Understanding ISO 9000: user benefits and drawbacks.
We went for ISO 9000 because we needed to protect our sales position in key markets where casting buyers specify only ISO-certified vendors. Certification has helped us pick up a number of customers who wouldn't have been available to us without it, while keeping some of our customers from taking their business elsewhere. Without question, our certification has been well worth all the effort and expense."
That was the assessment of Alan Yates, managing director, Cradley Castings, Ltd., of his foundry's experience before and after ISO 9000 certification.
Producing gray iron and aluminum castings for the foundry-crowded European Community (EC), Yates is one of hundreds of English foundrymen who are profiting from their ISO standards certification in domestic and export markets where certification is deemed essential. (Yates will bring his ISO 9000 quality message to U.S. foundrymen at the AFS "Experiences with ISO 9000: Practical Aspects in the Foundry" conference on March 30-31, 1993 in Des Plaines, Illinois.)
Quality and service will make the difference for foundries of the '90s and beyond as the new ISO standards become the norm for world commerce in cast metals and other goods and services. It boils down to simple economics: the cost burden of non-quality is so much higher compared to the cost of good quality. Non-quality costs include castings rework, re-engineering, processing customer returns, inspection, energy and other expenses.
Surveys of U.K. foundries revealed that costs of non-quality absorb about 25% of a foundry's labor cost, a figure probably similar to that of the U.S. Foundries need genuine quality commitments from top management on down, and ISO 9000 quality assurance systems promote this commitment.
Planning the quality challenge will position foundries to meet the tightening demands of a world marketplace where competitors can spring up almost overnight. Customers will pay for good quality, and foundries providing quality services will thrive.
Compared to the dramatic gains in productivity, less scrap and a more successful operation, actual QC operating costs are negligible. The formal approach to quality assurance provided by ISO 9000 ensures that the foundry always operates to best practice, and any productivity gains achieved are consolidated and maintained.
ISO 9000 is a set of quality systems oriented toward customers' needs in terms of basic management disciplines, certifying procedures and criteria to ensure that products or services meet buyer requirements. Certification formally mandates that company policy is:
* written down;
* insistent that you do what you said you would do;
* able to demonstrate that what is written has been done.
The certification period varies with company size, averaging 15 months for small companies and 18 months for larger ones. Of 2300 ISO-certified British companies surveyed, over 80% reported increased efficiency, 45% reported profits were up, more than 70% identified marketing improvements and 30% claimed improved exports. While most registrations were in the manufacturing sector, numerous service industry companies are also moving toward ISO 9000.
Over 35% of all current applications for certification are received from service industry companies, largely because certified customers find it easier to deal with suppliers who also are certified.
Foundries and ISO 9000
The British foundry industry, like those in most industrialized countries, has slimmed down in recent years, an ongoing process that sees another closure every week or two. Of the estimated 800 foundries listed as operational, about 230 have become ISO 9000 registered, most to ISO 9002 and a few to ISO 9001.
In preparing for certification, there are clear delineations between easy-to-operate systems and those that tie up foundries in endless paperwork. A common complaint from foundries is that many system manuals prepared for certification include stifling amounts of red tape. It is possible to create operating manuals that conform to the requirements of ISO 9002 and are simple to understand and use. Developing manuals, procedures and work instructions necessary to achieve these systems is a specialty largely learned through experience.
Case Study: Joseph & Jesse Siddons, Ltd., an 84-person gray and ductile iron foundry supplying castings up to 4400 lb using resin-bonded sand and electric melting, chose to seek ISO 9002 because "in certain market sectors, we were not considered because we lacked ISO 9000 certification," said Andrew Siddons, managing director.
"When our quality manager was ill, it showed us that knowledge carried only in an individual's head and not fully documented for others to use can prove costly," a foundry supervisor reported. "During his absence, customer returns rose and the correlation between a key individual's absence and the problems it can cause became obvious. Through our ISO certification process, we now have systems in place that prevent the reliance on individuals in favor of written operating manuals."
