Many of the espoused criticisms of quality standards, such as ISO 9000, by managers seem valid on the surface but may actually mask an underlying strategic position of an organization. Our recent study attempts to demonstrate that companies who fully integrate a Quality Management System (QMS) may reap significant benefits both internally and externally in terms of quality assurance.
Quality standards like the aforementioned ISO 9000 do not have to be a non-value adding, paper-driven process. However, companies who see registration as a game to maintain customers will not obtain the additional benefits seen by more proactive peer organizations where additional effort is put into quality standards integration and supply chain quality assurance. Consequently, we find that there are significant differences between facilities that install a registered QMS with external coordination and integration when compared to facilities that do not. Facilities that see ISO registration as an opportunity to improve Quality Assurance (QA) and supply chain integration of quality standards will support a more effective supply chain.
Buyers wanting to improve the integration of quality within their supply base should seek out suppliers that are characteristic Prospectors within the Miles and Snow typology1.
Integration Drives Performance
Prospectors have the greatest opportunity for a competitive advantage from ISO registration. Plants with a lesser amount of integration or that do not use ISO registration as a catalyst for change and quality assurance tend to be Reactors and should not be sought out by buying firms. Interestingly, buyers wanting to increase either ISO standard integration or quality assurance should seek out Defenders or Analyzers. These types of plants, while not as desirable as Prospectors, can improve a supply base and a supply chain to varying degrees.
Inclusion of Supply Base Enhances Performance
ISO registration contains important foundations for QA. Registered plants are forced to examine all of their processes and, in doing so, examine their own competitive priorities. Many plants with a strong focus on QMS integration have used the documentation process as a tool to discover and later solve problems.
Much the same as any new initiative, early in the implementation of a quality system and its registration, low hanging fruit will be found; plants with successful integration will receive early benefits. They will also find more long-term returns through each of the following: inclusion in a customer’s supply base, less variance in manufacturing processes, enhanced visibility and communication with supply chain members, an external image of quality, and the ability to attract new customers who understand and work with registered suppliers.
Institutionalized System Ensures Repeatable Results
Quality standards, such as ISO 9000, force plants to measure many things they have not previously measured and the resulting metrics may be useful in both finding and solving problems. Without a proper performance measurement system it is difficult to measure, manage, and hold people accountable for their actions.
The importance of performance measurement cannot be stressed enough, as good performance measurement systems facilitate better understanding of processes and products internally and externally. A repeated sentiment from managers involved in this study is that without the structured approach of the ISO registration process, many quality system implementations would have fallen short of delivering the benefits discussed in this study. These same benefits are what help facilitate quality assurance upstream and downstream within a supply chain.
Full Adoption by Supply Base Results in Competitive Advantage
The results of this study contribute to theory development by exploring a strategic dimension of QA, i.e., ISO 9000; positing new research propositions; and confirming relationships posited in previous research. It also suggests that future research should take into consideration the strategic position of a plant when assessing the impacts of ISO 9000 or when modeling supplier section practices that include ISO registration of a supply base.
In this study we show that ISO 9000:2000 has the potential, when used under the right circumstances, to improve QA across the supply chain. In other words, it is a tool for QA and it can be applied across firms so as to tap into the synergies associated with QA, i.e., better understanding of processes, lowers costs, and improved performance.
Through the use of a structured interview protocol and qualitative data collection methods, the information from the respondents in this study also helps to develop theory in a broader context. It does this through an increased understanding of the ISO 9000 uncertainties, risks, benefits, and implications for quality assurance within a supply chain.
We find that ISO registration does not make for a level playing field and that the level of integration and impact on supply chain QA vary. This variance allows for some plants to actually obtain competitive advantages from registration while other plants will always struggle with QMS development, integration, and compliance with registration.
We hope these study conclusions will help you and your team drive quality performance throughout your supply chain.
1 Miles, R.E., Snow, C.C., 1978. Organizational Strategy, Structure and Process, McGraw-Hill, New York, NY.