Read This CNN Article on “ISO 9000” from 1993

This article originally appeared on a now-defunct “CNN Money” website in June of 1993, which apparently republished this from an original article in Fortune Magazine. It was written by reporters Ronald Henkoff and Ricardo Sookdeo. The original web article was captured within America Online (AOL), and was highly corrupted (AOL was not friendly for saving online articles), so a few sentences may have gotten truncated. I’ve done the best I can recreating headers and paragraph breaks from what was a run-on text string. The original article apparently included a graphic on ISO 9001 certification, but that’s lost to time.

I add my comments at the bottom.

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THE HOT NEW SEAL OF QUALITY

Brace yourself for ISO 9000, the certification many people don’t understand. If your operation hasn’t qualified, it may need to soon.

By Ronald Henkoff REPORTER ASSOCIATE Ricardo Sookdeo June 28, 1993

(FORTUNE Magazine)

WHAT IS ISO 9000 — dial-a-horoscope? A foreign sports car? A new galaxy? No, try again: ISO 9000 is a standard of quality management, hugely popular in Europe, that is rapidly taking hold in the U.S. — and around the globe.

If, like many business people, you don’t know the first thing about ISO 9000, or if you think this is just another trendy program with a goofy acronym, then listen up. Your customers are calling. Du Pont, General Electric, Eastman Kodak, British Telecom, and Philips Electronics are among the big-name companies that are urging — or even coercing — suppliers to adopt ISO 9000 (say it ICE-o nine thousand). GE’s plastics business, for instance, commanded 340 vendors to meet the standard by June.

Declares John Yates, general manager of global sourcing: ”There is absolutely no negotiation. If you want to work with us, you have to get it.”

”It” is a certificate, awarded by one of many independent auditors, attesting that your factory, laboratory, or office has met quality management requirements determined by the International Organization for Standardization. In the U.S. the number of certificates issued has more than quintupled in just the past 14 months (see chart).

The ISO 9000 standards, spelled out in a slender paperback volume (available in the U.S. for $235 from the American National Standards Institute, 11 West 42nd Street, New York, New York 10036; 212-642-4900), do not tell you how to design a more efficient washing machine or build a more reliable nuclear missile. But they provide a framework for showing customers how you test products, train employees, keep records, and fix defects. Think of ISO 9000 not as another variant of total quality management but as a set of generally accepted accounting principles for documenting quality procedures.

With certificates issued worldwide estimated at more than 30,000, the standard is rapidly becoming an internationally recognized system, comprehensible to buyers and sellers. Says Richard Thompson, vice president and general manager of Caterpillar’s engine division, whose Mossville, Illinois, plant was among the first American diesel engine factories to win the certificate: ”Today, having ISO 9000 is a competitive advantage. Tomorrow, it will be the ante to the global poker game.”

So frothy is ISOmania in the U.S. that auditing firms, known officially as quality systems registrars, are doubling and tripling their staffs in a frantic effort to keep pace with demand. Often offshoots of product safety testing firms such as Underwriters Laboratories, registrars are frequently booked solid six months ahead. The drive for ISO 9000 registration — which can cost a company as much as $200,000 per site — has spawned a new industry of consultants, trainers, and conference organizers.

Hold Onto Your Checkbooks

Despite the hoopla, ISO 9000 remains dogged by controversy and confusion. Most industrialized countries have set up accreditation bodies to vet registrars. But accreditation is a nicety, not a prerequisite for setting up shop as a registrar, and even if a registrar has passed muster in one country, its certificates may not be recognized overseas. Says Stephen Halliday, a lecturer at Buckinghamshire College Business School in Britain: ”You and I could start a company this evening, and by tomorrow we could be awarding certificates.”

In the U.S. the biggest problem surrounding ISO 9000 is ignorance. Nearly two-thirds of executives at midsize manufacturers have either never heard of ISO 9000 or think it will have no impact on their companies, according to a poll by management consultant Grant Thornton. Other managers cling to the wrong-headed impression that ISO 9000 is a legal requirement for doing business in the European Community. It isn’t, though it is steamrolling through Europe. In Britain about 17,500 certificates have been issued, vs. just 1,300 in the U.S.

Founded in 1947, the International Organization for Standardization is a nonprofit group that comprises industrial standard-setting bodies from 92 countries (the U.S. is represented by the American National Standards Institute). The organization sets but does not enforce international norms for everything from paper sizes to screw threads to film speeds.

