Canadian survey points to continued growth of ISO 9000, ISO and QS-9000

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1 Canadian survey points to continued growth of ISO 9000, ISO and QS-9000 In brief Following is a detailed review of Management System Standards: The Story So Far, a study of Canada s experience of the ISO 9000, ISO and QS-9000 management system standards based on over telephone interviews with Canadian private-sector businesses, carried out on behalf of the Standards Council of Canada (SCC). Despite some observers suggesting that implementing and registering to the standards is too time-consuming and costly, and that they provide no real benefit to users, their clients or the public, the survey analysts conclude that ISO 9000, ISO and QS-9000 are widely recognized, accepted and respected, (and) they provide genuine benefits to the organizations that use them. The survey reveals that small companies, making up the majority of non-certified respondents, had concerns not shared by the much more positive large organizations that formed the greater proportion of certified respondents. The survey makes interesting comparisons between the three standards, with ISO 9000 being perceived of significantly greater value than QS-9000 as a tool for accessing the European market, while both are seen to help organizations compete globally. And QS certified organizations were found to be almost three times as likely to be planning to certify to ISO than non-qs-9000 entities, mainly because of an announcement by Ford and General Motors that ISO certification or implementation would become a supplier requirement. Pointing to the survey results and the increases in ISO 9000 and ISO certifications in Canada, the document predicts continued growth in the use of the standards in the country. Described as a landmark study, the work is intended to provide an objective, statistically representative review of all aspects of Canadian firms relationship with ISO 9000, ISO and QS-9000, based on the Canadian standards community s need to know how well founded and pervasive these concerns were, and to understand Canada s experience to date with the standards. Methodology Published in October 2000, the study was the result of over telephone interviews with Canadian private-sector businesses conducted between November 1998 and January 1999 by Performance Network Management Inc., and funded by Industry Canada. It included Canadian firms certified to an ISO 9000 standard, 34 to ISO 14000, 186 to QS-9000, and uncertified businesses. Certified organizations were described as having a highly positive attitude toward ISO While ISO 9000, ISO and QS-9000 have been widely accepted around the world, they ve also come in for their share of criticism, states the executive summary of, Management System Standards: The Story So Far, a study of Canada s experience with the three standards, commissioned by the Standards Council of Canada (SCC) 1). Some observers have suggested that implementing and registering to the standards is too time consuming and costly; that they provide no real benefit to users, their clients or the public; or that they are suitable for large corporations, but not for small or medium enterprises. However, the survey results, reviewed here in some detail by The News, presented a much more positive picture. The document concluded that the ISO 9000, ISO and QS-9000 management system standards are widely recognized, accepted and respected, that they provide genuine benefits to the organizations that use them, and that their implementation and registration is, despite the costs involved, generally a positive experience for all concerned. The 68-page spiral bound document is arranged in five key sections in addition to the Executive Summary, Introduction, Methodology and Conclusion, three of which review each standard and the corresponding survey results under common headings: ; Knowledge, information and experience; Motivation; Processes; ;. The remaining two sections provide a compara- 1) Management System Standards: The Story So Far, ISBN , 68 pages, price CAD 49,95, published October 2000, is available from the Standards Council of Canada (SCC), 270 Albert Street, Suite 200, Ottawa, Ontario KIP 6N7, Canada. Tel Fax info@scc.ca Web

2 tive analysis of ISO 9000-certified versus ISO certified, and of ISO 9000-certified versus QS 9000-certified respondents. Survey questions According to the document, the study was designed to examine the experience of both certified and non-certified businesses in sectors likely to have an interest in the standards. These ranged widely across manufacturing, wholesale, retail, construction, transportation and warehousing, utilities, and services including professional, scientific and technical. For the automotive industry-specific quality requirement QS-9000, the overwhelming majority of respondents represented the metal products manufacturing sector. small firms in the non-manufacturing or service sector with one Canadian location and little or no export business. Knowledge, information and experience Certified participants reported little difficulty finding information on the standards from a variety of sources including literature and promotional materials, workshops and conferences, registrars, consultants, customers and the Internet. Most had used a formal quality management system (QMS) prior to implementing ISO Only about a third of the noncertified respondents described themselves as familiar with the standards, although about twothirds had no difficulty finding the information they needed. Nearly