Please bear with me if I hose this up. Tis my first poll !
(Any of you poll experts, feel free to jump right in and fix it !)

Factor in all the costs.

**Pencil whipping the night before the audit
**Useless busy work
**Doing tasks "for ISO"
**Forests of paper
**Meetings
**Anxiety
**Spent energy
**More meetings
**Doing someone elses work for them
**Time away from family
and
**Payables to the Registrar

How many of you have ever experienced a return that meets or exceeds registration investments ?

The only identifiable return might just be the right to do business with the company that requires such.

If you are 80% big 3 you do what it takes, if you are 10% big three you need to talk about the direction the business wants to take.

In my opinion these various "systems" make viable sense for any business even if they are not required to do so. A company may use all or part to fit their goals. It all comes down to what company goals and aspirations entail.

MHO

Al...:)

I appreciate the goal here, but how do you add in the savings from the problem that didn't happen because of some corrective or preventive action that would not have been taken or even identified without the QS?

How can we measure the profit from a customer kept because they are delighted? Do we figure how much it will cost to get a new customer to replace the business?

How about our employees? If they are more productive through "elimination of hassles" (see P. Crosby), how much more productive are they?

Maybe Deming said it best - "...unknown and unknowable..."

So, I would love to know the answer, but doubt that, anecdotally, I would accept the numbers.

Craig: I appreciate very well your points, but ask you this: Is registration the cause for this favorable outcome ? Is the registration body the stimulus for a successful QS ? I see all reasons for an effective QMS falling completely outside of any registration activity. Here is one of dozens examples: An automotive supplier I recently consulted for passed their last 3 surveillance audits (from a very reputable auditor). How ? They wasted weeks at a time fabricating documentation for compliance purposes, while, simultaneously, their dPPM’s were deplorable, scrap was higher than ever, customer back-charges mounted to over $300,000, etc, etc. The auditor in all three cases commended us for our QS and “allowed” us to retain our certificate.

How can any registrar advertise an effective QS when all your key indicators prove otherwise ? The only body that can measure & improve QS effectiveness is you. So, needless to say, every facet of the get- well plan came from within the walls of the organization itself.

:biglaugh:

nobox:

Agreed. If there is no desire to improve, if the cert. is window dressing, then acquiring it IS a cost center, and there will be little to show for it.

However, recently, in another thread, there was a link for an article by Corbett, et. al. that explored the question for a large group of companies ("Does ISO Certification Pay?") that I think you would find very interesting.

As far as getting certified with a lousy or fake system, in my accounting auditing class (several years ago) one of the "secrets" we learned is that it is very difficult to catch fraud, using auditing techniques, if the person(s) engaging in the nefarious activity have access to the records, the people know the system, and there is little or no effective internal oversight and controls. What is caught is usually the result of a mistake or dumb luck.

Upper management commit quality systems fraud? No, never! Say it ain't so.

;)

I would like to see one or more case study with evidence of a positive (+) ROI over a 5 year (or more) period. I always see the 'immediate' ROI but never Long term ROI. Again, I stress the word Evidence. All my old clients tell me they experienced a short term ROI or no definite immediate or + Long Term ROI from implementation.

I've browsed the web and seen so many testimonials on sites selling services, yet I see no evidence of long term evidence other than on sites which have an direct interest in not addressing 'failures'.

Anyone out there with an unbiased assessment?

Originally posted by Marc
---X---
Anyone out there with an unbiased assessment?

I very much doubt if we'll ever find anyone truly unbiased... but still, so would I.

Originally posted by noboxwine
---How many of you have ever experienced a return that meets or exceeds registration investments ?

A good question, and I pondered for a while before responding.

My answer will have to be that when it comes to hard figures, I really don't know... There are simply too many unknown in the equation. The major one among those is imo what is would have cost us not to go for registration.

We will always consider the cost for taking action of some kind, but we'll never see an invoice for what it cost us not to do so, even though it may be even more expensive to do absolutley nothing.

I will try to answer the question anyway, in my own way. I think it's worth it, not only becuse our customers require it. I believe that the improvements, short as well as long term we achieve in order to get and keep the registration exceed the costs. But any hard figures? Sorry, I can't give you any, but I'll say this: It's up to ourseves to make it worth it.

