Quality Standards Update
by Paul Scicchitano
A recent survey reveals some surprising facts about
ISO 9000 registrations in the United States.
ISO 9000
Registration Cost Drops
You don't have to be a quality guru to know that ISO 9000 registration is
becoming a fact of doing business in the United States.
But how much does it cost? What are the savings associated with registration,
if any? How long will it take to recover your investment? A recent survey
of all certificate holders in the United States reveals some surprising
facts about ISO 9000 registration.
First, the costs have apparently declined since a similar survey in 1993.
Companies report average total costs associated with registration of $187,000-nearly
$60,000 less than three years ago.
The survey findings are based on a 26-percent response rate from 7,000
questionnaires distributed in October 1995-one for every certificate holder
at the time. The poll was conducted by industry newsletter Quality Systems
Update and co-published by Dun & Bradstreet Information Services and
Irwin Professional Publishing.
While overall registration costs are down from the previous survey, so
too are the average annual savings associated with registration. Companies
reported average annual savings of $117,000, or $62,000 less than the $179,000
in savings they reported at the time of the first survey in 1993. But unlike
the first survey, companies also reported average one-time savings of $77,000.
One possibility for the decline in annual savings is that most companies
had not been registered for an extended period at the time of the first
survey. They may have also combined one-time and annual savings for the
first survey.
The latest survey, however, went a step further to confirm the cost information.
Companies were also asked if they had systems in place to accurately record
internal registration costs. Not surprisingly, 71 percent said they did
not have such systems.
But the minority of companies that did have systems in place reported average
combined internal and external expenses of about $220,000-higher than the
overall average. Those companies also reported higher savings on the average-$121,000
annually and $87,000 one-time savings.
On the down side, the survey did find a Grand Canyon-size gap in the estimated
length of time it takes some companies to recoup the costs of registration,
suggesting some firms may be pursuing registration purely for the certificate.
For obvious and other reasons, this could prove to be a costly mistake,
according to the survey results. Half of the 1,880 respondents said it would
take 3.28 years or longer to recover their costs. The average estimated
recovery was 10 years.
Respondents said it took about 15 months to attain registration as measured
from senior-management commitment.
If you're wondering about the longevity of ISO 9000, it appears the
phenomenon will continue. Indeed, most respondents said they plan to seek
registration of additional domestic sites. Nearly half of the respondents
said they are either encouraging all their suppliers or select suppliers
to seek registration. And 36 percent said they may encourage registration
of suppliers in the future. Only 16 percent of respondents said they had
no plans to encourage their suppliers to seek registration, suggesting that
the third-party registration business will be healthy for some time.
Slightly more than half of the respondents reported a positive difference
in the performance of their registered suppliers. About one-third reported
no difference between registered and nonregistered suppliers. The remaining
respondents did not answer the question.
The survey found that about one of every six ISO 9000 certificate holders
in the United States also plans to seek registration under the Big Three
automakers' QS-9000 requirement. About 20 percent of the respondents that
indicated they will seek QS-9000 registration said they plan to do so within
the next year. Another 21 percent said they plan to seek registration within
one to two years, while 19 percent said they had not yet set a date for
registration.
QS-9000 ultimately is expected to affect more than 20,000 first-tier production
and service-part supplier locations.
A surprising number of respondents-31 percent in all-said they also plan
to seek ISO 14001 registration for environmental management systems. Of
those, 2 percent said they plan to become registered within two years; 3
percent said they plan to seek registration in more than two years. The
largest percentage of those companies planning to seek ISO 14001 registration-18
percent-had not yet set a date to do so.
Companies said they planned to seek registration to the coming environmental
standard because of perceived internal benefits, regulatory pressures, marketing
and public relations benefits as well as customer pressure.
About the author . . .
Paul Scicchitano is managing editor of Quality Systems Update, a monthly
newsletter and information service by Irwin Professional Publishing devoted
to ISO 9000 and ISO 14000 issues. For more information, telephone (703)
591-9008, fax (703) 591-0971 or e-mail isoeditor@aol.com.
