A STUDY ON EVOLUTION AND SECTORAL ANALYSIS OF ISO 9001 QMS CERTIFICATIONS

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1 A STUDY ON EVOLUTION AND SECTORAL ANALYSIS OF ISO 9001 QMS CERTIFICATIONS 1 Dr S R Bharmanaikar, 2 Prof Suryakumar N Khanai 1 Professor, Department of PG Studies, Visvesvaraya Technological University, Belagavi (India) 2 Asst Professor, Department of MBA, KLS, Gogte Institute of Technology, Belagavi (India) ABSTRACT Modern business is more complex as the needs and demands of the customer are changing and are diversified in many ways. This dynamic marketing environment requires more creative ability and quality convincing capability for an entrepreneur to succeed in the business. Producing quality products is a unique competitive advantage for any business. Quality is associated with improving processes, products and services and reducing costs. ISO (International Organization for Standardization) certification is one such tool of Total Quality Management (TQM), used by various corporate to enhance the firm s competitiveness. ISO 9001:2008 sets out the criteria for a quality management system and can be used by any organization, large or small, regardless of its field of activity. The present study is undertaken to examine recent evolution of ISO 9001 QMS certified companies across the globe and to estimate the demand for ISO certifications in key sectors. The world-wide trend analysis of top five industrial sectors for ISO 9001 QMS Certifications is made using available published ISO Survey data. Further the requisite information is also collected by having a detailed discussion with executives associated with ISO 9000 standards. Key Words: QMS, ISO 9001 I INTRODUCTION: Quality is associated with improving processes, products and services and reducing costs. Processes can have a significant impact on the performance of a business, and process improvement can improve a firm's competitiveness. ISO (International Organization for Standardization) certification is one such tool of Total Quality Management (TQM), used by various corporate to enhance the firm s competitiveness. ISO International Standards ensure that products and services are safe, reliable and of good quality. For business, they are strategic tools that reduce costs by minimizing waste and errors and increasing productivity. They help companies to access new markets, and facilitate free and fair global trade. A quality management system (QMS) is a set of policies, processes and procedures required for planning and execution of core business activities of an organization. It seeks to: Recognize the external quality related requirements specified in Licenses to Trade, guidelines, specified customer requirements, and the chosen management system standards. It also ensures that all requirements have been documented within management 128 P a g e

2 system in the appropriate location in terms of defined specific system requirements. QMS confirm that employees receive applicable training in the quality system requirements. The system further outline performance processes, where applicable, to the quality system requirements and produce records or evidence that system requirements have been met. At last, QMS measure, monitor, report the extent of compliance with these performance procedures and continually monitor the changes to the requirements. ISO 9001:2008 is an example of a QMS which sets out the criteria for a quality management system and can be used by any organization, large or small, regardless of its field of activity. ISO 9001:2008 assists the customers get consistent, good quality products and services, which in turn brings many benefits to the organization. II OBJECTIVES: 1. To study the world-wide evolution of ISO 9001 QMS certified organizations 2. To study the world wide annual Growth of ISO 9001 QMS certified organizations 3. To study the trend analysis of ISO certified industries in priority sector. 4. To study the reasons behind the growth of ISO 9001 QMS certified organizations. III METHODOLOGY: The study is based on descriptive research which explains the trend of ISO 9001 QMS certifications of selected Industrial Sectors. The study is based on secondary data. Relevant published data from ISO survey reports is used from 2005 to Personal interaction with the experts from Quality Management Systems working in various organizations also helped to examine the reasons behind the growth of ISO Certified Companies. Top five industrial sectors considered for the study are Basic Metal & Fabricated Metal Products, Electrical and Optical Equipment, Construction, Wholesale & Retail Trade, Repairs of Motor Vehicles and Machinery and Equipment Industries. The trend analysis is made with the help of regression equation Y = a + bx where; x is the independent variable and y is the dependent variable. The value of a, b are calculated using the formula; b = x y - n x y / x² - n x ²; a = y - b x The trend component of the time series is extracted to predict the future demand for the ISO 9001 QMS certifications. IV ANALYSIS AND INTERPRETATION OF DATA 4.1 World-wide Evolution of ISO 9001 QMS certified organizations: Table 1: Analysis of world-wide Evolution of ISO 9001 QMS certified organizations No of ISO certified Companies in 2014 No of ISO certified Companies in 2013 Evolution Evolution% Total % Africa % 129 P a g e

