HISTORY AND DEVELOPMENT OF MANAGEMENT SYSTEMS

1 THE DEVELOPMENT OF QUALITY

The recipe for company survival is a complex one which contains many ingredients
such as;
Management sincerity and commitment
Training at all levels within the company
Being able to experiment with the methods of working without fear.
Learning from mistakes
Continuous improvement
Understanding the skills within the company
Everyone must identify with the product and pull together for
improvement.

Working towards a single goal, that of a quality product must be the aim of everyone
within the organization. So what is quality ?

Quality The degree to which a set of inherent characteristics fulfils

requirements
(ISO 9000: 2000 Quality Management Systems Fundamentals and Vocabulary)

To which can be added the following qualifications:

The term quality can be used with adjectives such as poor, good or excellent.
Inherent means existing in something, especially as a permanent characteristic.

Notice how the term product or service has now disappeared from the definition.

However, in business terms it is first and foremost the product or service which has to
conform to requirements. These may come directly from a customer order or may be
implicit in the product itself such as safety requirements.

In addition to requirements for the product a second consideration must be for an

organizations management system to conform to requirements. In this case
requirements will arise from a given framework, such as ISO 9001, legislative and
regulatory requirements and any specific requirements imposed by parties interested
in the organizations activities such as directors, shareholders, enforcement agencies
(such as local government) and the local community.

2 INSPECTION
From the foregoing it will be seen that the quality of a product or service is determined
by:
a) The customer, defining their requirements completely and accurately, and
b) The organization, ensuring that what is delivered will satisfy all the customer's,
and other interested parties requirements.

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Most organizations aim to deliver their products and services at the right level of
quality. All too often, however, they attempt to do this merely by inspecting what they
do at selected times and on completion, throwing out unsatisfactory materials and
work.

Furthermore, having taken delivery of the product or service customers often found
that what they received did not fully satisfy their needs.

Unfortunately the use of inspectors tends to release responsibility from operators for
the achievement of good work. The implication is that "If I make a mistake it won't
matter - that's what the inspectors are for.

Many companies still rely heavily on inspection in order to have an independent

authority check that critical areas have been completed to the appropriate standard.
For most companies however, too much reliance on checking activities wastes money
(non value-added) and the incentive to train individuals to understand quality is very
important.

3 QUALITY CONTROL
This is aimed at controlling the way we work and may be regarded as the "hands-on"
aspects of managing quality. It is the term given to the activities, by which we fulfil the
requirements for quality in order to ensure that our product or service conforms to
specified requirements.

Quality Control: Part of quality management focused on fulfilling quality

requirements.
(ISO 9000: 2000 Quality Management Systems Fundamentals and Vocabulary)

Due mostly to the efforts of two prominent experts in the field of statistics Dr. Deming
and Joe Juran who moved to Japan and helped rebuild Japanese industry after the
second world war, we have a range of very important methods of controlling
processes entitled SPC or Statistical Process Control.

4 QUALITY ASSURANCE
In the 1960's the problems of high costs incurred in the inspection and rejection
systems and the often, unsatisfactory performance of the finished products, began to
be viewed from a fresh angle.

The fresh approach was to ensure, before production commenced, that the product or
service would satisfy the customers' needs when delivered and furthermore it would
be produced in such a way that there would be no rejections upon inspection or test.

To put it another way, companies would assure the quality before the work
commenced. The concept came to be called "Quality Assurance", and it was a
different concept to any which had gone before.

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Quality Assurance: "Part of quality management focused on providing
confidence that quality requirements will be fulfilled.
(ISO 9000: 2000 Quality Management Systems Fundamentals and Vocabulary)

Since everyone and every activity in an organization is concerned either directly or

indirectly with the attainment of quality, it follows that everyone is concerned with
quality assurance. Indeed, the first task of Management is to define the organization's
quality policy and objectives and keep everyone aware of them.

Over the years techniques have emerged which facilitate the achievement of prior
assurance of quality. Collectively, these techniques add up to what is called a "Quality
Management System".

