ISO 9002 or ISO Stupid?
by Andy Birol

Recently I was interviewing the star performer and production scheduler of a manufacturing client when I asked her to talk about the company’s commitment to ISO. She shot back, “If people here would just do their jobs, I would not have to do ISO in addition to my work.” Well, two things are certain; most people won’t fully do their jobs, and there will always be some version of ISO.

While processes designed to ensure manufacturing effectiveness are critical, the industry that provides this guidance has grown faster than a federal deficit. From KANBAN and just-in-time to quality circles and lean manufacturing, an entire industry has emerged. This is great news for ISO consultants, whose clients pursue the latest mythical definition of perfection. Moreover, many companies still need to get their manufacturing acts together. However, the more I see manufacturers pursuing ISO 9002, the more I grow concerned that they are hurting themselves as much as helping themselves. Here is why:

ISO 9002 is designed to give purchasing of large manufacturers, Tier 1 and Tier 2 companies, a good housekeeping seal to prove they have reduced supplier risk and met their bosses’ objectives. Unfortunately, ISO has an unexpected consequence: it turns a manufacturer into an ever-the-more-qualified commodity provider to an ever-shrinking pool of buyers, many of whom are so focused on cutting costs that they ultimately buy from off-shore providers. If a manufacturer's goal is to keep the buying decision up to engineers and manufacturing managers by innovating and differentiating what they sell, then pursuing ISO can be a mistake. ISO 9002 best helps purchasing managers who seek to create standard specifications, RFPs, and multiple providers of identical products. If you understand that your future manufacturing success relies on your ability to innovate, differentiate, and brand yourself, think long and hard before making ISO your mantra.

So, how can you take the best from ISO to drive your costs down and your quality up without risking your future of innovation, customer value, and profitability? Here are a few key steps:

  • Quantify the business you will find, keep, and grow by pursuing ISO certification.
  • Assure that the business you do gain from your ISO-demanding customers comes with the gross margins you need to grow your business.
  • Have a clear growth plan in place beyond what you currently expect from your ISO customers. If your business is being shopped to foreign producers, recognize that quality and service won’t save your day.

The latest version of ISO emphasizes customer satisfaction. Assure that you are satisfying the true users of your output and your own requirements. If you are measuring satisfaction in terms of buyers who are only interested in price amongst identical suppliers, how can you win? This is particularly critical for small manufacturers who risk being driven down to bankruptcy by selling parts they cant produce as cheaply as their Far East competitors can. A better solution for these companies is to take responsibility for delivering full design, quality control, and procurement services.

In closing, remember that real customer satisfaction pays off when customers give you:

  • Referrals.
  • References.

Anything else is just lip service.

When you buy something because it is cheap and identical to everything else on the market, how much do you care who sold it to you? If you want your output to be similarly valued, then ISO is for you. If not, then keep your ISO fires burning brightly enough to keep you warm--but not hot enough to burn down your whole house.



Andy Birol is a Cleveland-based business growth consultant, owner of Birol Growth Consulting and author of "Focus. Accomplish. Grow… The Business Owner's Guide to Growth." He holds an MBA from the Kellogg School of Management at Northwestern University and has been published in The Wall Street Journal, New York Times, Entrepreneur Magazine, Fortune Small Business and many more. In 2002, his firm won the Weatherhead 100 Award as Northeast Ohio's fastest growing single-employee business. A guest expert on CNN's Dollar Signs, NPR, and NBC, Andy comments on national and local issues facing business owners who want to grow their businesses. Andy can be reached by visiting his website at www.andybirol.com or at abirol@andybirol.com .

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Copyright 2004 by Andy Birol. All rights reserved.

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