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by Dan Nelson

Smart companies investing time and effort into upgrading their quality management systems to ISO 9001:2000 will also switch their standards-based systems to process-based ones while they’re at it. Perhaps the most valuable benefit of a process-based QMS is its clear demonstration of how real processes affect quality. With such a system, management can understand—and more important, support—procedures that make sense, and they can effectively drive the QMS as a “real” management system. In addition, a process-based QMS is more easily measured, audited and improved. It represents a truly useful management tool instead of a nonvalue-added appendage.

How does the process approach differ from the more prevalent standards-based approach? In the latter case, companies comply with ISO 9001 requirements by structuring their documentation according to the standard. This practice is also known as the “20 element” approach, named for the 1994 standard’s 20 elements.

In contrast, the process-based approach views a QMS as a system of processes that affect the quality of the product or service supplied to the customer. With this method, system documentation is structured around the company’s processes themselves—not around the standard.

Process lies between input and output

According to ISO 9000:2000 (clause 3.4.1), a process is a “set of interrelated or interacting activities that transforms inputs into outputs.” For example, a sales process might operate upon three inputs:

Requests for pricing and availability

Requests for quotations

Purchase orders from customers

The sales process transforms these inputs into their respective outputs:

Pricing and availability information

Quotations

Accepted sales orders

What happens between receiving input and delivering output is the process—a set of interrelated or interacting activities that transform inputs into outputs.

Activities associated with producing pricing and availability information might include determining inventory levels or accessing standard price lists or catalogs. Activities associated with producing a quotation might entail completing an estimating sheet to compute labor, materials and other items before developing a quotation based on that information. Activities associated with accepting a sales order might include reviewing the order against an associated quotation, ensuring that the order is clear and complete, and checking work-in-progress to determine whether the company has the capacity to meet the delivery date. All of these activities might be included in a typical sales process.

ISO 9000:2000’s clause 3.4.5 defines a procedure as a “specified way to carry out an activity or process.” Before ISO 9000 came along, companies that wanted to stay in business had to have some kind of procedure to conduct its sales process, and it might or might not have been documented. Whatever the case, it’s important to keep in mind that a procedure describes how a process is performed.

In its introduction, ISO 9001:2000 explicitly endorses the process approach. It also states that the standard’s intention isn’t to compel uniformity of QMSs or QMS documentation. In other words, ISO 9001 is (very politely) saying: “Don’t structure your QMS around the elements of a standard intended to assess QMSs. Instead, structure it around your own business processes.” Were the standard’s authors not so polite, they might have added: “The standard-based approach is, and always was, a bad idea—it’s confusing and counterproductive. Furthermore, it has given ISO 9000 a bad reputation!”

In order to ensure the quality of the product or service provided, a company’s QMS documentation should first reflect the normal flow of processes and provisions that are in force. For example, Bob’s Widgets Co. employs 50 people. The processes affecting quality, according to Bob, are sales, purchasing, receiving and production. The following list summarizes the sequence and interaction of those processes:

Sales. A customer submits a purchase order. This constitutes an input to the sales process. One process output is an approved sales order, which represents an input into the production process. Bob’s sales orders therefore contain processing steps and serve as routers for production.) Another output of the sales process is a purchase requisition to buy the goods needed to realize a product that meets the customer’s requirements.

Purchasing. The above purchase requisition is an input to the purchasing process. One output of the purchasing process is an approved purchase order, which is submitted to approved suppliers for fulfillment. Another output is a dock copy purchase order, against which incoming product will be verified. This document serves as an input to the receiving process.

Receiving. Incoming product from suppliers is another input to the receiving process. One process output is accepted product, which is staged for use in production and also constitutes an input to the production process. Records of verification (e.g., signed packing lists) represent another output of the receiving process.

Production. According to the requirements of accepted sales orders and using product accepted through receiving, the output of the production process is finished, verified and labeled product. Another output is the set of verification records at appropriate stages of realization (e.g., completed routers). Finished product is placed into finished goods inventory, where it awaits packaging and shipping according to the customer’s delivery requirements (these are specified on the sales order).

Standard-based documentation

If Bob’s QMS is designed using the 20-element approach, the company will write 18 procedures. (The organization isn’t design-responsible and doesn’t service its product, so the design and servicing procedures have been excluded.) Of these 18 procedures, 10 will cover the company’s primary processes—those directly affecting quality: sales, purchasing, receiving and production.

