Interested Parties

Management requires everyone to work together for quality

Management requires everyone to work together for quality

Context of the Organization – Interested Parties

This is one way of looking at Interested Parties. Other consultants look at it differently. You need to decide what works best in your company.

Scope, requirement hasn’t changed, Assume you reviewed it and it accurately represents your organization

Who are the interested parties?

This changes from company to company only you can determine who the interested parties are. In previous revisions of ISO we were mostly concerned with  the customer with some interest in our suppliers and our employees. But nothing was formalized and there wasn’t a direct consideration of risk/opportunity.

¡  People who have a stake in what and how your organization performs in producing products or services which meet the customers’ requirements

¡  Are relevant to the QMS

While section 4.2 of the ISO 9001:2015 standard does not require you to identify the risks and opportunities, they should be included in section 6.1. So we’ll go over that now and save repetition later.

Risk negative or positive, ISO 31000, 14001 opportunity, Interested Parties can be both

Here is a side point in ISO 9001 risk is considered to be either negative or positive. In ISO 31000 and ISO 14001 they consider risk as negative and opportunity as positive. Keep that point in the back of your mind in-case an auditor challenges the term “opportunity” and be prepared to say in your company opportunity means positive risk. You can use whatever name you want. I have a client who names quality objectives as “rocks”. It is a term everyone there knows and understands and it meets the standards requirements for quality objectives so the auditors don’t challenge the name.

Interested Parties effect the QMS

Interested parties effect the QMS. This is important because this may or may not include the customer, the end users and your competitors.

One way to look for Interested Parties is to consider the  following areas. Again you may not have all of these and you may think of some not included in this presentation. It is up to you to identify the interested parties for your company.

  • Suppliers – Providers of raw material, components, sub-assemblies, finished product and services
  • Internal groups – Employees, unions, stock holders, management
  • Intermediaries – The most common is a distributor but there are also aftermarket service groups
  • Alliances – A bank may recommend a consultant they think will increase the company’s profitability, while the consultant may recommend a bank to clients who are having banking issues
  • Influencers – Think of peer groups, councils, chambers of commerce

Organizing Interested Parties

There is more to be done than just list the interested parties. Some of the interested parties can provide both a risk and an opportunity. For example a supplier performance issue presents a risk to you meeting your customers’ requirements. However, if they are a leader in their industry they could provide you with a competitive advantage with a new product none of your competitors has access to use.

Slide 10 – Risks and opportunities

So let’s start the table.

Interested Party Concern Risk Opportunity
Suppliers Their reputation and quality/delivery/price influences yours Nonconformance Superior performance
Employees Is it stable? Do they have pride of workmanship? Controls product quality Source of innovation
Shareholders Source of investments, company direction Looking for short term ROI Supports re-investing
Community Impact on your reputation, and ability to produce Demands which reduce profits Promotes development
Intermediaries Increased sales, impacts your reputation Damage to product More contacts/sales
Alliances Increased opportunities, concerns for reputation Your reputation is tied to theirs Increased sales
Interested party Concern Risk Opportunity
Influencers Is their advice of value Different frame of reference Wide range of experience
Regulators Compliance Not managing changes Good rating
Certifying bodies  Do they understand the organization and the standard(s) Dependent on auditor training Global view of QMS

 

You get the idea.

Controlling Risk from Interested Parties

Now that you have a list of your interested parties and the concern or impact they have on your company with the inherent risks or opportunities, you need to monitor and control your risk and capitalize on your opportunities. So let’s add a column.

Interested Party Risk Opportunity Monitor
Suppliers Nonconformance Superior performance Annual performance review/ random inspection
Employees Controls product quality Source of innovation Annual performance review
Shareholders Looking for short term ROI Supports re-investing Review BOD reports
Community Demands which reduce profits Promotes development Community newsletters, membership in community organizations
Intermediaries Damage to product More contacts/sales Reports of NC and Sales
Alliances Your reputation is tied to theirs Increased sales Monitor press releases Qtrly Sales
Influencers Different frame of reference Wide range of experience Monthly meetings
Regulators Not managing changes Good rating Regulator updates/ ratings
Certifying bodies Dependent on auditor training Global view of QMS Annual surveillance audit

 

 

Of course these controls are typical examples and you should define what works for your company. The point is you should have a way to monitor and address risk and capitalize on opportunities.

