The International Organization for Standardization (ISO) was founded in 1946 in Geneva, Switzerland, where it is still based. Its mandate is to promote the development of international standards to facilitate the exchange of goods and services worldwide. ISO is composed of more than 90 member countries. The United States representative is the American National Standards Institute (ANSI).
The ISO Technical Committee (TC) 176 develops a series of international standards for quality management systems which were first published in 1987. The standards (ISO 9000, 9001 and 9004) were intended to be advisory and were developed for use in two-party contractual situations and internal auditing. However, with their adoption by the European Community (EC) and a worldwide emphasis on quality and economic competitiveness, the standards have become universally acceptable.
Most of the countries have adopted the ISO 9000 series as their national standards. Likewise, thousands of organisations throughout the world have quality management systems registered to the standard. In the United States, the national standards are published by the American National Institute/American Society for Quality (ANSI/ASQ) as the ANSI/ASQ Q9000 series. Government bodies throughout the world, including the United States, are also using the standards. US government agencies using the series are the Department of Defense (DOD) and the Food and Drug Administration (FDA).
In a two-party system, the supplier of a product or service would develop a quality system that conforms to the standards. The customers would then audit the system for acceptability. This two-party system results in both supplier and customer having to participate in multiple audits which can be extremely costly. This practice is replaced by a third-party registration system.
A quality management systems registration involves the assessment and periodic surveillance audit of the adequacy of a supplier’s quality system by a third party, who is a registrar. When a system conforms to the registrar’s interpretation of the standard, the registrar issues a certificate of registration to the supplier. This registration ensures customers or potential customers that a supplier has a quality system in place and it is being monitored.
Benefits of ISO Registration
There are various reasons for implementing a quality system that conforms to an ISO standard. The primary reason is that customers are suggesting, or market is demanding, compliance to a quality system. Other reasons include required improvements in processes or systems and a desire for global deployment of products and services. As more and more organizations become registered, they require their subcontractors or suppliers to be registered, creating a snowball effect. Consequently, in order to maintain or increase market share, many organisations are finding that they should be in conformance with an ISO standard. Internal benefits that can be received from developing and implementing a well-documented quality system can far outweigh the external pressures.
A study of 100 Italian manufacturing firms was undertaken to determine if there was any improvement in performance after registration. Significant improvement was noted in the following areas:
Internal quality as measured by the percent of scrap, rework and nonconformities at final inspection Production reliability as measured by the number of breakdowns per month, percent of time dedicated to emergencies and percent of downtime per shift
External quality as measured by product accepted by customers without inspection, claims of nonconforming product and returned product Time performance as measured by time to market, on-time delivery and through put time
Cost of poor quality as measured by external nonconformities, scrap and rework
On the negative side, prevention and appraisal cost increased. Additional examples of benefits after registration are as follows:
The American Institute of Certified Public Accountants (AICPA) now has a quality system that works. Also, there was a 4% improvement in gross margins which was the largest improvement in their history.
North town Ford automobile dealership in Toronto, Ontario, raised customer satisfaction and loyalty by 20%. It experienced a 55% increase in customers who would recommend the dealership.
United Airlines reduced the average engine overhaul cycle time from 120 days to 60 days.
Cleveland Center for Joint Reconstruction has experienced lower costs and more control and consistency in the care it provides.