Prepare a briefing for an organization which summarizes the requirements of ISO 9000:2000. Explain the extra requirements of ISO 9004:2000 and summarize the benefits and problems of accrediting to the 'higher' standard of ISO 9004:2000.
TBS 950 - QUALITY IN MANAGEMENT
INTAKE A - 2004
Report 1
Prepare a briefing for an organization which summarizes the requirements of ISO 9000:2000. Explain the extra requirements of ISO 9004:2000 and summarize the benefits and problems of accrediting to the 'higher' standard of ISO 9004:2000.
To: Prof. Michael Hough
By: Christina Samuel
Student ID: 2532256
Date: 4th March 2004
COMPANY OVERVIEW
Company ABC is a medium-sized health services provider in Dubai that has been operational for the last fifteen years. Its early years were focussed on delivering optical and dental care to upper middle income families but for the last ten years they have developed to offering medical care in fields ranging from dermatology to paediatrics. Following the Dubai government's move towards quality management in business organisations, the management team at Company ABC decided to implement ISO 9000 standards solely for the internal benefits they bring in increased effectiveness and efficiency of operations. Choosing this option helped then benefit from the system without incurring the investment required in an actual certification programme.
Recently, however, with the updating of the ISO 9000 family, more and more firms in Dubai are seeking to get certified. This has helped many firms pull in more customers primarily assuring them of high quality standards that are internationally approved. The management at Company ABC are in a state of dilemma. While convinced of the benefits of conforming to such standards, they are still in doubt of the financial feasibility of the same. The actual certification process with the revised standards will not be too tedious as all their business processes already adhere to ISO 9000:1994 standards. The issue stems from the fact that they do not seem to have much strategic direction of what to do after gaining certification. Should they rest with the ISO 9000:2000 certification or should they take their quality levels a step higher.
The following brief has been designed to present to the management of Company ABC a summary of the revised requirements of ISO 9000:2000 and also explains the extra requirements of ISO 9004:2000, keeping in mind the benefits and problems of accrediting to the 'higher' standard of ISO 9004:2000.
To: The Board of Directors, Company ABC
From: Christina Samuel, Business Quality Consultant
Date: 4th March 2004
Sub: ISO 9000:2000 certification
No. of pages: 13 pages (in total)
. Introduction
Management at Company ABC is primarily seeking to become ISO 9000 certified because of the internal improvements and strategic benefits associated with this particular quality tool. The internal improvements include requiring that all business activities related to their health services be conducted in a three-part continuous cycle of planning, control, and documentation. The strategic benefits include gaining access to a vast number of educated customers who are seeking to avail of the services of an internationally certified health service provider. The dilemma rests with the management who wish to maintain high quality levels but still want to keep their costs low.
The earlier ISO 9000 standards adopted by the company ensure that everyone within the organisation understands the importance of quality and of implementing documented processes. As a reminder, let us now go through a few of the main concepts related to the ISO standards.
2. Definition of Quality
The International Organisation for Standardization defines quality as the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.1 Specifically, quality is achieved when the nature of the service meets the need. The nature of the service with regard to the product or service provided also includes information and customer contact. Needs refer not only to the customer's desires and expectations but the aspirations and obligations of society (environmental protection and safety) and those of the service provider himself (costs and deadlines). In our case, the customer or patient that comes to us for treatment has the need to recover from their illness, expects a clean and pleasing environment in which to consult us and a qualified doctor to prescribe treatment. Company ABC of course wants to do all this as cost effectively as possible within a given time frame so as to best utilize all its resources.
3. ISO 9000 family - key concepts
A large number of books and papers exist on the topic of ISO 9000 and its related programs. For example, Clements2 and Zuckerman3 have written books that provide step-by-step guidance on how to standardize procedures and how to ensure that those procedures are being followed.