Documenting Interested Parties

When the auditor arrives they are going to ask, “Who are your interested parties?” There is no requirement in the standard that you list interested parties.

You must communicate to your organization who are the interested parties and how they will be monitored.

So when identifying Interested Parties think about who affects or has the potential to affect your QMS

Let your common sense guide you on identifying the Interested Parties, Don’t worry, you can do this. If you need help, e-mail me at technacon1986@sbcglobal.net or call (708) 814-3685.

The next presentations will be on internal and external influences.

What Does ISO Stand For?

ISO means working together for standardization

Where Did the Name ISO Come From?

ISO is the anachronism for “International Organization for Standardization”. It is not the” International Standards Organization”. The anachronism would have been different in each country – IOS in English, OIN in French. To avoid any problems this would create the founders gave it a short, all-purpose name. They chose “ISO” from the Greek isos meaning “equal”. So whatever the country or language, the short form is always ISO.

What does the ISO do?

The International Organization for Standardization is the world’s largest developer and publisher of international standards. Did you ever wonder who came up the with standard size of a sea-tainer or a tablet of paper? It was the International Organization for Standardization. Most of the time we don’t think about standards, we just expect things to fit and to work well and safely. Standards are hidden given only noticed when absent. The International Organization for Standardization has more than 19,000 international standards. The International Standards provide a common technological language facilitating trade and the transfer of technology.

How Did ISO Get Started?

In 1946 delegates from 25 countries met and decided to create a new international organization with the objective “to facilitate the international coordination and unification of industrial standards”. It officially began operations February 23, 1947. It is not a governmental organization but a network of 163 countries, one member per country, with the central secretary in Geneva, Switzerland that coordinates the system.  Some the members are part of their government structure, others are from the private sector, usually from a national partnership of industry associations. Each member has one vote and all members are on equal footing. Standards are based on consensus among experts in the field and are periodically reviewed, usually every five years to see if they should be maintained, updated, or withdrawn. The standards are voluntary and market driven. There is no legal authority to enforce the implementation of the standards.

How Are ISO 9001, ISO 14001, ISO 27001, ISO 26001 Different?

The majority of the standards are specific to a particular product, material or process. However ISO 9001 (Quality), ISO 14001 (Environmental management), ISO 27001 (information security) and ISO 26001 (social responsibility)are generic management system that can be implemented in any organization, no matter the size, product or sector.

If you would like to learn about how International Organization for Standardization is financed and new standards are selected for development go to http://www.iso.org/iso/about.htm

 

Creating and Maintaining a Corporate Culture Using ISO 9001

 

How do we maintain and communicate corporate culture using ISO 9001?

                I have a Saturday morning secret weapon, to improve my business. I attend the Levy Entrepreneurial Group meeting. Thank you Joe for creating it, Jack and Terry for leading it, and Don for introducing me to it. I love talking to the attendees, they have so much experience and they are happy to share.  Subjects range beyond my imagination, no small feat when you realize I write fiction as a hobby. On the drive home, this week’s meeting  on corporate culture, had my mind running like a squirrel that got into chocolate covered coffee beans. Good thing traffic was light, I was definitely a distracted driver.

                Let’s start by defining corporate culture. It is the psychology, attitudes and experiences of the society formed in a company. It is a blend of values, beliefs, rituals and myths, developed over time. To sum up, corporate culture is the perception of a company by its’ employees, vendors, and clients.

                So how do we create and keep a positive corporate culture? Implementing ISO 9001 correctly.

Communicating Corporate Culture using ISO 9001

It starts with the Quality Policy. It is a simple, straight forward statement of how we treat the customer, our employees and our suppliers. It must be something more than a framed plaque on the break room wall. Company leaders, and that is anyone who supervises, trains, or assists other employees, must live and refer to the values stated in the policy when it comes to decision-making. Thus a requirement of ISO 9001 is communicating the corporate culture.

                Job descriptions also communicate the corporate culture in more subtle ways and are required by ISO 9001. The job descriptions guide the employee to work within specific constraints and include a responsibility to evaluate and improve how the company does business. This should also be reflected in the employee review process and the development of objectives. All of these are requirements of ISO 9001. All of these communicate the corporate culture.

