the business value of a good qms
TRANSCRIPT
The Business Value of a Good
QMS Building the Case for Quality in your Company
Copyright © November 2011
IBS America, Inc.
www.ibs-us.com 781.862.9002
“The Business Value of a Good QMS”
IBS America, Inc.
www.ibs-us.com 781.862.9002
IBS America, Inc.. 24 Hartwell Avenue . Lexington, MA 02421 .Tel: (781) 862-9002 Fax: (781) 862-9003 .www.ibs-us.com
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Introduction:
You understand what quality is, and you understand how important it is to the life of your organization.
It’s your responsibility as a quality professional to assure quality in the goods and services provided by
your company, as well as acting as an advocate for quality to upper management.
As you may know by now, this isn’t always easy: convincing C-Level executives of the value of quality
can be a daunting task, especially when you don’t know where to start. In this whitepaper, we’ll discuss
the business value of quality, which will help you to build a case to present to upper management in order
to increase your quality management systems efforts. We will look at the two-fold aspects implicit in this
topic. First, what is the value of organizing the company around a quality management system and
second, what are the advantages to be gained from using software to facilitate the operational aspects of a
QMS?
A Good QMS
Given the industry, it’s safe to assume that an organization will be dealing with quality requirements of a
single harmonized standard, meaning the countries involved have agreed to accept industry standards
such as the ISO 9001 or ISO 13485 certification/registration, rather than requiring an organization to
undergo registration to different requirements in each country where it intends to do business. From a
business’ marketing standpoint, this is a key point in terms of streamlining operations and reducing costs
of compliance.
This has led management in some organizations to view compliance to a standard as an otherwise
unnecessary set of activities that either unrelated to the business and which merely add costs…Unless this
perception (and it is only a perception – not the reality) of the role quality plays in the enterprise is
changed, not only will the value of the QMS be undermined, but the overall performance of the
organization will be hamstrung.
A good QMS (Quality Management System) should provide a well-defined representation of your
business model as an organization, company, and/or division that demonstrates conformance to the
standard that your company is held to be compliant to, whether it be ISO 9001, AS9100, ISO 13485,
ISO/TS 16949; etc.
Quality managers have commented in that past that companies that develop, implement, and embrace
their QMS as a way of running day-to-day operations, tend to be more successful in process performance
and delivering customer satisfaction to those who seek their products and services in comparison to those
who merely seek having a QMS because they “have to.”
“The Business Value of a Good QMS”
IBS America, Inc.
www.ibs-us.com 781.862.9002
IBS America, Inc.. 24 Hartwell Avenue . Lexington, MA 02421 .Tel: (781) 862-9002 Fax: (781) 862-9003 .www.ibs-us.com
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A recent blog post from Quality Digest, “ISO 9001 Proven to Help Win New Business”, outlines some
recent findings in terms of QMS implementation. In it, The British Assessment Bureau (BAB) states
that the business value of a good QMS comes into play when a company can realize that the effectiveness
and efficiency of their quality management system, and sees that the QMS has directly helped your
company or organization achieve and sustain their goals and objectives. This then leads to continuous
process improvement, profitability, and performance – and directly affects your bottom line.
The findings of the 2010 survey by the Harvard Business School, Quality Management and Job
Quality: How the ISO 9001 Standard for Quality Management Systems Affects Employees and
Employers, compares 500 companies seeking quality certification against otherwise similar
companies who were not. The research revealed significant positive differences between the two
groups of companies, including fewer certified companies went out of business, certified
companies were more profitable, and their employees were paid more. Sales and employment
also grew substantially more rapidly post-ISO certification at firms that adopted ISO 9001 than
those who did not.1
According to data from the BAB independent 2011 Client Satisfaction Survey, 44% of
respondents said that they had won business as a result of becoming certified to ISO 9001, the
quality management system standard from the International Organization for
Standardization (ISO). This survey, which was carried out by specialized market research
organization, Lake Market Research (LMR), showed that for many organizations, the prospect of
winning more work was the primary motivation for implementing the standard.
Bottom Line: “Build a better process, and they will come.” 2
The Case for Quality Management Software
Even with all the positive attributes and capabilities as outlined above, an effective QMS doesn’t always
have the respect that it deserves within a company. In reality, there is no difference between an effective
quality management system and a financial accounting system, a human resource management system, or
even a strategic management system – yet these can all be given priority over quality.
