Scicchitano: An estimated 408,000 ISO 9000 registration certificates have been issued around the world, according to the most recent data from ISO. Certificates are found in more than 150 countries and on every continent - from Jordan to Israel to the Czech Republic, from Singapore and South Korea to South Africa and Zimbabwe. North America is no exception to this phenomenon, where the combined number of third-party registration certificates in the United States, Canada and Mexico has surpassed the 50,000 mark, according to the ISO 9000 Registered Company Directory North America. Certificates are held by defense contractors and automotive suppliers, aerospace companies, medical device manufactures, ship makers, chemical companies, service companies, software companies and even government agencies like NASA and the US Bureau of Engraving and Printing. All of these organizations have one other thing in common. They are facing a December 2003 deadline to transition to the new ISO 9001:2000 requirements. As of this morning, only 2,124 certificates to the new standard had been reported in all of North America. The United States has more than half, some 1,374; Canada 664 and 107 in Mexico. It does not take an expert in mathematics to conclude that there are a tremendous number of organizations that still must complete their transition to the new standard over the next 17 months.

Today we have assembled a uniquely qualified panel of experts to discuss the issues surrounding the transition and the experience to date. Joining me here at the site of the 56th Annual Quality Congress in Denver is Charlie Cianfrani, managing director of the Customer Focus Quality group with Arbor Incorporated and one of the key drafters of ISO 9000:2000. We are also pleased to welcome representatives from two of North America’s largest registrars: Ron Mathis, senior vice president for marketing and sales with BSI, and Frank Sidorowicz, director of technical service with BVQI. Joining us by telephone is Robert Peach, principle of Robert Peach & Associates, who was the founding chairman of the board of directors of the Registrar Accreditation Board and remains an original member of the US Technical Advisory Group to the ISO Technical Committee responsible for the ISO 9000 family of standards. Also joining us by phone is Larry Beck, manager of productivity initiative with Lockheed Martin Missiles and Fire Control in Dallas, who will give us a user’s perspective of the new standard.

Before we begin I would like to invite the panelists to weigh in at any time during the discussion. However, for the purposes of our transcript I would like to ask you to please identify yourself each time you speak.

Let's begin our discussion with a forecast from our registrars.

Scicchitano: What do you see in the pipeline with regard to the transition and are you able to predict with any certainty when most of the North American organizations are going to upgrade?

Sidorowicz: Right now we have about 2 1/2 percent of our clients who have actually upgraded. Most of them are going through the process where we have been allowed to dedicate a portion of time at surveillances to look at things that they may have in place and then, at whatever point they have everything in place, issue the certificate at that time. And since that piece is essentially free, they have opted to do that rather than just go full bore and jump in and get their upgrade right now. From what we are hearing most of them will probably be accomplished by next spring. I don't think anyone is really waiting until next September or October; we've encouraged them to do it sooner than that.

Mathis: We have 40 percent of our clients currently involved in the process from one standpoint or the other, and so, like Frank, we anticipate having very little trouble with it in any form or fashion. It seems to be going smoother than we anticipated, and more or less most, if not all, of our client base is opting to it and moving progressively forward.

Scicchitano: Do you anticipate that we are going to have a last-minute crush in the last six months of 2003?

Mathis: I do. I think we will. I mean this industry in general seems to thrive on the last six months of the year anyway, and so I would say that the combination of something that is a natural occurrence and the fact that there are those people who are last-minute Willies means just that. So I would anticipate some of that. Yes.

Sidorowicz: I have to agree. Summer is usually a fairly slack season for registration, mainly because of vacation time, and those who don't get it done by the spring are obviously going to have to get it done in the fall. We've encouraged everybody to not wait any longer than September to try and accomplish this so they don't run into the possibility of loosing their registration because they don't have nonconformances cleared by the deadline.

Scicchitano: Frank, are you going to have sufficient auditing resources to handle all of these companies that wait?

Sidorowicz: Yeah, really because most of this is all being done at surveillances. They're all scheduled anyhow, so it's not like anyone's going to be doing special surveillances to get the upgrade accomplished. So, at whatever time their last surveillance comes in would be an appropriate time to do this. It would just be part of the schedule anyhow, so I don't see anything like an auditor shortage to get this accomplished.

Mathis: Yes. I agree with that wholeheartedly.

Scicchitano: Charlie and Bob, is this a simple matter of procrastination or are there significant new requirements in ISO 9001:2000 that companies are having to grapple with?

