ISO 9000 for Micro, Small and Medium Businesses Presentation to the International Quality Congress

1. ISO 9000for Micro, Small and Medium Businesses Presentation to the International Quality Congress for the micro, small and medium businesses: Quality as a Strategy to compete Mexico City, 2-3 December 1999 by Charles Corrie Secretary ISO/TC 176/SC 2

2. Overview of presentation • Items to note on MSMEs • What is ISO and TC 176 • ISO 9000 and MSMEs - the Present • ISO 9000:2000 • ISO 9000 and MSMEs - the Future

3. Items to Note on MSMEs 1. Importance MSMEs are vital to employment and form the bulk of enterprises in an economy (In Europe, during the 1990s MSMEs have absorbed the 2 million jobs that have been shed by larger organizations while total employment has been static) They can be flexible and dynamic, leading to the foundation of future large, successful, organizations Their importance cannot be over-emphasized.

4. Items to note on MSMEs • 2. Categorization: • Lifestyle, or Income Substitutor organizations • Objective for the owner to make a reasonable living. • Generally reach their ultimate (small) size within a short time • Growth Businesses, or Builder companies • From outset, founder(s) driven by ambition to create an organization that will be a significant force in the business world • From the perspective of developing an economy, main focus is usually on the Growth / Builder firms

5. Items to Note on MSMEs 3. Leadership Leadership is everything !!!!!!!! It determines purpose, style, culture, ambition, access to finance, technical ability, flexibility etc. Much research in this area, specifically on MSMEs

6. Items to Note on MSMEs - 4. Growth patterns

7. ISO 9000 affects all types of MSMEs !

8. What makes up ISO ? • ISO is made up of its members which are divided into 3 categories: • Member bodies are the national body “most representative of standardization in their countries”. Thus, only one body in each country may be admitted to the membership of ISO • Correspondent members are from countries which do not yet have a fully developed national standards activities. • Subscribermembers are from countries with very small economies

9. Who does the work ? • ISO is a hierarchical, but decentralised organization. • Representatives of industry, research institutes, government authorities, consumer organizations, and international organizations come together as equal partners in some 2850 technical committees, sub-committee and working groups. • Administration of standards committees is by representatives of the national standards bodies • ISO Central Secretariat, Geneva, has a supporting and monitoring role

11. How are ISO standards developed ? • Consensus • The View of all interests are taken into account • Industry-wide • Global solutions to satisfy industries and customers world-wide • Voluntary • International standardization is market driven and therefore based on voluntary involvement of all interests in the market place

12. How is ISO’s work financed ? • Member subscriptions (80%) • Sales of standards/other publications (20%) • Note: ISO member bodies bear the cost of the secretariats for which they are responsible. It is estimated that the operating expenditure of the ISO Central Secretariat is only 20% of the cost of financing ISO administrative operations • Also the costs of the volunteer experts has to be added to the sums, but this has never been calculated.

13. ISO’s partners • International partners: • International Electrotechnical Commission • International Telecommunications Union (part of the United Nations Organization) • World Trade Organization • Regional Partners • Regional standardization bodies, e.g CEN in Europe • International /Regional organizations • Liaisons with about 500 international/regional organizations

16. ISO 9000 is NOT a single standard A family of 27 published documents on Quality Management and Quality Assurance

17. The four main groupings of the current ISO 9000 standards - Quality Assurance standards, e.g. ISO 9001 - Quality Management standards, e.g. ISO 9004-1 - Quality Auditing standards, e.g. ISO 10011 - Other supporting standards, e.g. ISO 8402

18. Sub-groupings of the current ISO 9000 standards - Guidance on selection and application e.g. ISO 9000-1, ISO 9000-2 - Guidance against the generic product categories e.g. ISO 9000-3 - Software ISO 9004-2 - Services ISO 9004-3 - Processed materials - Guidance against specific clauses in ISOs 9001/2/3 e.g. ISO 10005 - Quality plans ISO 10012 - QA for Measuring equipment ISO 10013 - Quality manuals - Guidance on Quality Management e.g. ISO 9004-1, ISO 9004-4

19. Also in the current ISO 9000 family of documents Handbook: ISO 9000 for Small Businesses- What to do: Advice from ISO/TC 176 Published in 1996

20. Handbook - Background ISO/TC 176 recognised that there were differences between large and small companies, but considered that this was limited to the Technical differences in application of quality technologies e.g. MSMEs unlikely to be involved in large production runs, therefore unlikely to use SPC. Research by France (and other countries) presented to September 1994 meeting of TC 176 showing urgent need for SME guidance, based not on technical differences, but on approach to understanding and applying the ISO 9001/ 9002/ 9003 standards . TC 176 accepted this recommendation, and establish a Small Business Task Group (SBTG), with experts from 15 different countries

