Contemporary marketplaces work in a highly competitive environment. It has become imperative for organizations to improve their business performance and stay ahead of their competition. Improving business performance requires cost reduction without compromising quality. Implementing ISO 9001 can help organizations easily improve their business performance. ISO 9001 is an international standard that defines requirements for Quality Management Systems. It has all the ingredients which can ensure that a business runs in the most optimized manner and improves its performance. Let’s explore how various aspects of ISO 9001 help achieve higher business performance.
How does ISO 9001 help improve business performance factors?
Business Performance is defined by product quality, waste control, cost reduction, competitiveness improvement, sales volume, and profitability. An ISO 9001 system ensures each of these factors improves with the implementation of requirements which are built-in to various clauses of the standard.
Product Quality and achievement of higher customer satisfaction is at the core of the ISO 9001 standard. ISO 9001 defines various controls within its clauses that ensure that an organization provides high-quality output to its clients and meet its customers’ expectations. Some of the ISO 9001 requirements that ensure these are:
- Understanding the Context: ISO 9001 requires that an organization understands the requirements of all its interested parties and internal/external issues that are relevant to the organization while defining the scope of the Quality Management System. This ensures that the requirements of customers are well understood and catered to when defining the Quality Management System. ISO 9001 requires that top management actively involves themselves in defining the strategic direction and ensuring that the Quality Management System runs in conjunction with the business scenario and aligns with the companies’ long term and short-term objectives. Understanding the requirements of its customers and setting of objectives ensures that an organization understands the needs of its customers well and processes defined are more customer-centric.
- Risk Management: Risk-based thinking is introduced in the new version of ISO 9001 and is an important tool to understand the risks involved in delivering a quality product/service to the customer and to take actions to address these risks.
- Operational Controls: Various controls are built in the standard in various clauses to ensure all deliveries are reviewed and tested before it reaches the customer. Some of these are requirement/design reviews, quality inspections of both raw materials/final product, monitoring of suppliers, etc.
- Resources and Infrastructure: ISO 9001 touches on all the aspects of a business and support systems required to ensure product quality to the customer. This includes infrastructure, communication, resources, both human resource and equipment/tools that may be required.
- Data-Driven Approach: ISO 9001 is a standard that is driven by data and has efficient monitoring mechanisms applied. It requires that the organization defines its quality objectives and constantly improves on their performances. Organizations with a continuous focus on the quality objectives and with improvement in the goals, achieve their business objectives.
- Process-Approach: ISO 9001 focuses on having a standard set of procedures and having streamlined processes in all departments of an organization. This ensures processes are repeated and produce the same quality of product every time. This approach provides the necessary controls that are required to keep the risks at an acceptable level and deliver a more consistent result.
- Empowered and Engaged Employees: ISO 9001 also stresses having empowered and engaged employees, a suitable work environment, access to organizational knowledge and training. This helps to improve the overall morale of employees and employees put in their best efforts towards customer satisfaction and ensure better product quality.
To achieve higher business performance, waste control is important as it makes your processes leaner and more efficient and you deliver faster. This also ensures that the procedures are optimized and the product quality improves.
- Non-Conforming Product/Process: ISO 9001 requirements define a very detailed approach for handling non-conforming product /processes. It requires that an organization analyse all aspects of the non-conformities and ensure that the non-conformities do not re-occur. This pro-active approach improves processes and reduces waste in the processes.
- Continual Improvement: The new version of the ISO 9001 standard has captured various aspects of running a business beyond just a Quality Management System. It gives a framework or a tool to improve performance. ISO 9001 focuses on continual improvements which require that organizations explore various ways to improve the current set of processes and develop optimized ways of working.
Implementing ISO 9001 means that the business operates a set of consistent processes which are continuously improving with time. This brings in efficiency and you deliver more with the same set of resources. Waste control and lesser rework reduce the cost of deliveries.
Efficient risk management which is embedded in all the processes of the organization ensures that the organization has analysed business needs well. This reduces all risks due to external factors like competition, market, trends, technological advancements, etc. and improves business sustainability in a competitive marketplace. ISO 9001 also improves customers trust in the organization’s processes when an organization is ISO 9001 certified. ISO 9001 focuses on increasing customer satisfaction and working towards improving customer relationships at all levels. This itself improves the competitiveness of an organization as old customers are retained and new customers are introduced.
Sale Volume and Profitability
The overall increase in the reputation of the organization in the market due to excellent customer satisfaction and improved product deliveries brings in new business and increases sales volume. Reduced costs and increases in sales result in increased profitability in business.
ISO 9001 is all about: Improved product quality + process improvements.
Both of these factors, when implemented through the various clauses of ISO 9001, ensure that there is less waste in the system. This further ensures cost reduction. The reduced cost helps the organization to pass on better value to its customers. As you provide value to the customer within the same cost, the customer is “delighted” and you gain more business. Each delighted customer provides you with new references and your competitiveness improves. A surge in sales volume is what follows which increases your profitability. So, just by applying the ISO 9001 standard, you achieve higher business performance with improvement in all the parameters that define performance.
About the Author
Avital Koren is the Director of ISO Global
To the novice quality manager, ISO jargon can be extremely overwhelming. What is an NCR? What do you mean by OFI? Are we certified or accredited? But before you go and pull out your hair, let’s take a moment to go over some of the most frequently used terms and their definitions with regards to ISO and Management System Certification.