/Claes

I to would like to see the long term ROI.

Here is a problem;

A lot, not all companies have opportunities for improvement. The seven wastes, quality issues, poor design, poor equipment, etc.

I currently am fortunate to work for a compnay that from the beginning has reduced improvement opportunities down to all most nothing. I am having a hard time finding one or two a year. My registrar asked for at least one for their audit.

In order to get the ROI, companies have to have the opportunities and a lot of small, medium and large companies have them. But not all.

I am currently an expense to my organization and in order to just recoup the implementation cost which includes my salary. Reuiqres new sales. How great is that.

When I see AIAG and other truit improvement and cost savings of these quality management systems, makes you wonder after to you have seen real life.

Instead of our customers have a quality manual that we need to follow. They require this base system and then add on requirements. To a certain point good, but some of the reuqirements add to cost and some costs are hard to recoup.

I believe that for the most part QS/TS has increased cost!

:thedeal:

Originally posted by LMO

Here is a problem;

A lot, not all companies have opportunities for improvement. The seven wastes, quality issues, poor design, poor equipment, etc.

I currently am fortunate to work for a compnay that from the beginning has reduced improvement opportunities down to all most nothing. I am having a hard time finding one or two a year. My registrar asked for at least one for their audit.


LMO,

I find this hard to believe. I'm not saying you are lying, just that maybe you aren't looking in the right places. If it is so, you are truly a one in a million company -- maybe one in ten-million. What a great problem to have.

I wonder if your customers and floor-level employees, if they were to speak candidly, would agree that there is "almost nothing" you could do to improve? I'll bet there are some folks here in the Cove who would LOVE to interview your management, employees, and customers!

Well, I am not lying!

The company is small two owners, myself the quality manager, 1 full time and 1 part time floor assocaite.

The owners are verify conscious about quality, production and customer satisfaction.

When we set up a new process, we optimism the process at that point, not months after the fact.

May be I am unique because I work for a small company and not a at a large organization any more.

At this time I just do not have the waste in my process to recoup the cost of the quality system. If it was not a customer requirement. I guess I would have a job at this company.

The last comapny I was at, passed their audit and then laid off the quality manager to save money.

They were understaffed and did not have the understanding to do improvement. At that company, they had the waste and I was able to make some significant improvement.

But I am still not seeing it, as claimed by AIAG and others.

LMO,

Just wondering what your rate of on-time deliveries looks like, as well as your rate of 1st time customer accepts -Vs- rejects/non-acceptance? Also (and along with the latter query) how is the company doing with regard to number/amount of nonconforming product (at receiving, in-process, and from the customer perspective)?

How about re-inspection/rework/repair/scrap costs internally, are they nonexistant?

Do you have any problematic suppliers (on-time delivery or quality)?

I know these may seem like duh type questions, but it is hard to believe that in the real world a company is doing so well.

Originally posted by LMO
I to would like to see the long term ROI.

Here is a problem;

A lot, not all companies have opportunities for improvement. The seven wastes, quality issues, poor design, poor equipment, etc.

I currently am fortunate to work for a compnay that from the beginning has reduced improvement opportunities down to all most nothing. I am having a hard time finding one or two a year. My registrar asked for at least one for their audit.

I believe that for the most part QS/TS has increased cost!

:thedeal:

Where in the standard does it say the auditor has the right to ask for one improvement activity for an audit ?

I can easily believe (from experience) that in a smaller company improvement projects can be impossible to find. An auditor questioned me about it during a follow-up audit at a sheet metal job shop (25 total employees). 0 DPPM, virtually non- non-existent scrap, supplier of the year, no accidents, etc., etc... I see your point LMO !

So, my poll didnt get as much response as I would have hoped. That's OK. But, sounds like, for the most part, we hang our hat on being forced to be certified and if not, we're out of business--- and you cant measure that ????

I leave you with this to ponder:

If you want to procure a new peice of equipment that will cost $ 100,000, you are required to submit pages upon pages of data, clearly illustrating the costs, benefits and the window for anticipated payback. How many times must we go back and revise the package until it meets the financial needs of our company. Lots of work, but in the end tangible payback and added value for all.

