What are the benefits of ISO 9001?
An ISO 9001 certified quality management system can provide a whole range of benefits.
- You have consistent, repeatable processes and a common, understood system. So that means your people are clear about what to do, and how you want it done. They don't spend time making things up, finding things out, reinventing wheels, or duplicating effort.
- Better management control and reporting - you know how your business is doing.
- Your business functions in a disciplined way: no matter what happens (well, nearly) you have a systematic way of handling it
- You have fewer problems with failures in service or product quality
- As you get better at quality management, you spend more and more time on improving rather than fixing or reacting
- You often gain more or better business, because you can sell to new markets or having the endorsement distinguishes you in the marketplace
- You know more quickly if things are going wrong, and where
- You stop spending money or wasting time on the same old problems - many problems have been resolved permanently. If another crops up, you have the skills and methods to identify & resolve it faster.
- You don't scratch your head wondering how to respond to tenders or other questions asking about your quality system. Because you know! And that 'ISO 9001' phrase works wonders, as companies who have ISO 9001 certification know.
I love hearing from clients about the benefits they achieved via doing ISO 9001. The things they say most are that their business runs better, everyone is clearer about what they do, processes are improved, they know they are managing things more effectively, they feel much more in control, they notice increases in customer feedback, employee satisfaction and positive feedback, and noticeable reductions in duplication, recurring problems, rework and other frustrations or time-wasters.
Worth reading is this definitive joint statement from ISO (who create the Standards) and IAF (who oversee accreditation) on the Expected Outcomes from ISO 9001 If you're a SME (Small to medium-sized enterprise?) ISO has a nice little brochure with 10 SMEs describing the benefits they got from 9001.
See these case studies from ISO on the economic benefits. They showed these three key benefits:
- Streamlining internal operations (reducing costs, increasing productivity)
- Innovating and scaling up operations (eg, new products or services, reducing risk)
- Creating or entering new markets.
Selection of Research Studies
1. A joint study in the Asian region looked at the economic benefits of 9001, its credibility and purchaser perceptions. The study found that implementation of accredited certification to ISO 9001 has positive results for the certified organisations and their customers, and thus ultimately the economies.
- Clear empirical economic benefits to the implementation of accredited certified quality management systems
- Credibility - perception of certification to ISO 9001 in the region was positive
- Purchasers were satisfied with the performance of ISO 9001 certified suppliers, and in general found they performed better or 'much better' than non-certified suppliers.
Reference:ISO 9001 - Its relevance and impact in Asian Developing Economies, a joint study by ISO, United Nations Industrial Development Organisation (Unido), IAF and NADC. Pub. 2012
2. A 2007 Australian study looked at why businesses implemented ISO 9001, their approaches and experiences, and particularly comparing the 2000 version with the earlier 1994 version it replaced to see if it really better (yes!).
- The top 3 reasons for getting certification were externally oriented: enhancing the company image, responding to customer demand, and getting 'preferred supplier' status.
- Top internal reasons were to establish better control over business operations, and to provide a foundation for continuous improvement.
- The major benefits reported were in: relations with customers, management of business processes, management of business knowledge and information, and in organisation strategy & culture, such as improving their managerial policies & procedures.
[A frequent post-9001 theme from Mapwright clients is: 'now we really know what we have and where it is, and everyone knows where to find it'.)
- The area reported as least impacted was supplier management.
- Businesses found the 2000 version of the Standard significantly easier to implement than the previous (1994) version, and it took less time to implement.
- Overall, results confirmed that the Standard had been much improved in terms of its ease of implementation & simplicity, while maintaining high levels of impact in business areas.
* Reference: The Implementation of ISO 9000 in Australian Organisations, Australian Supply Chain Management Research Unit, Monash University, supported by JAS-ANZ. Dr D Prajogo & Professor Sohal. It was conducted by Monash University in collaboration with JAS-ANZ. Findings from 326 organisations, evenly spread between manufacturing and service; majority (87%) = small to medium- sized organisations. Available from JAS-ANZ.
3. An earlier study (2003) found a significant and positive relationship between management's motives for adopting ISO 9000 certification and business performance. Organisations that pursued certification willingly and positively across a broad spread of objectives are more likely to report improved organisational performance. The individual element found to contribute most to business performance was Customer Focus.
* Reference: The Longitudinal Effects of the ISO 9000 Certification Process On Business Performance, 2003 Terziovski, Power and Sohal, Melbourne & Monash Universities. Findings only from manufacturing.
4. Positive effects of Certification - a US survey in 2006 got the following answers asking about whether they had gained internal benefits. Of 2500 surveyed, there were:
- Competitive advantage - 922 Yes Responses
- Improved customer satisfaction - 1,391 Yes Responses
- Improved customer satisfaction - 1,391 Yes Responses
- Reduced scrap/rework costs - 728 Yes Responses
- Increased efficiency - 936 Yes Responses
- Greater quality awareness - 1,861 Yes Responses
- Positive cultural change - 845 Yes Responses
- Enhanced communications - 880 Yes Responses
- Better documentation - 1,869 Yes Responses
- A whopping majority (96%) said gaining certification had been a positive experience.