Siddons concedes that it costs money to develop and run ISO 9002 systems, but the company expects the accredited third-party certification to give it the standard of production credibility that will provide marketing advantages.
Case Study: Nokes Foundry, Ltd. is a 70-employee foundry with ISO 9002 certification. This high-production and jobbing foundry handles light alloys via sand molding, permanent mold and pressure diecasting as well as other pressure diecast nonferrous metals. The company also operates a machine shop offering fully finished castings.
"The major benefit of the ISO system has been increased internal efficiencies," Managing Director Colin Richer said. "We're a much tighter organization. There is closer team effort and the process of getting 1S0 9002 removed any 'us vs. them' attitudes between production workers and management. Motivation is improved. People are engrossed in solving problems and the delegation of jobs by senior managers has increased, mainly because of the confidence that formal procedures are clearly defined."
Case Study: Alucast (Die Castings), Ltd. obtained ISO 9002 certification in March 1992. The company is an aluminum sand casting and permanent mold foundry manufacturing castings in a variety of alloys up to 500 lb. The formal project to attain registration began in 1990 as a joint effort involving everyone--from the top managers to the newest hand in shakeout.
Quality Manager Ray Gutteridge, assisted by a consultant, designed the system.
"The (ISO 9000) system enables us to have confidence in the consistency of how we operate," he said. "We know exactly how an employee will handle a specific job because he has been shown how to do his operation within a total system. He also knows he can be audited at any time. There is an awareness of just how important quality is to this company and how critical it is for every operation they do."
Some successes in the marketing area have already been seen in the first six months following certification. The company has been able to quote successfully for two jobs with customers who insisted on ISO 9002 as a minimum for new suppliers. Alucast also has been able to retain business that otherwise would certainly have been lost.
Internal efficiency has improved, too, Gutteridge said, noting that average internal scrap levels on difficult castings were reduced from about 8% before installation of the ISO 9002 system to around 3%. Rework levels dropped by 10% across the board with a system that largely runs itself. He now has more time to work with customers and improve the system.
"We are very careful in our written procedures to avoid overkill. We only say the minimum in our procedures--only what must be done to satisfy the ISO standard," Gutteridge said. "This applies when auditing our suppliers. We deliberately designed our system to be as easy to operate as is humanly possible."
Case Study: Westley Brothers, plc., a copper-base foundry, has several years' experience operating under ISO 9002. Part of the Westley Engineering Group of Companies, the foundry was opened by William Westley in the early 1800s and is a 225-employee shop.
Tom Westley, group chairman and managing director of the company, said the certification project's main initial objective was to influence customers, but subsequent unexpected benefits significantly improved operational efficiencies. As quality shortcomings surfaced, the foundry's QC manual was completely revised to improve performance, even though the manual satisfied ISO 9000 requirements.
For instance, it was discovered during certification that 80% of all machine shop defects were holes drilled out of position. Suitable jigs eliminated the problem, renewed customer confidence and reduced this costly problem. In another instance, machined castings were being bruised during transit and customers complained of substandard castings. New packaging eliminated the problem and also resulted in significant internal savings.
The foundry also began the policy of having production employees sign for the operations for which they were responsible. That ended the attitude that the next operation would take care of any problems allowed to go through. In effect, every operator now guarantees his work or he rejects the part. A new management system established a "skilled people network" to eliminate the concentration of too much responsibility on one person.
"When we began the ISO 9000 process, we saw the advantage of being one of the first foundries to attain the international quality standard," Westley said. "It positioned us ahead of many of our competitors in an industry where certification was uncommon."
In practice, his strategy has worked. The foundry exports a large part of its production and its volume has held up in a weak economy.
According to Westley, certification was helped by using a foundry computer package to control order processing, production planning and recording, as well as shipping and invoicing memos. Other computerized functions include quality/work instructions, shop floor documentation, historical traceability and scrap analysis.