The Quality Management System:

"Management system to direct and control an organization with regard to
quality.
(ISO 9000: 2000 Quality Management Systems Fundamentals and Vocabulary)

The Quality Management System is potentially one of a number of systems used to

direct and control an organization. It is the proper integration of all the disciplines and
techniques to manage the correct quality of the goods and services provided based on
the organizations policies and objectives.

It is the responsibility of the organization to build into the quality management system
all the requirements, which are appropriate to their stated quality policy and objectives.

The customer, however, or perhaps a third party either independently or acting on

behalf of the customer, may want to be satisfied that the supplier's quality system is
complete and effective. Hence the reason for certification to a formal standard such as
ISO 9001.

5 QUALITY MANAGEMENT
Since the early 80's the concept of managing quality in the company has been the
driving force. New techniques for management, some of which have originated in the
Far East from the well-known 'Quality Gurus' have had a fundamental effect on the
way we consider 'quality'.

Quality Management:
Coordinated activities to direct and control an organization with regard to
quality.
(ISO 9000: 2000 Quality Management Systems Fundamentals and Vocabulary)

Managing quality relies on effective quality control and quality assurance but takes the
philosophy of meeting customers needs to the next phase. Meeting the needs of all
interested parties is a fundamental requirement for business success.

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For this to be achievable organizations must be flexible in order to change with the
changing needs of their customers and must have consistent, systematic and
transparent management styles.

In order to support the management approach, eight Quality Management Principles

have been identified as essential in order that top management can lead an
organization toward improved performance.

6 QUALITY MANAGEMENT PRINCIPLES

The ISO 9000: 2000 family of standards are based on eight quality management
principles:
1. the customer focused organization
defining customers as internal, external and interested parties;
understanding and satisfying customers present and future needs;
aim to meet customers' and, strive to exceed customer requirements
2. leadership
management is not an administration activity;
leadership is needed to provide unity of purpose and direction, and to
create an environment in which people in the organization become fully
involved in achieving the organization's objectives;
3. involvement of people
peoples' co-operation and involvement allows for their abilities to be fully
and effectively used for the organization's benefit;
4. process approach
in order for the results to be achieved efficiently, the resources and
activities need to be managed as processes;
each process cannot be considered in isolation but as part of a chain of
activities with interrelations and interdependencies
5. system approach to management
identifying, understanding and managing a system of interrelated
processes for achieving objectives;
process ownership
transparency of management
6. continual improvement
a permanent objective of the organization;
7. factual approach to decision making
effective monitoring and measurement techniques
decisions are based on the logical and intuitive analysis of data and
factual information;
8. mutually beneficial supplier relationship
establishing such a relationship between the organization and its
suppliers will enhance the ability of both organizations to create value.

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It is expected that the application of these management principles may provide not
only direct benefits to the organization, but may also contribute to managing costs and
risks.

7 QUALITY MANAGEMENT STANDARDS

There have historically been some twenty standards in the ISO 9000 family and this
has caused some concern and confusion. The objective therefore has been to reduce
this number to a managegable four core standards.
ISO9000 Fundamentals and vocabulary
IS09001 Requirements
IS09004 Guidelines for performance improvements.
IS019011 Guidelines on quality and/or environmental management systems
auditing.

8 OVERVIEW OF THE ISO 9000 FAMILY

At first sight the third edition (2000) of the international ISO 9001 standard shows that
the structure has changed considerably compared with the second (1994) edition. In
particular the manufacturing orientation of the elements, which have provided the
familiar layout of the requirements of twenty system elements (4.1 - 4.20) has
disappeared and the process approach has replaced it.

This is represented in the model given in Figure 1 below.

