Earl
I can cite you one case from my personal knowledge. However, I shall not
mention names or places for reasons that will become apparent.
It is the case of an SME in a village of 2,000 inhabitants, employing
about 25 persons, in the electronics assembly business, at the high-tech
end of the scale. Their turnover was about $3.5M. Their clientele was
essentially in the professional instrumentation business, but 90% of
their turnover was with 3 customers (admittedly quite dangerous, but
let's not go into that). About 10 or 12 years ago, one of their big
customers indicated a requirement that the company obtain ISO 9000
certification, even though they never had any quality problems with what
was supplied. They prevaricated until this happened with the second one,
a few months later, and it became obvious that they were going to have
to do something. Again, there was no need to improve their quality.
Knowing little about it, the boss asked around and his customers
recommended a consultant, expert in ISO 9000 matters, whom he called in.
A plan was made and started off. The manual was written according to
their existing processes, but this implied the need to conduct things
like checking the temperature of the temperature indicators in their
reflow ovens against standard instruments, traceable to national
standards, which he had to buy - and they were not cheap. Before, he had
relied on the fact that the inbuilt Pt100 resistance thermometers were
not likely to go off calibration significantly and, even if one did, the
results would be immediately visible. So it can be said that the quality
of the products altered not a jot. Then he discovered that establishing
and filing the additional paperwork was occupying too much time of his
senior production personnel and the latter's lack of availability was
causing the quality to actually drop. So he engaged a specific QC
manager (not cheap) whose terms of reference were to do everything
necessary to ensure that all the requirements of his ISO 9002
certificate were complied with, that the paperwork was kept correctly
and to ensure that the certifying authority's annual audit passed
smoothly. Up to this point, it had cost him an estimated $500,000 in
consultant's fees, pre-audit and audit fees, time required internally, a
year's salary for the QC manager, purchases, tracing calibration
instruments etc. As this was greater than the previous year's net
profit, it was no surprise that he started to make a loss, but the boss
decided that the following year would produce some benefit. He announced
to his customers that his selling prices would have to be increased by a
few cents per assembly, but this was just as the recession started and
he was told in no uncertain terms that, au contraire, he would have to
reduce his selling prices to continue working with them. He had no
choice but to comply, even though the orders were coming in slower and
smaller. He desperately sought further afield to obtain new business but
was told that he was too expensive and obtained little extra work. He
slimmed down the personnel but he dared not rid himself of the one
person who was costing him most: the QC manager. Down from 25 to 10
persons, he finally had to start making arrangements with his creditors
and seeking external help. In a way, he was lucky, because he found a
buyer (one of his much larger competitors, one who was one notch
downmarket in quality) who offered to purchase 95% of his company at its
audited value, put in a few million to restart it again, but who would
do the management. His first action was to go round their clients and
explain to them that their insistence on ISO 9002 certification had
taken the company down to its knees and they would abandon it, but,
after ascertaining that the quality of the products supplied had not
improved in the three years since their demand to comply, he assured
them that they would continue to supply the same quality AND drop their
prices as a result. Since then, they pulled themselves up by their
bootlaces (without a QC manager) and, today, they are in a better
position than ever, without ISO 9000 certification, the original bossman
having repurchased the company back from his buyer, who was under the
illusion that the hi-tech market was going to pay back his investment
better.
I agree that this has little to do with DFM/CE, but it illustrates that
there is a danger to the health of SMEs by being bullied into ISO 9000
certification. What counts is the quality of the product, not a neat
certificate on the wall of the boss's office. IMHO, it is often
counter-productive for large companies to insist on it from their
suppliers. It stifles innovation and increases costs without necessarily
any concomitant improvement of quality. It is not even certain that he
would not have had some conjunctural difficulties without the ISO 9000
story, but it certainly made a big contribution and is almost sure to
have tipped the balance into the red.
The boss of this company is a fairly close friend and I visited his
brand new factory for the opening this year. This story is not unique: I
know another similar case in a different country where, although it was
not quite as dramatic, suffered along the same lines and only just
survived. However, the worst case I know of is a larger, privately-owned
multinational with an excellent reputation for quality products, with
600 employees in 4 locations world-wide. Their profits diminished with
ISO 9001 certification in 1992 (granted, they went the whole hog by
applying everything bureaucratically down to the way they purchased
their toilet paper). They sold out a few months ago to a competitor,
with a hole in their accounts of some $15M. Again, I can't be sure that
there is total cause and effect, but their ISO 9001 certification
certainly did not help - and this was not an SME but was previously a
very profitable concern.
Of course, there are companies that have profited from ISO 9000
certification, but my advice is not to think twice before going ahead if
you are an SME: think a dozen times, at least. OTOH, DO implement DFM/CE
measures without hesitation: this is a much surer way of improving
quality and lowering overall costs.
Best regards,
Brian
Earl Moon wrote:
>
> Brian and Edward,
>
> I really appreciate your points of view. This is exactly the kind of
> discussion for which I hoped as a primer for more technical type talks. I am
> not taking a stance here or in my book - but to offer options to improve
> product quality within an organization dedicated to DFM/CE, based on a
> standard like ISO and the wisdom it offers some. There always will be
> different interpretations and opinions as to how a valuable tool, or not,
> should be used, how well it will be used, and the extent of its use.
>
> While respecting your view points, I must say that in no way does ISO, much
> as did MIL-STD-2000, tell an organization how something SHALL be done. It
> simply says it SHALL be done. Therefore, an organization must say and do
> that which is DEMANDED, or not be registered. I does leave the "creative"
> process up to the organization and those CLEARLY responsible for its
> success, from first registration through all continuous process improvement
> phases. No where does any ISO requirement say, as an example, you SHALL hang
> SPC paper over each wall in your organization. It does say, based on NEED,
> say what you do and do what you say.
>
> My thesis in all this is simple. There always are better ways to do a job. I
> believe it to be foolish if a good tool, or guideline, is supplied for
> process and product improvement, and it is not recognized as such and put to
> good use.
>
> What I'm really looking for are some success or failure stories concerning
> ISO 9000 as clear examples of what works or doesn't for whomever.
> Specifically, I'm looking for these stories as they pertain to section 7.3
> and its clearly stated requirements as the 20 or so shall statements. Again,
> I'm not taking sides in a debate. I'm just trying to get the facts men,
> women, and any other interested beings. Brian and Ed, I'm sure you have such
> stories - beyond classic, or not literature - though I happen to be a
> Shakespeare fan with a much more limited vocabulary. I think that's apparent.
>
> Thanks again guys and, as always, appreciate your very valuable input to the
> forum,
>
> Earl
>
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