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by Dirk Dusharme Since ISO 9000's
inception in 1984, there has been plenty of speculation, argument and anecdotal evidence regarding the usefulness or wastefulness of the standard and its myriad spinoffs: ISO 14000
(environmental), QS-9000 (automotive), TL 9000 (telecommunications), AS9100 (aerospace) and, most recently, ISO/TS 16949 (a worldwide automotive standard). Proponents claim that the standards
help companies improve quality, reduce waste and increase profitability. Opponents say that they're a waste of time and money and simply make companies jump through hoops implementing procedures
that could be done in more efficient, relevant and useful ways. However, evidence supporting either argument has been fairly sketchy and often focused only on ISO 9000's effect on export or on a
particular segment of registered companies (e.g., small businesses). With this, our first annual ISO 9000 State of Registration Report, we aim to shed a little light on
registered-company demographics and on the perceived value of registration as a follow-up to our third annual ISO 9000 Registrar Customer Satisfaction Survey, which appeared in the July 2001
issue. The survey is based on 5,700 survey respondents drawn from registered companies in Canada and the United States, or about 10 percent of the regions' ISO 9000-registered companies.
Table 2 Company size If ISO 9000 has both universal appeal and universal value, one might imagine that
companies of all sizes would seek registration. Although many of us suspected that small companies generally eschew registration, the data contradicts this. Table 2 shows the
distribution of registrations by company size compared to the distribution of company sizes in the United States and Canada.
Although more than half of all U.S. business establishments (i.e., individual sites, even if part of a larger company) employ fewer than 10 people, only about 3 percent of
registered companies fall within that size category. Conversely, the 10- to 50-employee range contains about 16 percent of all U.S. companies but 24 percent of all ISO
9000-registered companies. And although only 8 percent of U.S. companies are in the 50- to 999-employee range, two-thirds of all U.S. ISO 9000 registrations belong to such organizations.
The Big Three automakers might be the primary cause of this phenomenon. As a representative, who wished to remain anonymous, of one of the nation's largest
registrars speculated, the ISO 9000 movement in the United States has been largely fueled by the Big Three's mandate for QS-9000 registration of all of their tier-one
suppliers -- a great many companies (few of which are mom-and-pop size). These companies, in turn, might require registration of their suppliers, even if it's not directly required.
"In the auto industry, I can't imagine that there are many first- or second-tier suppliers with fewer than 10 employees," says Radley M. Smith, former member of the Big Three
team that developed QS-9000. Further, unless required to do so, most small companies probably won't bother with registration. "This may be a controversial statement, but a
company with 10 to 20 people might not need a quality management system like ISO 9000," continues Smith. "These small companies can probably implement an effective
QMS without everything that ISO 9000 requires." Cost may be one of the biggest factors, suggests Bud Cuthbert, director of U.S.
operations for QMI. "These companies are generally new enterprises, and their energy and focus is more likely to be on the maintenance and growth of their business," he says.
"Although we have had no direct feedback from small companies on this issue, we believe the primary -- and sometimes sole -- motivation for registration in this category is
competition. Larger companies normally have a number of motivations (e.g., quality improvement, competition and customer specifications). And with fewer drivers, the
push to become registered is lessened." For the most part, the representatives of small companies we interviewed agreed that
without some driving force such as a customer requirement or market pressure, they wouldn't have bothered with registration, due to its initial cost and hassle. For smaller
companies, the issue against registration seems to be labor resources. Is registration easier for smaller companies?
Depending on their perspective, some might surmise that registration might be more difficult for larger companies due to corporate inertia and communication issues.
Conversely, some might argue that small companies struggle more with registration due to a lack of resources. We, too, expected there to be some difference.
To measure this, we asked respondents to tell us how many nonconformances they received on their first audit. We then ran a correlation on company size vs. number of
nonconformances. The result? There is no correlation. Smith isn't surprised. "What matters is not the size of the company but the quality of its
management," he states, echoing a key registration success factor that registrars and consultants alike have been hammering home: If management fully supports the effort,
there should be few nonconformances. Management is then responsible for ensuring that the necessary brainpower and resources are used when implementing ISO 9000 and
ironing out any nonconformances. Table 1
We were surprised at the large number of companies (about 13%) that reported
receiving zero nonconformances and the number reporting 15 or more nonconformances (see Table 1). However, regarding the zero nonconformances, Smith points out that
automotive suppliers have a lot at stake. Faced with being cut off as Big Three automotive suppliers, those companies might work extra hard to have their systems run
perfectly. Although at face value this makes sense, comparisons between the percentage of nonconformances to ISO 9000 registered and QS-9000 registered companies showed little difference.