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 C o n t in u a l I m p r o v e m e n t o f t h e Q u a lity
M a n a g e m e n t S y s te m

M anagem ent
R e s p o n s ib ility
C u s to m e r
C u s to m e r

M e a s u re m e n t,
R e s o u rc e
a n a ly s is a n d S a t is f a c t io n
m anagem ent
im p r o v e m e n t

IN P U T P ro d u c t O U TPU T
R e q u ir e m e n ts P ro d u c t
r e a liz a t io n

V a lu e a d d in g a c tiv it ie s
Key
In f o r m a tio n f lo w

Figure 1: Model of a process-based quality management system

The model illustrated at figure 1 represents conceptual presentation of the quality

management system requirements stipulated in the standard. It reflects the integration
of four major headings (clauses 5, 6, 7 and 8) and shows how the processes interact
to form the integral structure of a quality management system.

Figure 1 does not intend to illustrate the processes of the quality management
systems in a detailed manner. Instead it presents a generic model demonstrating the
interaction between the processes.

The central loop illustrates the interrelation between management responsibility

(clause 5), which creates the system framework, determination and application of
resources within resource management (clause 6) needed to exercise product
realization processes (clause 7) in order to transform customer's needs and
expectations into defined requirements, which if met will allow the achievement of
customer satisfaction. The loop is completed by measurement, analysis and
improvement (clause 8), which provides a feedback to management review (clause
5.7) so the cycle returns to management responsibility (clause 5) which includes
authorisation of changes and initiation of improvement.

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There is a further loop which illustrates the significance of the role of customers. This
role is not limited to providing the input requirements. Customers feedback is essential
for identifying the need and potential for further improvement. The process for
measurement of customer satisfaction (clause 8.2.1) therefore completes the
horizontal loop.

Both loops are clearly based on the familiar principle of the Deming cycle and both
loops generate the feedback for the continual improvement process.

Plan - Do - Check - Act

In noting these changes and the context within which the standard is set, we can
make the following comments as to the key differences and changes of the draft.
These will be discussed in the examination of the standard in Section 3 of this
handbook.

9 GENERAL APPROACH
The content and approach of these standards is intended to promote a wider
approach to integrated systems incorporating Environmental and Health & Safety
requirements. The compatibility of ISO 9001: 2000 with ISO 14001 will enable
combined auditing to take place more effectively.

Throughout these standards there is improved terminology with a wider appeal, which
in turn provides for a simpler range of definitions (ISO 9000: 2000). Key terminology
within the standard has been changed to reflect wider commercial acceptance:

The Organization is now the unit to which the standard applies

The organizations supporters from which goods and services are obtained, previously
termed 'Subcontractor' is now replaced with the word 'Supplier'

The new supply chain terminology is as follows:

7 .2 C U S T O M E R -R E L A T E D
7 .4 P U R C H A S IN G
PRO C ESSES

S U P P L IE R O R G A N IZ A T IO N C U STO M ER

G O O D S A N D /O R
PR O D U C T
S E R V IC E S

10 ISO 9001: 2000

This is the document, which now contains the recognized international framework for a
quality management system. Of the range of documents in the ISO 9000 series this is

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the only document that can be used for certification as it contains all the
requirements of the quality management system approach. In general the new
standard is less prescriptive than the 1994 edition. It allows for more flexibility in
structuring a quality management system (QMS) to suit an individual organization. In
particular it allows a wide flexibility in how an organization can demonstrate
conformance. However, this does not make the auditors job any easier!

Throughout the standard there are far fewer defined requirements for system
procedures than in the 1994 version. The structure of the QMS is emphasized as
being the organization's decision but for some organizations new to Quality
Management systems this open approach is likely to make decisions relating to,
procedure writing more difficult.

The revised standards approach to the provision of human resources is heightened

by the importance given to competence rather than the previous qualification. Both
the infrastructure of the workplace and the working environment are requirements
included for consideration, which add to the importance of effective resources.

There are new requirements introduced for measurement and analysis. In particular
mention is now made for measurement of process performance and customer
satisfaction, which are new requirements.

