Managing the System
Revision introduces focus on
organizational operating conditions
by John E. "Jack" West and Charles A. Cianfrani
As organizations begin to review the draft international standard (DIS) of ISO 9001:2015, they will notice a number of language changes. The question that comes to mind first is: Do the new words imply new or different requirements, or are they just repackaging of the same requirements? Surely, there must be some of each.
It can be argued that if an organization properly interpreted and implemented ISO 9001:2008, the changes in the 2015 version should have minimum impact. There is an apparent difference in focus in the DIS, however. Clause 4 of the draft introduces what seems to be a new concept, "context of the organization," which focuses on understanding the organization’s operating conditions. The DIS includes four subclauses that elaborate on this concept.
This article explores Clause 4 of the ISO 9001:2015 DIS. The bolded statements throughout the article signify takeaway points that may be helpful for organizations preparing for the transition to the revised standard.
Context of the organization
The notion behind "context of the organization" is that an organization must fully explore and understand the internal and external conditions under which it operates. This is like a football team understanding the rules of the game, the nature of the playing field, and the strengths and weaknesses of its own team and the competition.
It is a simple concept, but in reality, it is an ongoing enterprise challenge. In today’s world, organizations must understand the changes that occur all around them. Formal recognition of this need in the DIS can perhaps be viewed as a significant advancement in thinking.
Clause 4.1 requires the organization to: "… determine external and internal issues that are relevant to its purpose and its strategic direction and that affect its ability to achieve the intended result(s) of its quality management system."1
The requirement is to determine internal and external issues but to accomplish that in a useful way, an organization must first understand its strategic direction.
It is amazing how many organizations have a fluid set of uncoordinated strategies without a clear direction. There are always issues that will affect the strategic direction of any organization. Those issues must be determined, and knowledge about them must be used in planning. Some, or perhaps most, of these issues will affect the effectiveness and efficiency of the quality management system (QMS), so understanding them is potentially a great input to QMS development.
Earlier versions of ISO 9001 hardly hinted at these ideas. An issue organizations will face with the DIS’s wording of clause 4.1 is how far they should go when determining "… external and internal issues that are relevant to its purpose and its strategic direction and that affect its ability to achieve the intended result(s)."
Keep in mind: It is the organization’s responsibility and prerogative to make such decisions—not external auditors.
The title of clause 4.2 introduces two more terms that are new to ISO 9001: understanding the "needs and expectations" of "interested parties."2 Earlier versions of ISO 9001 did require identification of customer requirements but did not use the terms "interested parties" or "needs and expectations."
The text of 4.2 makes it clear the intent is to determine the interested parties and requirements that are relevant to the QMS. The organization must determine which interested parties are relevant and which of their requirements are relevant.
In most cases, the needs and expectations of customers are most important, but other interested parties might include regulatory agencies, suppliers and even society in general, especially if environmental implications are related to the realization or use of an organization’s products.
In any case, it is best to keep the customer in mind. In the Annex B listing of quality management principles (QMP), the first principle listed is customer focus:
- Statement: The primary focus of quality management is to meet customer requirements and to strive to exceed customer expectations.
- Rationale: Sustained success is achieved when an organization attracts and retains the confidence of customers and other interested parties on whom it depends. Every aspect of customer interaction provides an opportunity to create more value for the customer. Understanding current and future needs of customers and other interested parties contributes to sustained success of an organization.
Remember also that the scope of the DIS is focused on consistently meeting customer and regulatory requirements and system improvement. Don’t let the expanded concepts of the new revision divert primary attention away from customers. It is ultimately the organization that decides who to include as interested parties.
It is noteworthy that current and earlier versions of ISO 9001 avoided using the term "leadership," perhaps, because for many organizations, it has something of a soft feel to it. The DIS for ISO 9001:2015 no longer avoids the word, however.
While the draft does continue to use terms such as "top management," emphasis has shifted to demonstration of leadership. Leadership is another of the seven QMPs given in Annex B of the DIS:
- Statement: Leaders at all levels establish unity of purpose and direction, and create conditions in which people are engaged in achieving the quality objectives of the organization.
- Rationale: Creation of unity of purpose, direction and engagement enable an organization to align its strategies, policies, processes and resources to achieve its objectives.
