o 9000 is a set of international standards of quality management that have become increasingly...

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O 9000 is a set of international standards of quality management that have become

increasingly popular for large and small companies alike. "ISO is grounded on the

'conformance to specification' definition of quality, " wrote Francis Buttle in

theInternational Journal of Quality and Reliability Management."The standards specify

how management operations shall be conducted. ISO 9000's purpose is to ensure thatsuppliers design, create, and deliver products and services which

meetpredetermined standards; in other words, its goal is to prevent non-conformity."

Used by both manufacturing and service firms, ISO 9000 had been adopted by more

than 100 nations as their national quality management/quality assurance standard by

the end of 1997.

This quality standard was first introduced in 1987 by the International Organization for

Standards (ISO) in hopes of establishing an international definition of the essential

characteristics and language of a quality system for all businesses, irrespective of

industry or geographic location. Initially, it was used almost exclusively by large

companies, but by the mid-1990s, increasing numbers of small-and mid-sized

companies had embraced ISO 9000 as well. In fact, small and moderate-sized

companies account for much of the growth in ISO 9000 registration over the past

several years. The total number of ISO 9000 registrations in the United States increased

from a little more than 2, 200 in 1993 to more than 17, 000 in 1998; of those 17, 000

registrations, nearly 60 percent were held by companies with annual sales of $100

million or less.

The increased involvement of small and midsized firms in seeking ISO 9000 registrationis generally attributed to several factors. Many small businesses have decided to seek

ISO 9000 certification because of their corporate customers, who began to insist on it as

a method of ensuring that their suppliers were paying adequate attention to quality.

Other small business owners, meanwhile, have pursued ISO 9000 certification in order

to increase their chances of securing new business or simply as a means of improving

the quality of their processes. "The pressure for companies to become ISO 9000-

certified is absolutely increasing and will continue to increase, " predicted one

management consultant in an interview withNation's Business."The question many

smaller companies have to ask is when, not if, they [will] get ISO 9000-registered."

ELEMENTS OF ISO 9000 QUALITY MANAGEMENT

SYSTEMS

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The standards of ISO 9000 detail 20 requirements for an organization's quality

management system in the following areas:

• Management Responsibility

• Quality System

• Order Entry

• Design Control

• Document and Data Control

• Purchasing

• Control of Customer Supplied Products

• Product Identification and Tractability

• Process Control

• Inspection and Testing Control of Inspection, Measuring, and Test Equipment

• Inspection and Test Status

• Control of Nonconforming Products

• Corrective and Preventive Action

• Handling, Storage, Packaging, and Delivery

• Control of Quality Records

• Internal Quality Audits

• Training

• Servicing

• Statistical Techniques


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MODELS OF ISO 9000

The ISO 9000 quality standards are broken down into three model sets—ISO 9001, ISO

9002, and ISO 9003. Each of these models, notedIndustrial Managementcontributors

Stanislav Karapetrovic, Divakar Rajamani, and Walter Willborn, "stipulate a number ofrequirements on which an organization's quality system can be assessed by an external

party (registrar)" in accordance with the ISO's quality system audits standard. "A quality

system, " they added, "involves organizational structure, processes, and documented

procedures constituted towards achieving quality objectives."

Each of the three sets concentrates on a different quality area. ISO 9001 is the most

wide-ranging, for it specifies the various operating requirements in such areas as

product design and development, production, installation, and servicing. ISO 9002 is

concerned with quality assurance at the production and installation stages. ISO 9003

covers testing and inspections. As Karapetrovic, Rajamani, and Willborn noted, "if the

minimum requirements are met [for the above operating areas], a registrar accredited by

anational accreditation institution issues a certificate of compliance and the

organization's quality system becomes ISO 9001, 9002, or 9003 registered."

It is worth noting that certification is handed out for individual quality systems, not

companies; this means that one company may hold more than one ISO 9000

registration. Moreover, Harvey R. Meyer pointed out inNation's Businessthat "the

standards do not certify the quality of a product or service. Rather, they attest that a

company has fully documented its quality-control processes and consistently adheres tothem. If that's done, quality products and services generally follow."