3 Central and South America % North America % Europe % East Asia and Pacific Central and South Asia % % Middle East % ISO 9001 QMS Certifications is one of the International Organization for Standardization s (ISO) flagship standard demonstrates moderate growth with a mere 1% increase in the number of certificates issued worldwide in This is basically due to some of the western markets like Central and South America (-4.2%) and Europe (0.2%) took off in the early 1990s are gradually reaching maturity. Middle East and African countries are showing inclusive growth rate of 5.5% and 5% respectively. In Middle East Israel, UAE, and Saudi Arabia are at the top, whereas in Africa, South Africa, Egypt and Morocco are at the top for the total number of certificates issued till North America is showing a decent growth of 4.0%. Overall in Middle East, Africa and North America the figures are showing a healthy sign of growth and in East Asia and Pacific the figures are showing a moderate growth of ISO 9001 QMS certified organizations. 4.2 Worldwide Annual Growth of ISO 9001 QMS certified organizations: Table 2: Analysis of world-wide annual growth of ISO 9001 QMS certified organizations TOTAL 17% 16% 6% 3% 9% 5% -4% 2% 3% 1% Africa 39% 10% 0% 15% -1% -9.1% 6.5% 18.5% 1.5% 5.0% Central and South America 32% 31% 34% -5% -5% 38.6% 4.9% -0.4% 2.0% -4.2% North America 19% 3% -23% 1% -12% -12.7% 2.5% 2.8% 25.9% 4.0% Europe 18% 10% 4% 6% 10% 5.9% -13.3% 2.3% 2.7% 0.2% East Asia & Pacific Central & South Asia 10% 20% 11% 4% 11% 7.3% 7.6% 0.9% -1.8% 1.9% 102% 61% 12% -12% 1% -15.4% -10.7% -3.6% 38.5% 1.2% Middle East 7% 40% 10% -3% 20% -23.4% -9.4% 11.6% 9.2% 5.5% The annual growth of ISO 9001QMS Standards is rather fluctuating since According to the ISO Survey report, the fluctuation in number of certificates is largely due to the variability in response from individual 130 P a g e

4 certification bodies. The worldwide growth rate of ISO 9001 QMS standards are varying in different parts of the world. This variation in the growth rate of ISO 9001 QMS standards is seen because of the introduction of ISO 9001 Standards varies in the different parts of the country. Some of the developed countries had awareness about the quality issues related to a given product much before than that of the developing and under developed countries. 4.3 Trend Analysis of Top Five industrial Sectors for ISO 9001 QMS certified organizations: Table 3: Top five industrial sectors for ISO 9001 certificates in 2014 Sl No Name of the Sector No of ISO Certified Companies 1 Basic Metal & Fabricated Metal Products Electrical and Optical Equipment Construction Wholesale & Retail Trade, Repairs of Motor Vehicles Machinery and Equipment The 2014 survey report once again demonstrates comprehensive growth for same industrial sectors as compared to 2013 in terms of number of ISO 9001 QMS certifications. One of the major reasons behind this trend could be the tremendous growth of all these sectors in all the economies across the world. Basic Metal & Fabricated Metal Products stands first with certifications across the globe. Electrical and Optical Equipment sectors stands second and construction sector stands third with and certifications respectively. Overall these five sectors together contribute 50% and remaining 34 sectors contribute 50% for the total number of ISO 9001 QMS certifications. 4.4 Trend Analysis of Basic Metal & Fabricated Metal Products Sector Table 4: Total number of ISO 9001 QMS Certified Organizations from 2005 to 2014 ISO Certified Companies P a g e

5 Table 5: Forcasted number of ISO 9001 QMS Certified Organizations from 2015 to 2024 Year Forecasted Values Figure 1: ISO Certified Organizations and Trend Line of Basic Metal & Fabricated Metal Products Sector Basic Metal & Fabricated Metal Products Sector has ISO 9001 QMS certifications as on Except 2008, the sector could see a consistent growth in the number of ISO 9001 QMS Certified organizations. The Forecast of ISO 9001 QMS certifications using regression analysis method reveals that, by 2024 the sector could achieve 52.5% growth with ISO 9001 QMS certifications. 4.5 Trend Analysis of Electrical and Optical Equipment Sector Table 6: Total number of ISO 9001 QMS Certified Organizations from 2005 to 2014 ISO Certified Co P a g e

