Management

Improving Your Business with Management System Standards

Management system standards bring technological, economic and societal benefits.

August 4, 2014
Trans

A properly implemented management system can contribute to the financial strength and organizational resilience of a company. Additionally, the Organization for Standardization (ISO) notes that formal, internationally-accepted management system standards bring important technological, economic and societal benefits. They help to harmonize technical specifications of products and services, making industry more efficient and breaking down barriers to international trade. Additionally the use of standards provides a uniform language across industries. This enables international companies to communicate and operate more seamlessly. (ISO, 2014)

Management system standards are used by businesses, large and small, to ensure that operations, products and services meet or exceed customer expectations. They are also used to monitor the health of the organization and drive continual improvement. The best systems provide organizations with ongoing opportunities to improve their processes. With an ISO standards-based system, companies are guided by best practice. Nothing that is critical to the management of a particular business is left out. Organizations learn at every step in the classic Plan-Do-Check-Act model.

TECH TIPS

Management system standards are used by businesses to ensure that operations, products and services meet or exceed customer expectations.

They are also used to monitor the health of the organization and drive continual improvement.

The best systems provide organizations with ongoing opportunities to improve their processes.

More strategic-based thinking

With the new standards framework, Annex SL1, all new and updated standards will emphasize the requirement for more strategic-based thinking by corporate leadership. Analysis and risk assessment of the management system is built to clearly define process owners, responsibility, and specific mitigating actions, as well as details and timelines for those actions. The system specifies how, where and why that action is to be performed. Through continual improvement activities, the system is monitored and all actions are documented and updated. Processes then can be accessed across the entire company and at any associated sites to measure effectiveness and benchmark both internally and externally.

This new way of thinking emphasizes the need for improvement by implementing activities that can range from small-step continual improvements at a workplace to significant improvements of the entire organization. The organization should define objectives for the improvement of its products, processes, organizational structures, and its management system through the analysis of data. The improvement processes should follow a structured approach, keeping in mind the PDCA but adding an extra step known as the Plan Do Modify (PDM) cycle. This methodology should be applied consistently for all processes, and the organization should ensure that continual improvement becomes established as a part of the organizational culture. This is achieved by continual self-assessments using a structured maturity process.

The organization should review its performance against specified criteria, identify current maturity levels, and determine its strengths and weaknesses. The criteria given for the higher levels can assist the organization to understand the issues it needs to consider and to help it determine the improvements needed to reach higher levels of maturity and ultimately a positive effect on the bottom line.

Return on Investment

Studies have shown that the ISO and standards derived from the ISO contribute more to a company’s economic sustainability than ever before. An increasing number of manufacturers and business customers will not even do business with a supplier that is not certified, i.e. automotive, aerospace and healthcare. The new NIST2  cybersecurity framework released in February of this year maps to and supports the use of voluntary international standards.

A Harvard University study on the benefits of ISO 9001 clearly showed the powerful results afforded to organizations that have adopted this quality standard as opposed to those that have not. When compared to non-adopters, adopters: (Toffel, 2010)

Experienced 10% faster sales growth than non-adopters

Were more likely to report no (zero) worker compensation claims

Grew employment 10% faster than non-adopters

Grew payroll 13.5% faster than
non-adopters

Were more likely to survive than non-adopters.

Additionally, British Standards Institution had a more recent independent study3 performed and found that ISO 9001 certified clients:

outperformed the market by more than 100%

55% achieved cost savings

71% acquired new customers and retained existing clients

75% boosted their operational performance

75% improved their levels of customer satisfaction and loyalty

Manufacturing cycles reduced by 48%

Increased supply-chain confidence

Reliability and trust in international businesses and supply-chain relationships is a ubiquitous concern for most organizations. With the complexity of supply chains and the growth of international business dealings many times on opposite sides of the world, it is difficult to truly ascertain whether your suppliers are following proper and responsible business practices. ISO certification is a way to ensure your business partners that your company adheres to international standards, and by the same token insisting your suppliers are certified can provide a screening process for new suppliers and provide assurance that that your suppliers are credible and reliable as well. Remember, the effect of one incident up the supply chain could be devastating to an organization and they may not even see it coming. An approach that sets the rules of engagement and expectations greatly reduces the chances of this happening.

Conclusion

Implementing and certifying a formal management system will:

Ensure awareness of and compliance with an established set of relevant internal and external guidelines, standards, practices, policies, regulations, and legislation, and other obligations (such as contracts and service level agreements) related to managing operational resilience.

Redundant activities can be eliminated along with their associated costs.

Staff resources can be more effectively deployed and optimized.

It facilitates a process that is owned by a line of business and organizational unit managers and consistently implemented across the organization.

A common, collaborative approach greatly influences how operational risk and management system control is planned, executed, tested, measured and managed to the end objective of greater effectiveness, efficiency, and reduced risk exposure.

The most effective management system follows international standards and is part of the organizational business strategy. One which is regarded as simply “the way we always do business” and one based on continual improvement that is weaved into the fabric of an organization. As Ray Kroc said, “The quality of a leader is reflected in the standards they set for themselves.”

 Effective adoption of ISO standards requires a comprehensive approach including training, assessment services, and technology 
 

Footnotes

 Annex SL describes the framework for a generic management system. However, it requires the addition of discipline-specific requirements to make a fully functional quality, environmental, service management, food safety, business continuity, information secu-rity and energy management system standard

National Institute of Standards and Testing

Additional statistics available for other ISO standards upon request
 

Bibliography

ISO. (2014). Benefits of International Standards. ISO Website, www.iso.org/iso/home/standards/benefitsofstandards.htm.

Toffel, D. I. (2010). Quality Management and Job:How the ISO 9001 Standard for Quality Management Systems Affects Employees and Employers. Harvard Business School.

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