ISO is not an acronym — not in any language. It is an official nickname, derived from isos, a Greek word meaning equal, as in isobar, isometrics, and isosceles triangle. ISO 9000, published in 1987, is actually a series of five related standards (numbered 9000 through 9004) that has been adopted by 60 countries — including the U.S., Japan, Canada, and the 12 members of the EC. Businessmen, not bureaucrats, are the force driving ISO 9000. Purchasing agents like the certification because it helps them cut through the worldwide clangor of competing quality plans, gurus, audits, and awards.

Says Jim Holz, director of suppliers quality assurance at Bell Canada, that country’s largest telephone operating company: ”Saying you have a total quality management program doesn’t mean a lot to me unless you have a way of benchmarking it to a standard that I can understand.”

But ISO 9000’s biggest virtue, its universality, is also its greatest vice. By setting norms that are attainable across a broad range of industries and cultures, ISO 9000 falls far short of the quality that world-class corporations demand of themselves and their suppliers. ISO 9001, the most detailed standard in the series, consists of just seven pages of often vague directives (”The supplier’s management shall define and document its policy and objectives for, and commitment to, quality”). Its governing principles can be summed up in three words — documentation, documentation, documentation. To become registered, a business must prove it is following its own procedures for inspecting production processes, updating engineering drawings, maintaining machinery, calibrating equipment, training workers, and dealing with customer complaints.

But ISO 9000 makes no demands or assurances about the quality of a company’s products. And the standard virtually ignores the mantra of modern quality management, continuous improvement. Companies don’t have to show that they know how to reduce cycle time, cut inventories, or speed up delivery. Nor do they have to demonstrate that their customers are happier than they used to be, or even that their customers are happy at all. Complains Richard Buetow, director of corporate quality at Motorola: ”With ISO 9000 you can still have terrible processes and products. You can certify a manufacturer that makes life jackets from concrete, as long as those jackets are made according to the documented procedures and the company provides the next of kin with instructions on how to complain about defects. That’s absurd.”

Even Motorola, one of the first major companies to win a Baldrige award, is pursuing ISO 9000 registration for many of its plants around the world.

Why?

Because customers are asking about it. Says Buetow: ”We’re doing it for insurance.” If you’re a Motorola supplier, however, an ISO 9000 certificate won’t even buy you a cup of coffee. Adds Buetow: ”We would never stop auditing a company with ISO 9000. It’s just a fraction of what we’re looking for.”

Perhaps, in a more perfect world, the Baldrige award criteria — which do demand quality products, satisfied customers, and continuous improvement — would become the international quality standard. But few companies are actually ready, or willing, to play in that league. Only 76 companies applied for the 1993 award, down from a peak of 106 in 1991. And even a Baldrige award is no guarantee of commercial success. Wallace Co., a small pipe and valve distributor, won the prize in 1990 and filed for Chapter 11 the following year.

Many managers insist that ISO 9000 is worth chasing, not simply because their customers are demanding it but also because it helps them run their businesses more efficiently. A company can spend up to 18 months — and seven man-years — getting a single site ready for an audit. Registrars descend for up to a week, quizzing managers as well as randomly selected factory workers. The process doesn’t end when the certificate is issued. The registrars return every six months to make sure the company hasn’t let standards slip.

Prepping for an ISO 9000 exam is like going through a giant spring-cleaning exercise. Companies find the darnedest things: operating manuals so obtuse that nobody understands them, training records so incomplete that supervisors don’t know the skills of their own employees, and engineering drawings that have been obsolete for months still in use on the factory floor.

In its drive to win — and maintain — registration, Caterpillar Engines has undergone a massive tune-up. In the past when customers complained that an engine wasn’t performing well, engineers might order a design change. But the company had no systematic way of checking that factory workers were using the new specs. Says Larry Fischer, manager of quality technology at the sprawling Mossville, Illinois, diesel plant: ”A guy could get a blueprint and stick it in his drawer and forget it was there.” Today Cat regularly audits all employees to make sure they are using only the latest documents. That helps avoid mistakes that used to be caught only in final testing bays, or, worse, when the engine reached the customer.

But wait a minute. This doesn’t sound like TQM. What about doing it right the first time, checking your own work, and inventing new ways to do your job better? What about empowerment?

Fine ideals, say the proponents of ISO 9000, but they need to be tempered with an old-fashioned concept: discipline. Says Richard Haworth, CEO of Haworth Inc., a leading manufacturer of office furniture: ”You can’t just let a group of people do what they want when they want. An environment of empowerment without any guidelines is not going to create a lot of consistency.” Haworth speaks from experience. For nearly a decade his privately held company, based in Holland, Michigan, experimented with quality management.

