Raise the standard to win worldwide success
Press release - 20 May 2004
This article first published in the Daily Telegraph on Thursday May 20, 2004
Stevan Breeze responds to our article that argued British management standards were stymying thinking
In 2001 Dalepak Ltd, a Midlands-based enterprise in the contract packing business, took a monumental decision. It decided to get registered to the world's most popular business improvement model and see what good it did it. Three years later, Dalepak has grown from 30,000 sq ft to three sites covering about 130,000 sq ft.
It now employs 80 full-time staff and about 250 part-time in-store merchandisers nationwide. Its client base includes blue chips such as Stanley Tools, Universal Electronics and Toys R Us, but the biggest feather in its cap has been achieving Q1 status from Ford Motors, which qualifies it as a Ford supplier.
Since implementing 9001 - the updated ISO 9000 standard - it's handled more than 7m parts for Ford at a rate of 20-25,000 units a day and the rejects rate is now zero. To what does it attribute this success? Mick White, managing director, says of the ISO 9001 standard: "We learned that it was not the process itself but the results of applying the process that delivered such powerful change." That is the point: it's not about achieving a standard, it's about raising standards by using the system.
Across the board, large or small, service or manufacturing, there are legions of similar success stories from British Gas Services, which saved £2.9m as a result of its ISO 9001 registration to Sun Chemicals General Printing Ink, whose complaints tally reduced by 75pc. From Garden State Consumer Credit in the US, whose response time to clients has been reduced by 16pc, to Essex-based J W Suckling Transport Limited, whose turnover in 10 years of ISO 9001 implementation has increased 10-fold.
Research shows that ISO 9001-certified companies consistently out-achieve the stock market average on many performance management measures. The weight of evidence confirming the value of ISO 9001 is growing, with practitioners reporting both operational and bottom-line benefits.
A US-based study published in 2003 found that ISO 9001-registered firms from February 1990 to January 2000 had an average annual rate of return of 23.85pc against the S&P 500 average annual return of 16.12pc.
Even more striking, it was calculated that an initial investment of $100,000 in the ISO 9001 companies would have grown to $814,335 by January 2000: the equivalent investment in the S&P 500 would have grown to only $425,745.
University of California
University of California Los Angeles-led research published in 2002 found: "Careful design and implementation of consistent and documented quality management systems contribute significantly to superior financial performance."
The same year, European research calculated the average profitability from 1994 to 1998 of 400 registered firms against that of 400 that were not. The conclusion: the registered firms were measurably more profitable than those that were not. Benefits include improved management control, productivity, customer service and staff retention.
The new standard, ISO 9001:2000, which came into force from December 15 last year, is an even better model: cutting red tape, with a tighter focus on customer satisfaction and more flexibility enabling companies to deploy the quality management system to give them the best results.
Critics of 9001 such as John Seddon wilfully misunderstand the processes that go into getting an international standard written. In common with all other ISO standards, as well as European and British standards, the final document is a distillation of know-how contributed by many experts across business and society over many years.
Proponents of the standard see the logic: making do with trial and error is wasteful when you can stand on the shoulders of those who've gone before you, worked out best practice and formulated a model that everyone can adopt. Standards only come into existence in response to demand.
In the case of 9001, the market sought the standard because it was sick of poor supplier quality and wanted a tool to improve it. At every stage, ISO 9001:2000 has been developed through a consensus-building process that takes everyone's views into account.
UK technical committee
The UK technical committee looking after ISO 9001 is made up of more than 90 bodies from across the spectrum of stakeholders from industry and professional institutes to consumers, academia and government. Between them they represent thousands of bodies, large and small and every perspective. Anyone can contribute.
Moreover, in the UK the benefits of standardization are supported by both business and government through the establishment of the National Standardization Strategic Framework, a platform set up with the CBI and Department of Trade and Industry to promote innovation, increase productivity and raise global competitiveness through the use of standards.
ISO 9001 is a continuing success story. To date, 561,747 ISO 9001 certificates have been issued in 159 countries - an increase last year of 10pc. For a mature product first published 25 years ago this is good going and the pattern of growth is quite naturally following the growth of manufacturing industry across the globe.
In China, the standard is growing at an annual rate of 31pc. Meantime, its younger environmental counterpart, ISO 14001, grew by 34pc last year - with 49,462 registrations in 118 countries. Quality isn't created by management systems, it's created by people.
But without a model, without the experience of best practice, it's difficult to change management and employee thinking. ISO 9001:2000 is an internationally recognised way to start.
- Stevan Breeze is chief executive of the British Standards Institution
This article is available on the Daily Telegraph website at: www.telegraph.co.uk/money/main.jhtml?xml=/money/2004/05/20/cciso20.xml