ISO as a strategic decision - PART 1: Commitment to Excellence
Excellence. A quality many seek, but few are truly committed to achieve. As part of the EPIC family, you know that in order to be met, the commitment to excellence must be pledged on an individual level across your entire company.
Whether you’re an entrepreneur looking to structure your organization, a large company looking to streamline your processes, or a vendor looking for a new contract in the supply chain of a large corporation, ISO standards provide frameworks that have been developed, tried and improved upon by the top experts in your industry. They’ve been through the trenches, so that you don’t have to. All in the name of... excellence.
What is ISO and their different standards
An ISO standard is an internationally agreed upon “formula” that describes the best way of doing something. Established in 1947, The International Organization for Standardization has set out to define best practices in a huge range of activities whether it be making a product, managing a process, delivering a service, or supplying materials. Companies that are ISO certified have committed to these practices and to their continuous improvement. As a result, they achieve higher efficiency, quality, safety, and customer responsiveness.
“ISO Standards are the distilled wisdom of people with expertise in their subject matter and who know the needs of the organizations they represent – people such as manufacturers, sellers, buyers, customers, trade associations, users or regulators.” – ISO website
By far the most popular standard is ISO 9001. “The number of organizations that are ISO 9001 certified is more than double all other ISO standards added together,” says Neifer França, Director of QMS Certification Services North America (an accredited third-party certification body, currently present in 33 countries, focusing on the certification of management systems). ISO 9001, a Quality Management System, deals with ensuring that organizations consistently and efficiently meet customer and other stakeholders’ needs as well as statutory and regulatory requirements related to a product or service.
A Quality Management System (QMS) is defined as “a formalized system that documents processes, procedures, and responsibilities for achieving quality policies and objectives… helping to coordinate and direct an organization’s activities to meet customer and regulatory requirements and improve its effectiveness and efficiency on a continuous basis.”
Sounds fancy, but in plain English, a Quality Management System is essentially a series of processes an organization commits to follow that lead to an assurance of quality for themselves and for their customers.
Besides ISO 9001, other widely used QMSs are ISO 13485, which deals with the production, sale, and distribution of medical devices, AS 9100 which focuses on the aerospace industry, and CARF which covers medical service providers (see our Road to CARF Accreditation article for more information).
Reasons to implement a QMS
There are mostly 4 reasons organizations decide to implement a QMS:
As a requirement from customers or the market
As a regulatory necessity
As a general management and improvement framework
As a marketing tactic
However, there is another big reason that is often overlooked when organizations first think of implementing a QMS: MONEY. Let’s explore…
Based on an analysis of 42 empirical studies, it has been determined that a well implemented ISO 9001 certification enhances financial performance by increasing sales in two fronts:
Internally, processes become more efficient, increasing the quality and productivity of products/services, thus making them more attractive and competitive.
Externally, a higher customer satisfaction and access to new markets leads to increased market share and reach.
When you put higher supply (made possible by efficient processes) and higher demand (achieved through a growing market share and reach) together, a large return on investment is inevitable. On top of this, customers will be assured that your organization is operating at optimum capacity to ensure they receive the best product/service.
According to the International Organization for Standardization, on average, every $1 invested into the Quality Management System will bring the company $6 in return!
Every organization should have an idea of the Cost of Quality associated with their business model, and with that, understand how implementing process improvements could affect their business. A general rule of thumb is that the cost of poor quality in a thriving company will be no more than about 10-15% of operations. Effective quality improvements can help you reach this goal, or even surpass it, ultimately making a direct contribution to your profits. Welwaze Medical, a client of EPIC Consultants, saw this firsthand with a reduction of cost of poor quality of 57% this past year. (see article WELWAZE MEETS ISO - a Promise of Quality)
Why some people may not see a benefit in ISO
Neifer França suggests that the biggest reason some companies may have a sour taste in their mouth when it comes to ISO standards is because it isn’t implemented properly.
According to an ISO study, organizations that implement an ISO standard in three months or less are 50% more likely to lose their certification upon the next review. This is because there wasn’t enough time for the new culture to settle and solidify. To improve and expedite the implementation, many companies hire consultants. Besides ease the certification process, competent consultants help instill a cultural change that will ultimately elevate the organization to a new playing field. The consultant is there to make sure the entire company, from top to bottom, is held accountable for the new goals and processes set out for themselves.
“The biggest advantage a consultant brings is that he/she is a catalyst. In this process, consultancy is an accelerator; what would have taken you twelve months to properly implement on your own, may now take you six.” attest Neifer. He highlights that an ISO accreditation is a serious journey that requires great understanding and experience with the standards. On top of this, the time commitment during the implementation and the attention demanded from many areas of your company may not be something every organization has the resources to dedicate. Therefore, consultants are very popular in projects like these.
Nonetheless, Neifer emphasizes that “consultants aren’t there to do the work for your organization, they are there to guide you and keep you accountable with your own goals.”
ISO standards have HUGE global markets and have seen a lot of growth over the past years. In the business environment we find ourselves today, the quality and reliability of products and services are at the forefront of our buyers' purchasing decision. We have discussed what makes implementing ISO such a great strategic decision, in part 2 of this ISO series we will dive into how the companies of the world are interacting with such standards and how these trends compare to our home state of Florida. Stay tuned.