Managing by Fact and with Knowledge of Variation

Management by Fact

 involves understanding the how ’s and why ’s of a situation before taking action
 Requires an appreciation for and an understanding of the key systems of an organization
 Management of systems requires knowledge of the interrelationships between all of the components
within the system and the people who work in it.
 When leaders manage by fact, they use objective evidence to support their decisions
 Objective evidence is not biased and is expressed as simply and clearly as possible. More importantly,
it is traceable back to its origin, whether that be a customer, an order number, a product code, a
machine, or an employee.
 Effective leaders remember to ask Dr. Deming ’s favorite question: “How do we know?” -This question
verifies the source of the information and its importance to and relationship with the issue at hand.
Having this knowledge means having the facts available to support a plan of action.

Managing with a Knowledge of Variation

2 Sources of variation:
 Controlled Variation – the variation present in a process due to the very nature of the process, can be
removed from the process only by changing the process
 Uncontrolled Variation – comes from sources outside the process. Normally, it is not part of the
process and can be identified and isolated as the cause of a change in the behavior of the process.

Managing with an understanding of variation –

 a leader would recognize the type of variation present and respond accordingly
 enables leaders to make the right choices and deal appropriately with problems as they arise.
 According to Dr. Deming, it would be a mistake to react to any fault, complaint, mistake, breakdown,
accident, or shortage as if it came from a special cause, when in fact there was nothing special at all—
that is, it came from random variation due to common causes in the system.
 It is also wrong to attribute to common causes any fault, complaint, mistake, breakdown, accident, or
shortage when it actually came from a special cause.

Ethical Behavior and Good Citizenship

 Leaders of effective organizations are expected to be role models for their employees.
 Leader s are expected to conduct themselves appropriately in all stakeholder transactions and
interactions.
 They promote, enable and ensure legal and ethical behavior. They are accountable for their
employees’ behavior. They monitor and respond to any breaches in ethical behavior.
 Organizations and their leaders have social responsibilities that include protection of public health and
safety and the environment.
 Leaders should review activities conducted by the organization in order to determine their impact on
society and the environment of their products, services, and operations.
 They also anticipate future concerns. The strategic plan should document how the organization will
lessen their impact and cite specific goals and objectives. The strategic plan may include programs to
improve the disposal of products or the reduction of waste created.
 Effective leaders support their community. They are involved in its activities, and so is their workforce.
 Leaders contribute in a variety of ways:
 Making safety or health care programs or information available to the public,
 Strengthening community services,
 Collaborating efforts to enhance community

Effective organizations go beyond mere compliance and create an organization that emphasizes
behavior and social responsibility

Malcolm Baldrige National Quality Award (MBNQA)

 The Malcolm Baldrige National Quality Award interrelated core values and concepts to provide a
foundation for excellence.
 Beginning with visionary leadership, these values and concepts improve an organization’s agility in the
marketplace.
 The criteria focus on customers, organizational and personal learning, valuing employees,
management by fact, continuous improvement, and social and community responsibilities
 The systems perspective of the criteria emphasizes results and value. Adhering to these core values
and concepts enables organizations to direct their process improvement efforts in ways that increase
the value an organization provide s to its customers and stakeholders.
 Their value system is shared by their employees, resulting in improvements in communication,
collaboration, empowerment, commitment, and trust.
 Together, this approach improves the organization’s public image with a commensurate increase in
customer confidence.

Origin of the Malcolm Baldrige National Quality Award (MBNQA)

 Established in 1987 by the United States Congress.
 MBNQA was named after former US Secretary of Commerce, Malcolm Baldrige due to his personal
interest in quality management and improvement.
 Similar to Japan’s Deming Prize, it sets a national standard for quality excellence.
 Open to companies in three areas: Business, Education, and Health Care.
 It is managed by the American Society for Quality

Malcolm Baldrige National Quality Award

 Every year, this award attracts several dozen applicants in each category.
 A group of qualified examiners compares and contrasts each application with the criteria for up to 300
hours.
 By the completion of on-site visits, a company may have been examined for as many as 1,000 hours.
 This award is considered the United States’ highest award for organizational effectiveness.
 Organizations pursuing the MBNQA focus on their approach to doing business and the deployment of
their strategic resources.
 One key metric for measuring results is the stock price.
 The MBNQA allows companies to make comparisons with other companies. This activity is called
benchmarking.
 Companies also use the award guidelines to determine a baseline
Benchmarking vs. Baselining

Benchmarking – is a continuous process of measuring products, services, and practices against

competitors or industry leaders; this lets an organization know where they stand compared with others
in their industry.