In addition to ISO 9000, two related quality standards emerged in American industries in

the late 1990s. ISO 14000, also known as the Environmental Management Systems

Standards, is intended to combine environmental management systems with the ISO

9000 quality system. The second system, QS9000 is anadaptation of ISO 9000 to meet

the specific needs of the "big three" American automobile manufacturers—Ford,

General Motors, and Daimler Chrysler. Both systems were expected to have a

substantial impact on U.S. companies.

ADVANTAGES OF ISO 9000

The advantages associated with ISO 9000 certification are numerous, as both business

analysts and business owners will attest. These benefits, which can impact nearly all

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corners of a company, range from increased stature to bottom-line operational savings.

They include:

• Increased marketability—Nearly all observers agree that ISO 9000 registration

provides businesses with markedly heightened credibility with current andprospective clients alike. Basically, it proves that the company is dedicated to

providing quality to its customers, which is no small advantage whether the

company is negotiating with a long-time customer or endeavoring to pry a

potentially lucrative customer away from a competitor. This benefit manifests itself

not only in increased customer retention, but also in increased customer

acquisition and heightened ability to enter into new markets; indeed, ISO 9000

registration has been cited as being of particular value for small and mid-sized

businesses hoping to establish a presence in international markets.

• Reduced operational expenses—Sometimes lost in the many discussions of ISO

9000's public relations cache is the fact that the rigorous registration process

often exposes significant shortcomings in various operational areas. When these

problems are brought to light, the company can take the appropriate steps to

improve its processes. These improved efficiencies can help companies garner

savings in both time and money. "The cost of scrap, rework, returns, and the

employee time spent analyzing andtroubleshooting various products are all

considerably reduced by initiating the discipline of ISO 9000, " confirmedRichard

B. Wright inIndustrial Distribution.

• Better management control—The ISO 9000 registration process requires so

much documentation andself-assessment that many businesses that undergo its

rigorscite increased understanding of the company's overall direction and

processes as a significant benefit.

• Increased customer satisfaction—Since the ISO 9000 certification process

almost inevitably uncovers areas in which final product quality can be improved,

such efforts often bring about higher levels of customer satisfaction. In addition,

by seeking and securing ISO 9000 certification, companies can provide their

clients with the opportunity to tout their suppliers'dedication to quality in their

own business dealings.

• Improved internal communication—The ISO 9000 certification process's

emphasis on self-analysis and operations management issues encourages

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various internal areas or departments of companies to interact with one another

in hopes of gaining a more complete understanding of the needs and desires of

their internal customers.

•

Improved customer service—The process of securing ISO 9000 registration oftenserves to refocus company priorities on pleasing their customers in all respects,

including customer service areas. It also helps heighten awareness of quality

issues among employees.

• Reduction of product-liability risks—Many business experts contend that

companies that achieve ISO 9000 certification are less likely to be hit with

product liability lawsuits, etc., because of the quality of their processes.

• Attractiveness to investors—Business consultants and small business owners

alike agree that ISO-9000 certification can be a potent tool in securing funding

from venture capital firms.

DISADVANTAGES OF ISO 9000

Despite the many advantages associated with ISO 9000, however, business owners and

consultants caution companies to research the rigorous certification process before

committing resources to it. Following is a list of potential hurdles for entrepreneurs to

study before committing to an initiative to gain ISO 9000 certification:

• Owners and managers do not have an adequate understanding of the ISO 9000

certification process or of the quality standards themselves—Some business

owners have been known to direct their company's resources toward ISO 9000

registration, only to find that their incomplete understanding of the process and its

requirements results in wasted time and effort.

• Funding for establishing the quality system is inadequate—Critics of ISO 9000

contend that achieving certification can be a very costly process, especially for

smaller firms. Indeed, according to a 1996Quality Systems Updatesurvey, the

average cost of ISO certification for small firms (those registering less than $11

million in annual sales) was $71, 000.