Yet, with $100,000 of registration costs & maintenance, we go to our boss and say that WE HAVE TO HAVE IT ! The requisition is signed, money is expensed, and no discussion of any payback.....in any size window. Does the window we are looking out of need cleaned ? :vfunny:

Have a Day !

Originally posted by LMO
Well, I am not lying!

The last company I was at, passed their audit and then laid off the quality manager to save money.

But I am still not seeing it, as claimed by AIAG and others.

LMO,

As Marc indicates, there is NO hard evidence of ROI for registration. This is like religion. You either believe in it or you don't. Incidentally, my former company didn't wait for any audits before they canned the QA Manager and scrapped plans to get registered to save money. They just had another 15 employees go. It's quite obvious what they think about. The hocus pocus works for a little while and when owners start looking at what they consider a waste of time, we're gone!

If there was hard evidence, other than the chanting from the believers, we would be more secure in our positions because we can also believe and present the facts. :p :ko:

Originally posted by Marc
I would like to see one or more case study with evidence of a positive (+) ROI over a 5 year (or more) period. I always see the 'immediate' ROI but never Long term ROI. Again, I stress the word Evidence. All my old clients tell me they experienced a short term ROI or no definite immediate or + Long Term ROI from implementation.

I've browsed the web and seen so many testimonials on sites selling services, yet I see no evidence of long term evidence other than on sites which have an direct interest in not addressing 'failures'.

Anyone out there with an unbiased assessment?

Evidence of a positive ROI over a 5 year period. How is this, 95% of our clients said if you do not become and maintain ISO Certification we will leave. Also, since that time we have had a few new clients sign on for our services. The comments that have been made were, "It was between you and Company X you both were pretty equal in price and service, however, they are not ISO Certified so we are signing with you." Is that enough evidence?

Originally posted by ISO GUY
"It was between you and Company X you both were pretty equal in price and service, however, they are not ISO Certified so we are signing with you." Is that enough evidence?

ISO Guy,

That would be good enough for me. But, the key part of your statement is "equal in price and service". Without the costs associated with ISO compliance in dollars and manpower, a company can be cheaper with equal service and land the job. And, a smart and efficient company doesn't need ISO to do that.I positively agree that if customers insist on registration, there's no choice. Is that really ROI for companies that are not under that mandate and have not been told that registration is a must? We need a contractor's license to operate in this state. Is that ROI? I don't know. I just jumped in with my 1 1/2 cents worth. :p :smokin:

Good comparison Energy 10 commandments (shalls)-136 commandments (shalls) and its up to the followers to determine how they will live each commandment (shall). Is it Greek?:)

To finish this!

The company I currently work for is Great! I get all the management support I need. My two managers are the owners.

I do not have the big waste problems and quality improvements that other companies (Big or Small) have. I guess I am lucky at this point.

The prior companies that I have work at, do not see the ROI, cause they do not suuport the QMS. Which depending on your company is either a cost or you have the waste and other problems to show a ROI.

I looked at last years deliveries and quality issues.

Delivery is 100% on time. My cutsomer however made two mistakes that cost them expedite frieght.

I had no formal rejections. Two request from one customer to improve the components I make for them. One was do to thier poor assembly operation. We changed material, but problem will always be there, until they assemble parts correctly. Second one was flash caused by the material change. Tool was made for original material, but customer needs both materials for different operations. Fixed by using an airblow off.

It just depends on the company and how well have have do their processes. Big or small companies!

Right now I am in a good position!


:truce:

Originally posted by energy
ISO Guy,

Is that really ROI for companies that are not under that mandate and have not been told that registration is a must? We need a contractor's license to operate in this state. Is that ROI? I don't know. I just jumped in with my 1 1/2 cents worth. :p :smokin:

Energy:

Are there any requirements in your state to obtain that license, other than the payment of the fee?

If not, then the "license" is really just a contractor tax, no?

Assuming that a company is in a situation where they have to get registered, and can go out and "buy" it, then certification becomes a type of tax, especially if their customers will take the certificate alone as continuing evidence of competance.