The reasoning behind this is that the existence of a QMS must be justified by its ROI. It’s unfortunate
that most quality management systems are given a harsh “pass/fail” grade, and if they don’t perform, they
are scrapped. If resistance is met in this case, you must justify the QMS existence by identifying ways it
1 “Quality Management and Job Quality: How the ISO 9001 Standard for Quality Management Systems Affects
Employees and Employers” Harvard Business School, David I. Levine and Michael W. Toffel, January 2010
2 “ISO 9001 Proven to Help Win New Business” Quality Digest, June 2011
“The Business Value of a Good QMS”
IBS America, Inc.
www.ibs-us.com 781.862.9002
IBS America, Inc.. 24 Hartwell Avenue . Lexington, MA 02421 .Tel: (781) 862-9002 Fax: (781) 862-9003 .www.ibs-us.com
Page | 3
adds value to your specific organization. Or, if a QMS is already in place, identify ways in which it can be
improved, then present these findings.
Another obstacle the quality professional faces is that
having the most sophisticated quality management software
technology is not always available at their fingertips at
many companies. In this case, it can be tempting to “build”
your own quality management system, especially if your
organization is on a budget or not given priority within an
organization. After all, there are plenty of free tools to
utilize, right?
While some tools, like Excel and SharePoint, are excellent
for certain tasks, quality management isn’t necessarily one
of them. Having a comprehensive Excel template may
serve the purpose for a while, but it can be difficult to
document issues well and to track the history of each issue
during research, resolution and retesting. Additional test
runs of the same cases are also difficult to document well
and to link together for a comprehensive history.
Collaborative efforts to identify root causes, apply short-
term remediations, or organize effective long term solutions
can be much more time-consuming and fraught with failure
when these activities are not managed within an integrated
system.
Additionally, building an extensive library of test cases across all projects or related projects is
near impossible with these tools. It requires manually adding a test case list to another 'master
index' file with links. Without the ability to effectively assemble information, it is impossible to
leverage experience and “lessons learned” throughout the enterprise.
Having a library of test cases allows you to accumulate the existing test cases from any project in
order to start a new project. Once you implement an appropriate quality management software
system for your company, you will be able to have relationship links, extensive history with
details by user for each item, and an incident workflow. You can also customize the workflow
for any project and for any I.T. group, such as Operations, Training & Support, etc. And these
are just a few of the many quality management software capabilities that are available in the
market.
For a more specific analysis, IBS America took a look at an available tool, SharePoint, to see
how the technology stacked up to quality and compliance document control needs in our
whitepaper, “Why SharePoint Doesn't Meet Doc Control Demands for Quality and Compliance”.
Download this whitepaper to get some more details on the limitations of SharePoint.
According to data from the
BAB independent 2011
Client Satisfaction Survey,
44% of respondents said
that they had won business
as a result of becoming
certified to ISO 9001, the
quality management system
standard from the
International Organization
for Standardization (ISO).
“The Business Value of a Good QMS”
IBS America, Inc.
www.ibs-us.com 781.862.9002
IBS America, Inc.. 24 Hartwell Avenue . Lexington, MA 02421 .Tel: (781) 862-9002 Fax: (781) 862-9003 .www.ibs-us.com
Page | 4
Bottom Line: Business value is improved efficiency and better documentation of information
and relationships between objects. There are additional benefits that contribute to the business
value. The bottom line savings, in this case, is in man hours.
The Right QMS for You and Your Customers: A Competitive Edge
There is no blanket quality management software tool that will fulfill all company QMS needs.
Most companies don't make use of a QMS as tool for change, as the QMS must be able to fit the
needs of the organization, and often do not. An effective QMS also needs to be driven by
management, and unfortunately, seldom is.
A quality management system can be a very good tool to assess the current condition of the
business performance if all the requirements like audit management and Quality Management
Reviews (QMR 's) are conducted on a timely basis. Also, if it is well understood by the
appropriate departments, changes, corrective actions and preventative actions can be made
quickly to improve performance before major damage is done.
Having the right QMS can also help you stand out from your competition. Most organizations find that
a consistent, systematic approach - such as following either or both FDA and ISO 13485 requirements -
appeals to both wholesale and retail customers because it gives those customers a chance to compare
"oranges with oranges." Most customers are cost-conscious and having to evaluate a "wild card quality
system" versus those which adhere to a common, known Standard are considered more trouble than the
business is worth: any product or service cost benefits offered by the wild card system are offset by the
soft costs of evaluating the wild card system for efficiency and efficacy.
Thus, having an effective QMS system in place that aids in your company compliance to quality
standards and government regulations can help you to win business. Comments Christian Stoneham of
Masters Exhibitions & Shows, “We are starting to win new accounts that we could not have approached
in the past as they insisted on having ISO 9001.”3 That’s great - but how does this work?
Imagine that you have a pile of resumes to filter through for one job opening at your
organization. How do you reduce that pile to only a few qualified candidates? The answer is
credentials: which is exactly how your customers will separate you from the herd. A registered
QMS will put your business in the running with new clients.
