Should you centralize quality?

Q: In the ASQ Global State of Quality research, 30% of the organizations indicated that quality is governed and managed by a centralized quality group. How should an organization decide the best model for quality management and governance? Are there specific factors (such as size of organization) to consider?

A: The most important consideration in deciding whether to have a centralized or decentralized quality management function is the consistency of quality management operations from facility to facility, whether it’s a factory, store, warehouse or office. Consider inspection, testing and quality system audits, as well as data collection, analysis and reporting associated with those operations. For a global organization, in general, such consistency is often more easily achieved through centralized quality management versus decentralized quality management.

Centralized quality management means that quality management functions, such as development of specifications, standard inspection procedures, standard operating procedures, criteria for acceptance and non-acceptance, testing procedures and reporting procedures, are carried out by people who report to the centralized quality management structure. Of course, some of these functions, such as development of specifications, must be completed by working with other groups including marketing and sales, purchasing, suppliers and customers.

If a global organization has a decentralized quality management structure, achieving consistency in quality from the customer’s point of view can become a nightmare. Everyone involved in quality functions wants to do things their own way, and they find justification to do so. This results in enormous efforts on management’s part to get everyone on the same page.

Think about organizations such as McDonalds, Subway and Hewlett-Packard (HP), for example. I have been to many McDonalds in several countries and have found no difference in the french fries I’m served. Can you imagine what would happen to the crispiness of McDonalds’ french fries if it had decentralized quality management?

It’s the same with Subway’s sandwiches. I have found consistency of its sandwiches to be high among its U.S. locations and those in other countries. Similarly, when I buy HP black and white ink printer cartridges in the United States and in India, I find them to have the same quality. These are the results of managing quality in a centralized way.

Unfortunately, most people do not realize that the most important element in managing quality is having an organizationwide agreement and clear understanding of what a defect is and what quality is. Having a centralized quality management function facilitates such an agreement and an organizationwide understanding. In those organizations where people in various divisions have different ideas about quality, a lot of time and energy is spent on conflict resolution rather than on quality management.

Centralized quality management does not mean that the quality management staff in the field must work at the organization’s headquarters. Quality staff members can be located anywhere, but they work for and report to the centralized quality management group.

For example, an organization I worked for had operations in 35 countries and suppliers from many countries. We had two quality assurance (QA) field offices—one in Germany and one in Japan. We also had staff members employed and stationed in various countries. Staff members in Europe reported to the QA field office in Germany, and staff members in the Asia-Pacific reported to the QA field office in Japan. The two field offices, in turn, reported to the organization’s headquarters in Dallas.

In today’s age of technology, where voice and data communication is so advanced, the size of an organization shouldn’t affect whether the organization has a centralized or decentralized quality management function. Large or far-flung operations should not be an impediment to operating a centralized quality management group.

Pradip Mehta
Principal, Mehta Consulting LLC
Coppell, TX

What’s the cost?

Q: What are the estimated costs of implementing ISO 9001? We are an organization with five divisions: contract manufacturing, structural fabrication, steel service center, rebar and metal castings. We employ about 200 people and operate from two facilities. Our metal casting division is a separate location from our other operations. I am trying to generate return on investment and an implementation time frame.

From the Ask the Experts Blog

A: This is an excellent question and often asked by companies considering ISO 9001:2008 certification. To accurately estimate costs that will be associated with obtaining ISO 9001 certification, the following approach should be considered:

Step 1. Contact a registrar to identify the following:

  • Cost of application fee.
  • Cost associated with conducting required stage one and stage two audits for ISO 9001 certification.
  • Hourly and per-day rates charged for off-site and on-site audit activities.
  • Administrative fees, if any.
  • Travel time costs (minimum and maximum daily charges).
  • Other associated costs for airfare, hotel, meals and car rental.
  • Frequency and cost for surveillance audits to maintain certification.
  • Cost for quality management system (QMS) recertification.

Discuss your organization’s plans and timeline with the registrar to obtain QMS certifications at separate locations. There may be an opportunity to share or save costs. For example, consider establishing a single corporate quality manual and common QMS procedures for all facilities. Also discuss the availability and location of potential auditors that the registrar may assign to your facilities. Usually, the closer they are, the better.

In addition to determining the registrar’s costs, it is equally important to determine the registrar’s certification requirements. Some require that at least four months of records be available to provide evidence of conformance and implementation of the QMS. Consider contacting a couple of registrars to compare costs and requirements. Another important point is to select a registrar that is familiar with your industry or business sector. Be picky and ensure the registrar can assign an auditor that has past experience that relates to your QMS processes or product line.

Step 2. Determine the availability of in-house expertise that will be required to develop and implement a QMS for certification. If these activities are going to be outsourced, contact an experienced QMS consultant and request that a quote for a gap analysis be provided. Do your homework before selecting a QMS consultant. Contact a few QMS consultants, compare their rates and request contact information for past clients, or other references, to verify their experience and reliability. Again, select a consultant who has past experience with your industry, processes and product line.

Confirm that the results of the gap analysis will document all areas that meet certification requirements as well as those that do not, preferably by clause number. The consultant should use the results of this gap analysis to estimate the number of man-hours that will be required to develop and assist with the implementation of the QMS for certification.

The bottom line is that the cost to obtain ISO 9001 QMS certification cannot be effectively estimated without knowing four items:

  1. The registrar’s costs for ISO 9001 registration, surveillance and recertification audits.
  2. The company’s current level of conformance with ISO 9001 requirements.
  3. The amount of resources that the company will dedicate to this project for development and implementation.
  4. The amount of support that will be required from a consultant and the associated costs.

Figure 1 is a flow chart that provides a general overview of the ISO 9001:2008 QMS certification process.

Figure 1

Bill Aston
Managing director
Aston Technical Consulting Services LLC
Kingwood, TX

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