                Using the standard organizes communications to the employees. Clearly defining the corporate culture using ISO 9001 provides consistent values as different people generate job descriptions, reviews and other employee documents since everyone is guided by the quality policy.

                Small companies often do a good job of “presenting the vision” when they start. Growth can change all of that. Training is necessary. Not just job training but also training on the corporate culture. Much of Saturday’s meeting included examples of when this was done well and when this was done poorly. The standard requires the training on the quality policy which defines the corporate culture. Using ISO 9001 requires the communication of the corporate values.

Keeping the Corporate Culture Using ISO 9001

                Documentation  

                When developing your documentation systems it is critical to realize everything is linked and the quality policy it the keystone holding the over arching philosophy together. Using the standard as a guide helps control the dispersal through the documentation process, making it easier to communicate the corporate culture using ISO 9001.

Section 4.2 of the ISO 9001 standard lists the documents a company needs to use for training to keep the corporate culture in place:

  • A quality policy and objectives
  • A quality manual
  • Procedures
  • And documents for planning, operation and control of the processes

All of these must reflect the corporate culture, particularly when it comes to guidance on decision making.

                Management

                According to section 5.1 of the standard, management must accept the responsibility to keep the values important to the corporate culture in place. A key element to keeping corporate culture is stated in clause 5.5.1 of the ISO 9001 standard, “Top management shall ensure responsibilities and authorities are defined and communicated within the organization.” That isn’t just guidelines on who does what and with what and to whom, but also the values guiding each and every interaction, decision and activity in the workplace.

Viewing Employees as a Resource Stabilizes the Corporate Culture using ISO 9001

                ISO 9001  has a whole section on employees. How does management make sure they are competent, aware of the corporate culture, and trained? Does the corporation provide the infrastructure and work environment to make the employees successful at living the corporate culture? Most importantly, the standard recognizes employees are a valuable resource. Section 6 of the standard is a guide to empowering employees. It becomes a simple task to stabilize the corporate culture using ISO 9001.

Outside perceptions of the Corporate Culture using ISO 9001

                The Care and Feeding of Clients

                ISO 9001 requires interaction with the client and a development of a feedback mechanism, not only for errors but in ways to provide better service. The corporate culture has to be built around serving the customer or the company doesn’t stay in business. Thus the clients perception  is improved and the corporate culture using ISO 9001 is propagated.

                Controlling vendors

                Most companies focus on communicating and living their corporate culture  when it comes to their clients and their employees. A much smaller number take the same care to communicate the corporate culture to their suppliers. Implementing ISO 9001 addresses that shortfall. The supplier must have a good perception of how the company expects them to perform and clear communication as to whether these requirements have been met. This goes beyond, meeting performance requirements, on-time delivery, and reasonable price. Consistency is created through the entire process stream and clear perceptions created of the corporate culture using ISO 9001 to deal with suppliers.

                How the standard is viewed and implemented can take many forms. However, creating and maintaining the corporate culture using ISO 9001 is one of the strengths of doing the job right, staying in business and providing jobs.

Point 9 – Are You Talking to Me?

Break down barriers

Break down barriers between departments and staff areas. People in different areas, such as Leasing, Maintenance, Administration, must work in teams to tackle problems that may be encountered with products or service.

Dr. W. Edward Deming

If you every want to see a head butting contest, put an experienced tool and die maker with a freshly graduated tooling engineer. If you don’t have a vested interest it can be entertaining. Certainly, I found it significantly enlarged my four letter word vocabulary.

The company faced an unacceptable defect level being generated from the tool. Root cause analysis guide us to a poor understanding, and therefore almost non-existent communication, between engineers and the tool makers. Each vocally attributed the problem to the other.

Our solution, have them trade positions for a day. The engineer got his hands dirty and once he got over being self-conscious actually had some fun running mills, lathes and all the other toys the tool maker used. The tool maker got to try his hand at CAD and got an earful of just how little information the engineer had to work with. Each came away from the project with respect for the other and the freedom to communicate instead of blame.

We started a program having new hire engineers working in the tool room and training toolmakers on the engineer’s toys. Each learned to respect the other. The groups went from snubbing each other in the lunch room to wearing a path in the floor tile between each others’ work stations.