6 Table 7: Forecasted No. of ISO 9001 QMS Certified Organizations from 2015 to 2024 Year Forecas ted Values Figure 2: ISO Certified Organizations and Trend Line of Electrical and Optical Equipment Sector Electrical and Optical Equipment Sector has ISO 9001 QMS certifications as on Since 2005, the sector could see fluctuations in the number of ISO 9001 QMS certifications every year demonstrates the lowest number with certifications. The Forecast of ISO 9001 QMS certifications using regression analysis method reveals that, by 2024 the sector could achieve 49.78% growth with ISO 9001 QMS certifications. 4.6 Trend Analysis of Construction Sector Table 8: Total number of ISO 9001 QMS Certified Organizations from 2005 to 2014 ISO Certified Companies P a g e

7 Table 9: Forecasted No. of ISO 9001 QMS Certified Organizations from 2015 to 2024 Year Forecasted Values Figure 3: ISO Certified Organizations and Trend Line of Construction Sector Construction Sector has ISO 9001 QMS certifications as on Alike electrical and Optical Equipment Sector, Construction sector also has inconsistent growth in the number of ISO 9001 QMS certified organizations since 2005, The Forecast of ISO 9001 QMS certifications using regression analysis method also shows negative growth from 2015 to 2024 and reveals that, by 2024 the sector could demonstrate 15.31% growth with ISO 9001 QMS certifications. 4.7 Trend Analysis of Wholesale & Retail Trade, Repairs of Motor Vehicles Table 10: Total number of ISO 9001 QMS Certified Organizations from 2005 to 2014 ISO Certified Companies P a g e

8 Table 11: Forecasted No. of ISO 9001 QMS Certified Organizations from 2015 to 2024 Year Forecasted Value Figure 4: ISO Certified Organizations and Trend Line of Wholesale & Retail Trade, Repairs of Motor Vehicles Sector Wholesale & Retail Trade, Repairs of Motor Vehicles Sector has ISO 9001 QMS certifications as on The growth of Wholesale & Retail Trade, Repairs of Motor Vehicles Sector reveals the steady growth in the number of ISO 9001 QMS Certifications since 2005, The Forecast of ISO 9001 QMS certifications using regression analysis method also shows consistent growth from 2015 to 2024 and reveals that, by 2024 the sector could demonstrate 47.27% growth with ISO 9001 QMS certifications. 4.8 Trend Analysis of Machinery and Equipment Sector Table 12: Total number of ISO 9001 QMS Certified Organizations from 2005 to 2014 ISO Certified Companies P a g e

9 Table 13: Forecasted No. of ISO 9001 QMS Certified Organizations from 2015 to 2024 Year Forecasted Values Figure 5: ISO Certified Organizations and Trend Line of Machinery and Equipment Sector Machinery and Equipment Sector has ISO 9001 QMS certifications as on The ISO survey data reveals that, there is an inconsistent growth in the number of ISO 9001QMS certifications with little fluctuations from 2005 to However the forecast of ISO 9001 QMS certifications using regression analysis method shows that there would be a consistent growth in the number of ISO 9001 QMS certifications, and by 2024 the sector could demonstrate 42.46% growth with ISO 9001 QMS certifications. V CONCLUSIONS Based on the above analysis, ISO 9001 QMS Certifications, have significant growth potential in the near future. It is basically because of considerable growth in few related sectors across the globe. Since ISO standards are also edited at regular intervals to deal with complex challenges in modern business environment, the growth for ISO standards is increasing and inevitable. 136 P a g e

10 REFERENCES 1. F. Franceschini, M. Galetto and P. Ceccon (2006), A worldwide analysis of ISO 9000 Standard Diffusion Considerations and Future Development, Benchmarking: An International Journal Vol. 13 No. 4, Total Quality Management, K Sridhar Bhat, Himalaya Publishing House 3. ISO 9001:2015 Revised Edition Manual 4. ISO 9001, Quality Management Systems Requirements Fourth edition 5. The ISO 9001 Survey Reports from 2005 to P a g e