21. Handbook - Key issues examined during development General: * What is a small business ? * Do the requirements need amending ? * Commercial pressures for registration * Third party auditing costs/approach Implementation: * Difficulties in understanding or applying the standards * Minimum availability of resources * Costs of setting up and running a quality system

22. Handbook - Key issues examined during development What is an SME ? Argued - No. of employees versus turnover Agreed - A philosophy of the way a business is run: Short, Simple, Direct communications (x 2n) Individuals do a wide variety of tasks Decision making confined to few(one) person

23. Handbook - Key issues examined during development Requirements SBTG considered there was NO justifiable reason to ADD to, DILUTE, or CHANGE ANY of the requirements in ISO 9001, ISO 9002 or ISO 9003 specifically for small businesses Also, SBTG did not agree the need for MSMEs to focus on using ISO 90003

24. Handbook - Key issues examined during development Commercial pressures Considered outside the remit of TC 176 and SBTG However, some guidance on obtaining registration given in an annex to the Handbook. Costs Disproportionately high for MSMEs Considered outside the remit of TC 176 and SBTG, but pleased to note recent Certification body small business, lower cost, registration schemes However, approach by Certification bodies is often as with large businesses, and does not recognize the flexibility of communication paths in MSMEs

25. Handbook - Key issues examined during development Difficulty of understanding and applying the standards Language - Historically derived from military/large manufacturing organisation standards, whereas many MSMEs operate in the services sector. Also many MSMEs have never used a formal standard before. Organizational structure - Standards imply a large organisational structure with defined, separate roles e.g. Inspector, or Internal Auditor Quality system requirements - MSMEs that survive start-up are usually efficient, and can be shown to be generally in compliance with the standards. However, some requirements e.g. formal Management Reviews, Internal Audits, are not familiar practice.

26. Handbook - Key issues examined during development • Minimum availability of resources • + costs of establishing and maintaining a formal QMS • Additional responsibilities usually held by members of MSMEs, so have multiple roles and pressure on personal availability • Time for registration, 18 months is a long time for an MSME • Lack of formal QMS knowledge, therefore training is needed for all staff • Documentation costs = hire a consultant • + 3rd party registration and surveillance fees

27. Focus of the ISO Small Businesses Guide * How to put an ISO 9000 quality system in place * Explain how the standards apply to the small business sector * Explain the requirements of ISO 9001/ 9002

28. REVIEW / REVISION ISO, CEN (and most national standards bodies) mandate a (maximum) five year period between reviews of individual standards. In 1990, ISO/TC 176 developed a revision strategy (Vision 2000) for the ISO 9000 standards, including a two Phase approach: Phase 1 - Minor changes Phase 2 - Fundamental revision

29. Vision 2000 recognised issues for Phase 2 - Proliferation of quality standards needs to be prevented - The standards need to be generic, addressing: - all product categories - all industry types - all sizes of organisation - There should be compatibility between the revisions of the standards

30. 1999 Strategy = Vision 2000 + New Challenges: - Other management systems standards e.g. ISO 14000 - Sectoral needs and sectoral documents e.g. QS-9000 - Too many ISO 9000 standards, many not being used - Where should ISO 9004 be positioned - Need for greater customer and interested party focus - Need for emphasis of improvement - Need for greater clarity/ease of understanding New ideas: - Single ISO 9001/2/3 standard - “Consistency” between ISO 9001 and ISO 9004 - Use of a ‘Process Approach’

31. Success of ISO 9000 • ISO 9000 standards adopted in over 90 countries • ISO Certificates Survey to December 1998 shows 271996 organizations have been certified, in 143 countries. An increase of 48563 compared to the December 1997 reported result • Estimate directly effects over 3 m people

32. NEW PARTICIPATION APPROACHES • Project Management approach • Design Specifications • Direct User Inputs - User Survey - Validation Programme - Transition Planning - New Product Introduction Planning • Use of internet / web sites

33. Project Management approach - Work Breakdown structure

34. 381 182 Survey participants Total: 1120 Argentina Australia Austria Belgium Brazil Canada Chile Colombia Denmark Egypt Finland France Germany Iceland India Indonesia Ireland Israel Italy Japan Korea Kuwait Malaysia Mauritius Mexico New Zealand Norway Poland Portugal Singapore Slovenia South Africa Spain Sweden Switzerland The Netherlands Turkey UK USA Zimbabwe