To take the medical design industry as an example, first question asked of such a company from
a prospect would be “Are you ISO 13485 registered?” Prior to implementation of said standard
and Current Good Manufacturing Practices (CGMP), many potential customers will simply
walk away upon hearing “no”, as the liability of working with a non-certified company is not
worth the professional relationship. Additionally, when you as are working to qualify vendors,
you should also ask the exact question of them.
3 “ISO 9001 Proven to Help Win New Business” Quality Digest, June 2011
“The Business Value of a Good QMS”
IBS America, Inc.
www.ibs-us.com 781.862.9002
IBS America, Inc.. 24 Hartwell Avenue . Lexington, MA 02421 .Tel: (781) 862-9002 Fax: (781) 862-9003 .www.ibs-us.com
Page | 5
Bottom Line: Choosing the right QMS for your industry and business not only enhances your
performance in day-to-day activities and requirements, but also distinguishes yourself from your
competition when you look to gain new customers.
Savings by the Numbers:
Having an effective QMS that adds value to your company can also be quantified in numbers.
After due diligence into your own company’s QMS, you may be able to identify and forecast
savings and ROI specific to your organization or industry.
To help inspire you, here are some companies that have provided some metrics: IBS customers,
for example, have seen a 42% improvement in 'first time through' performance of the build
process. Another has seen a reduction of staff turnover, from 80% to 20%. One company defined
$7 million in Cost of Quality savings in the first 3 years of implementing a QMS, on an annual
revenue base of about $120 million. Yet another removed a costly 60% rework loop, which was
costing the company thousands each quarter. It's all dependent upon the maturity of the
management and control of processes, overall.4
According to the 2011 Aberdeen Research Report on Closed Loop Quality Management, Best-
In-Class organizations were shown as more likely to adopt a QMS application. Quality
management systems help these organizations automate end-to-end business processes across
sourcing, design, manufacturing, delivery and service.5
4 Data provided by personal experience of LinkedIn quality professionals
5 2011 Aberdeen Research Report: Closed Loop Quality Management across the Value Chain
“The Business Value of a Good QMS”
IBS America, Inc.
www.ibs-us.com 781.862.9002
IBS America, Inc.. 24 Hartwell Avenue . Lexington, MA 02421 .Tel: (781) 862-9002 Fax: (781) 862-9003 .www.ibs-us.com
Page | 6
Implementing a Successful QMS
If you are considering revising your quality control system, take the time to revisit past QMS projects that
were considered in the past:
Why were those projects selected?
Did management resource the project, and endorse for its success?
Was the employee base receptive and engaged, or merely waiting for the "flavor of the
month" to pass by?
If the projects failed, why did they? Talk with the stakeholders from past projects; review the
project notes, charts, presentations.
Were the projects too easy or too complicated?
Or were they too aggressive to complete with an unrealistic deadline?
Was the project motivation based on a periodic bonus or a true internal need?
Try to leverage the knowledge you gain in order to move
your company forward. If you are new to the company or
don’t know where to start with this QMS evaluation process,
try downloading this IBS Whitepaper, “You’re In Charge of
Quality…Now What?” to help you get started.
Also try to discourage the management inclination to “throw
more money at the problem” with new hires. Remember,
simple quality management concepts and tools should
not be taken for granted: Job Descriptions, Performance
Goals, Organization Charts with clear reporting
structures and accountability have much more value
than simply adding personnel to a department that lacks
structure, which will only cause further problems in the
long run.
“With QMS implementation, new
audit and reporting procedures were
implemented, document control
procedures were improved, and more
effective corrective actions and
preventative actions were performed
to name a few of the changes. The
result was a 42% improvement in
our external inspection and a dramatic
increase in customer satisfaction.”1
“The Business Value of a Good QMS”
IBS America, Inc.
www.ibs-us.com 781.862.9002
IBS America, Inc.. 24 Hartwell Avenue . Lexington, MA 02421 .Tel: (781) 862-9002 Fax: (781) 862-9003 .www.ibs-us.com
Page | 7
One company offered the following reflection after a QMS implementation:
“My experience with QMS implementation was a result of regulatory/certification findings that
forced an overhaul of the way we conducted business processes. New audit and reporting
procedures were implemented, document control procedures were improved, and more effective
corrective actions and preventative actions were performed to name a few of the changes. The
result was a 42% improvement in our external inspection and a dramatic increase in customer
satisfaction.”6
Results of Effective QMS
An effective QMS provides confidence to customers and management that you have the
infrastructure to meet customer expectations and needs in a consistent manner. When a QMS is
effectively implemented, you have clearly defined ownership and processes that meet your
business and customer needs.
An effective QMS also provides the framework and infrastructure to identify, monitor, measure,
and improve performance. Lastly, it provides more revenue, lower costs, higher profits, engaged
employees, delighted customers, and successful suppliers.
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6 Quote given by experienced quality manager from the Quality Management LinkedIn group
Download the Quality Management Software Data Sheet