Case Study: Cradley Castings, Ltd. has two years' experience operating under ISO 9000. A medium-sized foundry, it manufactures gray iron and aluminum alloy castings using green and chemically bonded sand molding processes. Cradley had been pursuing ISO 9000 since 1986, but it proved to be beyond the time constraints on the company's staff.
In late 1988, a consultant familiar with foundry operations was retained to coordinate certification efforts. The process ran parallel to the installation of a computerized production control module using quality assurance software supplied by the consultant.
Yates, the firm's managing director, said his company's motivation for certification was customer pressure and the need to be competitive in key markets--a strategy that was successful.
British foundry executives agree that the ISO 9000 registration effort is a beneficial marketing tool and unmatched as a means to improved operations. Negative comments concern the cost of registration--recently quoted at $8500--plus consultant charges that add a further $8500-$13,500. Then there is the annual cost of assessment return visits, typically $1500 a year.
Gerard Turner, DST Castings, Ltd., said his company was one of the first foundries to be ISO 9002 certified, noting that many customers were astonished to find his small foundry already certified. He said there was no doubt that the marketplace responds to certification.
Tony Hewson, controller of Vald. Birn (U.K.) Ltd., a leading British and European supplier of high-production iron castings, said all aspects of a company's existence are dollar related (including ISO 9002) and must be questioned as to their worth. His company, which is preparing for an ISO assessment by one of the accredited bodies, has retained a consultant to help prepare the systems and documentation needed.
"The cost reduction possibilities of improved quality greatly interest me," Hewson said. "Given the penalties of making defective parts, the sheer logic of building quality in, rather than trying to inspect defects out, lends overwhelming credence to ISO certification."
Richard Pearson, managing director of Armalloy, Ltd., a specialty high-alloy steel foundry that has been ISO 9000 registered for more than four years, said certification helped his foundry's efficiency by formalizing operating systems. The company has never had people to spare, relying on computerization to control production. Certification took a year and it has been successful. Anyone doing business in Armalloy's market has to be ISO 9000 registered even to be considered viable competition, Pearson said.
Richard Newby, chairman of the Newby Foundries Group, with three years' experience with ISO 9002 in his largest foundry, reported extra work was imposed when the foundry took on ISO 9000, but now it helps with better culture, better disciplines, cuts the cost of inspection and has helped find new customers. Proving to be most significant, however, was when one of the Group's other foundries recently lost a large casting order from an established customer--because it did not yet have ISO 9000 certification.
Why ISO 9000?
It is clear that there is near-universal acceptance of ISO 9000 among senior foundry executives concerning registration to the International Quality Standard. The reason why they find the effort and cost worthwhile can be summarized as follows:
* customer pressure--there may often be a gun to your head;
* competitors are doing it--they may steal your customers;
* marketing and public relations--you want a good image;
* less hassle--formal systems get it right the first time;
* systems are dependable--individuals are not;
* cost savings--scrap reduction, less rework, fewer returns;
* product liability laws--it may provide protection;
* special customers' needs (government, military, etc.);
* avoid miracle worker syndrome--don't be "over a barrel";
* reduce inspection costs for your suppliers;
* reduce audit visits by your customers;
* free your most valuable people from routine chores.
"Understanding ISO 9000," modern casting, p. 32 (June 1992).
"Understanding ISO 9000," modern casting, p. 34 (July 1992).
"Understanding ISO 9000," modern casting, p. 40 (Aug 1992).
BS 5750/IS0 9000/EN 29000: 1987, "A Positive Contribution to Better Business," DTI Guide (Jan 1992).
"A Survey of Quality Consultancy Scheme Clients 1988-1990," PERA International, (June 1992).
The author acknowledges the help of many people in the British foundry industry who gave of their time and facilities for discussing ISO 9000 and its impact on their companies. These include all named contributors quoted in the paper and others with whom the topic was discussed during a six-month period, especially R.W. and P.P.
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|Title Annotation:||Quality in the '90s|
|Date:||Dec 1, 1992|
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