35. Summary of Survey results • Meet customer and relevant interested party needs • Connect quality management system to business processes • Usable by all sizes of organization, in all sectors • Adopt process approach, and have process model structure • Include requirement for continual improvement • Be clearly written for good comprehension and to aid translation • Provide for exclusion of ISO 9001 requirements • Have increased compatibility with ISO 14000 • Clear transition to Year 2000 standards

36. Other ISO 9000 Standards TS16949 Future ISO 9000 Family(Subject to Ballot) ISO 9000 Core Standards Technical Reports Brochures Withdraw or transfer to other TC Technical Specs 10006* 10007* 10013 10014 10015* 10017 9000 9001 9004 19011 10012 • QMP • Sel & Use • Small Bus • Handbook 9000-3 9000-4 9004-2 9004-3 9004-4 10005 * Document status TR to be considered at next revision

37. Where should ISO 9004 be positioned ? - As an introductory guidance ‘textbook’ ? - As a direct guide to ISO 9001 ? - As a higher level set of certification requirements than ISO 9001 (a competitor to the quality awards programmes ) ? - As a guide on ‘quality management’ or ‘business excellence’ ?

38. Other management systems standards • Industry wants ‘one-stop-shop’ certification • Legislators and Regulators want control • Should the standards be integrated ? Or, to what • degree should the standards be aligned ? • How could their differing Aims and Requirements • be reconciled ? • Which approach or structural model should be used ? • Revision to ISO 14001/4 to be commenced • Under development - ISO/IEC Guide for the development • of management system standards • Increasing development of sectoral standards

39. Relationship ISO 9001/ISO 9004 • A “consistent pair” of standards, but each capable of being used on its own • Allows for ready transition between the two standards • Harmonized main clause titles, structures and terminology • Based on 8 “Quality Management Principles” • “Process Approach”

40. Quality management principles • Customer - focused organisation • Leadership • Involvement of people • Process approach • System approach to management • Continual improvement • Factual approach to decision making • Mutually beneficial supplier relationship

41. Process-based structure • Management responsibility • Policy, objectives, planning, system, review • Resource management • Human resources, information, facilities • Product realization • Customer, design, purchasing, production, calibration • Measurement, analysis and improvement • Audit, process/product control, improvement

42. Basic process model MANAGEMENT CUSTOMER SATISFACTION CUSTOMER DESIRED ACTIVITIES INPUTS OUTPUTS ENABLERS

43. CONTINUAL IMPROVEMENT OF QUALITY MANAGEMENT SYSTEM Management S responsibility a C t C i u u R s Measurement , e Resource s s f q analysis , a t management u t c o improvement i t o r m i e o m e m n e r e n Product realization r t Input Output s Product Process Model (ISO 9001:2000)

44. ISO 9000:2000 - Fundamentals and Vocabulary • Merger and revision of: • ISO 9000-1 - Selection and Use • ISO 8402- Vocabulary • To be in two sections reflecting Fundamentals and Vocabulary • Vocabulary constructed using ISO/TC 37 Concept diagram approach

45. Revised ISO 9001 • “To provide confidence, as a result of demonstration, in product conformance to established requirements” • New “process” based structure and focus • Single quality management system requirements standard (no ISO 9002, 9003) • “Permissible exclusion” of requirements to meet the application needs of different organisations

46. New Role for ISO 9004 • "To achieve benefits for all stakeholders through sustained customer satisfaction” • Based on eight quality management principles agreed by ISO/TC176/SC2 • Towards “performance improvement” • Structure consistent with ISO 9001, but content not intended as a guide to its implementation • To be presented with ISO 9001 requirements included

47. "Target 2000" Schedule 1Q 1998 - Working draft - for info 2Q 1998 - Working draft - for info 3Q 1998 - Committee Draft (CD) - comment 1Q 1999 - Committee Draft (CD) - vote 4Q 1999 - Draft International Std. (DIS) - vote 3Q 2000 - Final Draft (FDIS) - vote 4Q 2000 - New Standards published

48. The future • Many of the external factors identified by the SBTG will not disappear, e.g.commercial pressures, minimum availability of resources. • Implementation will (hopefully) be eased, by better written standards, based on the process approach. • ‘Generic’ standards may eliminate the need for specific MSME guidance

49. Recommendations • Understand and apply the 8 Quality Management Principles • Use ISO 9004 to aid development of your Quality Management System and for guidance on performance improvement • before seeking to implement ISO 9001:2000

50. Staying correctly informed • National standards body • Professional associations • “ISO 9000 News” journal from ISO • “ISO Online” • http://www.iso.ch • ISO/TC 176/SC2 open access website • http://www.bsi.org.uk/iso-tc176-sc2