11 ISO 9004: 2000

It is stated within both documents that ISO 9001 and ISO 9004 are intended to form a
consistent pair of standards, which can be used together or as stand-alone
documents. ISO 9004: 2000 is not intended to be a guide for implementation of ISO
9001. It is intended to support an approach toward best practice and lead beyond the
requirements of ISO 9001. It can be used to guide organizations towards a more
comprehensive approach to quality management and performance improvement but
cannot be used as the basis for certification.

12 DEFINITIONS ISO 9000: 2000

In support of the 2000 standards ISO 9000 provides a wide range of definitions and
explanations of words and phrases used in the field of quality.

Some examples of the important definitions have already been given, other important
changes, or new definitions include:

Customer Satisfaction:
Customers perception of the degree to which the customers requirements
have been fulfilled.

Requirement:
Need or expectation that is stated, generally implied or obligatory.

Quality Objective:
Something sought or aimed for, related to quality.

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Continual Improvement:
Recurring activity to increase the ability to fulfil requirements.

13 PROCESS MANAGEMENT
Process management is not a new concept. The 1994 revision of ISO 9001 provided
a preventive approach, which relied on applying considerable effort at the start of a
process to reduce the risk of a defective product or sub-standard service resulting
from the process. In fact over half of the 20 clauses of ISO 9001 were aimed at defect
prevention.

The ability of an organization to prevent problems associated with process activity was
often centred round the 4-Ms:
MANPOWER
With defined responsibilities and authority
Qualified to carry out the activity through education, training and/or experience
MATERIALS
Purchased from reputable and reliable suppliers/sub-contractors
Stored and handled in a manner to protect and prevent loss or damage
MACHINES
Approved equipment, suitably maintained
Test and measuring equipment suitably stored, handled and calibrated
METHODS
Approved procedures and instructions
Controlled documents such as drawings, specifications etc.

With the introduction of the latest ISO 9000 series, the process approach has
developed considerably, requiring organizations to adopt a process orientated
management style. This does not mean that every activity should be seen as a
process in isolation but that all the organizations activities should be seen and
controlled as a set of interrelated and interactive processes.

This has immediate implications for auditors who now need to verify that not only
individual processes, but that chains of processes are under adequate control. For any
individual process the key elements are:

INPUTS
Inputs may be materials, information and are usually the result of one or more
previous processes, which may have taken place outside the organization
RESOURCES
Including the equipment required and the human resource, who are now required to
be competent to carry out the activity
CONTROLS
From the previous methods we have the procedures and instructions plus any
regulatory or legislative requirements imposed on the process.
OUTPUT

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The results of a process can be many and varied. Quality Assurance requires us to
ensure that the product meets all applicable requirements.

Figure 2 below shows a representation of an individual process. Note that we are also
required by ISO 9001 to identify methods of monitoring and measuring both our
processes and our products.

INPUTS PROCESS OUTPUT

RESOURCES CONTROLS

COMMUNICATIONS

MONITORING AND MEASUREMENT

Figure 2: The Components of a Process

To ensure the overall functioning of the organization it is necessary to define and

manage a number of interacting and interdependent processes. The output from one
process will often constitute the input to the next process. The identification of such
processes, understanding their sequence and interactions and managing them is
called the process approach to management (see figure 3 below).

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 P ro c e s s P ro c e s s
A B

P ro c e s s P ro c e s s
C D

In p u t, O u tp u t, C o n tro l a n d R e s o u rc e s

Figure 3: Interacting processes

The revised ISO 9000 family of standards strongly encourages the adoption of the
process approach to the management of an organization as a means of identifying
and using opportunities for improvement.

14 SYSTEM DESIGN
A successful organization should result from implementing and maintaining a
management system that is designed to continually improve the effectiveness and
efficiency of the organizations performance in considering and meeting the needs of
interested parties.

The nature and extent of the documentation established by an organization should be

sufficient to satisfy the contractual, statutory and regulatory requirements and the
needs and expectations of customers and other interested parties.

The documentation should be appropriate to the nature of the organization and its
business and can be established in any form suitable for its needs.

