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Making Sense-and Cents-out of ISO 9000FORM Magazine, Sept. 1996
This is the first in a series of three articles profiling companies that have achieved ISO 9000 certification or are working toward that goal. This article tells the story of a distributorship; upcoming articles will profile a manufacturer and a paper supplier.
BY KATIE SWEENEY
Do you think ISO 9000 applies only to manufacturers or huge companies that sell overseas? Do you think certification is impossible to attain and even more impossible to afford? Do you think it's just a fad?
If so, think again. Although ISO 9000 isn't for every company and is more prevalent in Europe, it's catching on in the United States. There are about 7,500 U.S. companies that are ISO 9000 certified, and that number is growing by about 25 percent a year, says Demo Stavros, president of WDI Inc., a systems integration and ISO 9000 consulting firm in Ypsilanti, Mich. Jim Lee, executive vice president and chief operating officer of GBS Forms and Systems, a North Canton, Ohio, distributorship that received ISO 9001 certification in January, predicts that ISO 9000 will become increasingly important to customers. "I think it's just a matter of time before you find major customers insisting that suppliers be ISO certified or have prices that are significantly lower," he says.
Adopted in 1987 by the International Organization for Standardization, ISO 9000 is a generic name for a series of five standards for quality management and quality assurance-9000 through 9004. The type of certification a company pursues depends on whether it is involved in the manufacturing, design or service sectors of the economy. Basically, the standards require a company to thoroughly document certain processes and then strictly follow them. ISO auditors inspect the company and interview employees to make sure everything complies. Certification does not mean the company has a quality product; it means it has a quality system that meets the written standard.
Getting certified takes time, money, and commitment. But those who have been through the process say it's not as difficult as some people assume.
GBS Forms and Systems began reaping the benefits of ISO 9000 before it even had its certificate in hand, says Lee. Although GBS did not receive its certification until early this year, the company spent all last year making improvements to prepare for the ISO audit. Those improvements and streamlining of operations helped GBS' 1995 sales increase 35 percent from 1994, Lee says. "I think [the ISO process] made a real difference in keeping customers happy, and that translates into bottom line profit," he says.
GBS was no stranger to quality processes when it began its quest for certification in August 1994. It received General Motors' Mark of Excellence award for quality in 1991. Although neither General Motors nor any other customer required GBS to get certified, officials saw the writing on the wall, says Lee. "The more we talked to customers and prospects, the more we realized that more and more of our customers were going to require their suppliers to be ISO 9000 certified in '97, '98, etc.," he says.
The company hired a consultant to guide it through the ISO process and appointed key supervisors and managers to a quality team. Then it began the long and often tedious process of documentation that is at the heart of ISO 9000. "We pretty much knew what we were doing, but we'd never really documented it in total," says Lee. "In ISO, you do what you say you're going to do and document it. And you have to make sure you have a way to audit those procedures." Several GBS employees volunteered to be internal auditors and make sure workers follow procedures.
Documentation is important because it helps identify flaws and inconsistencies in the system. The ISO 9001 standard covers all areas of GBS' operation except sales and finance. Among other things, GBS had to document how it purchased products, selected and evaluated suppliers, responded to problems and turned around requisition orders, as well as how quickly it responded to customer calls. "When you put something into writing, there's a great opportunity to probe and dig because you've got to be pretty detailed," says Lee. He says the company discovered that people within the same department were doing the same task different ways. Many employees were unaware of the best way to do certain jobs, he says.
One way GBS improved operations was to create a corrective action form. Employees who spot a problem fill out the form and give it to their supervisors. Managers then try to determine the cause of the problem so it doesn't recur, says Lee. For example, an employee in receiving may report that a manufacturer is not properly labeling products. Another employee may fill out the form if paperwork from another department isn't being processed promptly. The emphasis is on finding out why the problem occurred and fixing it, not assigning blame. The form "has really been a big factor in identifying problems and solving them," says Lee. "We're able to really pinpoint what we're doing wrong."
Lee says he'd recommend ISO 9000 to other large distributorships, but cautions that, "It's certainly not free." Besides paying any consultants you hire, you must also pay fees to the registrar that audits and certifies you. In addition, there's an expense in taking employees away from their regular jobs, he says. And those employees and managers have to be patient. "You just can't assume things are going to fall into place quickly. It's going to take some time," he says.
And the work and expenses don't end with certification. "It's an ongoing process. Every six to nine months you have a surveillance audit," says Lee. "But the benefits, even short term, far outweigh the initial investment."
Katie Sweeney is assistant editor of FORM Magazine.