What is required to demonstrate leadership? Top managers should refer to an extensive list of 11 requirements in clause 5.1.1. The list includes promoting activities such as the process approach, continual improvement, setting objectives and being accountable for system effectiveness.3
Process approach and the system
The use of the process approach in developing and modifying QMSs has become quite common. The fourth QMP addresses this subject:
- Statement: Consistent and predictable results are achieved more effectively and efficiently when activities are understood and managed as interrelated processes that function as a coherent system.
- Rationale: The QMS is composed of interrelated processes. Understanding how results are produced by this system, including all its processes, resources, controls and interactions, allows the organization to optimize its performance.
As did ISO 9001:2000 and 2008, the DIS continues to require organizations to do some specific things related to the processes of their QMS. They must identify the system’s processes and their interactions, and the resources required to operate, control, monitor, measure and continually improve those processes.
Too often, processes are well defined, documented and run for years without any real improvement or change. When this happens, the organization is in danger of losing its competitiveness over time.
One reason this happens is managers fail to fully appreciate the roles of people who work in the processes. Also underaddressed is the requirement to continually manage measurement, analysis of data and improvement of processes.
Used properly, the process approach can lead to quality excellence. The key here is the word "manage." In the past, organizations often used flowcharts to understand their processes but had not really defined how processes would be managed, controlled, monitored, measured and improved.
Flowcharts alone do not do all of these things. Processes are the way things get done. They are the way transformations take place to add value. They are also the way work is stabilized, controlled and made consistent. Process management is the first prerequisite to reducing variation.
When it is effectively implemented, process management can be a large contributor to improved quality and productivity. Some might argue that managing processes is the most important thing managers do, but that is not completely correct.
Are processes more important than people? Ultimately, an organization is nothing but processes and their associated resources. People are one of those resources, making people sound somewhat unimportant.
Is it reality, however, to expect processes to be defined by bosses who think of the people who work in the process as just another resource? Is managing processes more important than leading people? After all, it is people who create, monitor, measure, control and improve the processes of an organization.
Because it is the people who make processes work and determine how well they work, it is critical to get the people who work in processes fully engaged in their work and to involve them in the process management activities for improvement.
Competent and trained people who work with the processes every day are best able to manage them. Involving these people in process development, understanding, measurement and improvement is a key to successful process management.
People who work in the process should talk to the process customers to identify the process outputs, get agreements on what to measure and how, and set targets for those outputs.
Likewise, they should talk to the suppliers of the process to define what the process needs in terms of inputs to determine how these inputs should be measured and to set targets for them. Qualitative and quantitative customer feedback should be solicited.
The attitude that "the workers work in the process, and the managers work on the process" must change. It is the people who work most closely with a process who can often do the best job of analyzing process activities to find duplicative or nonvalue-adding activities that can be combined or eliminated. These people can be great at eliminating waste.
If working on the processes should be the job of those who operate the processes, what do individuals such as managers, process engineers and quality engineers do?
- They promote, educate and monitor.
- They ensure people are working on the right process improvements.
- They demonstrate their leadership by constantly communicating the objectives and progress being made.
- They create and maintain the internal environment in which people can become fully involved in achieving the organization’s objectives.4
The involvement of people principle is stated in the third QMP:
- Statement: It is essential for the organization that all people are competent, empowered and engaged in delivering value. Competent, empowered and engaged people throughout the organization enhance its ability to create value.
- Rationale: To manage an organization effectively and efficiently, it is important to involve all people at all levels and to respect them as individuals. Recognition, empowerment and enhancement of skills and knowledge facilitate the engagement of people in achieving the objectives of the organization.
Good leaders encourage participation and innovation. They make certain everyone is engaged in their work and involved in improvement. They must listen and consider innovative new ideas. Good leaders must ensure good ideas are focused on organizational objectives so objectives are developed into process changes that improve efficiency and effectiveness.
In the ideal process, a small number of independent variables can be measured and controlled to control the behavior of outputs (response variables).
Managing the process interactions is different for at least two reasons. First, process interactions are where problems seem to manifest themselves. Then there is the issue of complexity. Complexity increases as the number of process interactions increases.
The number of interactions increases faster than the number of processes. If there are three processes and each interacts with the others, there are three possible interactions among them. If there are four processes, there are six possible interactions. With five processes, there are 10 interactions, and it can go on. There also are often multiple interactions between any two processes. It can get messy fast.