ISO 9001 provides a mandatory list of documents, which include:

documented statements of a quality policy and quality objectives
a quality manual
documented procedures required by the standard
documents needed by the organization to ensure the effective planning, operation
and control of its processes
records required by the standard.

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15 PROCESS OWNERSHIP
The systems approach to management, one of the 8 management principles,
requires organizations to identify, understand and managing a system of interrelated
processes for achieving objectives. Within all but the smallest business this will
require the active cooperation of a number of persons within the organization.

It is vitally important therefore to ensure that all processes affecting the quality of the
organizations products are documented and their interactions and interfaces
controlled to ensure the free-flow of product and information from process to process.

Many organizations in the past have developed and documented their quality systems
through a central coordination function such as a quality manager. Although,
perhaps, efficient in the establishment of documentation, this centralised approach
does not sufficiently involve those who carry out or manage key departments or
activities within the organization. Without their involvement, promoting effective
implementation of the system there can be no buy-in or ownership of the management
system as a whole.

Process owners must be identified in order that local objectives can be established for
the processes and for individuals carrying out the processes. Suggestions for
improvement and change can only be effectively reviewed and implemented at the
Process Owner level.

16 SYSTEMATIC AND TRANSPARENT MANAGEMENT INVOLVEMENT

An effective management system must be management led. Any attempt at driving or
imposing a system will lead to resistance and a resulting inability to achieve lasting
improvement.

An important management objective must be to implement and maintain a

management system that is designed to continually improve performance, while
addressing the needs of all interested parties.

ISO 9004: 2000 provides a possible range of interested parties as including:

customers and end-users
people in the organization
owners/investors (such as shareholders, individuals or groups including the public
sector, that have a specific interest in the organization)
suppliers and partners, and
society in terms of the community and the public affected by the organization or its
products

Leadership, commitment and active involvement are essential ingredients for an

efficient and effective management system. To achieve lasting benefit it is necessary
to establish, sustain and increase customer satisfaction and top management should
consider actions such as:

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 establishing a vision, policies and strategic objectives consistent with the
purpose of the organization,
leading the organization by example, in order to develop trust within its people
communicating organizational direction and values regarding quality and the
quality management system
participating in improvement projects, searching for new methods, solutions
and products
obtaining feedback directly on the effectiveness and efficiency of the quality
management system
identifying the product realization processes that provide added value to the
organization
identifying the support processes that influence the effectiveness and efficiency
of the realization processes
creating an environment that encourages the involvement and development of
people, and
provision of the structure and resources that are necessary to support the
organizations strategic plans
(Extract from ISO 9004: 2000)

17 ESTABLISHING POLICY, OBJECTIVES AND TARGETS

The need to establish top-level policy and objectives has never been greater than with
the latest revision of ISO 9001. In order to achieve continual improvement every
organization needs to identify its current position, define where it wishes to be and
identify objectives for its constituent part to help it achieve these targets. Establishing
this top-level policy and associates objectives is one of the key management
responsibilities.

Such objectives however, should not solely be restricted to meeting product

requirements but should be established throughout the organization in order to
continually improve the quality management system.
Top-level objectives and policy are the responsibility of top management and changes
will take place often as a result of monitoring, measurement and analysis (section 8 of
ISO 9001: 2000). This process is one of the main ways by which continual
improvement in an organization can be achieved and can be audited for effectiveness.

18 SUPPLIER INVOLVEMENT
In previous revisions of ISO 9001 an organizations link to its suppliers and sub-
contractors has been solely through the Purchasing function. With the introduction of
the process approach a new and important requirement has arisen. The new
requirement from the General Requirements section 4.1 of the ISO 9001 standard
states:

Where an organization chooses to outsource any process that affects product

conformity with requirements, the organization shall ensure control over such
processes. Control of such outsourced processes shall be identified within the quality
management system.

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Although similar to the requirement states in 4.6.2 of the 1994 version of ISO 9001,
the new requirement is far more explicit in requiring control and records to be
established. This is a particularly new and important area of control that will be
included in any full system audit.

