American firms turn to ISO 9000.

ISO 9000 guides companies to establish their own criteria and procedures for quality. Periodic audits certify that the firms are maintaining the systems they created.

American manufacturers are improving their production processes and protecting or expanding export markets by developing quality-management

systems that meet the standards set by the International Organization for Standardization (ISO) in Geneva. Among the measurable benefits companies have realized from adhering to the ISO 9000 standards are lower scrap costs, fewer rejects, and better ontime delivery. Other advantages include better communication between departments, empowering plant operators, and not being shut out of markets that mandate these standards.

The ISO 9000 standards were published in 1987 to provide guidance for companies across various industries for selecting an appropriate quality-management program. Specifically, the standards list guidelines of a quality system, such as management responsibility, corrective action, training, and statistical techniques.

There are three factors cited by trade officials, standardization companies, and manufacturers as driving the spread of adherence to the ISO 9000 quality standards. First, some governments have, in effect, required that the products or services sold in their countries meet the standards. Second, many companies that purchase imported goods and services are demanding their suppliers be ISO 9000-certified. Lastly, manufacturers are finding that implementing the ISO 9000 standards enables them to institute, monitor, and improve the quality of their business.

Driving the Standards

A company that desires to be registered under ISO 9000 must have in place or must institute a quality system that is in compliance with the standard. It also must submit to an on-site audit conducted by an accredited and recognized independent third party. This auditor determines whether the standards are being satisfied. Both internal audits and ongoing third-party surveillance audits, which are typically conducted every six months, are required to maintain ISO 9000 accreditation. ASME is pursuing accreditation as an ISO 9000 registrar of mechanical equipment and systems, extending the kind of certification work the Society has been conducting for decades.

Since the introduction of ISO 9000, more than 55 countries, including members of the European Community (EC), have adopted national quality standards identical or equivalent to the ISO 9000 series.

"There are already a number of industrial products regulated under directives passed by the European Community, including construction materials, simple pressure vessels, and telecommunication terminals," said Mary Saunders, director of the Internal Market staff in the Office of European Community Affairs for the U.S. Department of Commerce (Washington, D.C.). Saunders and her staff study the impact of ISO 9000 on selling to the EC internal market. For example, the EC adopted a Construction Products Directive in 1992 that requires adherence to the ISO 9000 standards for building construction, building materials, and all equipment installed in buildings, including all air conditioning and refrigeration equipment. Saunders said that it is important for American companies planning to conduct business in Europe to determine if their products are covered by directives that will, in effect, require ISO 9000 certification.

In addition to governments, market forces are convincing manufacturers to seek ISO 9000 certification. "I am told by American firms seeking certification that the buyers of their products are demanding goods certified under the ISO 9000 standards, whether or not those standards are stipulated by government directive," said Maureen Breitenberg, an economist in the Standards Code and Information program of the National Institute of Standards and Technology (NIST) in Gaithersburg, Md. Saunders agreed that European consumers, attracted by the verifiable quality system provided by following the ISO standards, press manufacturers to adhere to them.

Primary manufacturers are another source of market pressure for ISO 9000 certification, according to Marshall Courtrois, president of Quality Systems Registrars Inc. (QSR) in Chicago, a standard certification company founded in 1978 and accredited in February 1991 to certify the quality systems of companies seeking ISO 9000 certification in industries including petrochemical, electronics, and paper manufacturing. "As primary manufacturers seek certification, they often request that their vendors follow suit and institute a controlled quality-management approach, such as that stipulated in ISO 9000," Courtrois said.

Since the late 1980s American industrial interest in ISO 9000 has grown sharply, Courtrois said. "We issued 21 certificates to companies between 1991 and August 1992, and more than 50 between then and February 1993," he said. Among the manufacturers whose facilities QSR has registered as meeting the ISO 9000 standards are Daniel Flow Inc. (Houston), General Valve Corp. (Fairfield, N.J.), and Woodward Governor Co. (Stevens Point, Wis.).

Additionally, Courtrois has made several recommendations to American manufacturers based on his experience in ISO 9000 registration. Among them was the importance of conducting a preassessment audit prior to the official ISO 9000 audit in order to spot any deficiencies in a quality system. Preassessment is typically performed by the registrar agency. This consultant can also assist ISO 9000 candidates in fine-tuning the quality manual companies are required to assemble under the standards. Courtrois' company will not even schedule an ISO 9000 evaluation until 30 days after it has approved the quality manual.