Baselining – is measuring the current level of quality in an organization. Baselines are used to show
where a company is, so that it knows where it should concentrate its improvement efforts.

 Standards to be used as baselines and benchmarks for total quality management are set in seven
areas. The MBNQA present a complete package.
 The criteria seek to provide guidance for improving organizational performance practices, capabilities,
and results.
 The criteria are a working tool for managing performance. They provide a guide for organizational
excellence by encouraging organizational and personal learning resulting in improvement of overall
organizational capabilities.
 Effective organizations sustain their excellence by delivering ever-improving value to customers and
stakeholders

The 2007 Award Criteria List

 Visionary leadership  Managing for innovation
 Customer-driven excellence  Management by fact
 Organizational and personal learning  Social responsibility
 Valuing employees and partners  Focus on results and creating value
 Agility  Systems perspective
 Focus on the future

There are seven categories:

 Leadership
 Strategic planning
 Customer and market-focus
 Measurement, analysis, and knowledge management
 Workforce focus
 Process management
 Result

1.0 Leadership
1.1 Senior leadership
1.2 Governance and Social Responsibility

2.0 Strategic Planning

2.1 Strategy Development
 2.2 Strategy Deployment

3.0 Customer and Market Focus

3.1 Customer and market knowledge
3.2 Customer relationship and satisfaction

4.0 Measurement, Analysis, and Know Management

4.1 Measurement, Analysis, and Improvement of Organizational Performance
4.2 Management of Information, Informational Technology and Knowledge

5.0 Human Resource Focus

5.1 Workforce engagement
5.2 Workforce environment

6.0 Process Management

6.1 Work systems design
6.2 work process management and improvement

7.0 Results
7.1 Product and service outcomes
7.2 customer-focused outcomes
7.3 financial and market outcomes
7.4 workforce-focused outcomes
7.5 process effectiveness outcomes
7.6 leadership outcome

Leadership
 Accounts for 120 of 1,000 points.
 How do your senior leaders lead?
 How do your senior leaders govern and address your social responsibilities?
 This section questions an organization’s values and mission.
 Study how well senior leader s personally promote an environment that fosters, communicates,
requires, and results in legal and ethical behavior.
 Senior leaders are responsible for taking action to ensure accomplishment of the organization’s goals
and objectives toward improved performance.
 Reviews accountability, both fiscal and physical, auditing procedures, legal and ethical behavior, and
support of key communities

Strategic Planning
 This section receives 85 of 1,000 points.
 Has a strong focus on innovation, strategic advantages, and resource needed to accomplish strategic
objectives.
 Focuses on two questions:
 (1) how do senior leaders develop your strategy?
(2) how do senior leaders deploy your strategy?
 Examiners study the organization’s strategy development process, in other words, how organizations
determine their strengths, weaknesses, opportunities, and threats.
 How an organization establishes their strategic objectives in relation to opportunities and threats is
also key.
 This criteria study organization’s action plan deployment and performance

Customer and Market Focus

 Customer and Market Focus receives 85 of 1,000 points.
 The criteria focus on two questions:
(1) how does the organization obtain and use customer and market knowledge?
(2) how does the organization build relationships and grow customer satisfaction?
 Organizations are judged based on their response to questions dealing with how they identify their
customers, how they capture the voice of the customer, and how they use this information to make
business improvements.
 Strong relationships with customers are encouraged.
 Organizations are expected to measure customer satisfaction.

Measurement, Analysis, and Knowledge Management

 This is worth 90 of 1,000 points.
 This section also asks two questions:
(1) how does the organization measure, analyze, and then improve organizational performance?
(2) how does the organization manage its information, information technology, and
organizational knowledge?
 Effective organizations track their progress through the use of performance measures.
 This criteria study how these measures are selected, collected, analyzed, and reviewed.
 This information must align with organizational goals and objectives and be used to improve
performance.
 Examiners check how the organization ensures information accuracy, integrity, reliability, timeliness,
security, and confidentiality.
 How this information is disseminated is also critical.