In addition we must also remember the eighth management principle, which

encourages organizations to establish mutually beneficial relationships with their
suppliers in order to enhance the ability of both organizations to create value.

1. 19 COMPARISON BETWEEN ISO 14001 AND ISO 9001

Given the many similarities between quality and environmental management and the
limited resources available in most organisations, it is not surprising that attempts will
be made to combine quality and environmental audits. Indeed, many certification
bodies are already combining the two types of registration and surveillance visits as
much as possible in order to minimise the costs of registration. However, at this
moment registration audits are being undertaken as a separate exercise. Certainly in
the UK almost every organisation approaching registration to an environmental
standard has already been registered against a quality system standard.
1.1 19.1 Similarities
A major similarity between these two sets of standards lies in the responsibility of
management in respect of establishing policy, providing resources and undertaking
regular reviews of the effectiveness of the companys system(s). Also included in the
third revision of ISO 9001 is the setting of objectives in support of the company policy.

This is also applicable to Environmental Management, and system standards now

require the establishment of environmental objectives and targets at all levels in the
organisation.

The establishment of the control framework (the documented system) is also an

activity, which requires the backing of senior management. The control of
documentation is very similar in both standards requiring the authorisation and issue
of controlled documents and the control of data.

Similarly the control of records is the same for both standards. The consideration of record
retention is particularly important for environmental aspects as many records are established to
demonstrate compliance with legislation and industry requirements.

1.2 19.2 Differences

There are some fundamental differences in the scope of the EMS compared with the
scope of any existing quality management system.

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 An EMS will almost invariably cover a wider scope of company activities and in
more depth.
Environmental issues are constantly changing what is acceptable today, may
not be acceptable tomorrow.
Unlike ISO 9001, which defines specific areas of the company requiring
controls, the company can exercise considerable discretion over the structure
and scope of its EMS and the definition of its objectives.

19.3 The additional requirements of an EMS are

Firstly a commitment to continuous improvement, coupled with the setting of
quantified objectives.
Secondly the requirements for awareness and compliance with legislation: and
Thirdly, the additional requirement relating to all company personnel who must
be competent in their dealing with activities which can affect the environment.

19.4 Environmental Management Systems and Occupational Health and Safety

The inclusion of human systems and the workplace into the definition of the
environment puts the working environment into the context of ISO 14000.
Management standards specify that an organization must comply with regulatory
requirements. Legal compliance therefore comes high on the priority list for most
organizations and often necessitates giving preference to health and safety
arrangements.

In many instances of contravention to regulations the environmental and health and

safety issues are complimentary. Although Occupational Health and Safety
requirements are not directly referenced by either ISO 9001 or ISO 14001 the
inclusion of health and safety will almost certainly increase the useful scope and
extent of any given system.

19.5 National and International Interest

Of the many pressures that companies are facing, the strength of environmental
concern throughout the developing world is rapidly becoming one of the most
powerful. Through constant media coverage and through the marketing of competing
organisations, a companys environmental policy and past record is becoming an
important factor in the selection of that companys products and services.

All environmental standards refer to individuals and groups of individuals who may be
affected directly or indirectly by an organisations activities as interested parties.
These persons have diverse links with the organisation and include:

a) those directly concerned with the organisation;

the staff
management
shareholders

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b) also those indirectly linked in commercial terms;
banks
insurers
financiers

c) those indirectly linked through legislation and regulations;

international, national and local government
public services
industrial controlling bodies

d) those with no direct link who may be affected by the companys activities, products
or services;
general public
immediate neighbours
the world population in general

Whilst it is not a specific requirement for organisations following the ISO 14001
standard to publicly release information concerning their environmental performance,
but merely ensure the effective handling of enquiries, companies intending to follow
the EMAS requirements are expected to prepare an environmental statement (Article
3(f)) for public release. Within this statement there must be an indication of not only
performance against targets but of evidence of improvement in defined areas.

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