Why QS-9000 Was Developed And What's in Its Future
Auto suppliers were troubled by multiple specifications and standards
by R. Dan Reid
The question "Why QS-9000?" is frequently asked by people involved with standards but outside of the auto industry. Surprisingly, it was not a Chrysler, Ford or General Motors idea. Actually the automotive suppliers suggested it, and while automotive standardization work began in 1988, the problem appeared much earlier.
Years ago, customers were closer to their suppliers. Think back to the rural general store. The customer could go to the proprietor to purchase or barter for goods. If the quality of the goods was found to be poor, the customer could return to the store and deal directly with the proprietor to get satisfaction.
With the advent of the Industrial Age, the distance between customers and suppliers increased. As the population grew, new companies were formed and fitted into material supply chains. It became difficult for companies to obtain what is called the "voice of the customer."
As an interim step, suppliers worked to a specification. As specifications multiplied, terminology became difficult to understand. There were multiple terms with the same meaning and terms that had multiple meanings. Over time, multiple specifications led to standards development.
By the mid-1980s, suppliers were subject to numerous military, national and customer standards. Some companies dedicated full-time employees to each customer account just to understand the varying quality requirements.
Situation worse for Tier Two suppliers
For Tier Two suppliers--those who sell to a tier one supplier--the situation was worse. They were subject to numerous unique Tier One supplier quality standards, which incorporated their own standards with those of the final customer. In addition, these Tier Two suppliers typically have fewer resources with which to deal with the variation than Tier One suppliers have.
By 1987, the ISO 9000 family of quality management system standards was released. The use of ISO 9000 promoted the use of consistent quality terminology internationally and resulted in significant harmonization. The standards were slow to take root in the United States, however.
Chrysler, Ford and GM elected to use the ISO 9001 standard as the base requirements for the automotive sector document called QS-9000. This happened mainly because there was a widespread rumor that companies would have to be ISO 9000 certified by the mid-1990s in order to do business in Europe.
While nothing in ISO 9000 was objectionable to the Big Three automakers, it lacked some elements that were in automotive industry documents at that time, such as business plans, customer satisfaction, continuous improvement, manufacturing capabilities and much of the advanced quality planning content.
Today there are a number of sector-specific ISO 9000 based quality system standards or requirements, for example, AS9000 and the new AS9100 (aerospace) and TL 9000 (telecommunications). However, some sectors object to adding elements like customer satisfaction and continuous improvement to ISO 9000, particularly if applied to the product, while others find this objection troubling.
QS-9000 use adds to supplier profits
The benefit of the QS-9000 has been proven. A 1998 ASQ/Automotive Industry Action Group survey of more than 200 suppliers reported the average cost of QS-9000 registration to be about $120,000.1 All but $20,000 paid to the certification body--17% of the total reported cost--turned out to be discretionary cost on the part of the supplier, for example consultants or training. The average sales of the respondents was $130 million, and they reported an average savings of 6% of sales as a result of the QS-9000 registration, which is about $8 million per company.
This 1998 survey also correlated greatly with the 1997 version of the same survey, which had over 600 respondents.2 That survey indicated a 3-to-1 return on total costs and almost 17-to-1 return on the certification body costs. The quality benefits in terms of parts per million (PPM) defects indicated that about half the suppliers improved their PPM by about 50%.
This is in contrast to the benefits of ISO 9000. In a 1999 McGraw Hill ISO 9000 survey with over 1,100 respondents, the average total cost of ISO 9000 registration was reported to be $156,000, with an average total savings of $187,000, or a savings-to-cost ratio of only 1.2-to-1.3 Less than 19% reported that their defect rate was significantly improving, and of these only one-third reported that the improvement was attributable to the ISO 9000 registration to a high or very high extent.
The difference in quality improvement and savings between QS-9000 and the ISO 9000 scheme is primarily due to the additional sector specific requirements and process controls imposed on the third party registration system, for example QS-9000 Appendices B, G, H and I.
Given that ISO 9000 is considered inadequate as is, there is a legitimate need for industry supplemental requirements. However, there is no consensus among the various sectors as to how the additional requirements should be published. In fact, most sectors, including those affected by regulatory requirements, prefer to see ISO 9001 contain only the minimum requirements for quality assurance. They want to publish their own supplemental requirements, sometimes in the form of company specific requirements outside of the ISO 9000 portfolio. Only the automotive sector has considered migrating to use of an improved ISO 9000 over time.