Workforce Focus
 A total of 85 of 1,000 points are awarded in this section.
 This seeks to find answers to these questions:
(1) how does the organization engage its workforce to achieve organizational and personal
success?
(2) how does the organization build an effective and supportive workforce environment?
 The focus is on workforce enrichment and creating an organizational culture conducive to high
performance.
 Effective communication and clear policies are critical to an effective organization.
 Successful organizations grow talent from within through good leadership and workforce
development practices.
 Recruiting, hiring, placing, training, and retaining a capable workforce is crucial.
 Much of an organization’s ability to attract and retain highly capable people is based on its work
environment.
 The criteria study how an organization ensures and improves workplace health, safety, and security.

Process Management
 Focuses on these questions:
(1) how does the organization design its work systems?
(2) how does the organization manage and improve its key organizational work processes.
 Requires understanding the organization’s work systems, core competencies, and work processes.
 Examiners study work process design, work process management, and work process improvement.
 They are interested in how the organization determines its core competencies and then design
systems to support the m.
 These systems must be regularly studied for improvement possibilities.
 Also covers emergency preparedness wherein an organization must know how to prevent disaster,
manage operations, and recover.
 Process Management accounts for 85 of 1,000 points

Results
 This section ties closely to the preceding six sections in order to ensure that the organization is
correctly measuring and achieving appropriate results.
 The focus is on outcomes, not activities.
 What are the organization’s product and service performance results?
 What are the organization’s financial and marketplace performance results?
 What are the organization’s workforce-focused performance results?
 What are the organization’s process effectiveness results?
 What are the organization’s leadership results?
 Positive results mean sustainable future operations.
 This is by far the most important section, worth 450 of 1,00

What is Benchmarking?
 The act of comparing performance against that of another firm in order to learn how they are
performing in the marketplace.
 Answers the question “How do they do it?”
 Fills the gap between “How do we do it now?” and “What do we need to do differently?

During the benchmarking process:

 A company compares its performance against a set of standards or against the performance of best-
in-field companies
 The company can now determine how and where to improve its own performance.
 Benchmarks serve as reference point.
 Information gathered and measurements taken can be made to make conclusions and any necessary
improvements.
 Typical areas for benchmarking include procedures, operations, processes, quality improvement
efforts, and marketing and operational strategies.

Purpose of Benchmarking
 Determine whether they are able to comply with performance standards set by their customers
 Point out areas where improvements are needed
 Determine whether a company’s quality system are able to fulfill the requirements appropriate to
meet ISO 9000 or quality award standards

Benchmarking answers the following questions:

 Are the company’s processes properly constructed and documented?
 Are systems in place to allocate resources and funding appropriately?
 Which areas have the greatest improvement needs?
 What are our internal and external customer needs?
--The information gathered in the assessment guides objectives, plans, and projects for continuous
improvement.

Types of Benchmarking
 Internal or External Benchmarking
Internal Benchmarking – focuses on activities within the organization
External Benchmarking – can be either competitive or functional
Competitive Benchmarking – an organization focuses on companies within their own market, studying
their business performance and processes

Functional Benchmarking
 performed by companies wanting to study a particular process; choose organizations with similar
processes regardless of their industry

Types of Benchmarking
 Based on levels of complexity

Perception benchmark assessment

 focus on internal issues
--what the people within the company think about themselves, the management, the company, or
the quality improvement process
--reveals current performance levels
–-may later serve as a baseline to compare with future benchmarking experiences
Compliance benchmark assessment
 More in-depth benchmarking experience
--verifies a company’s compliance with stated requirements and standards published standards
--locate where compliance to standards is weak

Effective benchmark assessment

--verifies that a company both complies with the requirements and has effective systems in place to
ensure that the requirements are being fulfilled

Continuous improvement benchmark assessment

--verifies that continuous improvement is an integral and permanent facet of an organization
--puts into place systems that support continual improvement on a day-to-day basis

Benefits of Benchmarking
 Knowledge gained:
--about where a company stands compared to standards set by its customers, by the company
itself, or by national certification or award requirements
--from which a company can develop strategies
 Identify existing assets within the company as well as opportunities for improvement.
 Involve discovering how a company is currently performing

Different Standards for Comparison

 Malcolm Baldrige National Quality Award (MBNQA)

--uses the 7 categories to discover present capabilities and areas for improvement (Leadership,
Strategic Planning, Customer and Market Focus, etc.)