Says chief operating officer Jerry Johanneson: ”We floundered from guru to guru, from book to book, from magazine article to magazine article. We used the right buzz terms, but we weren’t getting the message across to our employees.” That began to change, he adds, when Haworth applied for a Baldrige award (which it did not win) and an ISO 9001 certificate (which it did). Now every manufacturing work area at Haworth’s five West Michigan plants is adorned with multicolored placards that describe in words and pictures exactly what employees are supposed to do — helping to ensure that all follow company processes consistently, as ISO 9000 requires. In the past, an operator on the day shift might have driven in a screw with five pounds of pressure, while his counterpart on the night shift used ten pounds. Now there is no room for argument. Having crystalline processes will also help Haworth, with plants in five European countries, standardize production practices worldwide.

Despite its emphasis on documentation, ISO 9000 can actually force a factory to dramatically reduce paper flow. Workers at Rockwell International’s Allen-Bradley plant in Twinsburg, Ohio, which makes circuit boards, programmable controllers, and other electronic devices, used to have to cope with a blizzard of manuals, work orders, and memos, most written in engineeringese. Procedural changes arrived almost daily in the form of computer printouts stuffed into envelopes. Says plant manager Anthony Pajk: ”We were doing a great job of putting in new procedures but not a great job of taking old ones out.” Overwhelmed workers evolved their own methods for doing things, often taping up crude crib sheets on their work benches.

In pursuit of ISO registration, Pajk pulled seven assemblers off the floor — some for as long as seven months — and placed them on teams with engineers and supervisors. Their mission: to devise procedures comprehensible to everyone. Now the envelopes have been replaced by an electronic mail system that delivers new instructions and purges old ones. When an assembler has a problem with a new procedure, the engineering department has seven days to find a fix. Some complaints used to go unanswered for six months. The new system helped Twinsburg win an ISO 9001 certificate, one of the 21 held by Allen-Bradley around the world. Productivity at Twinsburg has improved 21% since last year, cycle time has dropped 18%, and product defects have fallen 32%.

ISO 9000 is not a solution. It is, at best, a catalyst. Square D, a part of France’s Groupe Schneider, makes circuit breakers and other electrical and electronic equipment, and it used ISO 9000 as part of a three-year effort to standardize quality management systems in its 29 U.S. plants. But W.F. Fightmaster, vice president for quality, is not one to overplay its importance. Says he: ”There are some people who believe that once you have ISO you have a quality system. That just isn’t so. It’s less than one-seventh of the system.” The other pieces include training and empowering workers, benchmarking competitors, and setting — and achieving — tough goals for continuous improvement.

The ISO 9000 Bandwagon is Rolling

The idea of a common quality system has strong appeal.

Last year 30 customers came to audit Caterpillar Engines, each spending one to four days touring plants and quizzing managers. Says Cat’s Larry Fischer: ”Each customer requires us to do things a bit differently. That’s where ISO comes in. Let’s all adopt the same standard.”

Given ISO 9000’s many imperfections, business will need to tread carefully. The ISOman cometh, but whether he delivers a quality revolution or just a bucket of cold water will depend largely on what else companies have in their larders.

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Chris Paris commentary:

It’s an interesting trip back in time, to see what people were saying in the late 80s and 90s about ISO 9001. I was active with this stuff back then, so I remember it well, and we already saw “memes” — like the “concrete life jacket” argument — starting to form.

One note on the price quoted for the ISO standard: that price ($235) was when ISO sold the five standards as a set, containing ISO 9000, ISO 9001, ISO 9002, ISO 9003, and ISO 9004 together. Now, ISO standards run just between $140 – $190 each, so that set would cost a fortune… but some of those don’t even exist anymore.

Another interesting point is how they were already tackling the issue of the unaccredited certificate mills back then — something I had personally forgotten about! It shows just how the creation of the massive IAF / IAF Regional Body / Accreditation Body cabal, worth billions of dollars annually, has completely failed. They promised ISO and the WTO back around the time (the 90s) they would fix this problem, and they have totally failed. There are now more unaccredited CBs operating than ever, and it’s estimated that nearly half of all ISO 9001 certificates are either fake (issued by mills) or issued by accredited CBs in violation of accreditation rules.

We also see the stock criticisms of ISO forming, that it was documentation-heavy and required “obtuse operating manuals.” That was never true, and the ISO standard, in that regard, is entirely innocent of those charges. Instead, that was the result of people doing it wrong. Unfortunately, ISO listened and has cut nearly all the documentation requirements out. Now, certified quality systems are a mix of meditative drum circles and tribal sing-a-longs, where procedures are communicated verbally with no formal documentation.

Some other fun points to ponder:

• $200,000 per site certificate? Price gouging much?
• Six-month surveillance audits? (Yes, that used to be common in those days)
• They really didn’t understand the difference between ISO 9000 and 9001 back then
• No continual improvement!

What are your thoughts? Put them in the comments.