The automotive sector has worked with ISO Technical Committee (TC) 176--the group responsible for the ISO 9000 family of standards--for several years to see how sector needs might be accommodated. Initially, TC 176 was resistant of sector specific documents. It preferred that the sectors use ISO 9000 as is.
Automotive industry representatives were invited to participate in the ISO 9000 revision for the year 2000 to see if ISO 9000 could incorporate enough additional content to avoid the need for sector specific additions. However, this participation came about too late. The year 2000 design specifications were complete by then, therefore much of the significant content brought forward was rejected by TC 176 on the basis that it was outside of the design specification.
In discussion with the other sectors, it became apparent that a way would have to be found for ISO 9000 to accommodate sector-specifics or the sectors would continue to publish the sector-specifics outside of the ISO 9000 portfolio. QS-9000 and the similar European automotive requirements manuals, including VDA 6.1, have been harmonized into a new ISO portfolio of documents called a technical specification (TS). ISO/TS 16949 was released one year ago as the first ISO TS and as an optional document for automotive suppliers. All this was accomplished in cooperation with the International Organization for Standardization, known as ISO.
Suppliers with numerous automotive customers requiring third-party certification to their own requirements document can now choose a certification to ISO/TS 16949, which will satisfy those customers when the relevant customer specific requirements are included in the registration scope by a recognized certification body. A listing of the recognized certification bodies for ISO/TS 16949 is available from the International Automotive Oversight Board at 248-799-3939.
The various sector specific documents mentioned earlier satisfy the needs of customers in these sectors, but the varying terminology and areas of emphasis among these documents continue to be a challenge for the lower tier suppliers that often sell to companies representing different sectors. The process of standardization has been iterative from the beginning, so there will be future opportunity for harmonization to benefit the mutual supply chain.
Four product categories
Four categories of products are defined in the ISO 9000 family: hardware, software, services and processed materials. A comparison of the sector specific documents reveals that a number of similar concepts use different terminology, for example "production part approval" vs. "first article inspection." These are particularly evident in documents within the same product category. Here lies an opportunity.
The current issues of these sector specific documents are based upon the 1994 version of ISO 9000. New efforts should focus on revising the current sector-specific issues to incorporate the new ISO 9000 text scheduled for release by the end of this year. These efforts should include discussion between sectors to standardize as much as possible. In the worst case scenario, common terminology should be used for like concepts. In the best case, a hardware specific manual that more than one sector could adopt would replace the current sector-specific documents.
This would mean that a customer requirement going forward would be the new ISO 9001 standard, with the hardware-specific additions and, perhaps, a few company-specific requirements.
The additional benefit of migrating to product-category specific documents would be in standardizing requirements further into the supply chain. To the degree that multiple sectors can agree on terminology and format, the customer and supply chain will benefit through better understanding and implementation of the fundamental quality system requirements. If past gains are any indication, significant cost and quality improvements would be achieved.
Valuing standardization work
There are a number of roadblocks to seeing this realized. One significant problem is with the reward system inside companies. Employees are traditionally rewarded for developing creative solutions to problems, not for standardizing requirements with other companies or with other industry sectors. We need to find a way to value the work of standardization and revise the reward systems in companies to reflect this value.
Another roadblock is the standardization process itself. Over time this process has become biased against the customer by a disproportionate number of supplier advocates and consultants. To continue to thrive, quality management stakeholders need to focus on the needs of the customer and end user of the product and on continual quality improvement of their product and service.
A recent example of this focus on the customer is American Airlines, which announced it would revise current aircraft to provide additional legroom for passenger comfort.
1. 1998 Annual Quality Survey Report (Southfield, MI: Automotive Industry Action Group [AIAG], 1998).
2. "1997 AIAG/ASQ Quality Survey Results" presented at the 1997 Quality Survey Workshop, March 17 in Novi, MI.
3. ISO 9000 Survey '99: An Analytical Tool To Assess the Costs, Benefits and Savings of ISO 9000 Registration prepared by Quality Systems Update and Plexus Corp. (New York: McGraw-Hill Inc., 1999).
R. DAN REID is manager of advanced technology purchasing at GM Powertrain and co-author of the following documents: three editions of "QS-9000;" "ISO Technical Specification 16949;" and the following Chrysler, Ford and GM manuals: "Advanced Product Quality Planning With Control Plan," "Production Part Approval Process Third Edition" and "Failure Modes and Effects Analysis." He was also delegation leader of the International Automotive Task Force and is or was on numerous ISO committees, working groups and task groups. He is currently on a drafting group for the Automotive Industry Action Group on ISO 9000 for health care.
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