Closing Quality Loopholes

To reap the benefits of ISO 9000 and to remain competitive in overseas markets, the Davenport Works of John Deere Co. (Davenport, Iowa)--part of the Industrial Equipment division of Deere & Co. (Mo-line, Ill.)--sought certification in 1991. In 1992, the company, a manufacturer of four-wheel-drive loaders, motor graders, excavators, and log skidders for the construction, road maintenance, transportation, military, and timber industries, received ISO 9000 certification. North American government agencies and private concerns account for the lion's share of the Davenport Works product line; however, the plant ships its heavy-duty industrial machinery to numerous users overseas, including in Australia, Brazil, Egypt, France, Indonesia, Japan, New Zealand, Saudi Arabia, and Turkey.

On the road to certification, one innovation the Davenport plant made to prepare for ISO 9000 certification was to develop an electronic quality manual to replace the paper one. "Traditionally, quality manuals are retained by the quality professionals, but our electronic version can be accessed by any employee at any computer screen in the plant," said Bob Janeczko, management representative at Davenport Works. (Janeczko supervises plant suppliers so that they meet ISO 9000 standards.) Computerizing the quality manual also permits management to regularly update it and inform employees of changes via electronic mail.

Another change brought about by the certification quest was greater control of the paperwork generated in the quality-improvement process at Davenport Works. "We established what forms to use for what purpose, who would control them, and how long the information would be retained," explained Jim Herring, manager of facilities and assets at Davenport Works.

Davenport Works changed the way it handles inventory because of the packaging and material-handling provisions of the ISO 9000 standards. "We use inventory that has a limited shelf life, such as batteries, O-rings, and decals. While these were date-coded, we had no way of knowing if they were used past their expiration date," said Janeczko. The quality team rectified the situation by training pertinent purchasers, supervisors, and operators to use the older inventory first and store the newer items.

Although Davenport Works had long audited the quality of its products, working toward ISO 9000 certification demonstrated the need for internal audits of the plant's quality system itself. To save costs, Davenport Works decided to train existing full-time personnel to conduct periodic internal audits, rather than hiring additional staff or creating a permanent ISO 9000 department.

Typically, internal audits require operators, engineers, or supervisors to take a day or two away from their regular duties to conduct their inspection. For example, production engineers from the shop floor will audit the purchasing department, while purchasing staff will audit the production line. "Here's a golden opportunity to walk in the other guy's shoes and understand what he has to do," said Janeczko.

Herring said that his company spent the first few months investigating which registrating agency would be most suitable for Deere and studying the ramifications of the ISO standards. "Since the amount of information now available is greater than it was then, the search for an agency would not take as long today," he said.

As its primary outside auditor, Davenport Works chose Canada's Quality Management Institute (QMI) in Mississauga, Ont. In an atypical move, the company also selected the Japanese Machinery and Metal Inspection Institute (Tokyo) as another auditor. "We pursued the dual accreditation to ensure that our Japanese customers would recognize our certification," explained Janeczko.

In September 1991, about seven months after Deere began its drive toward certification, a two-day preassessment audit was conducted by a QMI auditor. "We wanted someone who could tell us where we were deficient, not where we were strong. If not for that outsider's perspective, we might not have passed our certification audit the first time around," Herring said.

The questions posed by the visiting Canadian and Japanese auditors extended quality improvements to the suppliers of services to the Davenport Works plant. For example, Davenport Works uses third-party suppliers to recalibrate the gauges it employs to measure the parts it makes at the plant. "As part of our preparation for ISO 9000 certification we reevaluated our recalibration suppliers, consolidated them, and verified their traceability to the NIST," said Herring.

In addition to marketing considerations, management at Davenport Works viewed ISO 9000 as a good measuring stick to compare the plant's quality system to an international standard. "The outside auditing required by ISO 9000 gives us an independent viewpoint that may see things we miss because we are too close to the process," said Herring. "The continuous monitoring conducted each year to maintain our ISO 9000 certification also helps keep our feet close to the fire to continuously improve our quality system."

Empowering the Operators

Some manufacturers who look to exports to offset mature or sluggish domestic markets are using, ISO 9000 to protect or expand overseas sales. One such company is the Clark-Reliance Corp. (Strongsville, Ohio), which makes liquid processing equipment including liquid level gauges, sight flow indicators, separators, and steam traps. Their major end users are petrochemical and chemical processors and utilities in North America, Europe, and Asia.

"Since our U.S. sales are mostly for replacement, our goal is to increase our exports to countries that are building new petrochemical facilities and power plants, such as in Asia," said Tim Weber, director of quality for Clark-Reliance. His company's management is using ISO 9000 certification to enhance the appeal of the equipment for export.

