by Russell T. Westcott

As they make their transition to ISO 9001:2000, many organizations are doing it the hard way. They purchased the initial ISO documents, concentrated on deciphering ISO 9001:2000 and relegated the ISO 9004 guideline to obscurity. Meanwhile, they struggle to understand that value lies in maintaining registration.

The ISO 9004 guideline is a compendium of suggested actions for improving the potential value of a quality management system. ISO 9004 answers many of the questions that arise when an organization implements an initial transition QMS, and it offers the potential for subsequent improvements.

Solid reasons exist for establishing a value-adding QMS. The ISO 9001:2000 series allows almost any organization, regardless of type, size, product, industry or location, to implement the standard. It allows organizations flexibility in structuring, documenting, monitoring and continually improving their QMSs. However, the fact that registering to ISO 9001 represents the minimum requirements is frequently unrecognized. The ISO 9000 series doesn’t focus on maintaining a minimum-level QMS but rather on taking actions that will continually improve the QMS. And that’s where ISO 9004 comes into play.

Potential benefits of ISO 9004

ISO 9004’s strength is its ability to help companies achieve higher levels of performance. For example, the assessment tools in the standard’s Appendices A.1 through A.4 can help an organization determine its hot spots for improvement. Appendix A.3 translates the guidelines into “how” questions, the answers to which can be most revealing to those who participate in the assessment process.

ISO 9001:2000 emphasizes management’s involvement. To convey a continual and consistent message throughout the organization, management must actively participate in quality-related decisions and actions. Top management is usually evaluated on its performance in satisfying the organization’s stakeholders, especially the owners/investors. An effective and efficient QMS will directly enhance profitability, cost containment or budgeting and thus reflect favorably on top management. This is a key selling point for moving the organization’s QMS to a value-added system. Also key is assigning the responsibility for maintaining and improving the QMS to the highest organizational levels. This is no longer a job for the quality control department. It requires a recognized and respected positional authority to manage the QMS over the long term. Implementing and sustaining a strategic QMS is the business of higher management.

When an organization adopts a value-added philosophy for evaluating its QMS’s effectiveness and efficiency, it should also carefully monitor its resources. This means setting measurements and monitoring results. Teaching the entire organization how to apply simple return-on-investment measures to all improvements will highlight the QMS’s value-added contribution to performance. All these measured ROIs enable management, and those who evaluate management, to understand the importance of the QMS.

A good way to monitor ROIs is to establish a “log of quality system improvements” as a feature of the QMS. The LOQSI directs all improvements to a central manager, who documents the nature of the improvement and its estimated first-year, or partial year, ROI. A summary of these ROIs is presented at each management review. Appropriate recognition is directed to those who contributed to the ROIs, and all improvements are scanned for lessons that might be implemented elsewhere within the organization.

ISO 9004 emphasizes customer satisfaction. It focuses on how the quality policy embraces customer needs and expectations and how an organization can interpret their relevance. The guideline also addresses the resources and processes that will satisfy customer needs and expectations, and outlines how to collect and analyze the data. Thus, the guideline addresses factors that lead to customer retention and refer your organization to potential customers. Consider the five scenarios:

The outcome of a strategic planning process is to deploy goals and objectives throughout the organization. Operational (i.e., tactical) objectives and plans support actions to achieve strategic goals. An organization closely monitors action plans, makes informed course corrections, and measures and analyzes the results. Inherent in a well-planned strategic process is attention not only to the customers but also to the marketplace.

Marketplace competition is intensifying. Use ISO 9004 for guidance in maintaining and improving your position. Begin by assessing your organization. An effective and efficient QMS can help:

Decrease variation in its processes

Continually improve, organize and deliver customer needs and expectations

Do it faster and at less cost than its competitors

ISO 9004’s Appendix A.5 lists 27 benefits that might apply to your organization. If your company is going to stay in the game, it must continually strive to improve the potential of ISO 9001. The smartest way to do this is by using ISO 9004.

QMS or award criteria?

Should an organization first implement an ISO 9001-based QMS or undergo the process of applying for a quality award? Each approach has its own purpose. There are some similarities, but look at some of the differences:

An ISO 9000-based QMS focuses entirely on establishing an effective and efficient QMS. Quality award criteria such as the Baldrige National Quality Program focus on the whole organization and the environment in which it functions, the effectiveness of its approaches (e.g., breadth and depth), and--for a relative few--qualifying for an award.

ISO 9001:9004 concerns itself with organizational reliability and compliance (i.e., avoiding failure), whereas the Baldrige criteria focus on organizational excellence and strategy.

ISO 9001:9004 is more detailed and prescriptive than the Baldrige criteria.

ISO 9001:9004 addresses eight management principles that are also in the Baldrige criteria; however, the Baldrige criteria add additional core values including:

• Visionary leadership
• Organizational and personal learning
• Agility
• Managing for innovation
• Creating value

The assessment process for ISO 9001 certification and subsequent surveillance focuses on compliance with the standard, conforming to practices documented in the QMS and finding deficiencies that need correcting. The registrars that conduct assessments are paid by the client. The Baldrige examination process is more extensive and is conducted entirely by trained, nonpaid volunteers.

The ISO 9001-registered QMS remains in effect as long as surveillance audits indicate the system is in compliance and working effectively--and the registrar is paid. A Baldrige Award is basically a one-time event. Unlike the certified QMS, the Baldrige Award has no built-in leverage to keep the process functioning effectively.

Neither ISO 9000 nor the Baldrige criteria ensure that the product or service is of acceptable quality or meets customer requirements. It’s implied that if the certified QMS or the Baldrige winner has followed its processes and approaches, the product or service should be good.

There’s also no guarantee that ISO 9001 registration or the Baldrige Award will ensure that an organization will live long and prosper. Neither process addresses everything needed for an organization to remain viable, although the Baldrige criteria do offer more guidance in overall management.

Which should an organization attempt first? Absent any hard and fast rule, implementing an ISO 9001-based QMS and getting certified would appear a logical first choice for the following reasons:

Depending on what quality measures are already in place, a QMS could be implemented within a range of six to 18 months. Typically, Baldrige winners take three to five years or more to reach a winner’s qualification--and then there’s the limitation on how many awards may be given each year.

An organization must develop and follow its QMS according to ISO 9001’s documentation. It also instills the quality policy, principles and continual improvement practices among employees. It institutes organization and standardization. It firmly inculcates management in the need for data-based decision making and measurable results. And it helps employees to be aware of customers’ needs and the organization’s desired outcomes.

ISO 9001-based and ISO 9004-enhanced QMSs create a solid foundation upon which building toward the Baldrige criteria is less threatening and potentially less costly.

A value-adding QMS is a necessity for survival for all types of organizations. The most efficient way of establishing one is by using the guidelines outlined in ISO 9004. Companies should build an ISO 9001-based QMS and then expand to broader Baldrige-type criteria to achieve E3 status (as illustrated above):

ISO 9001 for effectiveness

ISO 9001:9004 for efficiency

ISO 9001:9004 plus applicable Baldrige criteria for excellence

About the author

Russell T. Westcott is president of R.T. Westcott & Associates, a consulting firm that assists clients with strategic planning, QMS implementation and registration process applying management concepts such as lean manufacturing and benchmarking as well as applying for Baldrige-type awards. He’s a fellow of the American Society for Quality, an ASQ Certified Quality Auditor and Certified Quality Manager, and serves on several committees of ASQ’s Quality Management Division. He’s the author of Stepping Up To ISO 9004:2000 (Paton Press, 2003). Letters to editor regarding this article can be sent to letters@qualitydigest.com.