basic work flow of your organization and I often receive a blank stare. I challenge you today to ask 3 people within your organization to explain your core processes and see how many of them can articulate how work flows. If ISO 9001 is meant to be used as a business management tool, every employee in the organization should have a basic understanding of how the organization generates revenues, the flow of organizational processes and their order and understand their role as part of the overall collection of processes within the organization.

The process approach used as a business management tool, is basically understanding your organization’s processes, their inputs, their outputs and how the processes interact with each other. Without understanding your organization’s processes, it’s difficult to diagnose problems, get to the real cause(s) of those problems and implement real preventive or corrective actions. The process approach is based upon (4) basic principles: 1. understanding and meeting requirements, 2. the need to consider processes in terms of added value, 3. obtaining results of process performance and effectiveness and 4. continual improvement of processes based on objective measurement (3).

Understanding and Meeting Requirements

Most problems in organizations and in life in general are associated with not understanding and meeting requirements. Just think about it, many marriages fail because the couple did not understand or did not meet the requirements of the other spouse. Employees often underperform due to not having a clear understanding of the requirements of their job; therefore, they are not either equipped or not able to meet job requirements. Customers are often dissatisfied due to the customer’s requirements not being understood and met. In all of these scenarios, the meeting of the requirement is directly correlated to the initial understanding of those requirements.

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