Use SOX To Put Quality on the Forefront
Richard Pennington’s response (“QP
Mailbag: SOX and ISO 9001: A Little Too Far Too Soon,” May 2005, p. 10) to
my article, “ISO 9000 and Sarbanes-Oxley” (March 2005,
p. 24), is enlightening. Pennington is well positioned to comment on these issues, given his responsibilities with the Colorado Division of Finance and Procurement.
I march to a different drum. My view derives from many years’ experience in specifications, contracts, standards and legal consulting. When you read the words of the Sarbanes-Oxley Act (SOX), you may take them literally. The directions are flexible, and will be flexed by those who see the need to improve quality through the force of liability.
My thesis is that the cost of quality (COQ) is material to the financial worth of the company and therefore falls under the purview of SOX. When a buyer stipulates in its solicitation that all bidders be ISO 9000 certified, it is requiring a specific quality system as assurance of the ability of the performer to meet customer requirements.
Thus, the customer pays not just for the products that it buys but also for the quality system itself. This fact can be easily demonstrated by considering the unit cost of production. All corporate costs are included: fixed costs, variable costs and capitalization. The sum total of these costs is prorated over the number of units purchased by customers, which offers economies of scale.
Thus, the customer pays for the entire production system, prorated, in force during the period of performance and for all corporate costs embedded in the cost per unit. If the customer is a large one, then this cost is material to the financial condition of the company and the transaction comes under the purview of SOX.
In this view the traditional idea that
COQ has to do with defect count is inadequate. The traditional view that ISO 9000
certification is limited to the cost of a quality manual and costs associated with
a few audits is inadequate. Under ISO 9000:2000, the true cost of certification
is the cost of meeting and maintaining customer require-
ments. This is nothing less than the entire cost of the quality system—all costs buried in the cost per unit times volume. Moreover, it makes no difference when these resources were purchased relative to certification.
Armand Feigenbaum tells us quality is what the customer says it is, and I believe him. But sometimes quality is what the jury says it is. The Ford-Firestone-Bridgestone fiasco was taken out of the hands of quality professionals and turned over to a jury. The customer is getting fed up with platitudes and more and more frequently turns to the courts for quality.
Rather than decry SOX, quality professionals should recognize the need for it. It is our ally. Under the threat of liability, CEOs can no longer afford to put quality on the back shelf.
WILLIAM A. STIMSON
Frank Gryna, Man Of Quality In All Aspects
In reference to “Keeping Current” (May 2005, p. 20), I am sure I share with others who knew him much sadness on the passing of Frank M. Gryna.
Gryna was a great, gentle and humble man, whom I admired for his integrity, knowledge and numerous contributions to society. Knowing him enriched my life and strengthened my commitment to a career dedicated to quality—in all aspects of life.
Gryna uniquely integrated the roles of educator, researcher, author and consultant. He successfully navigated the halls of academia and the offices and shop floors of business and industry. He influenced many generations of quality practitioners and organization managers through his teaching, research and writing.
Words cannot adequately capture the essence, broad influence and quality of Gryna, a man whose professional and personal life speaks for itself. I am grateful to have known him.
Save Yourself From Ghost Chasing
I read the article “Ghosts in Your Process? Who Ya Gonna Call?” in Quality Progress (May 2005, p. 52), and I really like the two steps John Duncan suggested to add to Six Sigma.
I especially favored the multi-variable analysis. It narrows down the problem cause at the beginning of the process and saves a lot of ghost chasing time at a later stage.
Fujitsu Computer Product of America
San Jose, CA
Chinese Proverb Explains Concept of Calibration
Thank you for Graeme Payne’s excellent “Measure for Measure” column, “Calibration: What Is It?” (May 2005, p. 72).
It reminded me of an old Chinese proverb I sometimes use when introducing the concept of measuring device variability and the need for calibration to colleagues who aren’t thoroughly familiar with the jargon of quality:
“A man with a clock always knows what time it is ... a man with two clocks is never sure.”
Musculoskeletal Transplant Foundation
Earn Extra Points With a Quality Poem
I teach the quality and productivity course in the college of business at Lamar University (Texas State University system). I am also the newly appointed faculty advisor to the student chapter of ASQ.
Since April was National Poetry Month and the end of the term, students could submit poems related to their coursework for a “poetry slam” that could garner them a few extra points.
The winner, as selected by students, was a poem by Eddie Mace, a senior management major:
Tools of the Trade
I choked on the fishbone;
It was cause and effect
But doing control charts
Is what I like best.
To do really well,
You use these tools
Or ignore them all . . .
And play the fool.
Well done, don’t you think?
LISA D. MCNARY
Expanding “Back To Basics” Examples
just finished reading Russ West-cott’s “Back to Basics” column, “Return on Investment” (May 2005, p. 104), and would like to suggest some clarifications. What management is interested in is either bottom-line savings, actual cost avoidance or increased dollar revenue. Savings are not real unless labor, material or capital expenses are reduced, eliminated or avoided. The examples presented imply that dollar savings may not actually flow to the bottom line. Did the elimination of a step in the widget process actually result in a reduction in labor?
For some projects, labor is redirected to service an additional workload; an example of this would have been effective. It would have been better to state what actual financial savings resulted after postimplementation audits were completed on these ROI projects.
Pfizer Global and Development
In the article “Design of Experi-ments for Dummies” (April 2005, p. 59) an error appears on p. 64. In the t0 formula, under the square root sign, the equation should read 1/n1 + 1/n2.
In the article “FMEA – Something Old, Something New” (May 2005, Standards Outlook, p. 90), Table 1 features the wrong graphic. The correct graphic is posted online, within the article PDF, at www.asq.org/pub/qualityprogress (click on “Back Issues” in the menu on the right side of the page).