3.1 Eight Management Principles
The entire quality management focus is tightly based on eight management principles4 that are to be employed by management in their quest to direct their firm towards improved performance. These principles are generic, similar to the quality system itself, and hence can be used in context of any organisation, of any size, in any given industry. The principles are:
3.1.1. Customer focus
3.1.2. Leadership
3.1.3. Involvement of people
3.1.4. Process approach
3.1.5. Systems approach to management
3.1.6. Continual improvement
3.1.7. Factual approach to decision making
3.1.8. Mutually beneficial supplier relationships
3.2 ISO 9000 Family - Standards Outlines
To understand what the ISO 9000 standards family is all about, we need to firstly define what each outlines:
3.2.1 ISO 9000: 2000 5 outlines the essentials and terminology. This simply means that it lays down the basics and definitions to be used in the ISO 9000 standards family. This definition of key terms is structured into four main sections:
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This is a preview of the whole essay
3.1.5. Systems approach to management
3.1.6. Continual improvement
3.1.7. Factual approach to decision making
3.1.8. Mutually beneficial supplier relationships
3.2 ISO 9000 Family - Standards Outlines
To understand what the ISO 9000 standards family is all about, we need to firstly define what each outlines:
3.2.1 ISO 9000: 2000 5 outlines the essentials and terminology. This simply means that it lays down the basics and definitions to be used in the ISO 9000 standards family. This definition of key terms is structured into four main sections:
- Management Responsibility - Customer focus, planning, communications, policy, objectives, commitment and management review
- Resource Management - Human resources information and facilities
- Product Realization - Customer interface, design, purchasing and production
- Measurement, Analysis and Improvement - Customer satisfaction, audits, control of nonconformity, data analysis and improvement.
The processes that were adopted at Company ABC over the last five years are not very dissimilar to the certification process being recommended. The revised version of ISO 9000 takes account of the accumulated experience with the ISO 9000 standards family, on one hand, and the environmental management rules (ISO 14000), on the other.
In the revised version, one can note the following changes:
- Introduction of the process approach to quality management. The standard implies that every activity or operation that involves the conversion of the input data to the output data may be treated as a process. The process approach is a systematic identification and managing the course of processes in an organisation.
- Selection of only one model of the system, i.e. ISO 9001. This implies the possibility of adjusting the requirements of the ISO 9001 model to the specificity of an organisation in a way that would enable to exclude the requirements that do not concern a given organisation.
- Introduction of the requirement of continuous improvement and prevention of discrepancies. It is not enough to confine the undertaken actions only to measuring the customer satisfaction level. It is necessary to pursue continuous action leading to increasing customer satisfaction from the supplied product or service.
- Introduction of the requirement of standards being easy to understand and adopt, and using simple language.
- Raising the level of conformity with the environmental management system standards of the ISO 14000 series.
- Placing great emphasis on surveying the customer needs and expectations.
- Paying attention to the management of resources, including HR management. The management is obliged to secure, among other things, education and personnel improvement.6
As management, it is quite understandable that you will have reservations on going ahead with this standard update and certification thinking about all the extra paperwork and resources that will need to be sacrificed for the same. However, rest assured, you will not need to rewrite any of your procedures since your current quality management system is successfully implemented, satisfies all the needs and objectives of your organization and reflects the way your organization works. Only the new issues introduced in the update will need to be addressed.
3.2.2 ISO 9001: 2000 7outlines the requirements of the quality management system. The main objective for the firm is to effectively meet their customer's needs. "Customer satisfaction" is recognized as one of the driving criteria for any organization. In order to evaluate if the product meets customer needs and expectations, it is necessary to monitor the extent of customer satisfaction. Improvements can be made by taking action to address any identified issues and concerns. The quality management system described in the revised standard is based on quality management principles that include the "process approach" and "customer focus". The adoption of these principles should provide customers with a higher level of confidence that products will meet their needs and increases their satisfaction. In addition to all the essentials outlined in the earlier version of this standard, the newer version also seeks to highlight a process for continual improvement and a dedication to quality and quality management by the top management.
3.2.3 ISO 9004: 2000 8 is a standard that helps companies build up a quality management system that not only allows for customer satisfaction but also meets the needs of all other stakeholders such as investors, government, employees, etc. Particular importance attaches to leading up and optimising processes. ISO 9004 cannot be certified. Instead, it points the way to total quality management (TQM).
4. Successive progression
As mentioned in the earlier section, ISO 9001:2000 aims at guaranteeing the effectiveness of the organization. However, this need not necessarily guarantee the efficiency of the organisation. One way to improve organisational efficiency is to use the new ISO 9004:2000 in addition to ISO 9001:2000.9 The principles are intended to assist an organization in continual improvement, which should then eventually lead to efficiency throughout the organization.
'Continual improvement' requires an organization to focus on repeatedly increasing the effectiveness and efficiency of its processes, to fulfil its policies and objectives.10 These progressive consolidation steps responds to the growing needs and expectations of customers and ensures a dynamic evolution of the quality management system.
