What should be changed in the ISO 9001:2015 Standard?

[howste]

Profit may not be universal, but cost is still important - even to nonprofit organizations. Introducing "efficiency" into ISO 9001 (which is a term already defined in ISO 9000) may have the effect you're looking for, djbeatsent.

 

[pldey42]

Even in commercial organizations the QMS may not driven totally by profit, cost or efficiency.

Some examples:

In Europe there are strict laws regarding effluent which attempt to minimize environmental damage. Processes have to meet such requirements, e.g. by removing toxins from effluent prior to discharge. This is pure cost, no profit, and at best an attempt to reduce costs in terms of legal penalties should there be an accidental poisonous discharge.

There are also laws regarding the accuracy and confidentiality of personal information and companies must invest in appropriate technology and processes to comply, again pure cost, little or no benefit except in customer trust and loyalty.

Also, there are laws regarding electrical and fire safety in products, forcing companies to add cost in order to comply.

Sometimes a company gets into difficulties with customer satisfaction and its reputation suffers (e.g. it gets caught by the press abusing cheap labour in a foreign country, or maybe its product just sucks) and will buy its way back into public favour with special offers, low prices, an expensive PR campaign – all costs it hopes will pay back.

Finally, in markets where new products are the norm it's common that the first company to build significant market share remains at the top for years – once we all bought Sony Walkmans, now it's iPods. Another example is satellite TV, where one service provider, now a major player, had a policy for a while of “never mind the cost, never mind the quality, just build market share in each new country we enter.” Now, several years after, they're the dominant player in many countries and making fat profits.

How could the standard accommodate what amounts to betting behaviour at the CEO level on innovative new products? For example, Sony (I think I'm correct in saying) didn't do market research on the Walkman; their CEO simply decided it was a good idea and he'd do what it took to sell it. The only way for truly innovative products, I think, is to put your money where your mouth is, launch the product and hope people like it. Once the product is making money, then one tries to reduce costs. But CEOs have a habit of doing that and hardly need a standard to tell them.

I agree that quality teams often ignore cash and strive for unrealistic quality targets in terms of defect rates and customer satisfaction, and the worst of them lose their jobs because their quality activities run counter to business objectives (e.g. market share today, customer satisfaction tomorrow). But I think it should be a part of their education to put relevant cost metrics into the QMS when they align with the quality policy, as has been said.

Just my 2c,
Pat

 

[howste]

Efficiency is defined as the relationship between the result achieved and the resources used. The examples you listed above may seem to go against this, but in the long term, they really aren't.

Most organizations incur significant short-term costs to gain long-term benefits. Capacity planning is an example. A machine shop buys a multi-million dollar machining center that takes years to pay for itself. They do it because they "gamble" on future business being there to more than recover the high costs. They are still using fact-based decision making to project the long-term profits.

Sometimes the difficulty with efficiency measures is that often short-sighted managers and the metrics they choose to use may not always align with long-term profitability and sustainability. Also, incurring large costs in one part of the business doesn't mean we shouldn't work for efficiency in other areas.

 

[Sidney Vianna]

Introducing "efficiency" into ISO 9001 (which is a term already defined in ISO 9000) may have the effect you're looking for, djbeatsent.

I believe efficiency should remain in the ISO 9004 realm. The scope of ISO 9001 does not lend itself to efficiency, in my view point, simply because it would have to be scrutinized by external parties, e.g., CB auditors. With all the uproar we hear now about CB auditors scrutinizing processes and systems for effectiveness, I can only imagine what would happen if efficiency of processes turned into the scope of an external audit.

 

[djbeatsent]

I believe efficiency should remain in the ISO 9004 realm. The scope of ISO 9001 does not lend itself to efficiency, in my view point, simply because it would have to be scrutinized by external parties, e.g., CB auditors. With all the uproar we hear now about CB auditors scrutinizing processes and systems for effectiveness, I can only imagine what would happen if efficiency of processes turned into the scope of an external audit.

This is a very good point.

 

[vanputten]

More learning and thought on cost and profitability is needed.

How does one measure "profitability" for a school's processes? Profitability is one result of the value stream. Profit is not the goal. Profit is a result. For some organizations, there is no "profit", there is only sustenance.

I would suggest reading the recent Quality Digest article titled "Believe" by Tripp Babbitt. Then read Deming's and Ackoff's writings.

From Tripp Babbitt's article:

"Managers are immersed in managing activity. The industrialized mindset taught by Frederick Winslow Taylor during the industrial revolution still rules management thinking. Can anyone say “stagnant thinking?” For more than a century, managers have been preoccupied by three questions:
1. How much work do I have?
2. How long does it take to do it?
3. How many people do I need?