Thus, Bob’s 10 procedures covering its four primary processes would be:

Contact review

Purchasing

Customer-supplied product

Product identification and traceability

Process control

Inspection and testing

Inspection and test status

Control of nonconforming product

Handling, storage, packaging, preservation and delivery

Statistical techniques

These procedures don’t reflect the company’s processes but rather the standard’s requirements. Although the contract review procedure covers the sales process and the purchasing procedure covers the purchasing process, the remaining eight procedures cover only two primary processes: receiving and production. This is confusing to many people, yet some organizations proceed in this fashion because they mistakenly believe that the standard requires procedures be structured in that way. Unfortunately, many practitioners of ISO 9001 ascribe to and promote this mistaken idea.

Documenting around processes

Using the process approach, Bob’s will develop only 10 or 11 procedures in all.

Of these, four will cover the primary processes: sales, purchasing, receiving and production. These procedures actually reflect the company’s normal operations.

Bob’s receiving procedure, for example, should describe the usual processing steps for receiving activities. Then, it might be modified to reflect precisely how the quality assurance provisions already in place satisfy standard requirements. Where they fail to meet the requirements, solutions are planned, appropriate controls are added to the process and the procedure is revised to reflect the addition of new provisions.

Using the process approach, standard requirements might be addressed through a combination of general statements and procedural provisions. For example, Bob’s receiving procedure might include the following statements and provisions:

General. Customer property will be received, verified, stored and processed in the same manner as purchased product. Such property will be labeled with the customer’s name upon receipt, if not already labeled appropriately. If customer property becomes lost or damaged, it will be brought to the attention of the quality manager, who will record the incident and notify the customer.

Incoming product will be identified by part numbers and by accompanying packing lists. Accepted product will be labeled with a blue dot or an “accept” stamp. Finished product will be identified by product labels.

Nonconforming product will be identified by its accompanying packing slip, which will indicate the nonconforming condition. Such product will be segregated to the reject shelf. The appropriate purchasing personnel will disposition nonconforming product, contacting the supplier as necessary to resolve the issue. Disposition will be recorded on the associated pack list, and the product will be processed accordingly. A corrective action will be requested of the supplier, as appropriate.

Employees will handle and store product in a safe manner and in such a fashion as to prevent product damage and deterioration. Appropriate handling and transport equipment will be used at all times. Product that is sensitive to electrostatic discharge will remain in its protective packaging pending its use in production.

Components subject to acceptable quality-level sampling inspection (per the dock copy purchase order) will be sampled and inspected accordingly, and results will be recorded on the associated packing list.

Receiving procedure. When a shipment arrives, receiving personnel will verify that the incoming goods agree in quantity and part number with their accompanying packing lists.

Product passing this verification will be further verified against the associated dock copy purchase order. If further inspection is required, per the dock copy purchase order, the product will be submitted to quality control for incoming inspection.

Product passing the above verifications will be stamped “accepted” or it will be labeled with a blue dot. The person verifying the product will sign and date the packing list, which will be submitted to accounting personnel. Accepted product will be staged for production.

Product failing the above verifications will be identified by its packing lists and placed on the reject shelf while awaiting disposition. The nature of the nonconformity or discrepancy will be noted on the packing list(s).

This procedure addresses the standard’s applicable requirements while describing how the process flows.

Using the process approach, Bob’s will create only four procedures to cover the company’s four processes. Not only will the process approach benefit Bob’s by documenting processes that make sense and that are easily viewed and measured, it will also save the company money. At the very least it will save the resources associated with administrating eight extra procedures (e.g., time spent reviewing, approving and controlling unnecessary or nonvalue-added documents).

Money is also saved in internal audit time. For example, Bob’s internal auditors earn an average of $10 per hour and spend about two hours on each internal audit. It costs a lot less to audit four well-written procedures than 10 confusing ones.

Furthermore, when the standard is revised in the future, Bob’s process-based procedures won’t change dramatically. After all, the company’s processes operate independently of the standard’s requirements. The QMS’s structure and operation doesn’t depend on the standard’s requirements—it complies with them. Organizations with standards-based documentation will have to change their QMS’s structure and documentation to fit each new revision. Or they will have to bridge their 1994 20-element system to meet future requirements, just as they did for the 2000 requirements. Sooner or later, smart companies will adopt the process approach.

About the author

Dan Nelson has worked with ISO 9000 for 10 years. He learned the process approach from quality management consulting firm Cavendish Scott and has used it to assist dozens of organizations through certification. Nelson is a QMS 2000 Principal Auditor (IRCA), and has an MA in business administration from the University of Iowa. He consults under the name Quality Crossroads. Letters to the editor regarding this article can be sent to letters@qualitydigest.com.