As management, your responsibility already acquires special weight when introducing a quality management system. There is, in fact, a risk that once introduced and certified, a quality management system continues to exist only on paper during the post-certification phase and is ignored by the company and its employees.11 You must, therefore, from the beginning communicate your dedication to quality, quality management and quality culture in the company and set a good example.
You have quite effectively built up a quality management system without actual certification. While this has helped keep a tight harness on the costs, please consider that it may be considered foolish to lie low and do nothing when all your competitors are moving towards proper certification. One may even suggest a bold proactiveness by improving on the current standards to implement both a higher standard such as ISO 9004:2000 and maybe even progress to obtaining a national business excellence award.
Before deciding to implement to such a higher standard one must first fully comprehend the scope and application of the ISO 9004:2000. The ISO 9004:2000 is only a guidance standard and it is by no means an added certification.12 The certification and registration ends with the ISO 9001:2000 which is a consolidation of ISO 9001, 9002, and 9003 standards.
The new ISO 9004 is all about the firm's ability to perform self-evaluation. This gives the management of the firm a better idea of the effectiveness and efficiency of the firm and the extent of success of its quality management system. This is because, in spite of the many external audits, the one accurate method of assessment is when it is done from within the company itself. The intent of this type of assessment is to provide an actual fact-based direction to the firm regarding where to invest resources for its development.
4.1 Benefits of ISO 9004:2000
The actual benefit of implementing the process of continual improvement through self-assessment is fairly evident. This approach actually serves to enable an organisation to identify and initiate improvement projects that would potentially provide the best benefits based on the needs of the organisation. Benefits can be found in each of the four major sections of the standard.
Take for example, section 5.2 with regards to the needs and expectations of interested parties. The ISO 9004:2000 continual improvement process ensures that the quality management system considers the needs and expectations of all stakeholders of the firm. For the management, monitoring the changing needs of their external and internal customers is very important and this continuous attempt to learn and understand more about the needs of these parties is bound to prove beneficial for them.
Section 6.8 concentrates on the financial resources within the firm. The continual improvement process helps to provide a better understanding of the costs and benefits associated with different processes. It also encourages improvement towards effective and efficient achievement of the organisation's objectives. Leaving room for continual improvement within the fixed standards ensures the existence of a certain amount of flexibility within the process. This may prove necessary to stimulate for efficient means of doing things within the company, especially with regards to innovative ways of managing finance.
The best advantage of accrediting to a higher level of standard is the strategic benefit it provides in enhancing organisational performance. As managers, you must realise that people in the organisation are the best source of ideas for ongoing process improvement.13 They are the ones that take part in implementing the process and hence, they are the ones that know best how and what they are doing and the changes they would like to implement.
Corbett, et al.14 (2002) were able to show, quantitatively, that implementing higher ISO standards leads to improved financial performance against competitors. This study looked at return on assets (ROA) to support these conclusions.
In totality, from reading through the ISO 9004:2000 documentation, we can conclude that:
People in the organization will benefit by:
* Better working conditions
* Increased job satisfaction
* Improved health and safety
* Improved morale
* Improved stability of employment
Owners and investors will benefit by:
* Increased return on investment
* Improved operational results
* Increased market share
* Increased profits
Suppliers and partners will benefit by:
* Stability
* Growth
* Partnership and mutual understanding
4.2 Problems of ISO 9004:2000
As with all standards, one of the major disadvantages with the system is that it presumes that work is best controlled by specifying and controlling procedures.15 This is why you find over-elaborate documentation, people having to do 'two jobs' - do the work then 'write' about it. There is an abundance of documentation that only exists so that an internal auditor can do his or her job. These methods are preventing people making a useful contribution, making them feel that the value of their contribution is, in whatever way, defined by procedures. Despite what many managers have been led to believe, to control performance by controlling people's activity is a poor way to manage. It is usually a fast way to sub-optimisation - it makes performance worse.
Take for example the main principles of the ISO 9004:2000. In this, quality management is talked of as though it is one of a number of management disciplines. Systems thinking, however, is at the heart of quality management and it represents a different and better way of managing work. It is not additional to, it is actually considered better than.