Our next step introduced Failure Mode and Effect Analysis (FMEA). We now had people who were willing to work together instead of point fingers. As soon as we armed them with data and invited them to utilize their education and experience our quality made a geometric improvement. Where 3 sigma had been an unrealistic dream, we made the jump to 6 sigma and parts per million defect levels.

This break though came because we broke down barriers, increasing respect and communications. If we had started the FMEA without first developing respect between the participants our success would have been minimal.

Where are the communication barriers in your company?

Point 5 – Improve Every Process

Improve every process

Improve constantly and forever every process for planning, production, and service. Search continually for problems in order to improve every activity in the company, to improve quality and productivity, and thus to constantly decrease costs. Institute innovation and constant improvement of product, service, and process. It is management’s job to work continually on the system (design, incoming materials, maintenance, improvement of machines, supervision, training, retraining).

Dr. W. Edward Deming

Improve constantly and forever, Wow, that is a tall order. Larger companies are able to staff for improvement, but what can the little guy do?

The first step is to prioritize, go for the biggest bang for the investment first. That does mean collecting data. Start with a Cost of Quality report. How much do you scrap? How much do you spend on rework?

When I go into plants to implement ISO9001 I expect to get them certified in system that is indicative of the company culture but I also look for where there is waste and I can reduce costs. I take a visit to the scrap bin and here is the trick, I look for similar parts with similar defects. This tells me there is a system failure. It can come from two places, the design of the part or the method of manufacture. I work backwards from the parts and look to save my client the annualized cost of my contract.

Service providers are a little different. There is no scrap box to look in. What I generally find with them is each employee has a different way of doing each job and there are no written directions or procedures. Each person is sure their way is best. Frequently they have found out about a customer problem and have incorporated a preventive measure in their own method. By listening and applying this information and then training the entire staff, making sure to acknowledge the source and reason for the preventive measure we create a streamline system that addresses all customer issues. We have searched out the problems and created improvement.

Both the manufacturer and the service provider do have customers. Both have complaints that can be used to create real and systematic improvement. Both have the opportunity to call their customers and really listen to what the customer wants and needs. A requirement of ISO 9000 is continuous improvement. The companies that deliver on that element grow.

My bank is ISO 9000 certified. I talked to one manager and he said the certification didn’t mean much to the average customer. What did make a difference was the consistency of accurate and reliable performance, from both new and long time employees. The customers found the bank listened to them and implementing safe new systems that made banking easier at no charge. ISO 9000 had created a system of continuous improvement that kept and drew in new customers. The bank has been able to stay in business, loan money and provide jobs. To quote the good Doctor, “So simple”.

Point 4 – End Lowest Tender Contracts

End the practice of awarding business solely on the basis of price tag. Instead require meaningful measures of quality along with price. Reduce the number of suppliers for the same item by eliminating those that do not qualify with statistical and other evidence of quality. The aim is to minimize total cost, not merely initial cost, by minimizing variation. This may be achieved by moving toward a single supplier for any one item, on a long term relationship of loyalty and trust. Purchasing managers have a new job, and must learn it.

Dr. W Edward Deming

We all do it. We go to a grocery store and will but the item that costs a few pennies less. Our perception is “they’re all the same”, but are they?

A very long time ago, before generics dominated the market, a major pharmaceutical manufacturer hired me as an engineer. Generics dominated conversations. Should they be allowed to replace brand name products? A well respected television news program did a segment on the subject. They stood in front of our plant, held up a generic pill and made the statement the pill was the same as anything made in our plant, the only difference was our pill cost a dollar and the generic cost a dime. What they didn’t know, or didn’t say, was our pills held the effective ingredient content to plus or minus 1% while the generic held the effective ingredient to plus or minus 25%. Generics took over the market and now if you want a name brand product, the doctor must write the prescription as “no substitutes” and some pharmacies will try very hard to get the patient to allow them to substitute. They insist, generics are exactly the same as name brands, they just cost less.

We look at suppliers the same way. They have to be the lowest price item coming through the door or we won’t buy. The companies that do research and could give us the next breakthrough product are competing with off-shore elements that copy the researching facilities products in violation of patent and copyright laws. And we support the theft by purchasing the cheapest initial product.