Weber and his colleagues at Clark-Reliance started work on certification in January 1992 and were approved the following October. The ISO 9000 certification process makes good business sense, said Weber. "It forces a company to look at its overall operations, not just production but suppliers and sales as well."

One improvement that came as a result of the certification process is that a Supplier Quality Requirement Manual was written for Clark-Reliance's vendors, who were evaluated through a survey, history, and audit results. "On the basis of our evaluation, we were able to classify 82 percent of our vendors as certified suppliers whose products did not require inspection, while the rest did require inspection," said Weber. Clark-Reliance's vendors include those selling castings, forgings, bar stocks, sheet metal, pipes, and some electronics.

To double-check its evaluations, Clark-Reliance kept track of all final rejects. "In the past four months, only one certified supplier had products rejected," Weber said.

Clark-Reliance's ability to meet product orders was also improved in the course of preparing for ISO 9000 certification. In the past, the company's sales representatives submitted product orders to the manufacturing plant without consulting the shop floor. This made it difficult for the plant to meet tight delivery dates. Indeed, three years ago Clark-Reliance had an on-time delivery rate of 30 percent. Bringing the sales and production departments closer together helped the company boost its on-time delivery rate to 90 percent.

Now, the order entry process requires the sales representatives to input product orders on the Strongsville plant's computer network so that in the case of large orders or those requiring quick delivery, the sales requests can be reviewed. "The shop staff determines whether we can fill the order in the alloted time and if we can perform required testing of the products," said Weber.

Using input from the manufacturing staff to fulfill product orders reflects a keynote of Clark-Reliance's post-ISO 9000 quality strategy--empowering the plant's operators. During the certification process, Clark-Reliance management shifted inspection responsibilities from an inspection department to the operators themselves. Seven full-time inspectors used to oversee supplies at the receiving end of the Strongsville factory. They also inspected components after their final machining, prior to final assembly. Today, 12 part-time auditors drawn from the operating and engineering staffs and a single full-time inspector make inspections at various points on the production line. Streamlining inspection procedures helped reduce scrap by nearly 50 percent from 1991 to 1992.

Operators play a stronger role in quality improvement at the Strongsville facility because of the ISO 9000 requirement for a documented corrective action process. In the past, when a problem arose at the plant, a correction would be made and then usually forgotten. There was no follow up or analysis of similar situations to prevent the same problem from occurring again. "Now our employees fill out corrective action requests that document the problem and its solution; this is used to prevent their recurrence," said Weber.

Clark-Reliance operators are also taking the initiative in making improvements and correcting errors by means of the plant's corrective action program. "One of our operators wrote that when he hoisted large parts out of a paint booth, the booth bent downward," recalled Weber. The operator believed that the booth might one day be damaged because of this and wrote up a corrective action request suggesting that laying an I-beam across the top of the booth would prevent it from bending. Clark-Reliance management incorporated his suggestion. Another operator used a corrective action form to ask why the company was using three forms for process inspection records when one would do. Clark-Reliance heeded his advice and cut its paperwork accordingly.

Reducing Scrap and Increasing Communication

In 1991, management at Eastman Teleco Inc. (Houston), a manufacturer of oil and gas exploration equipment, decided to pursue ISO 9000 certification before its customers required it. "ISO 9000 provides a solid foundation to set up continuous improvement procedures," said Jeffrey Haslam, quality assurance and quality control manager at Eastman Teleco's Oklahoma City facility. The plant manufactures downhole drilling motors and core sampling equipment used in drilling operations. The foreign buyers of this equipment include companies in Algeria, Argentina, China, Germany, Nigeria, Russia, and Venezuela.

When the process of ISO 9000 accreditation was initiated, a basic quality-control program that began in 1986 at Eastman Teleco was about 50 percent in place. "We needed to make a number of changes to our evolving quality-control program so that it would adhere to the specifications of the ISO 9000 certification process," recalled Haslam.

One of the ISO 9000 specifications lacking in the previous quality-control program was that work instructions were not in place. The quality-control staff in Oklahoma City turned to the workers on the factory floor for help. "We gave each department guidelines on the format of the work instructions and asked them to write the instructions themselves," Haslam said.

Another addition necessary to satisfy ISO 9000 was the documentation of training. "Since we had been training workers in quality control but did not document it, we needed to develop quality training plans and the documents to go with them," Haslam said. This involved listing the various training programs undergone by personnel on the company's data base in resume format. These training resumes are available in Oklahoma City and, increasingly, at other Eastman Teleco facilities.

