ISO 9004 and Your Organization

The final draft of the revised ISO 9004 standard is out for ballot. This means that it will hopefully be available before the end of this year. It’s radically different from the last version. For one thing, the title has changed. It’s now: “Managing for the sustained success of an organization—A quality management approach.”

What’s so special about this new version? Why should we care? The answer to both of the questions is in the new title. We all have a vested interest in the notion of sustainable success. Particularly in these days of globalization and outsourcing, the importance of the sustainability of organizations is becoming increasingly apparent.

If you were to ask a supplier if they hope to be in around in six months and they responded: “No, we expect to close our doors within 90 days,” how would you feel about continuing to do business with them? You’d probably start shopping for a new supplier. Most organizations don’t deliberately conduct themselves in such a way as to ensure their premature demise. But many times they fail to pay adequate attention to trends in the market, to fluctuations in raw material availability, to amendments to laws and statutes, to the emergence of new technologies, or to changes within their own four walls. They don’t notice that lead times from suppliers are getting uniformly longer or that customers may be giving them repeat orders but are not inviting them to bid on new projects. They don’t take the time to periodically assess their organization’s status and performance.

That’s what the new ISO 9004 standard is all about. It moves an organization beyond simple conformance to a management system, to a level of maturity that facilitates its ability to anticipate and respond to change.

Why should we all care about ISO 9004? Because the integrity of our supply chains is inexorably linked to the robustness of our suppliers’ management systems. Suppliers who aren’t committed to establishing and maintaining systems that espouse the practices of monitoring their environment (both internal and external) and taking appropriate action will eventually cease to be able to meet your needs. This in turn means that as their systems unravel or become obsolete you will have diminished ability to serve your customers’ needs.

Consider how costly it is to deal with the consequences of late delivery. Think about the drain on your resources as you rework sub-standard parts or sort through batches looking for the anticipated defective components. Or, calculate the expenditure to find and qualify a new supplier. There’s the initial research, the multiple calls and requests for samples. There may be one or two visits, followed by a supplier qualification audit. Then there are trial runs of material or probationary periods for service. Finally, you’re able to qualify the new supplier and add them to the ubiquitous Approved Vendor List. How much money has been lost from the moment you realized you were going to have to find a new source for a critical part?

In Out of the Crisis (Massachusetts Institute of Technology, 1982), W. Edwards Deming discusses the folly of buying on price alone. We should be attentive to our suppliers and to the many varied factors that affect their continued ability to serve us.

It is more cost effective to monitor the existing suppliers and (when appropriate) to partner with them for improvement so as to ensure their continued ability to respond to changing demands in the market place. One of the tools you can use is ISO 9004. Use it as an assessment benchmark for your organization as well as your suppliers. Teach them how to use the assessment tools.

ISO 9004 creates the tangible link between the seemingly esoteric requirements of ISO 9001 and that which ultimately matters to an organization. It illustrates how those requirements, by promoting the sustainable success of the organization and using the guidance from both standards, allows the organization to achieve both its own goals and those of its customers.

Organizations who deal with multiple tiers of suppliers should endorse both ISO 9001 and ISO 9004 right down the line. It’s the domino effect in reverse. Rather than causing the next tile to fall, we establish systems that ensure that we all continue to stand. The better your suppliers are the better a supplier you will be to your customers.

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