‘Tech. Co.’ is a sales and distribution organisation based in the UK. All products sold by the company are manufactured by its parent company overseas. The products are high-technology products, they are sold to business and government customers.
Tech. Co. decided to register to ISO 9000 three years ago. The primary reason for seeking registration was that Government customers were insisting on it. It was also felt that the company might achieve some benefits from clarity of working procedures.
Tech. Co. took advice from a consultant. The work to first registration took three years and registration was successful.
Originally the company had seven divisions (organised by product) and each division had its own sales order function. It had recently centralised the sales order functions – in a structural sense – but the people who worked within product divisions still processed orders for the same products. The primary change with centralisation was standardisation of working procedures.
Registration to ISO 9000 meant the creation of nine manuals of procedures. One for each type of product, one called quality and one for the warehouse. The manuals documented what should be done at each stage of an order, nothing had been left out.
The manager of sales administration took the view that sales administration was now controlled, the standard procedures meant that people wouldn’t get things wrong. He also viewed salespeople as needing to be controlled – “They won’t be able to get away with giving administrators inadequate information and what they provide has to be written down”. He also saw advantages in controlling customers: “Because we have controlled procedures we can prove to them what they have ordered if there is any dispute”.
Has ISO 9000 contributed to performance?
The first operational problems were felt by sales. The attitude presented to them by administration was ‘nothing proceeds without the right paperwork’. Furthermore, because of a new procedure introduced to ‘comply’ with ISO 9000 (see later), the warehouse would demand that sales ‘sign-off’ returned goods before they could be made available as inventory.
There had been a cultural tradition of sales being ‘heroes’, they had treated ‘back office’ staff work as drudgery, they were always seeking last-minute changes and rarely were accurate with their form-filling. But now administration had been instructed to work exactly to procedures. Some took the view that working to procedures would teach salespeople to pay more attention to putting the right information on their paperwork. Sales behaviour did not change, the same conflicts existed between sales and administration, they were sometimes more acute because administration had a specific stick with which to beat them.
The causes of these conflicts were many, but the one cause which appeared to be having the most influence was the complexity of pricing. Salespeople faced a variety of different circumstances when contracting with customers; the result was a need for flexible administrative practices. The complexity of current practices had been documented in the manuals. It would be unlikely that the administrator would be familiar with all situations and, furthermore, the manual would be unlikely to cover all situations (and would have to be continually up-dated). The consequences were an increasing sense of ‘drudgery’ amongst administrators and none of the original problems solved.
The sense of drudgery in administration was caused by the way the new procedures had been introduced (it was said that they were ‘dumped’ on administrative staff with the directive: you are to work to these procedures). The attitude in administration soon became ‘work to procedures’ (rather than serve customers). Furthermore, it was a perspective which valued working to procedures above finding and removing errors or the causes of errors.
When asked whether the new procedures had improved performance, no-one could say. There had been no collection of data on the performance of the administrative practices prior to the new procedures and hence it was not possible to determine whether things were better or worse.
The administration manager’s attitude to customers (“The procedures will enable us to prove what the customer ordered if there is a dispute”) was positively dangerous. What matters when the customer disputes, or for any reason wants a change, to an order is that the need is dealt with promptly and courteously. The last thing the customer wants to hear is someone seeking to prove the customer is wrong.
The thinking behind the new ‘goods returned’ procedure is also revealing. Goods returned stayed at the same level as prior to registration (suggesting no change to the performance of the system). What did change was the way returned goods were handled. ISO 9000 has a requirement to control product which is returned by customers (‘control of non-conforming product’). All goods returned by customers were now held in ‘quarantine’, pending authorisation for release into the warehouse (for re-use).
There had been considerable debate about what to do with returned product. Tech. Co.’s products are sensitive to excesses of temperature and light. If they had been subjected to adverse conditions while on the customers’ premises, they would be ruined. If product was tested on return it would be destroyed – the nature of the product precluded testing (or sampling) -any test would result in destruction. The choice was simple: return product to the warehouse or destroy it.
In the event, a compromise was developed. It was argued that product returned within fifteen days would be likely not to have been subjected to adverse conditions. The procedure for returned product required the warehouse supervisor to check date of receipt against date of despatch and, where it fitted the new rule, to send a list of returned product to a director for signature. Signatories were hard to find. When they were available, they were not inclined to think of signing forms from the warehouse as their top priority.
But no-one asked: Why do we have product being returned? – with a view to eradicating it. And, more interestingly, nobody had asked the question: Have we ever had a problem with product being returned and then sent out as another order? The answer, when asked, was no. There had been no need to create this ‘quarantine’ procedure. It would have been perfectly OK to place all returned goods in inventory. All of the available evidence showed there was not a problem. Tech. Co. had set up a procedure for an uncommon occurrence assuming it to be a common occurrence, in that way problems were now created. The result was losses to the system: at the time of this study, product to the value of half a million pounds was not available for sales.
If they had viewed their organisation as a system, they would have known that returned product had not shown signs of fault and would have taken the view that customers’ receiving faulty goods would have been an unlikely occurrence. In the unlikely event of a customer receiving faulty goods, the organisation could respond by engaging in excellent ‘repair’. A good way to show customers what matters to you.
There is little that can be said in support of the view that ISO 9000 contributed to organisational performance in this case. It seems the implicit purpose of registration was to create a ‘quality system’, rather than help the business. The emphasis on written work procedures was entirely unnecessary – a simple flow-chart would have been sufficient (and may have been more use in clarifying purpose). The manuals produced for administration should not have been necessary. If they had a purpose at all they should have been used for job training. Used in the way they were being used only exacerbated the problems between sales and administration.
This was a classic ‘bomb factory’ approach (see Appendix 3 ) to ISO 9000 implementation. The purpose of this organisation is to sell. How? By creating value for customers, developing loyal customers, attending to customers’ needs. Nothing was being done to understand and improve the core processes of achieving the organisation’s purpose. ISO 9000 was making achievement of the purpose more difficult and more expensive.