A bolt manufacturer can produce excellent product that never needs sorting or inspection. It goes direct to the lines and never causes a problem. A new supplier comes in a fraction of a cent cheaper in initial cost and we jump on the deal. Of course every tenth bolt has damaged threads and can’t be used but we buy from them and pat the purchasing agent on the back for our great savings.

How do we turn this around?

Look at your suppliers. When you go to evaluate the cost, look who helped you solve a problem with an innovative idea. Put a dollar figure to the increased sales or saved customer sales. Adjust the purchase price to reflect what the supplier did for you. Go talk to the line workers and look at the supplier costs on the cost of quality report. Adjust the supplier price accordingly. Point out to all the companies making an effort to quote how this information impacted your purchasing decision. Word will get around. Your suppliers will be watching what they do and looking to help you build your business and how can you beat that?

Point 1 – Constancy of Purpose

Constancy of purpose

Create constancy of purpose for continual improvement of products and service to society, allocating resources to provide for long range needs rather than only short term profitability, with a plan to become competitive, to stay in business, and to provide jobs.

Dr. W. Edward Deming

How do you create constancy of purpose in an economic time like this? Companies are struggling to stay in business and there are two places to put every dollar of resources so what do you do?

First you figure out how to keep the clients you have. That means understanding what makes you different from your competitors and building on that difference.

Second you understand what they like and dislike about your service and your product. You meet with your employees to discuss how to improve on the dislikes and support the likes. Making them part of the solution.

When your employees feel they are part of the solution morale improves and you drive out the fear of job loss and build loyalty.

You hold a steady course. If you started out with the right idea, don’t second guess yourself. There are ups and downs to everything, including the economy. Companies that chase fads are always one step behind the competition. Instead you get a long term picture, derive goals to meet that picture and work as a team with your employees to accomplish the end goal. Ultimately you will come through tough times stronger than the competition.

Think of it as you would your retirement investments. You buy in and hold through the lows in the market if you are in for the long term with a good investment strategy ultimately you will have a stronger financial position than selling at every market dip.

ISO 9000 is a Change to a Healthy Life Style, Not a Crash Diet

ISO 9000 is a change in the way everyone in the company thinks and behaves. It is not easy to implement correctly and it is very easy to back slide into the old way of doing things.

Think of ISO as a corporate change to healthy living from a junk-food junky. Ninety-nine percent of people don’t get up off the couch dust off the potato chip crumbs and start running five miles while munching on tofu.

Most people get on the scale and come to the realization they have to make a change. They may start out with a crash diet or they may add a walk to their daily routine, the diet may make a big impact in the short term with disastrous long term results while starting a reasonable exercise program will create gradual improvement your need for long term good health.

The corporate scale is the Cost of Quality report. It measures where there is waste and what it costs to keep control of problems. This is a report you should craft carefully because it is how management is going to measure your success or failure. Understand where the numbers come from, what it takes to collect them, and just how closely it relates to the P&L report. If you can’t find a close correspondence between the two reports, you need to revise the Cost of Quality report.

You need to break management into the idea that you are looking at a 5-10 year plan. Yes there will be measurable improvements in the short term but the real benefit comes from continuously monitoring and improving. You are about to implement Dr. Deming’s, Plan-Do-Check-Act and you better do it right or don’t bother doing anything at all.

Don’t Skip the Good Stuff Part 6

Management Responsibility

            There is a saying, “What goes around, comes around” or you can look at this circle and considerate it the visual definition of “synergy”. There is a reason this is a circle. Management responsibility, resource management, product realization, measurement, analysis and improvement are interrelated. Take away any one of these and the ball, better known as your company profits, drops dead. It is another way of looking at Dr. Deming’s ‘Plan Do Check Act” model.

 

            Looking at section .2 the top box in the circle is management responsibility. I have seen many corporate executives abdicate this point to the quality manager. Usually they pass along the responsibility but not the authority. So what is management responsible for doing?

  1. Steer the bus

This means providing a long term plan, as in a 10 year objective and nothing as vague as “make money”.

  1. Provide the fuel

Management must find the people, funds, equipment and raw materials to make the process work.

            If a company is going to grow and remain in business there must be a written policy for doing business and goals to be achieved. Unless a company is a charity the basic is to make a profit. The question is how much profit? A company isn’t going to double in size without planning, or if it does, it won’t stay that way for long. Management must set out a clear and definitive game plan to get long term positive results.