As part of their certification strategy, Haslam and his quality-control staff tried to instill the so-called internal customers and suppliers concept. All personnel at the Oklahoma City plant were taught they they are supplied by others and must supply others with products meeting the established parameters of quality, time, and cost.

Eastman Teleco conducted several internal audits, and on one occasion brought in an outside consultant, to Check on the implementation of ISO 9000 specifications at the Oklahoma City plant. The assessment audit itself was conducted by Der Norske Veritas Industries (DNV) in Houston in November 1991. Company management felt confident enough to skip the usual preassessment audit because of its experience with previous DNV audits, according to Jim Busche, director of quality assurance at Eastman Teleco in Houston.

This do-it-yourself strategy paid off when DNV found that the Eastman Teleco facility scored 92 percent on the implementation of the ISO 9000 requirements, the highest score the auditor found for any company that skipped preassessment auditing. The certification report was published in December 1991 and the plant was officially certified on January 1, 1992.

Haslam said that there were no hard financial figures on the cost of certifying the Oklahoma City plant since the company had not specificed the man-hours involved. He estimated that the cost of quality training sessions, documentation procedures, and auditing costs added up to more than $100,000. Ongoing expenses to maintain ISO 9000 certification include approximately $16,000, paid annually to DNV for the audits it conducts at the Eastman Teleco facility every six months.

In return for its investment in certification, Eastman Teleco has improved the quality of the drilling motors and core sampling equipment manufactured at the Oklahoma City plant. "Since certification, we have reduced our annual scrap and rework costs by 34 percent," said Haslam. The Oklahoma facility also surpassed its goal of a 90 percent first-time acceptance rate for finished products. This refers to products that match engineering drawings. By the end of 1992, the Oklahoma City plant had a first-time acceptance rate of 94 percent.

Busche noted that the continuous quality improvement built into the ISO 9000 standards was refining the production process itself. "A member of the manufacturing staff suggested some design changes for a part that had been made at the plant for years. By changing some tolerances, we were able to make the part with less material, cutting the cost of fabrication and speeding it up," he said.

In addition to the tangible results, such as reducing rejects, ISO 9000 certification provides intangible--but no less valuable--benefits, according to Haslam. "Breaking down the communication barriers between different departments and explaining the overall picture to all of our employees have fostered team spirit and enhanced our efforts here," he explained.

Going Global

Government and private industry sources concurred that acceptance of ISO 9000 is spreading. According to Saunders of the Office of European Community Affairs, European countries that do not belong to the EC, such as Austria, are also adopting the ISO 9000 standards in government procurement. One-time members of the Warsaw Pact are also getting on the ISO 9000 bandwagon to improve their trade with the West. Breitenburg of NIST reported that the Czech and Slovakian republics, Hungary, Poland, Romania, and Russia have all adopted the ISO 9000 standards. Asian countries including Japan, Malaysia, Singapore, and South Korea are requiring ISO 9000-certified quality systems, as are South American nations such as Argentina, Brazil, Chile, and Colombia.

Third World nations are also pursuing international quality standards, as Tunisia and Zimbabwe have both adopted ISO 9000. "Saudi Arabia is working toward accepting the standards, and when they do, it is likely other Gulf states will follow their lead," said Breitenberg.

North American authorities are also moving toward requiring ISO 9000 certification. Weber of Clark-Reliance said that his company recently received a letter from the provincial government of Ontario stating that the Canadian province would require adherence to the ISO 9000 standards for safety-related products by May 1993. "This description includes some of our own product line. We might have been shut out of the Ontario market if we had not been certified," Weber said.

In the United States, a number of government agencies are studying the possibility of requiring ISO 9000 certification of their industrial suppliers. "Among the agencies examining the requirement are the Department of Defense, the Department of Energy, the General Services Administration, and the Food and Drug Administration," said Breitenberg.

Although many companies see opportunities in the growth of ISO 9000, some executives feel they are being pressured into joining a system they view with trepidation. However, ISO 9000 is not for everybody. Companies that do not sell to markets or customers that require the standards may not see the need for adhering to ISO 9000 standards. For original equipment manufacturers that supply items requiring ISO 9000 certification, however, the standard is proving its worth as a cost-saving and selling tool.

"Manufacturers should not be afraid of ISO 9000 because it is not very different from the kinds of standard certification they have had to meet for years, such as the programs of ASME," said QSR's Courtrois. He added that the ISO 9000 standards are self-renewing, since a company that has implemented the standards will continually monitor and improve them simply by following their requirements.