ISO 14001 Management System Certification – Cost versus Value

The most popular type of management systems used today often depends on the type of organization, and how they run their operations.  ISO 9001:2015 Quality Management Systems is the most popular for companies selling products to the military, along with AS9000:2016 Rev D for aviation, space, and defense organizations.  Food processors lean toward ISO 14001:2015 Environmental Management Systems (EMS) and ISO 45001:2018 Occupational Health and Safety (OH&S).  The size of the organization can have a significant bearing on whether they get certified or claim to conform.  It cost less to state you conform than to conduct the number of audits needed to become, and stay, certified.

Agricultural oriented small and medium enterprises (SMEs) will often opt for EMS.  Vineyards, vegetable farms, and livestock farms like ISO 14001.  Therefore, it depends a lot on the percentage of SMEs that are in those businesses.  In many cases, the percentage of organizations conforming to ISO 14001 depends on the amount of local or government pressure to conform.  In Europe and China, ISO 14001 is much higher than in the USA, in part due to government and environmentalist pressure.

Agricultural businesses and those that are getting pressure from socially responsible groups are the types of organizations that become ISO 14001 certified.  Meat packaging companies like Smithfield Ham in Virginia (now owned by a Chinese company), is ISO 14001 certified.  Only four major Ports in the USA are ISO 14001 certified (Port of Virginia is one) but many countries require the certification.  Partly due to all of the food coming into the Ports, but also due to the amount of pollution generated by boats, trains, and trucks that service the Ports. Ports are also now looking at ISO 50001 Energy Management Systems in conjunction with ISO 14001 certification.

One of the key drivers is the desire to meet ISO 14001 Standard requirements in the markets that they want to operate in or sell to.  It is difficult to open facilities in most of Europe, the Middle East, and China without having an ISO 14001 certification.  Environmental impact, energy efficiency, pollution reduction, and sustainability are considered by government permitting organizations.  This is more important for large organizations, but many SMEs also want to sell internationally.

Like other ISO Standards, it takes about a year of internal audits to be ready to claim conformity or get certified to ISO 14001.  SMEs, due to their smaller size, could take less time.  Medium-size businesses, with multiple locations, may elect to just have their headquarters certified, and state conformity for branches and suppliers.  An organization may elect to get its headquarters operation certified and use second-party audits to confirm that its other facilities and suppliers conform to the Standard.

The major cost of becoming certified involves training and multiple audits to get ready for certification.  Once ready, a third-party audit is required.  Most SMEs could be ready within a year.  The actual cost would vary depending on the number of employees trained, and the number of audits conducted before certification.

With good training and responsible staff, most SMEs can become certified.  All processes need to be in line with the goal of using environmental best practices.  In some cases, the cost of changing current processes can become a barrier.  Organizations can consider out-sourcing some processes in order to become more environmentally friendly.  Internal and second party audits can help an organization determine what, if any, processes need to be modified or out-sourced.

There are many reasons why organizations decide to become certified, but over time, reasons have changed for both small and large organizations.  With the new high-level-structure (HLS), EMS is now more similar to other standards.  Organizations that use to be ISO 18001 are now considering ISO 45001, which has OSHA embedded in it.  SMEs, like larger organizations, appreciate the value of being certified to popular standards and promote their conformity in their promotional material.  Many companies that are certified to ISO 9001 have to get the certification to sell to government agencies.  Many of the companies that get ISO 14001 certification, feel their end-users appreciate the company for having it.

To be sustainable, an organization needs to consider many factors.  These factors typically fall into one of the three pillars of Sustainability – Social, environmental and economic categories.  All organizations want to be socially responsible and do minimal damage to the environment, but they have to address the economics of operation.  The key is to strike a balance and establish a management system with processes that can be defended in the light of internal and external audits.

– by Peter Burke

The Cost of Certification: A deterrent to system implementation?

Certifications often drive the implementation of a system approach, based on ISO standards. The primary implementation demand is for ISO 9001.

Certifications do have initial costs and then recurring costs for surveillance and re-certification visits. This is a responsive approach to business requirements, invariably driven by a forthcoming contract that mandates the system approach. Prudent businesses appreciate the risk of not having a process-based system.

When budgets are tight, supply chains are challenging, and retaining employees is difficult, it is all the more essential that organizations invest in a good management system. As W. Edwards Deming said, “A bad system will let down a good person every time.”

An efficient management system should be an essential asset of any good organization. Certification should not be the primary driver of this requirement. The optimum return on investment is by effective process performance based on objective information analysis, which in turn is based on data from within the organization or an appreciation of inputs publicly available. Organizations’ leaders should look beyond certifications to implementing and maintaining systems that drive continual improvement. Continual improvement drives organizations to find cheaper and quicker solutions while improving the quality of their products and services. After all, is that not what customers expect? The best quality for the cheapest price point?

Organizations can, and should, consider the option of self-declaring their conformity to ISO 9001, without incurring the added expense of certification, especially when customer requirements do not mandate it. Meeting customer requirements, ensuring continual improvement, and leading the organization to innovate cannot be achieved without a system in place. Effectiveness and efficiency is achieved when employees use system processes to achieve objectives. Customers’ confidence in the organization comes from trusting that they will receive conforming products/services consistently. The cost of not following a system approach can lead to work performance that is not optimized and results in losses.

ISO 9001:2015 requires an appreciation of the context of the organization, as well as the risks and expectations of the interested parties. This enables the organization’s leaders—in fact, requires them in clause 5.1.1 b—to define quality policy and objectives for the quality management system (QMS) that is aligned to the strategic direction of the organization. The QMS now is not an add-on to the business strategy but is integrated with it.

Experience has repeatedly shown that the lack of customer focus is the major cause of businesses failing or not performing, of governmental agencies overshooting budgets, and sensitive organizations (e.g., nuclear facilities, military bases, hospitals) making fatal errors. The cost of not having a system is so high and the consequences so dangerous that it would be almost suicidal not to have a management system in place.

Once the decision to implement the system has been made, why reinvent the wheel?

The well-tried, regularly updated ISO 9001 standard, which encompasses years of global wisdom, is the correct choice. Once the system is implemented and the organization’s leaders have confidence in the system’s performance based on objective inputs (such as audits, inspections, feedback, and other inputs), top management can self-declare the system as conforming to ISO 9001. There is no cost to this except the minor investment in using a competent consultant who comes in respecting the existing system and then identifies and addresses any gaps. After all, every functioning organization has a system.

The next stage, requiring investment in the certification, is a decision to be made by top management when a business requirement necessitates this. When it does, then the work will pay for it.