 ISO 9000
--was developed to help companies effectively document the quality systems that they need to
create and implement in order to maintain an effective quality system.
--The standard covers areas such as process management and quality assurance.
--Comparisons can be made between the company's existing systems and those required by the
ISO 9000 standard.

 Deming Prize
--The Deming Prize, including its guidelines and criteria, is overseen by the Deming Prize
Committee of the Union of Japanese Scientists and Engineers.
--The award guidelines are rigorous and can be used to judge whether an organization has
successfully achieved organization-wide quality.

 Supplier Certification Requirements

-- several larger manufacturers have supplier certification requirements (such as ISO 16949) that a
supplier must meet in order to maintain certified or preferred supplier status.
--assesses where companies currently stand compared to the requirements, and to determine where
they need to make improvements
-- Once the improvements are in place, t h e requirements serve as a benchmark against which company
performance will be measured by the customer

 Best-in-Field Organizations
--can be a powerful tool for companies wishing to improve their position in the marketplace.
--by comparing with the market leader, companies can better understand their own assets and
capabilities as well as the areas where they need improvements.
--companies against which to benchmark are those that perform well in the area under study; they may
not necessarily be competitors.
--Ex. A company interested in benchmarking its packaging and shipping system may choose to gather
information from an organization in a unrelated field that is known to possess an excellent system

How is Benchmarking Done

1. Determine the focus.

 Focus may be based on: customer requirements, standards, or on a general continuous
improvement process.
2. Understand your organization.
 companies must gather information concerning the external and internal customers and their
major inputs and outputs.
3. Determine what to measure.
 determine measures of performance
 This is the time to define what is truly critical in order for the company to remain competitive.
 these critical success factors will be supported by standards of procedures, processes, and
behaviors.
 Benchmarking will pinpoint questions to be answered and issues to be resolved, as well as
processes and procedures to be improved.
4. Determine whom or what to benchmark against.
 Careful attention should be paid to selecting appropriate companies.
 consider the activities and operations under investigation, the size of the company, the
number and types of customers, types of transactions and even locations of facilities.
5. Benchmark.
 investigators collect and analyze data pertaining to the measures established in Step 3.
 investigators use performance measures and standards that are critical to the success of the
company to study the company.
 As with problem solving or improvement activity, the 5Ws (Who, What, Where, When, and
Why) and 2Hs (How and How Much) are the questions asked during benchmarking.
6. Improve performance.
 A report summarizing the significant strengths and weaknesses of the area under study is
created.
 the gap between the existing and the desired levels of performance is documented.
 an effective report will focus on patterns of standards violations and missing elements.
 The report does not need to detail each of the observations made. It should not be a list of all
the observed infractions.
 information gathered is used to investigate and solve root causes, reduce process variation,
and establish systems to prevent the occurrence of nonconformities.

MBNQA’s view of Benchmarking

 Organization’s engaging in benchmarking are increasing their awareness of current levels of world-
class performance.
 Benchmarking enables organizations to achieve breakthrough improvements
 Knowledge and insight into the performance of others direct organizational growth.
 Benchmarking shows organizations whether they are making progress.

Are You a Quality Management Person?

Do you compare yourself to others? Do you use that information to make changes? If so, then you
benchmark.
 Do you compare your activities to someone else performing a similar activity?
 Do you improve how you do things based on what you learn by comparing with others?
 Do you sometimes see someone do something and see similarities between their actions and your
activities?
 Do you read about others who are doing the same activities as you are and make comparisons?
 Do you seek to improve upon how you do things?
 Do you ever compare yourself against standards?
 Do you seek out new methods in order to learn and grow?  Do you seek additional training or advice
to help improve?

Why Measure?
 If you don’t drive your business, you will be driven out of business. -- BC Forbes
 What gets measured, gets done.
 If you cannot measure, you cannot manage.
 Dr. Deming’s question on “How do you know?” cannot be answered without measures of
performance.
 Measures are indicators of performance.
 Without measures,
 You won’t know what you don’t know.
 You can’t act on what you don’t know.
 Leaders use measures of performance to ensure alignment among their organization’s mission,
strategy, values and behavior.

 Measures of performance enable effective organizations to define the meaning of success numerically

To remain competitive, effective organizations must manage their:

employees,
processes,
scheduling,
production cycle times,
supplier partnerships,
shipping, and
service contracts
 far better than competition.

