by Ronald J. Bowen

As the fourth part of our continuing five-part series on enhancing the value of your company’s ISO 9001:2000 quality system, this article reviews what steps an organization must take relative to supplier development and monitoring. Ronald Bowen illustrates the tools and practices that can help optimize the output of purchasing processes. He demonstrates the irrefutable link between supplier partnerships and customer satisfaction.

--Denise Robitaille, series editor

After undergoing an often costly and usually painful process to achieve ISO 9001:2000 registration, organizations invariably ask, “What do we do now to ensure that we maintain our registration and gain maximum benefit?” Under ISO 9001:1994, the old answer was fairly straightforward: Continue doing what you say you do. However, ISO 9001:2000-registered companies that follow this advice will lose out on the benefits the revised standard has to offer; and in most cases, they’ll fail to maintain their registration.

In the course of its evolution, ISO 9001:2000 moved from a product-focused and quality control-oriented standard to a quality management system concerned with continual improvement of customer satisfaction. This new focus requires companywide support, but management--in particular--must understand what’s required and commit to leading the company accordingly. This will happen only if management is able to translate the standard into what Joseph M. Juran has described as the “language of management” (i.e., money).

With this in mind, let’s look at the role ISO 9001:2000 plays in an area of the organization where cash flow really matters: purchasing and supplier development.

Purchasing department and continual improvement

How can the purchasing department demonstrate continual improvement? Most purchasing departments are primarily concerned with acquiring materials for product realization, so an important improvement would be to reduce input and output process variations associated with suppliers.

ISO 9001:2000’s clause 7.4.1, Purchasing process, requires organizations to “ensure that purchased product conforms to specified purchase product requirements.” In other words, the organization is responsible for maintaining control of the procurement process to ensure that the defined requirements of that process are satisfied. This might involve ongoing review of suppliers’ quality management systems capabilities.

Regarding suppliers, ISO 9001:2000 no longer uses the term “quality assurance.” Gone are “quality management and quality assurance standards”; in their place are “quality management systems.” This means that, in addition to product quality assurance, the QMS requirements specified in the new standard also aim to enhance customer satisfaction. Moreover, the term “quality control” is notably absent from the document to underscore the standard’s change of focus from product or service to a management system model.

Working with suppliers

ISO 9001:2000 can help you and your suppliers create a systems approach to customer satisfaction. The standard obligates a registered organization to create a QMS based on continual improvement rather than conformance to requirements, procedures and surveys. (For more on this subject, read part one of this series, “ISO 9001 and Customer Satisfaction,” in the March issue of Quality Digest.) The new changes in the standard, along with its focus on the eight management principles, are clear signs that the bar has been raised.

Another significant change in the standard from the 1994 edition is the frequent appearance of such phrases as “top management shall” or “top management is.” Also, you shouldn’t be surprised to learn that clause 8, Quality management principles, serves as the backbone of ISO 9001:2000. Taking all this into consideration, work with your suppliers to encourage them to think in terms of continual improvement whenever they talk about customer satisfaction. This will help them shift away from the traditional approach and move toward organizational development, monitoring and improvement.

Those with an automotive and/or tooling background, where QS-9000:1998 predominates, are used to some degree of customer development of the supplier base. Common concerns include packaging, performing inspections or involving suppliers in advanced quality planning. Successful companies do a thorough job of developing their supplier bases because doing so provides a competitive supply-chain advantage. Not every industry sets the same requirements or levels of customer control as the automotive industry does.

In some industries, such as telecommunications, electronics, medical devices and aerospace/defense, organizations develop their suppliers through seminars, conference calls, gap assessments and even consulting assistance where needed. Certain medical device companies give each supplier attention in direct proportion to the level of effect the supplier has on the final product. Some suppliers are even audited by the registrar as a part of the customer’s registration process, especially if the supplier performs a critical outsourced process. Because good, average and mediocre suppliers exist in all industries, your organization should analyze its supplier base to identify how much assistance is appropriate for each.

As the ISO 9000:2000 series of standards was implemented in various industries, the better organizations became aware that the process approach wouldn’t improve their internal processes until outside inputs also improved--hence, the new emphasis on developing a supplier base vs. beating up on it. As a result, registrars now place a stronger emphasis on supplier development than supplier corrective action as a way of strengthening the organization’s supplier base and, by extension, the inputs into the company. An ISO 9001:2000 assessment encourages organizations to extend their supply chain management systems as well as the process to improve them.

Suggestions for supplier development

In terms of supplier development and monitoring, what can your organization do differently from the ISO 9001:1994 approach? Here are some suggestions:

Create partnerships. This is important and must be emphasized. Look at a supplier as a part of your process. This will encourage total-supply-chain or value-adding stream thinking. It seems that far too many organizations still treat their suppliers and subcontractors as “hired help,” emphasizing improvement only on matters of delivery and price.

Encourage suppliers to seek ISO 9001 registration. Some industries have even created specialized interpretations of registration requirements, for example, ISO/TS 16949 for automotive, TL 9001 for telecommunications, AS9100 for aerospace, ISO 13485 or W1 for medical, and Z 1.11 for education.

Ensure that suppliers become customer-focused using the process approach. This will improve the product-realization process.

Ensure that top management understands your internal audit process. Remember that registrars aren’t an extension of this process; they’re a third party and therefore external. ISO guides 62 and 66 state this, but many organizations think they can substitute registration visits for internal audits. Confusion exists because internal audits, especially outside the United States, are often contracted to independent parties when the organization doesn’t have qualified auditors. Using your registrar’s audits or an associated “independent part of the registrar’s organization” doesn’t meet the requirement for internal audits.

