Untitled Document

ISO companies set to acquire new standards
By Suren Gnanaraj and Thushara Matthias
The International Standardisation Organisation has asked all ISO 9001,9002,9003 holders to change to the new quality management certification ISO 9001: 2000 version before December 15, 2003.

Companies that have acquired the new certification welcomed the change but warned that it might be too costly for small firms to maintain the high quality management standards required to get ISO accreditation.

The familiar three standards ISO 9001, ISO 9002 and ISO 9003 have been integrated into the new ISO 9001:2000. This new standard specifies the requirements for a quality management system to suit any organisation that needs to demonstrate its ability to consistently provide products that meet customer and applicable regulatory requirements, and aims to enhance customer satisfaction.

The main reasons that led to the revision of ISO standards have been the need to monitor customer satisfaction, reduce the amount of documentation as well as maintain user-friendly documents, and to promote the use of flexible quality management principles which can be adopted by virtually any organisation.

C.D.R.A. Jayawardena, Director General/CEO of the Sri Lanka Standards Institute (SLSI) said that standards have been periodically reviewed by the ISO technical committee, which consists of nominees of ISO member bodies, to benefit from the new developments in the quality management field and feedback from holders.

ISO 9000 is primarily concerned with "quality management", which ensures that an organisation's products conform to the customer's requirements. ISO 14000 is mainly concerned with "environmental management". It aims to ensure that a product will have the least harmful impact on the environment, either during production or during disposal, either by pollution or by depleting natural resources. However, neither ISO 9000 nor ISO 14000 are product standards.

Companies which have already registered under the ISO 9000 (1994) series need not re-write all their documentation but should only include the necessary additional documentation to meet with the required amount of six document procedures, Jayawardena said.

Of the 150 or so companies and organisations that have got ISO, around 50 have changed to the new standard. The cost of transition would be minimal, and would depend purely on the nature of the audit carried out for each individual organisation.

A company's entire business process is strategically organised to constantly document as much information as possible, which is available to the company at all times. These documentation processes must comply with ISO standard requirements, for which ISO certified companies are requested to conduct an internal audit every three months, following which the accreditation institute would visit the company either once or twice a year and conduct a comprehensive audit.
Jayawardena said that audits are conducted extremely meticulously.

The basis of this quality management system is that all employees should be aware of the standards of quality, which the company as a whole must maintain. "At an audit, we randomly interview workers and ask them relevant questions about the measures that have been implemented with regard to ISO. If they are unable to provide the answers the company is given a warning, which if repeated could lead to a suspension of the certification."

However, Jayawardena said that so far, no such certifications have been suspended. "If a company has a quality management system, the chances of making a mistake are very slim."

A company can acquire an ISO quality management certification from an accredited body, spending in the range of Rs. 100,000 - 250,000, which may vary according to the nature of the organisation. However, if a company opts to hire a private consultant to structure the company's business process according to the required conformities, an additional cost in the range of Rs. 200,000 - 300,000 may have to be incurred.

There is also an annual registration fee of approximately Rs. 80, 000.
With such a high investment being made, it was interesting to see the benefits these companies received by way of having an ISO quality management certification.

N. A. Bodhinagoda, Production Manager of Bata Shoe Company, said that before acquiring ISO 9000, the company could not ascertain the quality of a product, until it emerged from the end of the production line. ISO has changed this position. "The ISO certification enables total quality management (TQM), which ensures that quality is consistent throughout the manufacturing process."

The biggest advantage the company acquired, he said, is trace-ability. Since ISO requires companies to maintain a comprehensive documentation process inclusive of files and charts in all central points of the process, any faults or problems that arise can be detected quickly, which is often a bonus in terms of productivity. Each and every fault is recorded, which meant that in addition to taking instant corrective action, the problem is then scientifically analysed in order to ensure that it does not occur again, Bodhinagoda said.

Due to the emphasis on documentation, and on employees being knowledgeable on the procedures adopted in all departments of the company, any employee is able to substitute a regular, and still maintain that same level of quality.

Pointing out some of the drawbacks of the system, Bodhinagoda said that the amount of documentation involved is sometimes a bit too cumbersome. It is unwise for small companies to embark upon obtaining an ISO certification, because it required a lot of resources to maintain such high quality management standards.