GBS Corp. Celebrates 25th Anniversary
Larry Merriman, chairman of GBS Corp., remembers the days when he did the paperwork for his business at night at his kitchen table. That was 25 years ago. Today, GBS Corp. has four divisions and more than 500 employees in offices and plants from upstate New York to Mexico. "Our growth has been remarkable, and the single most important reason for that growth is the constant attention to customer satisfaction by every single person at GBS," says Merriman, a member of the DMIA Board of Directors from 1984-86.GBS Forms and Systems is the largest division in the company and is a distributor of business forms and other printed products. GBS Filing Systems, Malvern, Ohio, manufactures color-coded filing systems and storage and retrieval products for the medical, dental and financial services industries. GBS Computer & Communications Systems has offices in Ohio and Pennsylvania and provides installation and support of computer systems and voice and data communications networks. GBS Labeling Systems is a label manufacturer with plants in Ohio and Florida.
The Facts About ISO 9000
Although the International Organization for Standardization adopted its 9000 quality standard almost a decade ago, many U.S. companies still have misconceptions about what certification entails. Below are answers to commonly asked questions about ISO 9000:Why should a company get certified?
Two factors usually drive companies to strive for ISO 9000: They either want to start selling into European markets or they have major customers that have mandated that they become certified, says Bill Platt, technical manager at Mead Fine Paper, Chillicothe, Ohio, which received ISO 9002 certification last year.But certification offers numerous advantages, says Demo Stavros, president of WDI Inc., a systems integration and ISO 9000 consulting firm in Ypsilanti, Mich. It enables you to create a consistent operation, which makes it easier to analyze problems. It also gives management better control over operations and helps lower costs because operations become more efficient. Employees better understand what they're doing and how that affects other processes. And customers perceive you as having a quality operation. "Large organizations are very familiar with ISO 9000," says Stavros. "It gets you in the door where you may not have been able to go."
However, Stavros cautions that ISO 9000 is only a tool to help you make your business more efficient, and like any tool, if you don't know how to use it, it won't help you. He says some companies don't know how to analyze quality control data-or don't follow up and implement solutions. Those companies don't get much benefit from the ISO 9000 process.
What's the difference between ISO 9001, 9002 and 9003?
ISO 9000 has five categories, but most U.S. firms seek certification under ISO 9001, 9002, or 9003. ISO 9001 consists of 20 sections and is for firms involved in both the design and manufacture of products or services. Each section covers an aspect of a company's operations that must be documented. For example, one section requires that companies document how they store, protect and maintain their materials. Another section requires that they document their testing and inspection processes. ISO 9001 has the most stringent requirements. ISO 9002 has 18 sections and is for firms involved in manufacturing only. ISO 9003 covers firms involved in the distribution of manufactured goods or services. Its requirements are the least stringent of the three.How long does certification take?
In general, one to two years, but several factors are involved. "It's all over the map," says Peggy Murak of Murak & Associates, a Buffalo, N.Y., consulting firm that is helping Tapecon Inc., a Buffalo manufacturer, work toward ISO 9002 certification. "It really depends on how much time a company can dedicate to the project. Also, if a customer demanded that the company be certified by a certain time, you can speed up the process." The ISO audit usually lasts 11Ú2 to 2 days. During the audit, quality systems officials inspect the company and interview employees to make sure that procedures outlined in the documents are being followed. For larger companies with more sites, it takes longer.How much does it cost?
Again, this varies, but it's not cheap. For a small company with $1 million to $5 million in sales, less than 35 employees and one site, Stavros says a typical consultant contract would be about $15,000 to $17,000. The cost of the audit for the same size company is about $4,000 to $5,000. Costs in employee time might range from $10,000 to $20,000. A larger company with 100 employees would probably pay between $25,000 and $35,000 for a consultant and $6,500 to $8,500 for certification costs, he says, and that's not counting employee costs. These are only estimates. And don't forget the surveillance audits that occur every six to nine months. You have to pay for those, too.One way to keep costs under control is to make sure the company is dedicated to the goal, says Stavros. And employees who are assigned to ISO teams or work with consultants should be committed to staying with the company. "All of a sudden, if someone leaves, then we have to go back down and educate the new person," he says. "That means travel costs, extra time. And then it starts to get expensive. Then it's $2,000, $3,000 or $5,000 or $6,000 that you weren't counting on."
Can any size company get certified?
Yes. Murak of Murak & Associates says she's worked with companies as small as 17 people. But smaller companies probably would have a harder time seeing significant cost savings and benefits, says Jim Lee, executive vice president and chief operating officer of GBS Forms and Systems, a distributorship in North Canton, Ohio.Once a company is certified, does it have to use ISO 9000 certified suppliers?
No. However, many companies give preferential treatment to ISO 9000 certified suppliers, and others use it as a way to reduce their vendor base, says Stavros.What happens after certification?
"The biggest mistake companies make is they see this as an end to itself," says Murak. "But you don't earn certification and then it goes away. It's a continuous process." Every six to nine months there is a surveillance audit, and every three years there is a completely new audit to make sure companies are still following ISO standards. Murak says it's rare for a company to lose its certification, but you must be prepared to spend the time and money to keep up with the process.