Effective performance measurement systems are used to:

understand
align, and
improve performance
at all levels and in all parts of the organization.

What are Good Measures of Performance?

Performance measures should essentially answer the following questions:

 How well is something performing its intended purpose?

 Is the organization able to measure the impact of the changes being made?
 How does the organization know it has allocated its assets correctly?
 Well-constructed measures are aligned with strategic goals and their customers’ priorities.
 Measures that are clearly written and focused.
 Measures should provide information about undesired customer outcomes that must be avoided, or
eliminated, or at least minimized.
 Measures should also define the product, service, or process characteristics valued by the
organization’s customers

2 Categories of Measures of Performance

 Process – exist to get work done; activities that must take place in order to produce a product or
provide a service; monitor operational activities, or how the work is done

 Results – relate to both organizations and their customers; represent what they hope to obtain by
doing business with the organization, whether it be a product or service; focus on strategic intent;
performance measures related to customer results concentrate on the attributes of products and
services

 Measures need to be integrated and utilized throughout the entire organization

Traditional Measures

 Revenues
 Profits
 Growth
 Earnings
 ROI
 Sales Revenue
 Total Expenses
 Number of Customers
 Number of Repeat Buyers
 Payroll as a percent of sales
 Number of customers per employee
 Number of customer complaints
 Complaint resolution rating
 Schedule achievement

Overall Organization Measures

 Employee satisfaction, growth, and development
 Customer survey results
 Number of completed improvement projects
 Cost of poor quality reduction
 Vendor quality rating
 Return on process improvement investment
 Safety, environment, cleanliness, order
 Condition and maintenance of equipment/tools

Balanced Scorecard Method

 Introduced by Robert Kaplan and David Norton
 Goes beyond financial measures and integrates measures from four areas.
 Focus on key business processes and are aligned into a few manageable indicators of performance
 Combines and categorizes process and results measures into four areas: Customer Focus, Internal
Processes, Learning and Growth, and Financial Analysis
 Taken as a whole, this method lets readers see how changes and improvements affect all areas of
their business

Customer Focus
 Emphasizes connecting with the customer
 Determine what the customer is interested in achieving, and using that information to translate the
mission and strategy statements into specific market-and customerbased objectives.
 Asks “How do customers see us?” What must the organization deliver to its customers to achieve high
degrees of satisfaction, retention, acquisition, and eventually, market share?
 What is the organization going to do for its customers that will make them want to buy from the
organization time and time again?

Value Propositions
 Product or service attributes that meet customer needs, wants, and expectations.
 They are indicators that customers are satisfied.
 These measures are in 3 categories:
1. Product or service attributes related to functionality, price, and quality
2. Customer relationship attributes such as delivery, response time, convenient access, responsiveness,
and long-term commitment
3. Image and reputation attributes which are more intangible factors that attract a customer

Internal Processes
 Internal Processes measures study the effectiveness and efficiency of the processes performed by
organization in order to fulfill customer requirements.
 They answer the question:
 What must our organization excel at?

When designing measures:

 effective organizations identify the internal processes that are most critical for achieving customer and
shareholder objectives
 once these key processes have been identified, measures are developed that concentrate on
monitoring the improvement efforts in the areas of quality, response time, and cost.
 This information is used to determine whether:
-- the current processes serve the customer effectively
--the processes are the best, and --they are operating at their best

Learning and Growth Measures

 Monitor the individual and group innovation and learning within an organization.
 Focus on the ability of the organization to enhance the capability of their people, systems, and
organizational processes.
 Answers the question: “How can our organization continue to improve and enhance customer value?”
 Organizations emphasize the development of employee capabilities; development of information
system capabilities; and employee motivation, retention, productivity, and satisfaction
 These measures judge whether the organization’s employees have sufficient information and the right
equipment to do their jobs well.
 They are also interested in whether employees are involved in the decisions affecting them and how
much recognition and support employees receive.
 These can be used to evaluate employee skills and competencies and compare this information with
what employees will need in the future.
 These measures, in addition, can be used to monitor the morale and climate within the organization.

Financial Analysis
 Track an organization’s performance in the financial arena.
 Focused on monitoring financial performance.
 They answer the question, “How do we appear to our stakeholders?”
 Include revenue levels, cost levels, productivity, asset utilization, and investment risk.

