Starting two or three years ago, we have here a new fashion of some ISO 9001 registrars considering that quality improvement should enter in the financial field.
In this direction they think that organizations should have financial objectives in their QMS, such as knowing if each work is profitable or not. This not written anywhere in the standard, but some auditors find it very interesting…
:notme:


It is interesting, and probably beneficial, but not required. We frequently discuss things related to profitability for certain processes, because it is related to process improvement. But, there is no requirement to add it to Quality Objectives. Nor is it prohibited. It is how business runs, after all.

NOTE: THIS THREAD HAS BEEN SPLIT FROM ISO 9001 Implementation and Certification - Some advice (http://elsmar.com/Forums/showthread.php?t=13835)

It is interesting, and probably beneficial, but not required. We frequently discuss things related to profitability for certain processes, because it is related to process improvement. But, there is no requirement to add it to Quality Objectives. Nor is it prohibited. It is how business runs, after all.

Profitability issues should never be mixed with quality management. Not just because it’s not a 9001 requirement, but because it can lead to the “famous” budget cuts that are not related to improvement.
Sometimes small organizations use financial objectives in their QMS just because they don’t have other management system in the Organization.

Profitability issues should never be mixed with quality management. Not just because it’s not a 9001 requirement, but because it can lead to the “famous” budget cuts that are not related to improvement.
Sometimes small organizations use financial objectives in their QMS just because they don’t have other management system in the Organization.


I would suggest you ask your top management what they think. Profitability and financial issues are a key part of business organizations. Telling top management ISO has no interest in profitability would make support for the program dry up. Quality only for the sake of quality is very passe.

Profitability issues should never be mixed with quality management. Not just because it’s not a 9001 requirement, but because it can lead to the “famous” budget cuts that are not related to improvement.


Why should they 'never be mixed'? To me, this is a silo view: and a rather idealistic and unrealistic one at that (although I may be mistaking your meaning of 'mixing').

Commercial businesses must make profits and manage financials. For 'quality' to ignore or refuse to have anything to do with such issues, and/or insist that there should be 'no mixing' doesn't make any sense. For example, I'd see an objective that aimed to have a process achieve the same level of quality, but at a lower operating cost (say) or a higher profitability level as an eminently acceptable objective!

If budget is being cut unrelated to improvement, it's precisely because one part of the business isn't considering the other part. Silo thinking.

Helmut, I think we posted within minutes of each other.
Telling top management ISO has no interest in profitability would make support for the program dry up.
In a heartbeat!

Quality only for the sake of quality is very passe.
And very rightly so. Myopic and just plain silly thinking. :applause:
And exactly the kind of 'thinking' that makes managers think very rude things about 'quality'.

I would suggest you ask your top management what they think. Profitability and financial issues are a key part of business organizations. Telling top management ISO has no interest in profitability would make support for the program dry up. Quality only for the sake of quality is very passe.

If you say your top management that 9001 has anything to do with profitability, you’re not being completely honest to them!

If you say your top management that 9001 has anything to do with profitability, you’re not being completely honest to them!

What if you say that control of processes is linked to profitability? Would that require prevarication? We continually conflate the container with the thing contained. If ISO 9001 is the method chosen to regulate and control processes, then profitability and financial considerations in general are obviously important. Note that I'm not referring an any way to registration here.

Everything about 9001 and certification is related to profitability of one type or another (or to those things related to profitability, cost avoidance or whatever)

I have yet to see an organization or organization leadership commit to a QMS approach just to get a warm fuzzy or look good.:nope:

Thank you for your thoughts & reply.

The concern here is that the manufacturing will be having a industry specific ISO whereas the 'other side' will remain holding the ISO 9001.

Maybe the only person I am trying to convince for this 2 certificate is myself and not you ;-)

:topic:
If you say your top management that 9001 has anything to do with profitability, you’re not being completely honest to them!

Since we're making sweeping statements, mine is that if you are saying to your top management that '9001 / quality has nothing whatsoever to do with financials or profitability' then you're misleading them and advocating a limited and erroneous view of quality.

Please - at least tell them that this is solely your view and that there's a huge body of professionals out here who disagree with you very strongly! Jim, Randy et al have indicated some of the reasons why.

You don't have to think far... just imagine the impact of poorly controlled processes and/or producing crappy product, resulting in product returns/ loss of customers/satisfaction (with consequent inevitable impact on business) ... the quality management model of ISO 9001 - and thinking quality professionals! are utterly focussed on preventing these!

What if you say that control of processes is linked to profitability? Would that require prevarication? We continually conflate the container with the thing contained. If ISO 9001 is the method chosen to regulate and control processes, then profitability and financial considerations in general are obviously important. Note that I'm not referring an any way to registration here.

I don’t have that opinion!
Profitability of processes is an issue of efficiency and not an issue of effectiveness.
In no place of the standard is referred anything about efficiency.
We don’t have no 5.1.1 on ISO 9001 as we have in ISO/TS!
Of course we can do much more than what the standard requires, but we are not obliged to do it, in order to be in conformance!
Profitability of processes is an issue of efficiency and not an issue of effectiveness!

What you can say, is that acting this way, we might not be sure if we have a very effective QMS, but what I can assure is that it is according to ISO 9001!

AV

I don’t have that opinion!
Profitability of processes is an issue of efficiency and not an issue of effectiveness.
In no place of the standard is referred anything about efficiency.
We don’t have no 5.1.1 on ISO 9001 as we have in ISO/TS!
Of course we can do much more than what the standard requires, but we are not obliged to do it, in order to be in conformance!
Profitability of processes is an issue of efficiency and not an issue of effectiveness!