Help your suppliers’ internal auditors and their systems change to a process approach. The internal auditor’s level of competency should include wide-ranging process and system knowledge. Auditors must approach internal audits as opportunities to interpret the standard, not simply mark off elements on a checklist. An internal audit should record objective evidence for improvement. One way to help suppliers with this is to invite them to attend the internal auditor training that you conduct for your own internal auditors.

Help your suppliers focus on continual improvement. As you know, the original version of ISO 9000 didn’t emphasize continual improvement, so you shouldn’t automatically assume your suppliers are working toward it.

Meeting product specifications

What should an organization do to ensure that products meet specifications? First, ensure that the QMS clearly communicates purchasing requirements to all involved parties, both internally and externally. Further, ensure this information identifies specifications under various possible interpretations. For example, your company could:

Provide finished product examples to your suppliers to share with their workers

Hold supplier conferences to better communicate your needs

Establish internal and external inspection, verification and other activities

Implement an effective data analysis process with ongoing monitoring

Conduct regularly scheduled internal and external QMS audits, noting trends and identifying repeated nonconformities

Establish a hotline for your suppliers to talk with engineers in your organization, should questions arise

Additionally, you could establish joint training between your organization and your suppliers to focus on issues such as meeting customer requirements or developing learning opportunities for your suppliers. These opportunities might include:

In house/on-site, organization and/or outside consultant resources

Variation reduction, warranty problems, design and construction concerns

Core tools training for failure mode and effects analysis, control plans, advanced product quality planning, production part approval process, measurement systems analysis, statistical process control, problem solving and error proofing.

Internal audit practices, including checklists that support the process approach

Developing and implementing metrics to convert nonconformities, rejected parts, unplanned downtime, delayed deliveries and the like into the management language of money

Timken’s good practices

One of many examples of how successful companies help their suppliers comes from The Timken Co., a manufacturer of roller bearings and steel tubing. The principals in this case were General Motors Corp., Timken, Bosch and a “sensor supplier.” The GM project was the GMT800 integrated wheel-end system for light to heavy pickup trucks. The system integrated the brake disc, hub and bearing into a unit that was lubricated and sealed for a minimum expected life of 100,000 miles. It had to be capable of sensing rotation to detect skids or loss of traction at each wheel. When GM gave the project to Timken to develop, there weren’t a lot of sensor suppliers to partner with; however, both GM and Ford Motor Co. offered Timken recommendations on which company they preferred Timken to work with.

In response, Timken:

Conducted a process capability study at the sensor manufacturer’s plant

Reviewed the defect detection system for testing the electronic signal

Worked with the supplier to implement an effective process control plan

Installed a management review system of process performance

Held biweekly reviews of process results

Helped the supplier correct all special causes of process fallout

Shared customers’ data of final assembly test results to improve the process

Certified the operators and validated the appropriate process

Jointly worked to improve the robustness of both product and process

Held monthly updates of results with Bosch and GM, and monitored trends

All this was done before registration but was documented with a quality plan and process control plans. During the beginning phase of the project, it took one to two people from Timken, each devoting 20 to 40 hours per week, to ensure that the sensor supplier met requirements consistently. Keep in mind that ISO 9000:1994 didn’t emphasize continual improvement as ISO 9001 does now.

It’s important to note that Timken’s QMS--which included customer satisfaction, supplier and process management, and monitoring to ensure continuous improvement--was a prioritized responsibility of senior management and given the same attention as financial concerns. Under ISO 9001:2000, this role should be coordinated by the organization’s top management.

Note, too, that ISO 9001:2000 establishes a compatible framework for linking to nonproduct requirements and other management systems. These include the environmental standard ISO 14001, the lab accreditation standard ISO/IEC 17025:1999, the occupational health and safety standard OHSAS 18001, and statutory and regulatory requirements such as ADA, HIPAA, Sarbanes-Oxley, etc.

Auditor recommendations

How does this affect the organization that must conduct continual improvement of its supply base? Here’s what some experts in the auditing field recommend:

Treat your suppliers as partners. They’re a critical part of the extended supply chain in satisfying your customers. Your suppliers look to you as their customer and should be willing to become more involved with you.

Seek joint opportunities. Both your suppliers and customers can help improve the products and services you provide.

Keep tabs on customer satisfaction. Measure ongoing important parameters that affect customer satisfaction.

Engage supplier management. A joint review of process monitoring and audit findings will prove invaluable.

Speak the “language of management.” Money is the fastest and most effective way to get management’s attention and support.

Follow the leaders. Use W. Edwards Deming’s system of profound knowledge (www.deming.org) and/or Peter Senge’s Fifth Discipline (Currency, 1994) to foster thinking in new ways.

Conclusion

Registration to ISO 9001:2000 is another step on the journey toward excellence in business and industry. With the help of this standard, your organization can develop a process of learning and continual improvement throughout its entire business and manufacturing systems. Those who embrace ISO 9001:2000’s requirements will create customers satisfaction, achieve financial rewards and, most important, stay in business.

About the author

Ronald J. Bowen is president of Quality Station Inc., a consulting firm specializing in quality management and environmental management systems implementation and internal auditing. He spent 46 years with GM in a variety of careers. Bowen is also a co-author of The ISO/TS 16949:2002 Answer Book, new from Paton Press (www.patonpress.com).

About the series editor

Denise Robitaille is a consultant, writer and trainer. She’s also a lead assessor and certified quality auditor. She is the author of The Corrective Action Handbook, The Preventive Action Handbook and The Management Review Handbook, each of which is available from Paton Press (www.patonpress.com).

The author specially thanks Roderick Munro, William Harral, John Gordon Hudson, James Doebereiner, Lloyd Brumfield, Leslie Glasco and the American Society for Quality's Saginaw Section 1004 for their contributions to this article.