Probing the Limits: ISO 9001 Proves Ineffective
It has been a while since I commented on ISO 9001 so it is time to re-visit the topic with some statistical data. More than two years ago, I wrote a column, "ISO 9000: More Hindrance than Help," where I described my regret for championing ISO 9000 in my company. Because we already had a quality-centric culture, I found that ISO 9000 just added expense and overhead to our operation.
In the course of a published debate on ISO 9000,
a British quality magazine recently referenced an insightful article, "ISO 9000 Registration's Impact on Sales and Profitability: A Longitudinal Analysis of Performance Before and After Accreditation," in the International Journal of Quality and Reliability Management (Vol. 19, No. 6, 2002) that sheds light on the value of ISO 9000. The study starts by acknowledging that it is widely documented and clearly proven that ISO 9000-registered companies outperform non-ISO 9000 registered companies. The study sets out to determine if ISO 9000 is the cause for the better performance.
The study examined 800 companies in Spain. Some of the companies were registered, some were in the process of becoming registered and some never became registered. The profitability and sales performance in these companies was analyzed before and after registration during a five-year period.
The study confirms that ISO 9000-registered companies perform better than nonregistered companies. The main finding, though, is that registered companies had the same performance before and after the registration. In short, the study clearly finds that ISO 9000 registration had no affect on sales and profitability performance. Registered companies performed better than nonregistered companies, but they were performing at the same higher level before their ISO 9000 registration.
The contention that ISO 9000 registration improves performance is refuted as a cause-and-effect relationship, and the study speculates that companies that are high-performing tend to
adopt the standard at a higher rate than lower-performing companies, thus giving the deceptive appearance that ISO 9000 registration is correlated to better performance.
Is this bad news for the quality profession? No. In reviewing the literature, other referenced studies found that a focus on quality has a positive effect on return on investment, market share, sales growth, better sales margins and competitive advantage. Quality pays off, but taking a quality approach is unrelated to ISO 9000 registration.
ISO 9000 proponents frequently argue that ISO 9000 fails when top management only wants the certificate and does not really use ISO to improve the system. I agree. The issue is that ISO 9000 is ineffective in making companies put high-performing quality systems in place. Companies either care about quality and benefit from that approach, or they do not care about quality and suffer from that approach. An expensive and time-consuming ISO 9000 certificate just does not play into it. So why register?
How did we get to this state where the quality profession flocked to support a valueless, expensive program? I think there are several reasons. Part of it is herd mentality. The train of thought is, "If I have to get registered, then all my suppliers should too."
I also think that the consultant-centric leadership at the American Society for Quality (ASQ) drove the ISO 9000 fad as a tremendous revenue-generating opportunity. Although they are improving, ASQ continues to play more of a cheerleading role rather than an objective role in analyzing the quality trend du jour.
Despite my dislike for ISO 9000, my company still is registered. We maintain our ISO 9000 registration because almost all of our big customers require it.
My hope is that I have shed some light on this topic so that companies stop requiring their suppliers to have valueless ISO 9000 registration. If my customers quit demanding that my company be registered, we would use the time we now spend on ISO 9000 maintenance on activities that actually make our products better.
If you agree, eliminate ISO 9000 registration from your approved supplier requirements and let your suppliers start spending their energy in more productive ways.