Chapter 1 Lean and ISO 9001: Two Complementary
E. ISO 9004 and Lean
At the time of the writing of this book in the summer of 2009, ISO 9004:2009 was still a work in process, with the anticipated release date being some-time around the very end of 2009 and U.S. publication in early 2010. The anticipated title of the standard will change from the 2000 version, “ Quality management systems—Guidelines for performance improvements” to
“Managing for the sustained success of an organization—A quality man-agement approach.”
Since, as of this writing, ISO 9004:2009 has not been released, this section of the book will address the relationship between ISO 9004:2000 and lean.
ISO 9004 is a guidance document. No company has to comply with it or follow it for any reason. It exists for a company’s arbitrary and optional
use. ISO 9004, in my opinion, represents the spirit behind ISO 9001. Committee 176 on Quality Management and Quality Assurance is the com-mittee responsible for developing the ISO 9000 series of standards and guidance documents. It is they, and the technical advisory groups within each country, who have spent so much time and put so much effort into radically changing the ISO 9004 standard. But why, I wonder, if there is no
He mainly spoke of the larger, more involved changes to ISO 9004 and stated that ISO 9001 will not change much. He spoke of the many hours
and ANAB itself—the organization that accredits the companies that cer-tify your company—does not seem to understand root cause analysis.
Regardless of this issue, the present ISO 9004 standard is a good docu-ment, and it does demonstrate a great deal of overlap with and consistency with lean.
effectiveness and efficiency
I’ve known for quite some time that the words “effectiveness and efficiency”
were used in tandem a great deal in ISO 9004:2000. So, for the sake of this book, I took it upon myself to actually count the number of times that some form of “effectiveness and efficiency” is used together in tandem. It astounded even me. I counted 86 occurrences! 86!! If anyone was to ever think that the idea of eliminating waste and making processes more effi-cient was not an important part of ISO 9001, as reflected in its spiritual counterpart, ISO 9004, this fact should dispel that notion.
The term is used throughout the standard and is very prominent in two particular sections:
7.1 Planning of product realization (planning for little waste) 8.2.1.3 Internal audit (looking for waste)
This is the breakdown, by section of ISO 9001/9004, of the number of times some form of the words “effectiveness and efficiency” is used in tandem:
Section # # of occurrences
4 Quality management system 6
5 Management responsibility 16
6 Resource management 10
7 Product realization 24
8 Measurement, analysis and improvement 30
It is used throughout the standard, and there is a high concentration of it used, predictably, in section 8 “Measurement, analysis and improvement.”
An example of the use of “effectiveness and efficiency”: 8.2.1.3 Internal audit (ISO 9004:2000)
In Chapter 3, I make the argument that internal auditors should be looking for waste as they audit, and that when waste is observed they should write up preventive actions.
In support of this argument, Section 8.2.1.3 of ISO 9004 states:
Top management should ensure the establishment of an effective and efficient internal audit process to assess the strengths and weaknesses of the quality management system . . .
The internal audit process provides an independent tool for use in obtaining objective evidence that the existing requirements have been met, since the internal audit evaluates the effectiveness and efficiency of the organization.
Examples of subjects of consideration by internal auditing include
• Effective and efficient implementation of processes . . .
• Effective and efficient use of statistical techniques . . .
• Effective and efficient use of resources . . .
Internal auditors should be looking for waste, in the form of inefficient pro-cesses leading to ineffectiveness, and not just compliance. Internal auditors should be supporting the company’s lean journey.
Why Are the Terms “effectiveness” and “efficiency”
Joined Together 86 Times?
Section 8.5.4 of ISO 9004:2000 somewhat defines the two terms as:
• Effectiveness (such as outputs meeting requirements)
• Efficiency (such as resources per unit in terms of time and money)
Furthermore, many people associate the words as such:
• Effectiveness = Quality (or ISO 9001) related
• Efficiency = Lean related
I make the assertion throughout this book that ISO 9001 and lean should be integrated and should be one and the same, just as ISO 9004 asserts that effectiveness and efficiency should be used in tandem. But why?
It’s simple. If there is waste in an organization’s processes, this will directly negatively affect the resources per unit, in terms of time and money (efficiency), for that organization. As an example, if there’s more inven-tory (one of the 8 process wastes), it costs more to store it, it affects cash flow negatively, and it takes more time to allocate and move the inven-tory, thus negatively affecting efficiency. If there is excess transportation
of product (another one of the 8 process wastes), the organization needs to pay for the extra wages and equipment to move the product, thus negatively affecting the efficiency.
In both cases, quality and on-time delivery may suffer. With regard to inventory, excess inventory can lead to obsolescence, damaged product, contaminated product, lost product, and product that exists beyond the point of expiration or usefulness. Oftentimes when an organization makes extra inventory of one item based on a forecast, it is using capacity that could be used in getting hot products out the door to meet customer demand, which can result in not meeting the customer’s delivery requirements. In other words, because of the inventory problem, quality and on-time deliveries do not meet requirements, which is the definition of not being effective.
The same can be said of the excess transportation problem. Excess transportation leads to the increased possibility of dropping the product, dinging the product, contaminating the product, and/or losing the product.
The company’s quality goals may not be met, which is a sign of an ineffec-tive process. Furthermore, because of all of the extra movement, lead time increases and on-time delivery may not be met, which, again, is a sign of an ineffective process.
Just as effectiveness and efficiency should not be separated, neither should quality and lean.
Annex B of ISO 9004
Annex B of ISO 9004:2000 is entitled “Process for continual improve-ment.” The reader is encouraged to read this section of the standard. It starts off with:
A strategic objective of an organization should be the continual improvement of processes in order to enhance the organization’s performance and benefit its interested parties.
There are two fundamental ways to conduct continual pro-cess improvement, as follows:
a) breakthrough projects which either lead to revision and improvement of existing processes or the implementation of new processes; these are usually carried out by cross-functional teams outside routine operations;
b) small-step ongoing improvement activities conducted within existing processes by people.
Method A in “lean speak” is called kaizen events or kaizen blitzes.
Method B in “lean speak” is called developing a lean culture including the use of leader standard work, daily accountability meetings, visual man-agement, and leadership discipline.
If we were really smart as American businesspeople, we could have developed our own lean methodologies by understanding the spirit behind ISO 9001/9004 and developing our own ways. But then, it’s easier to copy other companies like Toyota rather than think for ourselves. (This is called sarcasm.)