Standardized Management Systems and Indian Mining Industry

by AK Garg
HoD, Management System Division, CMPDI, Ranchi.

INTRODUCTION
The process of industrialization worldwide has now transformed into a phase where the emphasis
has shifted from ‘industrial development’ to ‘sustainable development’. As a result, the
sustainability of an organization now depends not only on its business or market economics, but
also on the social economics of its operations. While the market forces determine its business
economics, its social economics is compelled by the society that is represented not only by the
governments but also by the employees, NGOs and even independent social groups. Obviously,
this additional emphasis increases the operational costs to pressurize the overall profitability, and
even creates a conflict in the minds of traditional managers – business? or social service?

The mining industry in India has also been experiencing this situation. On one hand it is under
great pressure to minimize its operational costs to become completive in the open market, on the
other hand, it remains thrusted by the negative public image despite considerable efforts and
expenditure on the remediation of social and environmental impacts of its operations. The
obvious solution to this is to install some kind of a management system that can enhances overall
competitiveness and organizational efficiency, reduce the operational costs and wastage, and link
the efforts and expenditure towards social and environmental responsibilities to the expectations
and views of interested parties and the actually existing socio-economic needs.

The International Organization of Standardization (ISO) has come out with specific solutions for
these organizational needs in the form of ISO 9000 and ISO 14000 series standards. These
standards present the principles and logical framework for managing organizations by installing
well-networked system processes, thus, enabling them to simultaneously ensure their economic,
environmental, and social sustainability. This makes the organizations capable of facing the
challenges of free market economy by enhancing their competitiveness, profitability and social
acceptability on a continual basis even in the changing environment.

Let us see in brief, what these management systems are all about.

Presented and published in the proceedings of ‘National Seminar on Policy Formulation and Strategic Planning for the Mineral Industry – 2012’
by Indian Mine Managers’ Association (IMMA), Bhubaneswar on 10-11 Jan 2004’ pp 105-110
Page 1 of 7
ISO 9001 AND ISO 14001 MANAGEMENT SYSTEMS
ISO 9001 quality management system (QMS) and ISO 14001 environment management system
(EMS) are the management standards which provide internationally standardized techniques for
managing an organization irrespective of its size, type, geographical location, or industry sector.
Their purpose is to enable an organization to install its own management system and practices so
that,
- It can remain dynamic and capable of performing even in frequently changing and highly
competitive business environment; and
- It can simultaneously manage the diverse (and ever-changing) needs and expectations of all
those who are concerned with their operations, viz, customer, owners, management,
employees, union, society, and suppliers.

ISO 9001 QMS standard was developed as the core management standard by ISO in 1987. As
per the decision to keep it a dynamic standard, it was upgraded in 1994 and then again in 2000.
To specifically address the needs of society, especially towards its environmental concerns, ISO
14001 EMS standard was developed in 1996 basically to be overlain on an ISO 9001 QMS.

ISO 9001 / ISO 14001 management systems were the natural outcome of the failure of
traditional management techniques which were focusing only on the management of
‘organizational resources’ and/or ‘production capabilities’, thus, enforcing some personal blames
even on the best managers (Table-1).

Table – 1 : LIMITATIONS OF TRADITIONAL MANAGEMENT

FLAW OF MANAGEMENT TECHNIQUE CONSEQUENT BLAME ON MANAGERS

Needed solutions do not come automatically. They delay too long in taking needed actions.
Results producing actions are at the risk of They work harder at being liked than at
personal image. producing results.
Persons are considered an input for managing They are insensitive to others; abrasive,
resources and technology. intimidating, aloof, and/or arrogant.
Faulty network of organizational processes They produce conflicts by betraying mutual
remains possible. trust.
Emphasis remains on the company’s
They are unconcerned with poor functioning
technological capabilities rather than on its
of the company.
overall performance.
Managerial decisions are based on personal They over-manage some areas at the expense
views and attitudes. of others.
Discussions for strategies are not
They are unable to take strategic decisions.
automatically triggered.

Presented and published in the proceedings of ‘National Seminar on Policy Formulation and Strategic Planning for the Mineral Industry – 2012’
by Indian Mine Managers’ Association (IMMA), Bhubaneswar on 10-11 Jan 2004’ pp 105-110
Page 2 of 7
 At around the same time, Edward Deming, the father of all present day management techniques,
demonstrated during 1950s that ‘technical incompetence’ of the organizations results into their
failures only to the tune of 6%, whereas the ‘deficient management-system’ contributes as high
as 94 % to the organizational failures. This very specifically established that investing heavily on
newer technology, etc, to increase the technological competence of a failing organization is
practically of no use. With the advent of free-market economy, failure of organizational systems
become more apparent due to increasing need for such type of dynamic organizations that are
capable of performing positively even in the frequently changing and highly competitive
business environment.

ISO has also standardized the eight management principles as the fundamental rules for leading,
managing, and operating an organization. Based on these management principles, both these
management techniques use the ‘system approach’, ie, managing the organization as a ‘system of
interdependent (and interdepartmental) processes’, rather than as a ‘conglomerate of various
departments’.