Cianfrani: I'll take a first cut at that. There are certainly clarifications in the 2000 standard. Some claim they're entirely new requirements. One that comes to mind is continual improvement, which I considered to be a clear mandate in the 94 standard. But what was clear to me in a mandate as far as I was concerned was neither clear, nor considered to be a mandate, by many of the users of the standard. How an organization can do management review, internal audit and corrective action and not continually improve is just beyond me. However, some people are looking at the requirement as an entirely new requirement. Of course the process approach, where we are saying no longer look at the quality management system as a series of 20 independent silos, but rather as a series of linked processes, is new and profound to many organizations. To others they have always been doing things like that. So the answer is it's a mixed bag, Paul. Some organizations view the new standard as just the normal evolution management system, others see profound new requirements embedded in the standard. From a drafting viewpoint we've looked at many of the requirements in the 2000 standard as being clarifications or making things very overt that were perhaps subtly implied in the 87 or 94 versions.

Peach: I would anticipate that if organizations felt that there were major changes and hurdles to cross in the revised standard they would get started sooner on making the change. That would be logical at least. I would then say that the delay in so many organizations not starting would be influenced by the fact that they don't really see that there is that much difference or don't understand at all, so they don't have any opinion because they haven't really approached it. I would say that I don't anticipate that the process changes are a major factor in the delay. But I can pose my response to the question with another question. Does the delay really imply that there may be some organizations that are really not going to continue on with ISO? Are there factors that would work quite independent of the change, such as: Well we did this because we thought it was a good idea and it's fine but our actual registration isn't paying off. Is there any of that hinted by the delay? Sort of a question to you registrars.

Sidorowicz: Could you phrase that one more time?

Peach: Yes. I'm saying here we have a delay or at least a perceived delay. It's taking quite awhile now. Is there any hint that because of this there may be a significant number of organizations now registered that will not continue their registration after the phase-out of the 94?

Sidorowicz: I can't say that's necessarily true, but right now the way the economy is we’re seeing companies deciding that registration itself is probably not something that is terribly important for them, particularly, if they got into it for the wrong reasons and aren’t using it. But I don’t think I would necessarily say that the delay has anything to do with that.

Peach: Okay

Mathis: I would like to add a thought. I am a firm believer that as I travel the country and talk to various clients there is a large number of those who believe frankly any excuse to get out of this would be great. And this has given them some reason to do that and so they’re second thinking. I think the economy, certainly agreeing with Frank, pushes them into thinking that even more so. And if they can find a way not to be involved, you know there is a large group within any organization that won’t pursue it if they can. So I think that’s not only a hint but a fact of life.

Scicchitano: Are we talking about 5 percent, 10 percent, can you quantify it at all?

Mathis: Great question. No, I can’t. I would certainly say over 10 percent.

Sidorowicz: No. I would have to agree with Ron. I would be hard-pressed to put a percentage on it. But let me go back to something earlier about changes. One thing I’m starting to see is people that have a good system in place, who got into it for the right reason and are actually using the system, are finding it very easy to transition because "the new requirements" are things that they’ve actually been doing anyhow. It wasn’t necessarily part of the ISO program; it was things that they may have perceived as being outside of ISO. But it was actual stuff they had been doing anyhow. So they’re finding it very easy to bring in those extra pieces: the customer satisfaction piece, the internal communication piece. The things look new but just weren’t considered as being part of ISO because they weren’t spelled out in the standard previously.

Scicchitano: What about the top management commitment?

Sidorowicz: Top management is always interesting. I do a lot of presentations at local ASQ sections and that’s one of the big questions always. How do we get top management support? Frankly, I’m hard-pressed to give an answer to that if top management does not demonstrate that commitment. I’m wondering why they’re in it in the first place, because you would think that the whole thing has to be directed downward from top management.

Cianfrani: I have a little different answer. I’ve been on the P&L side managing P&L operations for a good portion of my career. And the thing that used to drive me crazy was the quality people’s language. It’s not the language you use to run a business. If the language of management is money they’d talk about return on investment and things like that. And part of this management commitment issue is the failure of the quality people to speak in a language that makes sense. The way I typically put it is: When you’re in Italy if you want to eat you’d better speak Italian. So, we need to do a much better job in communicating with management in a language that they understand. Convert control charts into dollars; convert them into return on investments, things like that. Posture what we’re trying to do and what we get from what we do in the language of management.

Scicchitano: Charlie I’m glad you weighed in on that one. Was it your intent when you were drafting ISO 9001:2000 to force quality managers to talk more with their top management?

