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July 2000
Volume 7 • Number 3

Contents

ISO 9000: What Is Its Impact on Performance?

ISO 9000 is fast becoming a must for companies in both the manufacturing and service sectors. Some questions have been formulated on the basis of the debate around the effects of ISO 9000 on performance. Can certification help in improving quality performances? Are there reductions in costs? Is there any improvement in time performance? These topics are examined through analysis of data gathered by means of a survey based on a sample of 100 Italian manufacturing companies, all of which received ISO 9000 certification between June 1993 and June 1995. It was found that the impact of certification is clearest in the areas of quality (both internal and external quality and their related costs), punctuality, and throughput time, while there are no significant positive effects on other time and cost performances.

Key words: cost, external quality, internal quality, ISO 9000 certification, survey, time performance

by Pietro Romano, University of Padova

INTRODUCTION

ISO 9000 certification is a fairly recent phenomenon. Such standards were published for the first time in 1987. A series of initiatives (meetings, seminars, workshops, and so on) were held in 1997, to mark the 10th anniversary of the publication of these norms, to assess the situation after a decade of application, and to suggest possible future modifications given that the norms are soon to be revised. The Technical Committee ISO/TC 176, which was, and is still, responsible for drawing up and updating the ISO 9000 series, had planned to make such revisions roughly every five years. The first revision took place in 1994 and, under the terms of the Vision 2000 project, which set the guidelines for the evolution of quality standards over the next few years, the second revision should be published in the fourth quarter of the year 2000.

Because of its increasingly widespread acceptance, ISO 9000 is becoming an important factor in international trade, almost an imperative for companies that export to the European Union (EU), wherein many cases buyers expressly require ISO 9000 certification (Erel and Ghosh 1997). Indeed, large industrial companies, such as Corning, Exxon, DuPont, Volkswagen, Sandoz, and Kodak, which operate in different countries, have initiated vigorous company programs in order to implement these standards at their operation sites. Moreover, numerous large government purchasers–including the Ministries of Defence of the UK and Singapore, and the U.S. Department of Defense, the National Aeronautical and Space Administration (NASA) and the U. S. Food and Drug Administration (FDA)–have ISO 9000 registration as a requirement for their large contract suppliers (Rajeev et al. 1997, 1623-1625). In the automotive industry, several major manufacturers have imposed on their suppliers industry-specific quality standards that incorporate ISO 9000 requirements. Thus, the QS-9000 standard was developed and has been adopted by Ford, Chrysler, and General Motors, the AVSQ 94 standard by Fiat, the VDA 6 by Audi, BMW, Mercedes, and Volkswagen, and the EAQF 94 by Renault, Citroën, and Peugeot.

The success of the ISO 9000 standards is still growing, and it is interesting to note that, up to the end of December 1998, at least 271,966 ISO certificates had been awarded in 143 countries worldwide. This is an increase of about 50,000 certificates over the end of December 1997, when the total stood at 223,403 for 128 countries. Looking at the different regions of the world, Europe, with more than 166,000 certificates awarded, has still the major share (61 percent), followed by the Far East (14 percent), and North America (12 percent). Moreover, the United States and Italy exhibited the highest annual growth during 1998, with respectively 6406 and 5961 new certificates (ISO 1999). With regard to Italy, in recent years there has been a boom in certification with almost 30,000 firms certified through the first quarter of 2000 (Sincert 2000).

In summary, ISO 9000 certification is becoming a critical factor for both manufacturing and service companies in Italy and in other countries around the world. But is this popularity due to the fact that certification can, effectively, contribute to improving firms’ performances, or is it merely a fashion that will soon be overtaken by new developments? If certification really offers a tool that can reinforce competitiveness, which performances are most affected by it? Can certification be used as a means to effect improvements by any type of firm, or does it have different effects depending on the size of the firm itself, on the sector, or on the levels of exportation of the firm? In order to benefit to the fullest extent from the potential for improvement offered by certification is it better to be certified ISO 9001 or ISO 9002?

In this paper these questions have been taken up through analysis of data gathered by means of a survey based on a sample of 100 Italian manufacturing companies all of which were certified between June 1993 and June 1995. This paper intends to examine and discuss the results that concern four operational performance areas.

  1. Internal quality and reliability of the manufacturing system
  2. External quality and customer confidence and satisfaction
  3. Costs of quality (nonquality, prevention, and inspection costs)
  4. Time performance

Before analyzing the empirical data and discussing the results, the next section offers a review of the major topics of ISO 9000 certification with which other authors have dealt. This review, which is far from exhaustive, is useful in that it helps to place the problems dealt with here, within the larger context of the whole debate on certification.