            The fuel is something else management must provide. Imagine making medicine with untrained people. The result would be catastrophic. Management must find the right people and provide training. Good people are hard to find, they should not be treated as a commodity or the long term growth will suffer.

            Equipment is another resource management is responsible to provide. This does not mean going out and ordering a one of a kind machine to make your particular widget. It does mean making sure the machine consistently produces acceptable product. There is a tool called total productivity maintenance. I have seen examples where using team work and asking the operators for input has resulted in a machine which is 10 years old increasing in productivity by 30% and reducing variation by 50%. Normally productivity goes down and variation increases as a machine ages.

            Raw materials are another matter. There is an old saying, you can’t make a silk purse out of a sow’s ear. Raw materials must be capable of turning into good product. At one point I worked for a pharmaceutical company. We produced an injectable drug. The basic material was organic so there were variations. However on one particular lot an extraneous peak showed up in the gas chromatograph analysis. Checking backwards, that same peak had been in the raw material. Countless man hours were wasted because the raw material was not capable. Management had approve the purchase because they were desperate to fill a stock out situation and didn’t want to acknowledge the material was bad.

            Having provided everything necessary to make the product it is time to do just that – produce something to sell. There is an element of QS 9000 I like to implement in ISO 9000 applications. It is called the Pre-Production Approval Process (PPAP). It tests the ability to make a consistent product over a reasonable duration of time, usually half a shift.

            Once the product has been produced, it is time to measure and analyze for improvement and send it to the customer for feedback. One of my clients made toothpaste closures. They made millions of them and were very proud that they only had 12 open closures per 100,000 manufactured. The cost to the toothpaste company was huge down time. Every open closure shut the line down for cleaning for 10 minutes they were filling at the rate of 600 tubes per minute. Seven people stopped producing salable product and wielded scrub brushes for every open cap. With this feedback, my client designed a machine to make sure the closures snapped shut and removed those that did not. Cavity marking on the rejects gave the root cause of the problem and before too long they were whistling along at 3.4 parts per million open caps. Without the analysis and the customer feedback, my client would have lost a very important piece of business. Which would have impacted the long term plan.

So there you have it. The really good stuff for ISO 9000 is before you even get to the standard.

Don’t Skip the Good Stuff Part 5

            What is continual improvement of the quality management system? It is the big picture. It is looking at the performance of all the sub-processes that make the whole process, from getting the customer specifications and orders, to making sure the parts arrives on-time, at a reasonable cost and in a useable form.

            Here is where the quality manager has to avoid the biggest pitfall known to the engineering mind – trying to pick the fly poop out of the pepper. Engineers don’t know when to stop, and they are right, continuous improvement never stops but you have to know when to move on. I can say this as I am an engineer and there have been times when my engineering tendencies have driven my husband, a really knowledgeable construction consultant, to offer specific guidance (Honey, hand me the darned 2 x 4, it doesn’t matter that it’s off by a thirty-second).

            It is the Quality manager’s responsibility to evaluate the effectiveness of each step in the process and to determine where to improve the process. This means having a way to measure the performance of each step and a method to compare the various results. There are a number of tools to use.

            A good customer satisfaction survey is one. One of the most common things I see is a four or five generic question survey where any rating less than excellent draws attention like road kill draws flies. Sales staff and customers a like groan at the thought of filling the thing out and the input has no value. Do some research into your customer base. Talk to your sales staff, field engineers and repair people. They interacts with the customer in the field and you need their input on what is an effective line of questions to get real information from your customer.

            Complaints and returns are another resource when it comes to measuring customer dissatisfaction. There is a difference between measuring satisfaction and dissatisfaction. Depending on the price of a part, you may never know the customer has a problem. They may throw it away and go elsewhere without ever talking to you.

            Measuring internal costs to achieve customer satisfaction is a third. If you have to 100% sort parts before shipping them, this might be a process that needs to improve.

            Once you have all this data you must convert it into dollars of impact on the company. It is the only way to make a fair evaluation. How much is it taking away from profitability? How much sales have we lost? How much sales could we increase? Put a rough estimate together as to costs to evaluate a solution for each problem. Now you have a report that management can understand. Now you are ready to truly implement ISO 9000.