Cianfrani: We were trying to put the hooks in to create a basis for a higher level of involvement. We are trying to align the entire structure of organization around the business objectives of an organization, although we didn’t say that in the standard. We talk about quality objectives. Quality objectives have to align with business objectives. The idea was to have business objectives, strategic planning, coming into having the quality function integrated into the fabric of the organization and via the objectives group, which now get through policy into objectives that get deployed across the entire organization. Because the reason for the existence of all of these pieces in the horizontal chain across the organization is ultimately customer satisfaction and profitability. That’s not to say that document control isn’t important. In the 94 standard we had a section on document control and we did document control, and we had a section on corrective action and internal audit. Here we’re saying all those things are important but what really is important is for this organization to succeed in its primary mission, which is, to satisfy customers, in a for-profit organization. Also, to make a profit. Nonprofit organizations have a different spin but we’re trying to get to that end result and have that be the reason for existence of the organization. And to have that drive what goes on in each of those processes throughout the organization so that we have this flow from top management all the way through the organization, to end up with customer satisfaction. Sorry for the long dissertation.

Scicchitano: Let’s have Larry Beck weigh in here now as one of the users of ISO 9000. What can you tell us with regard to the transition effect at Lockheed Martin? Are you having a difficult time getting management to buy in at the top level?

Beck: No, I don’t think so. Generally, across all of Lockheed everyone is in some phase of the transition activity. The transition as I see it right now is just an issue of priority. Many of us do wait to the last minute but they have other things to do also. And so I think that we’re going to see next year, early in the year, a tremendous transition in many of the larger companies, including ours. Some of us are 80 percent, some of us 20 percent, but we are all at least in the game. I think that as we go out and travel with our suppliers and other smaller companies we find that many of them are taking a wait-and-see attitude. This too may pass, maybe. But I think the registrars are doing a great job. Where we’re primed at letting down a little bit, the registrars have stepped up to the plate and they’re out there selling the concepts and they’re making it very easy for companies to transition. It’s not an issue of money any longer. They’re making it easy for them to transition. They’re also helping us understand the critical points. I‘m very, very familiar with the standard, but when I first looked at this new standard I was overwhelmed. And then I got to reading it three or four times and I said, Wait a minute, this is not as much as I thought it was going to be. So, I think you have to really sit down and think about it. That first impression is going to be: we don’t need to do this anymore. And I think we do have a lot of small- to medium-sized companies - many of our suppliers - that are reconsidering certification as a value.

Scicchitano: What were the requirements that gave you pause when you were reading over that document for the first time?

Beck: The specific requirements? Nothing comes to mind right now. I guess seeing the whole thing laid out, it was so different - just the whole thing was such a drastic change. You know one of the reasons why I loved ISO and was anxious to do away with the mil standard, MIL-Q-9858 was because MIL-Q-9858 was not a very dynamic document. It got changed every 30 years whether it needed to be changed or not, whereas at least ISO is keeping up with the trends. It’s keeping up with technologies, new process and innovations and that was the thing that excited us to begin with. And to have seen the first change, you know the 87 to 94 version, which was kind of a minimal, tweaking kind of thing. And so some of us kind of fell into this false sense of security thinking maybe the next change might be a little above that. But not to the magnitude of this revision. On a scale of 1 to 10, it was 11, from the previous one which was 1, and so I think that kind of frightened a lot of people at first. It was just the magnitude of the way it was laid out.

Scicchitano: How are you going about conducting your transition? Are you forming a gap analysis training for the internal auditors? What are you doing to get ready?

Beck: Oh, all those things. We’re having new teams put in place, we’re relooking at procedures and seeing the linkage of them. We’re even having to rethink how we write procedures. Whereas before we wrote procedures in a functional silo kind of technique, now we’re having to go back and say maybe procedures need to be written in a process orientation. So it’s making us rethink that activity. So we’ve got teams in place to redo procedures, we’ve got teams in place to see where the gaps are at. Training is a big piece. And there will be thousands and thousands of hours spent on the transition. There is no question, even for small companies, you’re talking about hundreds of hours in the transition.

Scicchitano: Can you put a cost estimate on what’s involved in the transition?

Beck: Well, I’d be afraid to because it’s going to be based on the size of your company. This particular facility here, we’re about 3,500 folks and we’ll probably spend a thousand hours on this activity.