Management support Because it is such a critical element (so critical that it's a requirement of the new ISO
9001:2000 standard), we asked respondents to rate their organization's level of management support on a five-point scale, with 5 being best. The mean response was a 4.1.
Smith is shocked by this high mark. "That's surprising, but it's good news," he says. "Most people I know who are on the other side of the hill [pursuing registration] find
management support difficult. I hear an awful lot of 'What can you tell me to help me get better management support?' "
Management support is difficult even once registration is in hand, confirms Ron Mathis, vice president of marketing and sales for BSI. "There are really only two major drivers
for ISO 9000 registration: the market and the client," he points out. "Therefore, management often supports this effort only if it helps the bottom line. After that, they
often don't support it." Mathis is referring to what is almost common knowledge within the industry, particularly among consultants and registrars: Most company managers are
more interested in registration from a marketing perspective than in any real value the process may impart to the organization's processes. Regardless of what corporate
management might say to the public (or to their employees), many consultants and registrars will tell you that meeting a market or client need is what registration is really all about.
While Cuthbert is surprised at the figure, which he considers to be low, he does agree with Mathis that the figure might reflect management's disinterest following initial
registration. "The relatively low rating may be a function of the perceived support by management for registration following the initial registration audit," he says. "Thereafter,
management interest in the registration process may wane." What about value?
To try to determine the value of ISO 9000 registration to a company, we asked each
respondent to rank whether registration had a more positive or more negative effect on quality, productivity, morale, waste and profitability. A five-point scale with 1 being "most negative
effect" and 5 being "most positive effect" was used. The most noteworthy observation here is that quality received the highest marks (a mean of
almost 4), with the remainder of the categories sitting well below (at about 3.2). Some registrars we spoke to believe that this points more to a bias on the part of the
respondents ("Of course the quality guy is going to say that quality is great") than a real assessment of the impact. All registrars interviewed questioned the ability of the
respondents to rate any of the other categories. "This finding does not surprise us," explains Cuthbert. "In our own customer survey,
we found similar results. Companies tend to perceive registration as more of an intangible benefit than one that contributes directly to their productivity and the bottom
line. We feel that the new ISO 9001:2000 standard will alter some of this thinking. With an enhanced registrar focus on business processes and the results of those processes,
companies may tend to rate registration's contribution differently in the future. However, we don't foresee this perception changing for several years."
Respondents were also asked to rank the overall value of registration on a five-point scale with 5 being the best. This question received a respectable mean of 4.2. The market Is the market softening? Is there still an interest in registration? Table 4 indicates that
registrars still have several markets that are far from depleted. Obviously, the ISO 9001:2000 revision will k
eep food on registrars' and consultants' plates for quite a while, as 92 percent of the respondents indicate that their organizations will make the transition.
Additionally, the vast majority (87%) of those who said they will not pursue ISO 9001:2000 registration indicated that they will be pursuing registration to one of the other standards.
"QMI has experienced tremendous growth in the area of ISO 14001 registrations," agrees Cuthbert. "We don't anticipate a slowdown in
the demand for ISO 14001 registrations in the future. One of the biggest influences has been several major companies' mandate to have their suppliers registered to ISO 14001. However, as
was the case with ISO 9001, 9002 and 9003, the benefits of registration to ISO 14001 are becoming better-known by large companies.
ISO/TS 16949 promises to absorb about 7 percent of the currently ISO 9000-registered companies and is a market that registrars are hoping will explode in the future. "The
biggest prayer for all of the registrars is that the Big Three will mandate that their suppliers switch to ISO/TS 16949," says a representative from one registrar. That type
of requirement would re-create the old QS-9000 market and give registrars and consultants considerable work. The state of registration
In general, registered companies are pleased with the value ISO 9000 registration offers, both in terms of its effect on quality and on the organization as a whole. Small
companies tend not to bother with registration unless there's an explicit need. When it comes to implementation, there's no apparent advantage or disadvantage connected to
company size or whether the standard (e.g., QS-9000) is mandated -- all companies appear to struggle equally. Management support seems to be better than most of us
thought, and registrars and consultants still have plenty of work to look forward to, especially with ISO 9000:2000 and ISO 14000. About the author Dirk Dusharme is Quality Digest's technology editor. Contact him at ddusharme@qualitydigest.com . |