BENEFITS OF ISO 9000 / ISO 14000

The requirements of ISO 9001 QMS as the core management standard are in addition to – and
are not the replacement of – the quality requirement of a product. In fact, this system aims to
enhance the capability of an organization to,

- Understand and meet all the requirements posed onto it;

- Pursue continual improvement based on objective measurements;
- Obtain sustained results of performance and effectiveness in operations;
- Consider the need to add value to the industry-sector, society, etc; and
- Demonstrate the ability to consistently provide product that meets the expectations of
customers, and the requirements of applicable regulations.

Additionally, the ISO 14000 enhances the capability of the organization to.

- Identify the environmental impacts of its processes, products, and services;

- Apply the most economical and best available technology to control these impacts;
- Constantly control its pollution levels to meet the legal and social requirements;
- Demonstrate its ability for environmental control to the society and government; and
- Show its commitment towards continual improvement and environmental protection;

When simultaneously used, these management systems put a system in place that can,

o Ensure profitable operations in the organization even in changing/unstable business

conditions;
o Ensure continual up-gradation of management and technical culture of the organization;
o Differentiate between the commercial, social and technical objectives of the organization,
and maintaining a suitable balance between them.

Presented and published in the proceedings of ‘National Seminar on Policy Formulation and Strategic Planning for the Mineral Industry – 2012’
by Indian Mine Managers’ Association (IMMA), Bhubaneswar on 10-11 Jan 2004’ pp 105-110
Page 3 of 7
Specific benefits of ISO 9000 / ISO 14000 management systems are as follows.

ISO 9000 QMS ISO 14000 EMS

1. Sustained customer satisfaction, 1. Minimized adverse impact on
2. Increased operational efficiency, environment,
3. Consistency of operations, 2. Reduced material & energy
4. Cutting down on wasteful operations/ consumption,
expenditure, 3. Increased operational efficiency,
5. Increased market credibility, 4. Improved outputs of environmental
6. Continuing competitive edge, efforts,
7. Savings in costs, 5. Sustained level of environmental
8. Market image of higher quality, performance,
9. Better organizational adaptability for 6. Improved public relations,
future challenges. 7. Improved government relations,
8. Enhanced image in the society,
9. Legislative compliance.

EXPERIENCES IN COAL INDIA LIMITED

Implementation of ISO-standardized management systems was initiated in CIL with the
establishment of an ISO 9001 QMS in CMPDI in May 1997, and an ISO 14001 EMS in NCL in
April 2000. Since its own ISO 9001 certification in 1998, the CMPDI has been providing
guidance to various establishments of different companies under CIL for the implementation of
ISO 9001 and ISO 14001 management systems.

Initially the thrust in CIL was to implement ISO 9001 QMS in its HEMM workshops. It was so
because the enhancement in the system capabilities of these workshops was seen as the most
important requirement to ensure proper ‘availability of operative equipment’ during mining.
With the success of the QMS in the workshops, this movement was expanded to many other
establishments including in the mining projects to cover all their activities of coal mining, coal
handling & transportation, loading, quality testing, and even its personnel and financial
management.

The present status of implementation of these modern management-system techniques in Coal

India Limited is given in Table-2.

The experience of ISO 9001 and ISO 14001 based management systems in the opencast mining
projects in Coal India Limited has specifically shown the following benefits.

- Installation of an integrated management system to cover all the operational activities

in a network.
- Structured system for planning and result-oriented monitoring of all the processes that
are vital for all-round performance.
- Installation of performance reporting system against pertinent performance indicators.
- Systematic and verifiable efforts and actions for overall improvement.

Presented and published in the proceedings of ‘National Seminar on Policy Formulation and Strategic Planning for the Mineral Industry – 2012’
by Indian Mine Managers’ Association (IMMA), Bhubaneswar on 10-11 Jan 2004’ pp 105-110
Page 4 of 7
 - Surfacing of improvement actions with objective evidences, absence of which are
causing systemic imbalances.
- Opportunity to increase the social acceptability of operations by integrating the efforts
for social responsibilities with the actual socio-economic needs of the surroundings.
- Improving internal efficiency by cutting down on wasteful and non-value adding
operations, reworks, and wastage of resources.
- Improvement in the interpersonal relationships and moral of employees, and in the
market image.
- Change in mind-set to appreciate the need for more efficient, environmentally
conscious, customer-focused, and proactive approach to survive in the changing market.

APPROACH TO IMPLEMENT ISO 9000 / ISO 14000 MANAGEMENT SYSTEMS

Although both these management-system standards have different scopes, the ISO has
consciously based them on a common philosophy and structure. An organization can develop its
ISO 9001 QMS and ISO 14001 EMS separately, but one fully integrated management system of
ISO 9001 and ISO 14001 to cover all business and operational activities is obviously the most
effective and easy to implement.

Establishing such management-systems in an organization requires the following.