two-thirds were using some type of generally informal in-house QMS. Motivation How well does the registration process serve the needs of the organizations that undertake it? What effects do businesses experience as a result of their use of, or certification to, the standards? What attitudes do certified and non-certified businesses hold towards the standards? Certified firms were most likely to have implemented ISO 9000 as a result of factors relating to customers, or for internal reasons. The study stated that it was possible to apply ISO 9000 standards without certifying to them, however, it found that about threequarters of the non-certified firms did not intend to use ISO 9000 during the next two years. Over half did not feel that ISO 9000 was necessary for their organization while many of those intending to certify in future identified cost and lack of time as the major barriers. Management System Standards: The Story So Far presents the results of a study of Canada s experience with ISO 9000, ISO and QS The telephone interviews sought answers to a number of questions, including: Which types of businesses are using and certifying to the standards, and which are not? How informed are businesses about the standards? Where do they obtain information? Are they satisfied with the information they obtain from those sources? What factors motivate businesses to use or certify to the standards, or not to do so? Key findings Key findings, given in substantial detail throughout the book, are summarized below under the common headings, together with a selection from the numerous bar charts illustrating percentage agreement per question. ISO 9000 The organizations questioned that were certified to an ISO 9000 quality management system standard tended to be medium-sized firms engaged mainly in manufacturing, with locations in and outside Canada, and exporting to Europe, USA and elsewhere. Non-certified organizations (1 328 sampled) tended to be Processes Certified organizations cited overall attitude and expertise among key reasons for choosing an auditor or registrar, and most expressed satisfaction with the certification process. Most certified organizations reported that using or certifying to the standards had resulted in internal benefits chiefly, greater quality awareness, self discipline, improved management practice and better quality products or services and externally in improved relationships with customers, and advantages over competition. Most (99,5 %) intended to maintain their certification. Figure 10 (as numbered in the Canadian study), lists all benefits mentioned in terms of importance. 17

3 referenced the ISO handbook, ISO 9000 for Small Businesses (ISBN ), designed to make life easier for small organizations implementing ISO ISO Figure 10: ISO 9000 certified organizations benefits observed due to use or certification Figure 11: toward ISO 9000 The 34 ISO certified organizations sampled in Management System Standards: The Story So Far were mostly large (average over employees) export-oriented firms in the manufacturing sector with several locations in and outside Canada. Some 578 noncertified organizations were interviewed, generally small firms with more than one location, mostly in Canada, mainly in manufacturing, sales or service with about half exporting their goods and services. However, it was pointed out that ISO had only been in print for two years at the time of the survey and that since the stand- Certified organizations were described as having a highly positive attitude toward ISO 9000, and a significant majority were reported as feeling that the standard made organizations better global competitors. Figure 11 indicates the key perceived benefits, disadvantages and other attitudes expressed by certified and noncertified respondents. 18 Non-certified firms familiar with the standard had a moderately positive attitude toward ISO 9000, most agreed that it could help organizations compete globally, and two-thirds would encourage other organizations to use ISO 9000 even if they did not seek certification. The survey indicated that small firms made up the majority of the non-certified sample, and concluded that for such organizations, the cost of implementing or certifying to ISO 9000 was seen as overly time consuming or expensive. However, it

4 ards were at an early point in their evolution, future surveys may show significantly different results. In view of the small sample size, sample reliability was estimated at ± 5,5 %, compared with a statistical accuracy of ± 2.8 % for the ISO 9000-certified results. Knowledge, information and experience Registrars were the most frequently cited source of information among certified organizations, although over one-third indicated difficulties in finding information about ISO 14000, and in interpreting or understanding the information. The relative newness of ISO was considered to be an important factor in the results. Certified organizations implemented ISO primarily...to improve environmental performance, corporate policy, but also to enhance competitive advantage The findings revealed that most of the certified firms were also ISO 9000-certified, but that only about a third had used a formal environmental management system (EMS) before implementing ISO About two-thirds of the non-certified organizations were using some type of informal, internal EMS. Motivation According to the survey, certified organizations implemented ISO primarily for internal reasons to improve environmental performance, corporate policy, but also to enhance competitive advantage. Although the analysis