What you can say, is that acting this way, we might not be sure if we have a very effective QMS, but what I can assure is that it is according to ISO 9001!

AV

So you believe that processes can be effective without being profitable? :confused:

:topic:


If you say your top management that 9001 has anything to do with profitability, you’re not being completely honest to them!



Since we're making sweeping statements, mine is that if you are saying to your top management that '9001 / quality has nothing whatsoever to do with financials or profitability' then you're misleading them and advocating a limited and erroneous view of quality.

Please - at least tell them that this is solely your view and that there's a huge body of professionals out here who disagree with you very strongly! Jim, Randy et al have indicated some of the reasons why.


Are you, guys, sure that you are arguing about the same thing? ;)

I have a feeling that there may be a confusion between ISO 9001 as a set of requirements (which is built around customer's viewpoint) and "becoming and staying compliant/certified to ISO 9001" (which is an organization's internal concern) as an implementation of those requirements. The former indeed, has nothing to do with efficiency. The latter has everything to do with efficiency.

As a set of requirements imposed on an organization, ISO 9001 indeed "cares" only about effectiveness, because that's what customer cares about the most: from customer's viewpoint, an organization shall be effective and constantly strive to be even more effective. At the same time, everybody (including some customers) understands that efficiency is vital for any organization. In order to survive and prosper (let alone be ISO 9001 certified or compliant), an organization should be efficient and constantly strive to be even more efficient. This is plain common sense. However, this is the organization owner's primary concern, not the customer's. The organization's self-imposed requirement, if you wish.

Continually improving efficiency could be a standard requirement (e.g. if ISO 9004 would evolve into a basis for certifications), but... apparently there are some strong (not necessarily good) reasons why this did not happen so far. :notme:


BTW, here is a quote from ISO 9001:2008 that may be relevant:


0.3 Relationship with ISO 9004
ISO 9001 and ISO 9004 are quality management system standards which have been designed to complement each other, but can also be used independently.

ISO 9001 specifies requirements for a quality management system that can be used for internal application by organizations, or for certification, or for contractual purposes. It focuses on the effectiveness of the quality management system in meeting customer requirements.


At the time of publication of this International Standard, ISO 9004 is under revision. The revised edition of ISO 9004 will provide guidance to management for achieving sustained success for any organization in a complex, demanding, and ever changing, environment. ISO 9004 provides a wider focus on quality management than ISO 9001; it addresses the needs and expectations of all interested parties and their satisfaction, by the systematic and continual improvement of the organization’s performance. However, it is not intended for certification, regulatory or contractual use.


Interestingly enough, the previous version of ISO 9001 mentioned "efficiency" once (and only once) - right there, in cl. 0.3, in the description of ISO 9004. Now even this mentioning of "efficiency" is gone. So, ISO 9001:2008 literally does not say a word about efficiency, and I think this is intentional.

What you can say, is that acting this way, we might not be sure if we have a very effective QMS, but what I can assure is that it is according to ISO 9001!


I would contend that is missing the whole point of having a quality management system.

Everything about 9001 and certification is related to profitability of one type or another (or to those things related to profitability, cost avoidance or whatever)

In fact that can be true, but that’s not a direct issue. The standard has not one single word that requires the organization to be profitable!
20 years ago or more, quality management systems where “famous” in having larger costs than benefits in terms of profitability, and companies where registered te same way they are today!



I have yet to see an organization or organization leadership commit to a QMS approach just to get a warm fuzzy or look good.:nope:

You have never seen a state company as we have here….

Just for the record - a nonprofit organization (defined by the tax codes of the nation in which it is domiciled or operating) can, and many do, seek and obtain registration to an ISO Quality Management Standard - perhaps they think it gives a "warm, fuzzy" feeling to their donors and fund grantors. I'm certain most clients (recipients of services) of nonprofits and other nongovernmental organizations giving aid or education could care very little about the organization's registration status.

Just for the record - a nonprofit organization (defined by the tax codes of the nation in which it is domiciled or operating) can, and many do, seek and obtain registration to an ISO Quality Management Standard - perhaps they think it gives a "warm, fuzzy" feeling to their donors and fund grantors. I'm certain most clients (recipients of services) of nonprofits and other nongovernmental organizations giving aid or education could care very little about the organization's registration status.
"Non-profit" doesn't mean "no revenue," or that process control is not important.

In fact that can be true, but that’s not a direct issue. The standard has not one single word that requires the organization to be profitable!
20 years ago or more, quality management systems where “famous” in having larger costs than benefits in terms of profitability, and companies where registered te same way they are today!
...

Much has changed in the last 20 years. In today's climate, programs need to pay their own way to succeed and receive support. Companies need to get the full value from their ISO programs, and top management wants to see value, benefits and profits. If ISO is about optimizing processes, then it should improve profits.

The standard has not one single word that requires the organization to be profitable!
Thank heavens for that. I'd hate to see that become a requirement.
I'm certain most clients (recipients of services) of nonprofits and other nongovernmental organizations giving aid or education could care very little about the organization's registration status.
You might say the same about commercial ones. But all care a lot about getting good services/products, ie, getting what they expected or were promised they'd get.

Some of the nonprofits I've helped become certified were encouraged or even made to do so as a condition of funding or of being used as an 'outsource provider'. Others did it for similar reasons to some commercial organisations, to achieve improvement and/or distinguish themselves in the marketplace.