The Consortium Approach to Success
Small businesses have found this improvement model really works.

Stanley A. Marash, Ph.D.

About a year ago, I wrote in this column about the consortium model for small businesses. This month, I’d like to add some insight into how the system works.

To remain competitive in today’s business-to-business environment, smaller companies must meet the increasingly stringent quality requirements imposed by their customers--both larger corporations and government agencies. Registration to ISO 9001:2000, for example, is a given requirement for many industries, as well as for selling to the U.S. Department of Defense. Moreover, industry-specific variants of the standard, required within specialized industries such as medical devices, automotive, aerospace and telecommunications, place an additional burden on smaller firms--particularly those that sell to more than one industry. And some companies go beyond ISO standards and insist that their suppliers employ tools such as Six Sigma and lean enterprise.

In 1993, a public-private initiative involving the New Jersey Department of Commerce, various New Jersey agencies and organizations, as well as officers from small businesses and economic development organizations developed the concept of a consortium of small businesses that would pool resources to make ISO 9001 and other such standards affordable and attainable. By joining a consortium, small companies could achieve benefits from partnering and cost savings due to economies of scale.

Currently, 42 states provide some level of customized training funding for small businesses, and the model has been consistently successful.

Participating businesses must have a demonstrated need for the training, be committed to the process and pay their employees’ wages during training. However, these companies might still lack funds to cover outside assistance and instruction as well as the resources to design a quality management system for their firms. By including groups of companies in a joint venture, skills training can be cost effectively presented.

Because these small firms are unfamiliar with training and don’t have training staff or facilities, the consortium hosts--often local colleges--play a vital role in administering and hosting the classroom-based training. The host’s follow-through ensures training continuity and serves as a vital support resource.

The New Jersey companies partnered in regional programs lasting approximately 12 months and leading toward ISO 9001 registration. The purpose wasn’t merely to teach ISO 9001 principles to member companies but also to implement effective quality management systems as the program progressed through a series of monthly training courses coupled with on-site coaching. Some common problems shared by the companies were:

Poor quality, a high rate of rejects (e.g., scrap) and no real process to determine good and bad products

Shortage of qualified in-house staff to train others and no formal training system

Potential customer loss because businesses weren’t registered to ISO 9001, bad shipments, billing errors, inefficiencies and poor routine

Lack of employee awareness as to how product quality affects job security

No formal quality management system throughout their processes

A mandate from customers to adhere to ISO 9001 by a certain deadline or lose any business

The typical consortium process included these steps:

ISO 9001 executive overview--management orientation for all companies in the consortium

ISO 9001 gap analysis--each company individually

12 monthly group meetings--all companies together, reviewing progress and sharing lessons learned

On-site, one-on-one coaching--each company individually

Documentation training--formal training for all companies together

Lead auditor training--formal training for all companies together

Internal auditor training--formal training for all companies together

Preassessment audit--each company individually

Corrective action review--each company individually

In addition to ISO 9001 registration, specific program outcomes included:

Consistent documentation of the entire company process

Greater quality awareness by all employees

A positive cultural change involving the entire population

Increased efficiency and productivity

Enhanced communications throughout each company

Reduced scrap and/or rework and the expenses incurred

Customer expectations met

Companies better able to deliver a quality, cost-effective product on time

Today, the New Jersey version of the model is still working. Several other consortiums are in progress or getting under way, helping companies with ISO 9001:2000, basic quality skills training and, in one case, Six Sigma. The consortium model truly gives small companies the ability to emulate larger ones.

About the author

Stanley A. Marash, Ph.D. is chairman and CEO of The SAM Group, which includes STAT-A-MATRIX Inc. and Oriel Inc. Letters to the editor regarding this column can be e-mailed to letters@qualitydigest.com.