suggested that having an EMS in place may help to safeguard a company against liability claims in the event of an environmental mishap such legal issues did not appear to have been a major consideration for certified participants. The decision to certify About two-thirds of the non-certified respondents familiar with ISO were stated to be using other standards, or felt that ISO was not applicable to them. Those using the standard did so for essentially the same reasons as certified firms, but once again, those planning to certify in future noted cost and a lack of time and human resources as potential barriers. Processes Previous experience (generally with ISO 9000) was the most prominent reason given for choosing a registrar, and certified organizations were described as satisfied with most aspects of the certification process. The study revealed that nearly all the certified organizations had experienced improved environmental awareness and performance as a result of implementing ISO 14000, and all intended to maintain their certification. As shown in Figure 21 from the study document, over 90 % of respondents also reported a better environmental image as perceived by their customers, and 75 % claimed a competitive advantage from certification. Certified organizations had a very positive attitude toward ISO 14000, the document reported, and strongly agreed with statements about its benefits. The notion that organizations do not benefit from adopting ISO was unanimously rejected. It revealed that non-certified firms familiar with the standard had a generally positive attitude toward ISO and they agreed that ISO enabled organizations to compete better globally. However, there were significantly different attitudes expressed by certified and non-certified organizations towards the cost and necessity of ISO certification, but it was concluded that the somewhat less positive attitude of the smaller organizations was grounded in reality, since they formed the majority of the non-certified sample. Figure 21: Certified organizations benefits observed due to ISO use or certification Organizations familiar with both ISO 9000 and ISO believed both series to be highly compatible Comparative analysis: ISO 9000-certified versus ISO certified ISO 9000-certified organizations sampled were generally mediumsized ( employees) while the majority certified to ISO were very large firms (over 500 employees), the SCC document confirmed. Metal and wood product manufacturing organizations made up the majority of both groups and ISO certified organizations were the more likely to export to the United States, Europe and other foreign markets. 19

5 Motivation While factors influencing an organization to adopt either standard were quite similar, external factors such as the actions of competitors, access to export markets and customer demand were more influential in the case of ISO Figure 29: Reported differences in benefits between ISO 9000 and ISO Both groups of organizations saw significant benefits from certification, although reduction in the number of complaints was almost three times as likely to be Most certified organizations reported that using or certifying to (ISO 9000) had resulted in...greater qualityawareness... improved management practice...better quality products or services and improved relationships with customers 20 cited as an ISO 9000 benefit. However, in view of its greater influence over goods and services, this was considered a not unexpected result. Similarly, ISO trailed behind ISO 9000 in its influence over market share, customer demand and access to export markets. Figure 29 from the study illustrates the key differences well. According to the document, both groups had very positive attitudes toward the standards, with significant majorities believing they enable organizations to compete better internationally, and that all organizations would benefit by applying them. Compatibility The findings revealed that organizations familiar with both ISO 9000 and ISO believed both to be highly compatible, although quality management systems were most likely to be integrated with an environmental management system. They were also the most challenging to integrate. Despite some problems, organizations familiar with both ISO 9000 and ISO believed both series to be highly compatible. QS-9000 The survey sample of 186 organizations certified to the automotive industry-specific quality management standard QS-9000 consisted generally of large firms (average 750 employees) with several locations in and outside Canada, with most belonging to the metal products manufacturing sector. Almost all exported to the United States, which was considered not surprising given the cross-border nature of the North American automotive industry. The majority also exported to Europe and other regions, although these sales were described as much less significant to their bottom lines. Knowledge, information and experience Respondents found information on QS-9000 widely available and most reported having no difficulty finding the information they sought. The majority had used one or more types of QMS before adopting the automotive industry specific QS Motivation QS-9000 was developed by the North American automotive industry as a means of ensuring consistent quality from its suppliers, the survey document stated. Therefore it was considered not surprising that customer demand was cited as the most important reason for using or certifying to the standards. Corporate policy, improved product and management quality and competitive advantage were also major factors.