All this complexity tends to separate cause from effect. In other words, an action in one part of the system can have dramatic consequences in other parts of the system, and those consequences often happen long after the action was taken.
Here’s a possible example: A quality improvement proposal was resisted by the system but eventually turned into cost reductions that helped make last year’s financial goals. But the resulting rise in this year’s warranty costs are blamed on you for "not controlling the parts."
In this example, various parts of the management system reacted in different and unexpected ways. You proposed an improvement in quality, but the finance people thought it too expensive. The design and industrial engineers got together and came up with an alternative that reduced cost but had significant risk. Somehow, you were not involved in the final solution. The cost reduction part of the story is long forgotten, but the system tracked the item as your idea.
The point is that if the managers in this little situation saw the business as a system, they would look for the best overall results—not just grab the quick money and hope there is no problem in the future.
When there is a focus on processes, there’s a tendency to focus on the details. It’s important to understand how the entire system works, rather than search only for direct cause-and-effect relationships.
In leading all employees to make improvements, managers must understand what will happen if they make a process change that is not properly coordinated. People in a process usually have difficulty developing a big-picture understanding, but big-picture coordination makes system management work.
In the example, the interrelationship among the cost reduction, quality improvement and financial accounting processes needed attention.
Some things that can help with big-picture thinking include:
- When people work on improving one process, it is the job of the managers to make certain the other processes and interactions are considered.
- Think globally and understand how the various processes of the system work together to achieve the organization’s objectives. An organization has only one management system, but that system may have many components. It may include processes to manage aspects such as finance, investor relations and quality. All parts of the system must work together to produce results.
- Perform rigorous design review by all who are or can be affected when contemplating changes to processes and products.
All these activities take time and skillful leadership. Many managers are more comfortable doing the actual improvement work themselves. Solving problems and making improvements is the real fun part of their jobs. The key is that leadership must be focused on involving everyone.
Managers must learn that it is even more fun to see their team members successfully implement real innovative changes that make the organization better. The people make all the difference.
Fundamental need for alignment
As an organization assesses and decides how to address concepts such as the "context of the organization" and the "needs and expectations of interested parties" in its QMS requirements, it is concomitantly imperative to integrate such requirements into the mission, vision and strategic plans of the organization.
Figure 1 illustrates how the QMS is built on the vision, mission and objectives of the organization, and the QMS must not only be compatible with these items, but also support the achievement of them. The QMS will only be credible if it is a vital element of and contributor to the achievement of the vision, mission and objectives of the organization.
This column has just scratched the surface of the meaning and intent of a few of the concepts incorporated into DIS ISO 9001:2015. For some organizations, the new content will be viewed as a mere distinction from the requirements in the 2008 edition of ISO 9001. For others, it will require thoughtful attention.
Organizations should carefully consider the words of the DIS and, more importantly, the intent of the words. Most critical, however, is to consider implementing improvements to processes that will effectively contribute to the achievement of the vision, mission and objectives of the organization.
A QMS is not just for quality. It is a vital and integral element of the management of an organization.
References and note
- International Organization for Standardization, Draft International Standard ISO 9001:2015, Clause 4.1—Understanding the organization and its context.
- International Organization for Standardization, Draft International Standard ISO 9001:2015, Clause 4.2—Understanding the needs and expectations of interested parties.
- International Organization for Standardization, Draft International Standard ISO 9001:2015, Clause 5.1.1—Leadership and commitment with respect to QMS.
- Ibid. See leadership and commitment among the 11 items listed in clause 5.1.1.
John E. "West" is a member of Silver Fox Advisors in Houston. He is past chair of the U.S. Technical Advisory Group to the International Organization for Standardization Technical Committee 176 (ISO/TC 176) and lead delegate of the committee responsible for the ISO 9000 family of quality management system standards. He is an ASQ fellow and has co-authored several ASQ Quality Press books.
Charles A. Cianfrani is a principal consultant for Green Lane Quality Management Services in Green Lane, PA. He is a U.S. expert representative to ISO/TC 176. He has an MBA from Drexel University and a master’s degree in applied statistics from Villanova University. An ASQ fellow, Cianfrani is a certified quality engineer, reliability engineer and auditor, as well as an Exemplar Global-certified quality management systems auditor.