Measures are not without their pitfalls

 Measures must be reasonable to be effective
 Measures must focus on what is important to the organization, not simply on what is easy to measure.
 It is critical to determine what needs to be measured and why it needs to be measured before
designing a measure of performance.
 Measures for the measurement’s sake must be avoided. Too many measures or unfocused measures
lead to hesitation in the users.
 Measures need to be specific and quantitative to be effective.
 It is also critical to ensure that the correct things are being measured.
 One key question to ask is: “If only one item, parameter, type or result, and so on, could be measured
in order to assess the performance of the organization at a given level, what would it be?

 Measures must be defined in objective terms.

 The best measures are easy to express as a numerical value.
 Key measures focus on the organization’s desired outcomes, undesired outcomes that the
organization wants to avoid or eliminate, and the desired product, service, or process attributes or
characteristics.
 Valuable measures show progress toward the milestones of strategic goals and objectives
 Measures are useful and effective when those using them can identify how the measures enable them
to make better decisions in relation to their day-to-day activities.
 All measures must be evaluated to determine their usefulness.

How are Measures of Performance Utilized in an Effective Organization?

 Leaders of effective organizations analyze information provided by performance measures to assess
and understand their organization’s overall performance.
 Information enables leaders to make appropriate decisions about the actions they must take to ensure
organizational success.
 Performance measures can be used to align day-today activities with the strategic plan and improve
organizational performance at all levels and in all parts of the organization
 Through the use of performance measures, leaders use the systems and programs (i.e. QMS and Six
Sigma) to select projects ensuring that all decisions are tied to business results.
 Measures used by these systems and programs seek to optimize overall business results by balancing
cost, quality, features, and availability of products and their production.
 The measurement phase of any problem-solving process should require a complete evaluation of key
process variables through the use of measures.
 Measures work together in a complex system to produce good products in a timely manner, at the
best cost, and in a way that meets the needs of the customer and the company
Goals of a Measurement System
 Determine that a gap exists between desired and actual performance
 Determine the root cause of the gap
 Determine the necessary corrective action to eliminate the root cause of the gap
 Determine whet her t he co r re c t ive a ct io n s eliminated the root cause and closed the gap
between the actual and desired performance.

Gap Analysis
--the study of the difference between actual and planned progress.
--allows effective organizations to learn where their efforts should be focused concerning their strategic
plans.
--a critical component of a measurement system because it drives organizational change
 Effective organizations utilize measures to change the way they do business.
 Measures of performance that reinforce the strategic plan enable these organizations to guide the
direction their business is taking.

ISO 9000
 Virtually force the organization to evolve a system for managing quality in the organization.
 Companies have to fulfill the requirements stipulated in the standard for certification.
 Calls for the documentation of quality policy and its wide circulation in the organization.
 Calls for removing the gaps in understanding between the CEO and the junior employees about
the policy and objectives of the organization
 If implemented in true spirit, will help the organizations to be managed efficiently and
effectively.
 Help the organizations to establish a documented system, which will not give rise to different
interpretations by different employees.
 The first step towards TQM
 An important tool in the journey towards TQM

ISO
 Abbreviation for International Organization for Standardization, headquartered in Geneva.
 A world-standards body, in which most countries are members.
 Engaged in formulating standard specifications in a variety of disciplines such as quality
management, information technology, metrology, etc.
 Has published many standards, one of the most acclaimed of which is the ISO 9000 family of
standards.

ISO 9000 FAMILY OF STANDARDS

 ISO 9000:2000 standard defines management system as a “set of interrelated and interacting
elements to establish policy and objectives and to achieve those objectives.”
 Revised first in 1994 and later in the year 2000 
 he following standards constitute the ISO 9000 family of standards:
 ISO 9000: 2000 Quality Management System – Fundamentals and Vocabulary
 ISO 9001: 2000 Quality Management System – Requirements
 ISO 9004: 2000 Gives guidance for implementation of the standard ISO 9001: 2000

 ISO 19011 Guidelines on quality and/or environmental system auditing

 ISO 10012-1:1992 Quality assurance requirements for measuring equipment – Part
I:Metrological confirmation system for measuring equipment
 ISO 10012-2:1997 Quality assurance for measuring equipment-Part 2: Guidelines for control of
measurement processes
 ISO 10013: 1995 Guidelines for developing quality manual