6 Processes Survey findings confirmed that certified organizations were satisfied with every aspect of the certification process, particularly with the availability of materials in their language of choice and their relationship with the registrar and auditor. QS-9000-certified organizations reported greater quality awareness, organizational self-discipline and improved management practice among employees as key benefits, and virtually all intended to maintain their certification, despite some concerns with administrative burden. Nearly 90 % observed higher perceived quality by their customers. Figure 40 from the Canadian survey document lists percentage agreement with each stated benefit. The SCC study reported that most QS 9000-certified respondent organizations as displaying a generally positive attitude towards the standard, and about three-quarters would encourage other Canadian organizations to use it. The span of attitudes can be seen from Figure 41 of the survey document. Comparative analysis: ISO 9000-certified versus QS-9000-certified Sampled ISO 9000-certified organizations were generally smaller than those certified to QS-9000, the survey document confirmed, with exports being particularly important to the automotive-specific QS-9000 certified companies. Knowledge, information and experience While the information sources used by ISO 9000 and QS certified organizations were similar, the latter were significantly more likely to have had a QMS in place before implementing the current system. Motivation Although motivating factors were fairly similar between the two sets of organizations, it was reported that customers and competitors consistently represented a stronger influence in the case of QS Nearly all the certified organizations had experienced improved environmental awareness and performance as a result of implementing ISO Figure 40: Benefits observed due to use of or certification to QS-9000 According to the survey document, almost all respondents in both groups noted internal benefits of greater quality awareness, greater self-discipline, improved management practice, and increased quality, and higher perceived quality by customers and enhanced competitive advantage as key external benefits. The survey findings revealed a positive attitude toward both series of standards by respondents, with significant majorities believing that ISO 9000 and QS-9000 help organizations to compete globally, and that they are worth considering for any organization. ISO 9000 was perceived to be of significantly greater value as a tool for accessing the European market presumably because (QS-9000) is a North American standard that is not necessarily recognized by European automakers. The report commented 21

7 Conclusions SCC and Performance Network Management analysts concluded from the Canadian survey that ISO 9000, ISO and QS-9000 appear to be effective tools that can make a real contribution to improving a company s practices, performance and bottom line. Respondents, whether certified or uncertified users of one or more standards, were very nearly unanimous in declaring that the standards had led to genuine benefits. Users were able to maintain or expand their customer base, saw improvements in employee awareness of quality and the environment, in management practices, and in the quality of their products and services. It found that almost all certified organizations surveyed intended to maintain their certification status. 22 Figure 49: toward ISO 9000 and QS-9000 Awareness of ISO among ISO 9000 and QS certified respondents that this might change with the inception of ISO/TS which is designed to harmonize QS-9000 with similar European requirements. Figure 49, reproduced from Management System Standards: The Story So Far shows differences in percentage of ISO 9000 and QS-9000-certified respondents agreeing with some 20 attitude statements: Both ISO 9000 and QS-9000 registered organizations tended to be aware of ISO 14000, with a slightly higher level of awareness among the QS-9000 community. Interestingly, the survey revealed that QS-9000 organizations were almost three times as likely to be planning to certify to ISO the probable reason being the announcement by Ford and General Motors that ISO certification or use would become a supplier requirement. The report added that DaimlerChrysler were considering similar action. In addition, the survey illustrated that even where use of the standards is virtually mandatory, as is the case for QS-9000 in the automotive industry, firms are almost as strongly motivated by the internal benefits that can be achieved through registration