Chinthaka Dharmasena, Production Operation Manager of CTC, which recently obtained ISO 9001:2000, said that in the previous ISO version the main focus was on documentation and the general functions of the company. However, under the 2000 version, the company is also required to constantly set targets for itself and assess its position.

A new dimension has been created with the advent of consumer interests being included to the 2000 version. Dharmasena said, "Under the new version, we have to do consumer research and obtain feedback from them. Any complaints must be studied, analysed, and converted into our business process."

ISO has empowered all employees with knowledge and information, which has made it possible, for even a machine operator to take an instant decision on the ground, instead of having to refer it to the management. "We don't call our machine operators and labourers because there is a tremendous amount of responsibility that we all equally have to shoulder."

An official of Delmege Forsyth and Company Ltd, a company that has not acquired ISO certification to-date, has a positive outlook on the certification. "We appreciate its merits, and we feel that it is of value."

Asked why they had not got ISO certification, Delmege Forsyth officials said that though they have not obtained a formal accreditation, they do have their own adequate systems. "Our customer portfolio speaks of the quality that we have maintained."

Though ISO has been revised to encourage all organisations to acquire ISO quality management system certification, none of the leasing companies have moved towards acquiring it. A top official from a leading leasing company said, "It is unnecessary. No other leasing company has it and it was never the market need."

The revised standard (ISO 9001:2000) has been directed at achieving business results, including satisfaction of customers and others. There is confidence between accreditation bodies that the management of the organisation will be able to adopt the quality management system standards not only for certification purposes, but also as a profitable investment.

Sathosa to be promoted by two ad agencies
Sathosa, the retail arm of the Co-operative Wholesale Establishment (CWE), is enlisting the support of two of Sri Lanka's leading advertising agencies - Q & E Advertising and Masters Advertising - in an effort to become more customer focused and market oriented.

With an annual turnover of around $ 210 million, Sathosa, markets a range of essential commodities from food to hardware and sports goods at comparatively low prices. In order to expand its image and customer base, the Ministry of Commerce and Consumer Affairs is in the process of implementing a massive programme. The existing Sathosa retail stores - all 157 of them, will be upgraded to super malls. In addition, 200 Sathosa Supermarkets and 100 'A' grade Sathosa outlets are scheduled to open by 2005.

Q & E Advertising and Masters Advertising have been entrusted with the task of conveying the government's message of providing essentials at reasonable prices more effectively whilst projecting Sathosa as Sri Lanka's largest retail store network, a statement from Q & E said.

The two agencies were chosen after a rigorous selection process. Commenting on their choice of the two agencies, Jumar Preena, the Commerce Ministry's Director of Media and Marketing Communications said: "Five agencies pitched for the account. After strict evaluation, we settled for these two agencies, given their strength in corporate brand building and event marketing." Advertising industry sources said the CWE advertising account is worth over Rs. 20 million and is probably the biggest among state institutions.

Investor protection deal with Australia
The government is to sign an Investor Promotion and Protection Agreement with Australia under which investors would be compensated for losses caused by unexpected developments such as nationalisation.

The deal will be signed between Minister of Enterprise Development, Industrial Policy, Investment Promotion and Constitutional Affairs G. L. Peiris and Mark Vaile, Minister for Trade at Parliament House in Canberra on November 12. The Board of Investment (BOI) of Sri Lanka has arranged an investment promotion trip to Australia which includes visits to major cities like Canberra, Melbourne and Sydney.

Australia is one of Sri Lanka's best sources of foreign direct investments. There are nearly 50 Australian firms with big investments here under the BOI. The agreement, which is expected to enhance investor confidence, sets out state-to-state guarantees with regard to promotion and protection of investments, their treatment, compensation for losses including in the event of expropriation and nationalisation and provisions relating to settlement of investment disputes.

Sri Lanka signed over 25 such agreements with other countries since the economy was liberalised. Among the companies taking part in the business delegation are Abans, Harsha Trading Company, IDM Group and Singhagiri.

This mission, which is expected to bring a lot of Australian investments to Sri Lanka, will focus on key sectors such as electronics, IT-based industries, light engineering, agriculture, textiles, garment accessories and infrastructure investment.

The itinerary consists of one to one meetings with large companies. The BOI will also hold an investor Forum on November 14 at which BOI Chairman/Director General, Arjuna Mahendran, will do a presentation titled "Profit in Paradise". (TM)

Back to Business