BENEFITS OF ISO 9000 CERTIFICATION

  Provides a know-how for establishing a quality management system that has been found to
improve the bottom-line of businesses
 Certification of ISO 9000 has become the minimum requirement of quality for any tender.
 a status symbol for the organizations
 I t improves employee morale, because it improves system in the organization
 Customers get the benefit directly because they improve products and services.
 Suppliers get to know the exact customer requirements on account of ISO 9000 certification
 The organization benefits because every contract has to be reviewed before acceptance. This
reduces the waste.
 The organization becomes healthy and prosperous in the long run.
 Employees get trained in the latest methodology for managing the organization

ISO 9001 STANDARD

 ISO 9001:2000 is a contractual standard. This standard could be used for contracts such as:
 Certification of an organization by a certifying body, also called ISO 9000 Registrar
 Agreement between the supplier and the customer.

The ISO 9001 standard gives a number of guiding principles. It suggests that adoption of a quality
management system as per ISO 9001 should be a strategic decision for an organization

 The standard provides generic guidelines for establishing a quality management system in an
organization.
 It is the responsibility of the organization to design and implement QMS for the organization,
taking into consideration specific needs, objectives, product range, process employed and size
and structure of the organization.
 ISO 9001 is complementary to the requirements of products. They do not in any way reduce the
importance of the product specifications.
 The standard can be used to assess the organization’s ability to meet the customer’s, regulatory
and the organization’s own requirements.
 The standard can be used by the organization for self-improvement. Certification bodies and its
customers can also use it to assess the capability of the organization.
 The complementary standard ISO 9004 cannot be used for contract related matters. It is only for
self-improvement
 The 2000 revision has brought in one to one correspondence between the elements of ISO 9001
and ISO 9004.
 ISO 9001 is a standard against which an organization is certified.

REQUIREMENTS FOR THE QMS AS PER ISO 9001 STANDARDS

1. Process Approach.
 ISO specifically suggests adoption of a process approach for developing, implementing, and improving
the effectiveness of the quality management system.
 Suggests that there should be a chain of processes in every organization
 Indicates “application of a system of processes within an organization together with the identification
and interactions of these processes and their management

ADVANTAGES OF PROCESS APPROACH 

 Understanding and meeting the requirements
 The need to consider processes in terms of added value.
 Obtaining results of process performance and effectiveness, and  Continual improvement of
processes based on objective measurement

2. PDCA
 Introduction to the standard also suggests adoption of PDCA. PDCA can be applied to all the processes

REQUIREMENTS OF ISO 9001: 2000

 ISO 9001: 2000 “specifies quality management system requirements for organizations to: -
demonstrate ability to consistently provide product that meets customer and applicable
regulatory requirements - enhance customer satisfaction”
 The requirements of the standard are applicable to all the organizations regardless of type, size,
and product provided.
 The standard also defines supply chain as given: Supplier Organization Customer
 The suppliers are the subcontractors or vendors

QUALITY MANAGEMENT SYSTEM

The QMS is the foundation for the organization. The ISO standard has grouped the various requirements
as given below:
 QMS – Clause 4
 Management Responsibility – Clause 5
 Resource Management – Clause 6
 Product realization – Clause 7
 Measurement, analysis, and improvement – Clause 8 The QMS is the foundation and the other 4
clauses provide the structure for building and improving the quality in the organization, as well as
delivering products and services and delighting the customers.
CLAUSE 4 – QUALITY MANAGEMENT SYSTEM
General Requirements:
 The clause brings out the steps in establishing a quality management system meeting the
standards succintly. The sequence of events are:
1. establishing
2. documenting
3. implementing
4. maintaining
5. continuously improving its effectiveness
 o Implementation means practicing the quality management system as documented.
o Maintenance indicates consistently adhering to the QMS and updating the documented quality
management system. Such systems should be improved periodically.
o The organization has to carry out the following in particular:
- identifying the processes needed for the QMS for the entire organization
- making a process flow chart indicating the sequence of processes and their interactions
- determining methods to ensure that the system established is effective.
Once goals are met, the process should be further improved. The processes referred include the
ff.:
 Process for management activities
 Provision of resources – both human & material
 Product realization
 Measurement

SUMMARY OF REQUIREMENTS FOR QMS

 Develop a QMS for the organization

o Identify processes for the organization
o Describe the QMS processes
 Implement the QMS
 Improve the QMS
 Monitor and improve process performance