1. Creation and documentation of ISO 9001 / ISO 14001 compliant management

system. This includes,
a. Formulation of quality/environmental policy, objectives, and their measurement
criteria;
b. Finalizing the organization specific basis, content and approach of the
management system;
c. Study of existing system and processes to evaluate their compatibility with
standardized requirements; and
d. Documentation of the organization’s apex management-system and the
procedures, technical work-instructions and recording formats to the extent
needed.

2. Imparting awareness and training, to include,

a. Understanding of system / process approach of management;
b. Awareness of the approach and content of ISO 9001 / ISO 14001 standards;
c. Internal auditors’ courses; and
d. Programmes on the use of supporting techniques like metrological confirmation,
document control, statistical techniques, project management, cost-benefit
analyses, etc.

3. Initial implementation of the documented system. This includes,

a. Aligning the process/system to comply with standardized requirements, and fine-
tuning the initially documented system;

Presented and published in the proceedings of ‘National Seminar on Policy Formulation and Strategic Planning for the Mineral Industry – 2012’
by Indian Mine Managers’ Association (IMMA), Bhubaneswar on 10-11 Jan 2004’ pp 105-110
Page 5 of 7
 b. Metrological confirmation of measuring equipment and control of reference
documents; and
c. Conducting internal audits, and undertaking required corrective and preventive
actions.

4. Continuing implementation and maintenance, to include,

a. Periodic management-system audits to assess compliance and/or effectiveness of
implemented system;
b. Regular evaluation/measurement of benefits of the implemented systems; and
c. Finding out improvement opportunities and required actions for improvement.

However, lack of suitable and expert guidance towards this gives rise to a risk of sporadic and
un-coordinated efforts towards ISO 9000 / ISO 14000, resulting into the following.

- Lack of uniformity in the systems of different units carrying out similar operations;
- Lack of emphasis and control on systemic processes like internal auditing, management
reviews, monitoring and reporting of performance, and assessment of accrued benefits;
- Ineffectiveness/absence of a system for measurement of the benefits;
- Un-coordinated efforts towards improvement actions, or even their overlooking and
suppression within the system; and
- Use of the system more as a show-off of the certification, rather than as a tool to achieve
real improvement through a company-wide strategy for reforms.

CONCLUSION
With the shift in the perception of 'industrialization' world over, it has been seen in many studies
that the companies focusing on a 'triple bottom line' of economic, environmental, and social
sustainability consistently outperform the others, even in the stock markets. On the other hand,
the Indian mining industry has been generally seen as not very sophisticated, cost-conscious and
society-sensitive. Moreover with the liberalization of economic policies in India, this industry is
bound to face the challenge to compete with their international counterparts who manage to
operate on very slim operating margins due to their much-improved system capabilities. The
standardized management techniques of ISO 9001 and ISO 14001 are the obvious solutions
available to the Indian mining industry also. When implemented sincerely under the guidance of
a competent consultant who has specific insight of the mining and mineral industry, these
techniques are bound to take any mining company on a path of continual improvement in their
economic, technological, and social accomplishments.

ACKNOWLEDGEMENT
The author is grateful to the CMD, CMPDI, for allowing the presentation of this paper.
******

Presented and published in the proceedings of ‘National Seminar on Policy Formulation and Strategic Planning for the Mineral Industry – 2012’
by Indian Mine Managers’ Association (IMMA), Bhubaneswar on 10-11 Jan 2004’ pp 105-110
Page 6 of 7
 Table-2

ISO 9000 and ISO 14000 in CIL

(As on 1st January 2004)

Company Status ISO 9001 QMS ISO 14001 EMS

All 8 units (Hq and 7 Regioanl

CMPDI Certified Not applicable
Institutes)
Certified 3 workshops (central/regional) -
ECL 1 OC project
In progress 1 OC project
1 project workshop
BCCL None
1 central hospital
Certified 1 central workshop -
CCL 3 regional workshops
2 OC projects 2 OC projects
In progress
9 unit workshops 1 central hospital
2 OC projects
Certified -
1 central workshop
WCL
-
In progress 1 OC project
1 central workshop
Certified -
SECL
3 OC projects
In progress 3 workshops (central/regional)
1 central workshop
1 workshop
Certified All 8 OC projects
NCL 1 central hospital
In progress Whole company -
2 central workshops
Certified -
MCL 1 OC project
In progress 2 OC projects 3 OC projects
8 in CMPDI (Hq and RIs)
Certified 3 OC projects
8 OC projects
(25 units) 2 central hospitals
Total 12 workshops (central/regional)
In progress 1 whole company 10 OC projects
(1 whole company, 13 workshops (central/regional/unit) 1 central hospital
and 18 other units) 5 OC projects 1 central workshop

Presented and published in the proceedings of ‘National Seminar on Policy Formulation and Strategic Planning for the Mineral Industry – 2012’
by Indian Mine Managers’ Association (IMMA), Bhubaneswar on 10-11 Jan 2004’ pp 105-110
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