The standard (ISO/CD2 9004:2000, page 11) says: "The quality management system is an important part of the overall management system." Many may disagree with this saying that the two are one. To achieve genuine and sustainable improvements in quality, an organisation must be understood and managed as a system. The standard then goes on to say: "Organisations should define their systems and the processes contained within them to enable the systems to be clearly understood, managed and improved". While this may ring true the manual does not provide any useful guidance on how to go about doing that.
Many managers may also argue that they would rather adopt a National Business Excellence Model rather than focussing on the ISO 9004:2000 system.16 The National Model would result in them receiving an actual award which they can then communicate to their customers as opposed to the ISO 9004:2000 which is not even a certification.
Irrespective of what the standard advises management to think about, the core quality management philosophies can only be exercised if everyone in the organisation buys into the continual improvement notion. The actual organisational culture must foster this thinking of progressive improvements in processes and policies.
4.3 Cultural implications of implementing ISO standards
It is possible to improve quality management and its implementation through the study of organizational culture. Culture is defined, by Hofstede as the collective programming of the mind, which distinguishes the members of one category of people from another.17 An organizational culture contains a pool of experiences and core competences which can be mobilized on behalf of quality management. Quality management, as a consequence of culture maintenance, relies on processes and characteristics which are already effective in the company. It is based on intimate understanding of the patterns which the company is developing and to which it is adapting itself, at the same time.
In my opinion, the basic reason for much of the delay in implementing quality management is that top managers are usually not aware of the collective answers to basic questions as contained in the organizational culture. That is, top managers are insufficiently aware of basic issues and values, which support the daily practices in their organization: the organizational culture18. Diagnosing the organizational culture explains among other things what organizational members understand by quality and how this quality is accomplished in daily practices.
4.6 Other Quality Models
Keeping in mind other important stakeholders in the business, quality systems have now been developed to accommodate standards for the maintenance of the same. The ISO 14000 is a generic management system that is primarily concerned with "environmental management". This means what the organization does to minimize harmful effects on the environment caused by its activities. In the case of ISO 14000, the efficient and effective management of processes is going to affect whether or not everything has been done to ensure a product will have the least harmful impact on the environment, at any stage in its life cycle, either by pollution, or by depleting natural resources.
The Occupational Health and Safety standards are an example of guidelines that determine the care taken for employees in the workplace. By implementing such standards within the organisation, the general perception of the firm is improved in the eyes of the stakeholders.
5. Conclusion
One must remember that the main focus of any business is to retain satisfied customers. Any organisation without customers or with dissatisfied customers is in peril. To keep customers - and to keep them satisfied - your service needs to meet and nearly always exceed their expectations. The ISO 9000 standards family merely provides a tried and tested framework for taking a systematic approach to managing your business processes so that they consistently turn out conforming to the customer's expectations. This directly results in consistently happy customers.
Another aspect that must be highlighted is that ISO 9000 lays down what requirements your quality system must meet, but does not dictate how they should be met in your organization - which leaves great scope and flexibility for implementation in different business sectors and business cultures.
In the initial stages, Company ABC was a very small business concern with its own way of doing things that were not really documented. However, with the recent growth the firm has had over the last decade or so, the number of people involved ahs increased and hence the need written procedures, instructions, forms and records. These help ensure that everyone is not just "doing his or her own thing", and that the organization goes about its business in an orderly and structured way, so that time, money and other resources are utilized efficiently.
We have also seen how the presence of national cultures can play a very significant role in the acceptance and success of implementing such quality standards.
The ISO 9000 is a certificate of conformity. This has proved extremely popular in the market-place because of the perceived credibility of such an independent assessment. The certificate can also serve as a business reference between the organization and potential clients, especially when supplier and client are new to each other, or far removed geographically, as in an export context.
Hence, in spite of the negative aspects that may be of some concern with regards to opting to address a higher standard, I firmly recommend that Company ABC follow this suggested route and get certified for the ISO 9000:2000 standards and follow through by conforming to the ISO 9004:2000 as well.