as they are by the demands of their customers. And it suggested that Canadian firms not using the standards recognize their potential benefits, and were willing to recommend their use. In terms of certification processes and infrastructure, certified organizations were described as expressing a high degree of satisfaction with nearly all aspects of the process. Survey analysts claimed that this indicated the existence of a well-established implementation and certification infrastructure in Canada. And they found that general information on all three sets of standards appeared to be widely available and easy to obtain. However, Canadian businesses endorsement of the standards is neither universal nor unqualified, stated the conclusion to the survey document. Many nonregistered organizations seemed

8 to believe that these standards don t apply to me, citing cost, time and bureaucracy as potential barriers to certification. It was the smaller firms who expressed the most concern about these impacts, the report suggested. At the same time, the section mentioned other reports describing the success of ISO 9000 certification among small service providers such as dentists and architects, and referenced, Little guys thinking BIG with ISO 9000, Consensus: Canada s Newsmagazine of Standardization, June/July/August 1997, vol. 24, no. 4, p ISSN ISO 9000, ISO and QS-9000 appear to be effective tools that can make a real contribution to improving a company s practices, performance and bottom line Despite these misgivings, the survey paints a generally positive picture of Canada s experience with the standards. It shows that they are widely recognized, accepted and respected, that they provide genuine benefits to the organizations that use them, and that their implementation and registration is, despite the costs involved, generally a positive experience for all concerned, the survey document concluded. It pointed to ISO s annual survey of certifications that showed a 39 % increase in Canadian ISO 9000 registrations between December 1998 and December 1999, and a 165 % increase in ISO registrations over the same period. Based on these statistics, and on the survey results, it appears that the use of the standards in Canada will continue to grow. Q Insuring the environment Gerling recognized for best in class eco-management by Aiko Bode and Joachim Ganse Aiko Bode (right) is Project Manager of Gerling Sustainable Development Project GmbH. Joachim Ganse (far right) is Head of Corporate Environmental Affairs and Managing Director of Gerling Sustainable Development Project GmbH In brief Thinking beyond the present and assessing future risks and opportunities is an every day job for an insurer, according to Aiko Bode and Joachim Ganse of the Gerling Group of Insurance Companies, and co-authors of this article. But the corporate culture at Gerling goes beyond insuring customers, it also wholeheartedly embraces protection of the environment from damage or loss. Gerling claims to be the first financial services provider to be certified to ISO and registered under EMAS, the European Union s Eco-Management and Audit Scheme. This is the culmination of over 30 years work by a risk management team focused on reducing environmental losses and managing the adverse effects of potentially hazardous economic activities. Employees have enthusiastically welcomed measures that contribute to a healthier working environment. For example, only organic food is served in the canteen at the Cologne headquarters, and a bike pool and subsidised public transport tickets have led to reduced car use and fewer parking lots. The Gerling Group s commitment to the environmental cause on a global scale is demonstrated by its being a co-founder of the United Nations Environment Programme Insurance Industry Initiative, and its membership of the World Business Council for Sustainable Development and the UN Global Compact initiative set up by Kofi Annan. Last year, Gerling was eco-rated as best in class among 27 European insurance companies, and CEO Dr. Juergen Zech was earlier awarded the title of eco-manager of the year by the World Wildlife Fund and the German business magazine Capital. Thinking beyond the present and assessing the future with all its risks and opportunities is an everyday job for an insurer like the Gerling Group of Insurance Companies 1) a leading German insurance organization with employees in over 30 countries worldwide. We insure entrepreneurs and companies and help 1) Gerling Group of Insurance Companies, Kaiser-Wilhelm-Ring 7-9, D Cologne, Germany. Tel Fax joachim.ganse@gerling.de aiko.bode@gerling.de Web 23