*Reference: Survey conducted by The Independent Association of Accredited Registrars (IAAR) - an association of accredited management system registrars operating in North America.
5. A UK Study survey wanted to find out if consumers know (or care) about ISO 9001. The UK has perhaps the most mature usage of the ISO 9000 series worldwide.
- More than 1/4 (26%) of the general adult population was already aware of the standards. Knowledge was concentrated among working people.
- Results suggest positive attitudes towards ISO 9001 and companies certified to the standard. They tend to perceive products and services associated with ISO 9001 as being of higher quality.
- Consumers are more likely to contact a company if it uses ISO 9001 in labelling and marking of products/services
- Consumers possess greater levels of trust and confidence in ISO 9001 products and services
- The labeling of products or services with a logo denoting ISO 9000 is likely to cause consumers to prefer them.
- An interesting finding was that it would be 'beneficial for companies having certification to promote increased public awareness of ISO 9000, because increased levels of consumer awareness should improve levels of confidence and trust in their products and services'. In other words: if you have it, use it. Tell your customers and prospects you have it and wherever possible educate them in what that means: particularly the benefits for them.
*Reference: Do consumers really care about ISO 9001 certification?, J Tannock & Henry Brown, Nottingham University Business School, published in ISO Management Systems, May-June 2006 edition, Vol 6; by a professional market research organisation.
6.The Phoenix Police reported $11m in savings
Source: ISO video (previously published, but no longer available to public).
7. A detailed analysis of financial performance of ISO 9000-certified organizations over a 10-year period, found that companies who implemented a system certified to ISO 9000 gained a greater return on assets (ROA). This study was conducted by a distinguished group of business school academics from The Anderson School at UCLA, R.H. Smith School of Business, University of Maryland and Universidad Carlos III, Spain. They found that "Firms that failed to seek certification experienced substantial deteriorations in ROA [Return on Assets], productivity and sales, while firms that did seek certification generally managed to avoid such declines".
Source: July-August 2002 issue of ISO Management Systems
8. In a BSI survey of 227 US firms, one company reported a sales increase after certification of $6 m. Another reported a 75% improvement in customer satisfaction. (What would a 75% increase in customer satisfaction do for your business?)
Other findings from the survey:
- the transition and implementation costs were at least covered by savings (80% reported this)
- better use of data by management after certification (56% reported)
- improved customer satisfaction (54%)
- management reviews were more effective (51%)
- improved customer communication (41%)
- Many said that they had improved their processes and streamlined their systems as a result of identifying and analysing their processes (as required by the Standard).
- Certification to ISO 9000 was seen as a powerful means for recognising best practice and adopting it elsewhere, and for identifying the issues that contribute most to customer satisfaction.
- Other benefits cited included: a greater understanding of how their organisations worked (leading to shorter training times), clearer communication and accountabilities, and significant reductions in product development time and customer complaints.
Source: BSIGroup (global quality certifier).
9. In a 1992 survey of companies who had held certification for several years:
- Improved management control was reported by 86% of the managers
- improved efficiency (79% of managers)
- reduced waste (75% )
- improved market share (71%)
- reduced costs (61%)
Source: LRQA, a global certifier
What does this tell us?
For a start, that there are very real benefits to be gained. For around 20 years now I've worked with many organisations and the ISO 9001 Standard. The more I do that, the more respect I have for it, because I see how it helps organisations things improve if it's used intelligently.
Yes, it has its critics and no, nothing's perfect. But my experience of bad ISO 9001 systems is they are almost always due to failures in understanding of the Standard or failures in implementing it (how you do it). The unanswered question for critics remains: What do you propose instead?
BUT - does everyone get these benefits?
No. They don't.
You see, while the benefits of 9001 are very real, they are not automatic. As one study says (bolding added added):
"...the motive for adopting ISO 9000 certification and the maturity of the quality culture are significant predictors of the benefits derived from ISO 9000 certification... organizations that have been audited to the ISO 9000 standards believe that the quality audit process contributes to business performance when the quality culture in the organization is well developed and the manager's motivation to gain certification has been to improve business performance nd not to conform to an international standard.
The individual element found to contribute most to business performance was Customer Focus"
Ref: LONGITUDINAL EFFECTS OF THE ISO 9000 CERTIFICATION PROCESS ON BUSINESS PERFORMANCE, Terziovski, Power and Sohal, Monash University.
In other words, why (and how) you 'do ISO 9001' will determine whether you gain the benefits available.
Or not.Author: Jane Bennett