Tag Archives: ISO

ISO 9001:2015 What’s In It For You?

Tight Rope WalkerIn our last blog, we addressed some of the risks a company faces if they let their ISO 9001:2008 certification lapse.  This is likely not an issue for 90% of your portfolio companies.  Those companies have already taken the steps to comply with the new, ISO 9001:2015 standard.  For those portfolio companies that have not, losing their certification certainly offers the risk of lost competitiveness in the marketplace as well as the credibility the certification brings to their customer base. Avoiding the risk is certainly a strong motivator, but what about the business benefits the portfolio company can realize when an effective and efficient quality management system is in place?

We will answer the following 3 questions in this article:

  1. Why should I care?
  2. Ok, I hear you, but what’s the business impact?
  3. What should I do now?

In a Harvard Business School study comparing 916 adopter versus Quality Quote17,849 non-adopters of ISO 9001, they found that the adopters of ISO 9001 had the following business benefits:
“Quality is when the customer returns and the product does not”

  • Higher rates of survival, sales and employment growth
  • Increased wages
  • Reduction in waste generation
  • Enhanced worker productivity and ability to pay closer attention to detail

Why are organizations who have adopted ISO 9001 able to achieve these benefits versus their counterparts? The ISO 9001 standard provides a framework to maintain focus on key business elements. Why do customers buy our product? Who are our key partners? Why keep our team engaged? What does it take to create an “even better if” culture that is constantly focused on delivering value?

The American Society for Quality (ASQ) estimates that for every $1 spent on quality management, the organization can expect the following return:

  • $6 in revenue
  • $16 in cost reduction
  • $3 in profit

What are some things I should look for to see if my portfolio company has aligned their quality system with their business system?

Are there monthly management reviews where you can obtain a copy of the presentation package? How often are customers, suppliers, standards committees mentioned? How are employees kept engaged and is there an active development program? Are successes celebrated? How often is the leadership team on the floor or in departments? Upon your next visit, observe when / if this happens.

ASQ, in the same study mentioned above, found that:

  • Quality management reduces costs an average of 4.8%
  • Quality management was a significant driver of success for 93% of the organizations surveyed
  • Without quality management, 83% of organizations agree that they could not justify their pricing to their customers

All businesses have a quality management system that should be contributing to the business. If you are not seeing or experiencing some of the benefits highlighted in this article, a good place to start is by asking why. In asking this simple question, you will be drawing attention and initiating action which can be the spark you need to breathe life into that portfolio company that tends to keep you up at night.

Quality Quote 2

Ready or Not: ISO 9001:2015

The Deadline

Is your portfolio company ready for the ISO 9001:2015 QMS? We’re less than six months away from the deadline to comply with this revised standard, which was rolled out in 2015. While we’d like to assume that everyone’s preparations are well underway (if not completed), we also know that many companies have put this on the back burner while attending to more pressing tasks. As our Private Equity clients have begun to escalate this issue with management, they’ve encountered a trio of challenges. One or more may sound familiar to you.

The Pain Points

The first and most obvious is deadline stress. At this point, any unexpected monkey wrench while you’re moving toward compliance could lead to missing the deadline. ISO certifications are one of the ways we build trust with clients, so you could risk your position as a market leader, or even damage specific client relationships.

Another common complaint is that the sheer scope of what needs to be done seems overwhelming, especially in light of the resources you’ve already invested in compliance. How is it possible, you may find yourself asking, that we’re not closer to the finish line than this? When you find that quality and efficiency issues still persist, despite your best efforts to have sound processes, the recertification process can leave leadership feeling demoralized and frustrated.

Clients often raise a separate but related concern – the cost of maintaining a quality system can be high. But for many companies there isn’t a single system, there are two. One is the system your quality management team designed, which meets the highest quality standards. The other is the way things are actually done. This is particularly common when a team was rushing to meet a deadline. Rather than doing a deep assessment, then redesigning processes to meet best practices, the team designed a castle in the air that didn’t match the existing foundation. The disconnect between these two realities is often hiding potential EBITDA and a myriad of headaches.

The Possibilities

While the actual compliance process is frequently viewed as a headache, the new standard offers many benefits. Organizations that adopt ISO 9001:2015 will move toward a much leaner, process-based approach. This new quality standard is also designed to be tailored to your specific product or service, doing away with a more one-size-fits-all approach. We’re also very happy to see a push toward data-driven decision making.

If you’ve been paying attention to our blog, hopefully you’re making a connection right now. The key components of ISO 9001:2015 align with the best practices we advocate every day. That’s not an accident. You can see why we’d be natural partners for companies on the path to compliance.

What we typically do for clients who are working on their renewal is perform one of two kinds of analyses, depending on your needs. In some cases, an all-areas Systems Audit is the right starting point. Or, if there are specific areas where you feel exposed, we can do a more targeted Surveillance Audit. At the same time, we’ll do a Gap Analysis to highlight opportunities for cost reduction and profit improvement.

This is what we love about this new revision: it aligns your business with your Quality System, which is exactly what we do already. Instead of hiring a consulting firm to help with compliance, then having another firm in later to find overlooked EBITDA, clients who work with The ProAction Group on this will kill two birds with one stone. As an additional benefit, you’ll be able to count our due diligence as an Internal Audit, which it just so happens is a requirement of your QMS. If you’re ready to turn your ISO certification journey into a victory lap, reach out to us.

For Further Information:
Timothy Van Mieghem
The ProAction Group, LLC
445 North Wells St. Suite 404
Chicago, IL 60654
Tel: (312) 371-8323

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