So, for a registered company to compete with non registered companies, starting with all other things being equal, the registered company must get some added value (an economist would argue value equal to or greater than the registration cost) for the expenditure.

In the worst case, ISO registration would become like a business license. You pay your money, and you can sell your stuff.

Originally posted by Craig H.
Energy:

Are there any requirements in your state to obtain that license, other than the payment of the fee?

If not, then the "license" is really just a contractor tax, no?

In the worst case, ISO registration would become like a business license. You pay your money, and you can sell your stuff.

You're right, Craig. You need to have liability insurance. But outside of that, you can get one. I see your point. There are no other disciplines required to obtain one. However, being a member of the Better Business Bureau in good standing has its requirements. Any other things we pay for, like certification from a manufacturer to apply their brand with the consumer's confidence, would be considered investments and if they land the jobs, I guess it would be considered ROI. Thanks for straightening this burrhead out!;)

Originally posted by LMO
To finish this!


LMO, That's not how it works around here. You started it, but you can never finish it. Other forces are now in place.:vfunny: Relax. You did your job. I will just add that you and the owners know your business better than anybody else. Watch out for those who say you are sorely lacking because you do not choose to get registered. This is where THEY get THEIR good ROI.:agree:

Craig H. mentioned a link I posted to an article here (http://elsmar.com/Forums/showthread.php?postid=51700#post51700) that has very good data showing that certification does pay. I'll post the link again here:
http://personal.anderson.ucla.edu/charles.corbett/papers/does_iso_9000_pay.pdf

The study compares public information on publicly traded companies that have been certified with others that have not been. To control the comparison, they selected companies that followed the same financial trends before certification. The data shows a significant difference. Their conclusions were that those that became certified improved financially, while those that did not did become certified did worse.

The good news, clearly, is that, in all analyses we conducted, we found significant relative improvements in ROA. From that perspective, we can answer the original question of,
“Does it pay to seek ISO 9000 certification?” with a resounding “YES!”

Originally posted by howste
Craig H. mentioned a link I posted to an article here (http://elsmar.com/Forums/showthread.php?postid=51700#post51700) that has very good data showing that certification does pay. I'll post the link again here:
http://personal.anderson.ucla.edu/charles.corbett/papers/does_iso_9000_pay.pdf



howste

Thanks for finding the link. Never did say I wasn't lazy. This article was interesting.

The problem is that it looks at groups, and not individuals. The advantage, too, is that it looks at groups and not....

Remember the problems with applying population data to individuals. Still, again, it is interesting.

IMHO, it comes down to "where the rubber meets the road" - how the standard is applied. Or, more correctly, forget the standard, how well a company is run.

Energy, as far as the burrhead thing, I don't believe you are one. Taking a bath cures that, and I know both of us have had one (involuntarily) recently in our respective lakes. Fish 1, Craig 0.

howste, does the referenced article address the difference between companies that were ISO-Compliant but NOT certified -Vs- those that were compliant and certified; or does it address companies that were neither compliant or certified -Vs- those that were both compliant and certified?

I get the impression that it is the latter, which still leaves in doubt whether there is a ROI for "certification" (other than when it is required by your customer).

I believe their main sources were WorldPreferred for the ISO 9000 certification data and SEC reports for the financial data. I'm sure that there would be no data in either source of company "compliance" with ISO 9000 - just certification.

Originally posted by howste
I believe their main sources were WorldPreferred for the ISO 9000 certification data and SEC reports for the financial data. I'm sure that there would be no data in either source of company "compliance" with ISO 9000 - just certification.

Yes, that was my take, too. It just shows a coorelation, however. Taking coorelation to mean causation can be dangerous. Alternate causalities can be at work. Are companies that invest in registration also more likely to choose market niches that are more profitable? Are they better able to take advantage of changing markets?

If the answer to these (or other, similar) questions is yes, then they may be the real cause. Registration in and of itself does not usually mean that we instantly become more profitable, but other organizational behaviors consistent with registration- seeking would seem to me to be a more important determining factor.