Cianfrani: Can I weigh in? Paul just hit one of my hot buttons: the cost of complying with ISO. I believe that the cost that we assign to transitioning to or complying with ISO requirements is absolutely zero. Since we should not be doing anything in any organization just to comply with the requirements of a dumb standard or even a good standard, there has to be a business rationale for why we’re doing this. It has to make sense for the organization. Do we ask the question, Does it make sense to have a process for something like corrective action? Is the answer yes? Then we should go ahead and do it as responsible managers and directors of business operations. Don’t go hanging on the cost of ISO, because we’re doing something that makes sense for running a business. Every single item in the ISO standard or any standard ought to be assessed against this prudent judgment business litmus test. Does it make sense for the organization? Some things we do because we have to because of safety, some things we do because customers want us to do them. They’re all legitimate business reasons, but we should have the reasons clear in our mind, we should know what our objectives are. And we should be doing things because they help achieve our business goals.

Scicchitano: I think Charlie raises an important point, but I also think that it might be a good idea to give the quality managers who are reading this some idea as to what they can expect to pay this year in terms of registrar cost, or next year. Let’s ask the registrars. On average how many additional audit days might it take to upgrade to the new ISO 9001:2000 for a manufacturing site with 100 employees?

Sidorowicz: It depends. If they’re going to do it over a couple of surveillances, the cost is nothing. We don’t add any time. If they want to just go for it and upgrade a single surveillance for a 100 employees, I believe it’s a half man-day; over 250 employees I believe it’s a full man-day. In my experience with the audits that we’ve done so far that’s plenty of time.

Mathis: Agreed, exactly. I would like to go back to what Charlie said. He touched a few sparks being that I travel around and meet with our clients and have wonderful moments with them. I constantly hear that in a perfect world they all agree on good business practices and all understand this standard is something that they can’t refute, no question. It’s excellent and provides great benefits. But when you have a company that is trying to make it from a to b it’s thinning away at its resources, not preserving what you’ve embedded and/or adding resources. They would argue that there is an additional and incremental cost because they were doing it before and are now being told they have to in this process. There is a whole bunch of them that would certainly argue that point and tell you, Say do we really want to pursue this. So I hear that constantly.

Peach: And the question they should ask themselves from a business point of view is whether or not they want to do it. And if they want to they do it because it makes sense for the business.

Cianfrani: Yeah. I stated the case in a little bit strong language and I hear the same things from my clients when I’m talking with them. In the final analysis that really should be the test that business or people operating businesses should be asking themselves. Why am I doing this?

Sidorowicz: I want to throw something in too. A lot of time clients have these blinders on that they think there’s only one way to do something or a very limited number of ways to do something. And one of the prime examples in the new standard is the clause on moderating customers’ perception of how well they are meeting their requirements. And the first thing people think of is, now I have to do a customer survey, I gotta send out cards, I’ve got to send out questionnaires and this is going to be cost and someone is going to have to look at all the results and everything else. I had a small client who was just appalled that he was going to have to do something now that was going to add more cost. And I asked him, "How do you normally take orders in, right now?" and he said, "We get all our orders by telephone." I said, " How hard would it be for the person who’s receiving that order to say ‘How did we do? Did we meet your requirements? Did you get things on time? Was everything fine?’" I said, "The customer initiated the call. You didn’t have anything. What’s it going to take, 30 seconds to a minute, to get a reply on how well you did on the last order? The person who’s taking the order can tell you now." All the customer service reps are going to have a little pool there of all this information coming in. It’s not going to be that hard to put it together. No cost at all. All initiated by the customer.

Beck: Let me follow up on that just a little bit. I think there’s no question that if we can’t make a case for something we won’t do it. We also see a lot of things we can do better. And going back through this gives us an opportunity to go back and reevaluate our system and see if we’ve got it aligned properly, to see if we’re really doing things as good as we can, such as customer satisfaction. We have found that we have lots of ways of getting customer satisfaction but not enough ways of having that customer satisfaction really integrated and linked and aligned with our overall objectives. So we’re saying, Hey let’s use this as an opportunity to better a system that’s already in place. And yes there is some money associated with that, but we think there really is some opportunity for some returns there.

Cianfrani: Huge returns. From the name of my group, Customer Focus Quality, that’s what we typically do with organizations much more so than working with ISO. We’re working in customer satisfaction space and there was a question earlier about what are the major problem areas early on right after the standard was issued. I also have market research capability, formal market research capability. We went out and did a formal survey of over 500 currently certified ISO people and the things that came back were not surprising. The top issue was customer satisfaction; data analysis was right up there as was continual improvement and competence of work force and things like that. But in customer satisfaction it’s really interesting when I go in and talk to organizations just like we were talking earlier. We do an inventory; people are amazed to find that they’ve got 30 sources of customer information. Where is it? It’s sitting on a shelf some place; it’s not being used. Well the standard isn’t going to force you to use it, but it could encourage you to think about something you’ve already paid for that you may want to utilize. Or stop collecting the data if you’re not going to use it for anything.