With these questions come all the wrong measures. None are related to what are important to customers. Management is still further blinded by budgets and an unrelenting focus on reducing costs. And with an industrialized mindset, a focus on costs always increases costs."

 

[howste]

I believe efficiency should remain in the ISO 9004 realm. The scope of ISO 9001 does not lend itself to efficiency, in my view point, simply because it would have to be scrutinized by external parties, e.g., CB auditors. With all the uproar we hear now about CB auditors scrutinizing processes and systems for effectiveness, I can only imagine what would happen if efficiency of processes turned into the scope of an external audit.

I'm not convinced that the ISO 9001 stakeholders are ready for efficiency to be added to the standard either. AS91XX certified organizations are a small fraction of the certifications based on ISO 9001, and it seems that the new audit methods have sent a shock wave throughout the industry. I suspect that if ISO 9001 audits required the same scrutiny on process effectiveness the shock might be even more severe. This should probably be done first before introducing efficiency.

Keep in mind though, TS 16949 has required measurement of both efficiency and cost of poor quality for many years. I rarely hear complaints about CB auditors evaluating efficiency there. Of course, these complaints are usually drowned out by the overwhelming complaints about the prescriptive nature of the standard as a whole...

 

[JaneB]

Really interesting discussion and lots of thought-provoking responses (thanks for raising it, Patrick).

Even in commercial organizations the QMS may not driven totally by profit, cost or efficiency.

No - and to my mind they shouldn't be driven solely by those. There are other drivers which must be considered, some of which you provide as examples. Sustainability, anyone?

I agree that quality teams often ignore cash and strive for unrealistic quality targets in terms of defect rates and customer satisfaction, and the worst of them lose their jobs because their quality activities run counter to business objectives (e.g. market share today, customer satisfaction tomorrow).

If quality is truly owned and contributed to by all, then the so-called 'quality teams' wouldn't be doing that. Quality should be embedded into the business, not a thing apart. That direction = madness.

But I think it should be a part of their education to put relevant cost metrics into the QMS when they align with the quality policy, as has been said.

If more effort was put into producing a suitable quality policy for, say a commercial organisation, which included profit/efficiency/what have you, then aligning suitable business objectives to that policy would achieve this result?
I've often encouraged clients to include such in their policies such as eg, 'providing a suitable return to owners/shareholders' or 'having a sustainable business'.
I agree with Sidney though - I'd argue against including cost/efficiency in the Standard and think it best where it is in ISO 9004.

 

[pldey42]

Efficiency is defined as the relationship between the result achieved and the resources used. The examples you listed above may seem to go against this, but in the long term, they really aren't.

In some sense that's true, but such situations are, in my experience, measured with things like ROI, time to market, market share, capital burn rate, EBITDA and so forth. While these might be couched as various measures of financial efficiency I see no benefit in trying to force them into some kind of efficiency measure that might satisfy a requirement in ISO 9001 for efficiency to be measured. Not least, there would be a risk of provoking unnecessary duplication of effort and conflict amongst quality managers and finance or business managers, financial auditors and quality auditors.

In my experience of R&D efficiency measures cause many of the problems that the QMS tries to solve. For example, managers want software engineers to produce x lines of code per hour in order to make development time fit the unrealistic time-frame that sales have set, because the organization has no accurate productivity data on projects that nobody has ever attempted. While there are techniques for addressing this situation they're weak and rarely deliver what overly efficiency, Taylor-style managers want. Projects routinely overrun and deteriorate into political battle fields. It's worth noting that the internet had no project manager, no budget, no time-frame: it grew organically, incrementally, through dozens of little projects that were lead collaboratively by engineers with more of a mind to making it work than hitting budget and time constraints. They knew that, like an omelette made from fresh ingredients, some things cannot be rushed and they're ready when they're ready.

I agree that efficiency is better left where it is, as one of many KPI's in ISO 9004 an organization might choose to use. Not only would this leave organizations free to measure it or not, it enables the quality manager to concentrate on the measures that reflect customer satisfaction, such as on-time delivery, return rates, reliability, complaint rates, customer satisfaction and so forth.

Customers aren't generally concerned with supplier efficiency, and if they think that cost efficiencies will be passed onto them, or lead to a more sustainable supplier, they're not in the real world! It takes more than measuring efficiency to build sustainable business and competitive pricing.

Just my 2c,
Pat

 

[encee98]

Re: What should be changed in the ISO 9001:2014 Standard?

Thanks. This will be very helpful since there are still some auditors who want to see the standard re-stated in the quality manual because it will make the statements "official company policy."