In other words, registration can be a symptom of increased profitability, but the root cause lies elsewhere.

Craig

Another quote from the article along those lines...

Are these improvements a direct causal effect of deciding to seek ISO 9000? Certainly, it is possible that the decision to seek ISO 9000 is positively associated with other “good management” practices, and that it is these latter practices that improve ROA rather than the ISO 9000 implementation and certification process itself.
However, the control groups consist of firms with the same ROA
prior to the certification decision, so something changed specifically at the certified firms in the year prior to the actual certification.
Given the magnitude of the performance improvements, it seems likely that other effects than ISO 9000 certification contributed. However, due to the use of performance-matched control groups and the persistent nature of the relative improvements, our findings do strongly suggest that the preparations for the first ISO 9000 certification also contributed to superior performance.

Originally posted by Craig H.
Registration in and of itself does not usually mean that we instantly become more profitable, but other organizational behaviors consistent with registration- seeking would seem to me to be a more important determining factor.

In other words, registration can be a symptom of increased profitability, but the root cause lies elsewhere.

Craig

Craig,

That's what this thread is all about. All of a sudden, the contracts start pouring in. Is it because the money spent on advertising is paying off? Is it because the potential customer spots the rolling billboard (the company truck) or by word of mouth from satisfied customers? Nobody knows. We ask the question, "How did you hear about us?" The answers fall into those catagories mentioned above. For us, ISO registration is unheard of and would never be a reason to select us for their project. My input here is to just point out that you cannot say, with absolute confidence, that registration has helped the business. The things that result in you doing a better job of landing customers relies on a multitude of things, least of all ISO Registration. Those practioners of the creed believe that this is the only reason. To believe otherwise, is to cast doubt on the justification for their existance. Oh my! Did I say that?:agree: :smokin:

The things that result in you doing a better job of landing customers relies on a multitude of things, least of all ISO Registration.


OK, let's look at this backwards for a second. What makes one company more profitable than another?

What if we control for industry, company size, etc.? What are the differences?

The fact is that there will be differences that we can point out readily- different logos, different web sites, and so on. I would contend that one of the main differences will be what we call the culture - the way the company views itself and the world, and how the organizational creature reacts to its environment. I have worked for several years in essentially the same industry for different companies. The differences are amazing.

Companies that have looked seriously at ISO 9000, Baldridge, Deming, and so on, have had to at least look at their organization from the perspective of those criteria. Is it possible that the willingness to examine the very basic fabric of the company, and the implied willingness to change, is what is really contributing to the improved profitability?

Or am I just spouting off again?

With all respect to Craig (who's posts I really do respect), I wish I knew how to spell PFFFFFTTTTT !!!!! :biglaugh: You are starting to sound like I guy I once knew from England.

Do you seriously think the companies willingness to change has led to anything other than additional expense in an already crippling economy? I am willing to concede that someone, somewhere has profited from ISO Registration, but I find it hard to believe that it is a company outside the certification industry.

Please take notice I didn't say ISO 9000 itself (as a quality system). I am stating that registration has not earned us one cent and in fact has cost us thousands.

Please don't anyone take this to heart but if I hear one more auditor say something stupid like "our business sure hasn't slowed down", I will kick him square in the wallet.

Dave

With all respect to Craig (who's posts I really do respect), I wish I knew how to spell PFFFFFTTTTT !!!!! :biglaugh: You are starting to sound like I guy I once knew from England.

Do you seriously think the companies willingness to change has led to anything other than additional expense in an already crippling economy? I am willing to concede that someone, somewhere has profited from ISO Registration, but I find it hard to believe that it is a company outside the certification industry.

Please take notice I didn't say ISO 9000 itself (as a quality system). I am stating that registration has not earned us one cent and in fact has cost us thousands.

Please don't anyone take this to heart but if I hear one more auditor say something stupid like "our business sure hasn't slowed down", I will kick him square in the wallet.

Dave


Dave:

PFFFFFTT back!!! :vfunny:

Seriously, from what you have said, ISO 9000 itself is OK (right?) as a QMS. On this I think we agree.