BIBLIOGRAPHY
Books
Schrock, E. M. & Lefevre, H.L., 1988, The Good and The Bad News About Quality, Marcel Dekker Inc., NY
Huddleston, K., 1995, Back on the Quality Track : How Organizations Derailed & Recovered, Amacom, NY
Soin, S.S., 1992, Total Quality Control Essentials, McGraw-Hill Inc, USA
Galgano, A., 1994, Companywide Quality Management, Productivity Press, Portland, Oregon
Evans, J.R. & Lindsay, W.M., 2002, 5th edn, The Management and Control of Quality, South-Western Thomson Learning, USA
Clements, R.B., 1993, Quality Manager's Complete Guide To ISO 9000, Prentice Hall, New York
Zuckerman, 1995, ISO 9000 Made Easy: A Cost-Saving Guide to Documentation and Registration, Amacom, NY
Westcott, R.T., 2003, Stepping up to ISO 9004:2000, Paton Press, USA
Hofstede, G., 1980, Culture's Consequences, Sage, Beverly Hills, CA
Schein, E. H.,1985, Organizational Culture and Leadership: A Dynamic View, Jossey-Bass, San Francisco, CA
Manuscripts
ISO 9000:2000 Quality management systems - Fundamentals and vocabulary
ISO 9001:2000 Quality management systems - Requirements
ISO 9004:2000 Quality management systems - Guidelines for performance improvements
Journal Articles
Hofstede, G., Neuijen, J. A., Ohayv, D. D. and Sanders, G.J.E.M., Vol. 35, June 1990, "Measuring Organizational Cultures: A Qualitative and Quantitative Study across 20 Cases", Administrative Science Quarterly, pp. 286-316.
ISO 9000: 2000, ISO 9001: 2000; Tabor A., Zajac A., Raczka M., 2000, 2nd edn, Zarzadzanie jakoscia. T1 Jakosc i systemy zapewniania jakosci. Cracow, pp.71-72
C.J. Corbett, C.J., Montes, M.J., Kirsch, D.A., 20th June 2002, The Financial Impact Of ISO 9000 Certification: An Empirical Analysis
Fearn, G., Oct-Dec 1998, Vol. 17, Iss. 1, pg 113, In Pursuit of Quality - The Case Against ISO 9000, International Small Business Journal, London
Dalgleish, S., Oct 2002, Vol. 41, Iss. 10, pg. 64, ISO 9000: More hindrance than help, Quality
Websites
http://www.iso.ch/iso/en/aboutiso/introduction/index.html (20th February 2004)
http://www.zurichbusiness.com/pdf/rim_fs_008_quality-manage_e.pdf (20th February 2004)
Introduction http://www.iso.ch/iso/en/aboutiso/introduction/index.html (20th February 2004)
2 Clements, R.B., 1993, Quality Manager's Complete Guide To ISO 9000, Prentice Hall, New York
3 Zuckerman, A., 1995, ISO 9000 Made Easy: A Cost-Saving Guide to Documentation and Registration, Amacom, New York
4 Evans, J.R. & Lindsay, W.M., 2002, 5th edn, The Management and Control of Quality, South-Western Thomson Learning, USA, pp 136
5 ISO 9000:2000 Quality management systems -- Fundamentals and vocabulary
6 ISO 9000: 2000, ISO 9001: 2000; Tabor A., Zajac A., Raczka M., 2000, 2nd edn, Zarzadzanie jakoscia. T1 Jakosc i systemy zapewniania jakosci. Cracow, pp.71-72
7 ISO 9001:2000 Quality management systems -- Requirements
8 ISO 9004:2000 Quality management systems - Guidelines for performance improvements
9 Westcott, R.T., 2003, Stepping up to ISO 9004:2000, Paton Press, USA
0 Galgano, A., 1994, Companywide Quality Management, Productivity Press, Portland, Oregon, pp 121
1 http://www.zurichbusiness.com/pdf/rim_fs_008_quality-manage_e.pdf (20th February 2004)
2 Introduction http://www.iso.ch/iso/en/aboutiso/introduction/index.html (20th February 2004)
3 Soin, S.S., 1992, Total Quality Control Essentials, McGraw-Hill Inc, USA, pp 205
4 C.J. Corbett, C.J., Montes, M.J., Kirsch, D.A., 20th June 2002, The Financial Impact Of ISO 9000 Certification: An Empirical Analysis
5 Fearn, G., Oct-Dec 1998, Vol. 17, Iss. 1, pg 113, In Pursuit of Quality - The Case Against ISO 9000, International Small Business Journal, London
6 Dalgleish, S., Oct 2002, Vol. 41, Iss. 10, pg. 64, ISO 9000: More hindrance than help, Quality
7 Hofstede, G., 1980, Culture's Consequences, Sage, Beverly Hills, CA
8 Schein, E. H.,1985, Organizational Culture and Leadership: A Dynamic View, Jossey-Bass, San Francisco, CA
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