Mathis: As I’ve been listening to you folks talk I’ve been trying to sort out the distinction in the transition efforts between the structural changes in the standard and the substance, actual additional requirements. As you first look at the standard it can be a shock because it looks different because it’s totally structured in another way. This is very hard for someone to relate to but then you get into it and then you say, Now what are they actually requiring? So, my broad question is, Is it substantive changes that are the issues, primarily because that’s what you’ve been talking about the last two minutes, versus just structural clause shift with things in a different place that are causing potential problems?

Sidorowicz: I don’t think that it’s so much the structural because of the piece in there that says you don’t have to renumber your system. You don’t have to change to be compliant. We always ask, from the auditors’ point of view, please give us a cross-reference. It facilitates the audit so we don’t spend all our time trying to figure out where you’ve addressed things. So I think it’s more the substitute changes as opposed to the structural.

Beck: Yeah, the structural question. You know many of us were going back and changing, but not so much because of the registrar. When we say 4.6, they know what that is. And now we’ve got to say, forget 4.6 it’s actually…. So we’ve got to have a way in place to help those metric understandings, if you will. And that’s going to take a little time.

Scicchitano: Are you finding that you’re able to reduce documentation in your system with the standard?

Beck: That was the greatest change when we went from the mil standard system. We discovered a tremendous need to reduce procedures. Now I know most people in the world say ISO caused them to have more procedures. I happen to know for a fact, and I was over in Fort Worth in a tactical aircraft division at the time, that we reduced 500 top-level procedures when we implemented ISO. That was our greatest savings that we identified.

Scicchitano: That was the 1994 version, right?

Beck: That was the 94 version. I don’t see any need to reduce procedures in the new version. We may when we get into it realize that we can combine some procedures to have it more process oriented versus function oriented. So I do see an opportunity to take that step in the documentation world of reduction of procedures.

Scicchitano: Charlie and Bob, Is that a top priority in the revision to reduce the documentation burden on companies?

Cianfrani: No. The intent of the writing of the 2000 standard was to get away from the perception that the quality management system of an organization should be about documented procedures. The words appeared many, many times in the 94 standards. What we wanted to do was to minimize the emphasis on documented procedures. Rather stress the importance on the primary purposes of the organization: to deliver products and services that meet customer requirements and do it in a way that makes money for the organization or sense for the nonprofit. So what we tried to do was decrease the emphasis on what the organization had to do and give the organization flexibility to document or describe or handle the instructions to the work to the people who are doing the work in a way that made the most sense for the organization.

Peach: Just last week I answered a complaint from a purchaser of a Memory Jogger. They said when they got it they were disappointed because it didn’t show how to cut back on documentation. They were expecting that. They say, Oh, isn’t this thing great because now we won’t have to do all this stuff anymore. And our answer of course was that we didn’t do that. The standard really provides greater incentive to management to decide what they should be doing, what’s necessary for the control and build around that. And whether there is more or less or the same amount of documentation is not the issue. It is what is right for the company. We then said there are many organizations that indeed will require a level of documentation to do their business and that’s reflected in the standard. There’s a correct amount decided by the management and sure they will learn how to modify it, some places more, some less. But it’s their job to accomplish the intent of the standard and they are not told the level of documentation they need.

Beck: I think that one of the fallacies is that a lot of companies felt like a procedure was the only process control they needed. And they lost sight of other good process controls that were out there. A procedure is probably the weakest kind of a control that you can have. When you stand back, ask what other controls you can put in place besides a written control. You have to get a kind of creativity and you find that you put a lot better things in place.

Scicchitano: One of the criticisms of ISO registration over the years has been the tremendous disparity with respect to the savings and other benefits realized by users. And we’ve seen this as well on each of three major surveys that we’ve published at QSU. What are registrars doing to ensure that clients get more from their registration dollar in the future?

Cianfrani: I’m glad that question is being posed to the registrar and not the consultant.
Peach: We certainly can’t have any less. Clearly one of the purposes of the restructuring was to get the two in line and that was an instruction to the group that did it. And yet, now that’s done, will it help? The results aren’t in yet. They had to be done first and now there are other things out there. I just wrote something recently on Six Sigma’s relationship to 9004 because you can start with 9001 as a base and have a harmonized Six Sigma and 9004 structured effort and make it work. But we just don’t know. There are actually many companies, many organizations worldwide that have used 9004. And of course when you don’t have registration you don’t necessarily know what that it. And some people can look at it and use some pieces of it and that’s okay to use it that way. But 9004 clearly can be used now, and I trust would be, and some of that’s reaching top management to say now that you’

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