But, you have a problem with registration itself? OK, but without the "teeth" of registration, not to mention the confirmation that the standard is being followed that is implied, how much worth would it be to just say "we comply with ISO 9001" ? (Said with a heavy british accent). Since everyone could say it, it would not be worth much, IMO.

Also, the act of having an outside source (read external auditor) look at the company from time to time can also be beneficial, right?

Since I am not an exteranl auditor/registrar, I can say that I believe that my company has benefited from registration without getting my wallet booted (I think). How do you quantify the problems you don't have?

Really, Dave, I am a little surprised. We can agree to not agree, though, I guess.


Craig

Edited for lousy English

I think I reside on the fence between you two guys. By that I mean that if properly implemented, ISO 9001 can benefit a company greatly even without certification by a third party registrar which, to these kinds of companies, probably costs much more than any value obtained from it (negative ROI).

However, I also believe there are also a goodly number of companies who would say they have properly implemented it but would not truly walk the talk unless the "threat" or "motivation" of the external auditor were there. These kinds of companies are much more likely to realize at least some ROI on the registrar's charges because they would not do things correctly otherwise.

In the end, though, I think I would rather work for, or invest in, a company like the first one I mentioned rather than the latter one. Where am I now? I'd rather not say... :(

Dave:

PFFFFFTT back!!! :vfunny:

Seriously, from what you have said, ISO 9000 itself is OK (right?) as a QMS. On this I think we agree.

But, you have a problem with registration itself? OK, but without the "teeth" of registration, not to mention the confirmation that the standard is being followed that is implied, how much worth would it be to just say "we comply with ISO 9001" ? (Said with a heavy british accent). Since everyone could say it, it would not be worth much, IMO.

Also, the act of having an outside source (read external auditor) look at the company from time to time can also be beneficial, right?

Since I am not an exteranl auditor/registrar, I can say that I believe that my company has benefited from registration without getting my wallet booted (I think). How do you quantify the problems you don't have?

Really, Dave, I am a little surprised. We can agree to not agree, though, I guess.


Craig

Edited for lousy English

Yes, I am sure we do agree on the QMS. I think there is little doubt that anyone who implements a good QMS and follows it will have a better system, happier customers and more profits.

Now to the disagreement - To use your own example, "how much worth is it for a third party registrar/auditor to just say "we comply"? That is my point exactly. Since they all say it now, it isn't worth much. I get feedback from customers on the problems they are having with our competition (and sometimes us). The value is the system and not the certification. Too many certifications are given for bare minimum systems if that. The thing that should determine suitability of the system needs to be the customer.

We may be hung up on semantics here but I still insist no financial benefit is derived from the certification itself or the continued surveillance audits/renewals.

And yes, that's the nice thing about the Cove. We can always agree to disagree.

Dave

Yes, I am sure we do agree on the QMS. I think there is little doubt that anyone who implements a good QMS and follows it will have a better system, happier customers and more profits.

Now to the disagreement - To use your own example, "how much worth is it for a third party registrar/auditor to just say "we comply"? That is my point exactly. Since they all say it now, it isn't worth much. I get feedback from customers on the problems they are having with our competition (and sometimes us). The value is the system and not the certification. Too many certifications are given for bare minimum systems if that. The thing that should determine suitability of the system needs to be the customer.

We may be hung up on semantics here but I still insist no financial benefit is derived from the certification itself or the continued surveillance audits/renewals.

And yes, that's the nice thing about the Cove. We can always agree to disagree.

Dave


Dave:

OK, we may now disagree on our disagreement.

:rolleyes:

Do we agree that an honest application of ISO 9001 will likely result in improvements that impact the bottom line?

If so, then I think we also can agree that registration (the process) as it stands now is not quite what it should be, right? (As an aside, the procrastination of many is not helping this at all, IMO).

So, our disagreement, to me, lies in the view that registration is not worth the cost, right?

If so, all I can say is it depends....

And PFFFTTTTT!!!

:vfunny:

Craig

See - I knew there was a reason I liked your posts.

I think it is fair to say we agree right across the board. One of us has picked on an issue that currently isn't producing the results as were intended and climbed up on a soapbox with it. I will climb down long enough to agree "it depends ...."

Dave