• Heavy emphasis on documentation—The ISO 9000 certification process relies

heavily on documentation of internal operating procedures in many areas, and as


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Meyer stated, "many say ISO's exacting documentation requirements gobble up

time. Indeed, there are horror stories about companies losing substantial

business because a documentation obsession redirected their priorities."

According toNation's Business,small business owners need to find an

appropriate balance between ISO documentation requirements, which areadmittedly "one is ISO 9000's hallmarks, " and attending to the fundamental

business of running a company: "Strike a balance among obsessively writing

down every employee's task, offering training for the work, and letting common

sense dictate how a task is to be performed."

• Length of the process—Business executives and owners familiar with the ISO

9000 registration process warn that it is a process that takes many months to

complete. The 1996Quality Systems Updatesurvey indicated that it took

businesses an average of 15 months to move from the early stages of theprocess to passage of the final audit, and that processes of 18-20 months or

even longer were not that uncommon.

SELECTING A LEADER FOR THE ISO 9000

REGISTRATION PROCESS

ISO 9000 experts and businesses that have gone through the rigorous process of

certification agree that businesses that appoint someone to guide the process are much

more likely to be able to undergo the process in a healthy, productive manner than are

firms that have murky reporting relationships. Hiring an outside consultant is one option

for businesses. "An ISO 9000 advisor could give you a rough sketch of the registration

process and help you get started, " statedNation's Business."Or the consultant could

counsel you through the entire process, writing the company's quality policy statement

and even specific operating procedures." In addition, firms should hire an ISO-9000

registrar with a background in their industry, legitimacy with international customers, and

knowledge of small business issues.

Some small firms choose to appoint an employee as their ISO 9000 representativerather than hire an outside consultant. Many companies have done this successfully, but

small business owners should take great care in making this decision. "The ISO 9000

representative [should be] a person who encompasses a genuine and passionate

commitment to quality and success, knowledge of processes and systems within the

company, and power to influence employees at all levels, " wrote Karapetrovic,


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Rajamani, and Willborn. "He should be familiar with the standards. If this is not the case,

there are ample training opportunities available to acquire sufficient expertise."

For more information on ISO 9000 registration, small business owners can contact

several different organizations, including the American Society for Quality and American

National Standards Institute.

FURTHER READING:

Buttle, Francis. "ISO 9000: Marketing Motivations and Benefits."International Journal of

Quality and Reliability Management.July 1997.

Johnson, P.L.ISO 9000: Meeting the New International Standards.McGraw-Hill, 1993.

Kanji, G.K. "An Innovative Approach to Make ISO 9000 Standards More Effective."Total

Quality Management.February 1998.

Karapetrovic, Stanislav, Divakar Rajamani, and Walter Willborn. "ISO 9000 for Small

Business: Do It Yourself."Industrial Management.May-June 1997.

Meyer, Harvey R. "Small Firms Flock to Quality System."Nation's Business.March

1998.

Rabbit, J.T.The ISO 9000 Book: A Global Competitor's Guide to Compliance and

Registration.Quality Resources, 1993.

Rayner, P., and L.J. Porter. "BS 5750/ISO 9000: The Experience of Small and Medium-Sized Firms."International Journal of Quality and Reliability Management.Vol. 8, no. 6,

1991.

Simmons, Bret L., and Margaret A. White. "The Relationship between ISO 9000 and

Business Performance: Does Registration Really Matter?" Journal of Managerial

Issues.Fall 1999.

Van der Wiele, Tom, et al. "ISO 9000 Series and Excellence Models: Fad to Fashion to

Fit." Journal of General Management.Spring 2000.

Voehl, F., P. Jackson, and D. Ashton.ISO 9000: An Implementation Guide for Small to

Mid-Sized Businesses.St. Lucie Press, 1994.

Wilson, L.A. "Eight-Step Process to Successful ISO 9000 Implementation: A Quality

Management System Approach."Quality Progress.January 1996.

Wright, Richard B. "Why We Need ISO 9000."Industrial Distribution.January 1997.


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SEE ALSO:Quality Control ;Total Quality Management

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