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.

Risk-Based Thinking: Is This Something New?

Not really, but it does require a new way of planning.

Risk-based thinking can be considered the fundamental change in ISO 9001:2015. Compared to ISO 9001:2008, where preventive action (PA) held a spot in the “act” phase of the plan, do, check, act (PDCA) cycle, risk now appears in the “plan” phase and at each stage thereafter. This change formalizes an idea that has been around since at least 1546, when John Heywood coined the proverb, “Look before you leap.”

er clauses 4.1 and 4.2 of ISO 9001:2015, it is therefore reasonable that the context of an organization should be considered during the planning phase, as well as before it, together with the needs of interested parties. Based on these inputs, risk also should be considered, per clause 4.4.1 f: “address the risks and opportunities as determined in accordance with the requirements of 6.1.”

This makes me wonder: Has the standard previously not addressed risks posed to quality management systems (QMS)? Risk was always considered, but inferred and inadequately interpreted by organizations. Only now has it been systematized as a requirement. Throughout ISO 9001:2015, in clauses related to each stage of the PDCA cycle, there is a requirement to address the risk.

Can you imagine a general planning a war strategy without appreciating the risks involved, per clause 9.1.3, which requires analysis and evaluation? Perhaps this is an opportunity for the rest of the world! In real life do we not consider various risks as we send children to school, select toys, and plan expeditions? The details we go into are based on the context of what we are doing and the parties involved. Therefore, if an organization manages a simple production line to manufacture toilet rolls, the context and risk would be different than those involved in operating a nuclear plant.

But why call it “risk-based thinking” and not risk management?

ISO 9001:2015 has to be applicable across industries and to organizations of various sizes. It remains a process-based standard. Should an organization need a formal risk-management system, the standard refers to ISO 31000:2009—“Risk management.” Risk-based thinking asks that everyone in the organization think about the risk of doing, or not doing, their assigned tasks. This concept was implicit in earlier versions of ISO 9001, too, but now organizations are systematically required to understand the context (clause 4.1) and then determine risks before planning (clause 6.1).

Although the revised standard does not mention preventive action, a QMS is a preventive tool. With risk replacing preventive action, the QMS has become more effective as a philosophy. Moreover, risk no longer has a strictly negative connotation. It simply must be addressed, and where applicable, it should be taken as an opportunity for improvement. Risk input may lead to a positive and innovative idea.

As organizations transition to ISO 9001:2015, or seek to become newly certified, they must not go into “panic mode.” It’s helpful to remember that risk has always been considered in the standard, but companies are now required to be proactive rather than reactive in their considerations. With its high-level structure (HLS), ISO 9001:2015 is actually more logical, simple, user friendly, customer-focused, and aligned with modern technologies. And it’s applicable to both manufacturing and service industries.

At a very basic level, all that an organization has to do is consider these six steps:
1. Make a list of the organization’s hazards. These should be identified in various processes by process owners. Where an organization is departmentally organized, the department heads should consider these.
2. Having listed the risks, the impacts or potential harm should be listed against each risk.
3. The departmental lists can be consolidated into an organizational list under the direction of top management or a designated quality manager.
4. Evaluate each risk and its associated impact or potential hazard to assign a priority or significance number.
5. With top management’s involvement, decide how to isolate, minimize, accept, transfer, or eliminate the risk.
6. These risk-minimizing decisions then require a specific plan. Come up with proposed actions for each risk, including assigning responsibility and a completion date for them. Process owners must also agree with top management on the frequency of monitoring the progress.
7. This can be further expanded, if necessary and within the context of the organization, by considering the likelihood of detection.

The standard asks organizations to plan to address risks but does not specify the need for a documented plan. However, a well-documented plan to address risks can only benefit an organization and add value.


By CEO and President, Captain Inderjit Arora

Objective Auditing Meets ISO 9001:2015

Objective auditing has always been a challenge, and this is especially true now for ISO 9001:2015 audits.

To better meet customer expectations, fundamental changes have been introduced to the standard to address current business realities and advancements in technology. Much of the responsibility of meeting the new requirements falls on leaders, and a careful, objective audit to the standard can help them.

It’s human nature that with knowledge and experience comes a touch of ego, but an auditor with an ego can be a liability. Experienced auditors must guard against a tendency to add subjective opinions to their audit reports and focus instead on providing objective inputs. In this way they can help leaders make rational, objective decisions. This challenge is further compounded for auditors experienced in auditing to ISO 9001:2008, with its emphasis on preventive action. ISO 9001:2015 no longer addresses preventive action but instead focuses on establishing risk-based thinking throughout the management system. What’s the best way to audit this?

The starting point for corrective action (CA) is the non-conformance report (NCR).

A well-written NCR clearly states the standard’s requirement, the objective evidence for citing the non-conformance, and a description of the failure that occurred. If at this point an auditor allows his experience to bias what he expects should happen instead of sticking to the requirement, management ends up with a subjective input.

A closed NCR provides data that management can analyze for possible trends, which can then be addressed by preventive action. For previous editions of ISO 9001, that was the fundamental base of a successful management system: Basically, data drove trends and preventive action.

With ISO 9001:2015, preventive action has been replaced by risk-based thinking, which requires a more dynamic role for leaders. They must understand and continuously assess risks at every stage, mitigating them and considering opportunities for improvement (OFI). This is important to do even before the planning stage of the plan-do-check-act (PDCA) cycle, by first understanding the context of the organization.

Leaders’ understanding of the context of the organization, as well as their ability to assess risk and consider opportunities for improvement, need to be audited. Auditors must be especially careful here and not jump in and confuse management by offering their own opinions. ISO 9001:2015 has strengthened the leadership role, not weakened it, and by offering subjective advice, auditors could jeopardize this. They must limit their role to providing objective NCRs and allow management to make the decisions.

Understanding the Organization in Context

Per clause 4 of ISO’s Annex SL, ISO 9001:2015 and other ISO standards require an organization and its leadership to understand the context of the organization when determining key management system elements such as the scope of the system (clause 4.3), processes (clause 4.4), the quality policy (clause 5.2), and planning, objectives, risks, and opportunities (clause 6). For more about this, see also ISO/DTS 9002—“Quality management systems—Guidelines for the application of ISO 9001:2015.”

So what, then, is this “context of the organization?” Put simply, leaders must thoroughly understand the relevant internal and external issues, both positive and negative, that can affect their organizations’ ability to achieve intended results. Consequently, they must monitor and review these issues regularly.

Leadership also has a tremendous responsibility in being fully aware of the risks to the organization. An understanding and appreciation of the context of the organization can help with this, particularly if it’s undertaken before the planning stage of the PDCA cycle. When fully appreciated, the context will not only promote more robust plans but also highlight inherent risks that can provide opportunities for improvement and innovation. This is vital in the success of the organization.

When organizations undergo mergers and acquisitions, relocate, outsource large parts of their business, or change their products, the context of the organization changes. The internal and external factors change. Leadership must understand the implication of these changes in the context of the organization. Doing this will also allow them to see the risks and perhaps opportunities for improvement.

It’s like going into battle. A lot of things must happen before troops are deployed. For example, the logistics of deploying troops in harsh terrain surrounded by hostile countries, and the chances that they may fail, must be considered. If the risk is too great, then perhaps the nation’s diplomats should first reach out to surrounding countries to create a safe corridor for supplies or retreat. This diplomacy might uncover opportunities for better relations with these states. The risk might also require intelligence agencies to assess conditions on the ground. Thus prepared, the military leadership can best ensure the mission’s success.

By CEO and President, Captain Inderjit Arora