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September 9, 2009 Newsletter

Table of Contents

Clarification on ISO Versus an Effective QMS

ISO Internal Audit Training: A WIRE-Net Offering

Beyond the Product: Selling Services Can Be Profitable

WIRE-Net's Mission

WIRE-Net strengthens manufacturing to create healthy communities and fuel economic growth.

We provide expertise that is responsive to manufacturing related businesses and their employees.

WIRE-Net connects leaders to each other and engages them in their communities.

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Where Manufacturing Matters.

The views expressed in WIRE-Net's eNewsletter do not necessarily reflect those of our member companies or funders. To express your opinion or concerns, please contact John Colm at 216.588.1440, ext 105.

Drive Sales Up and Costs Down:
ISO vs. an Effective Quality Management System

An editorial by Ty Haines, WIRE-Net Vice President of Manufacturing Services

A reader of our last newsletter kindly noted some room for explanation in one of my tag lines for ISO: "There is only one reason to gain ISO compliance: because it is a requirement to retain or grow sales revenues." When delivered in person that line does come with some explanation:

1. A good Quality Management System (QMS) will allow problems to be identified, quantified, prioritized, and Lean principles to be applied to reduce wastes like operating costs from: rework, scrap, returns, remakes, and such. Lower costs plus customer retention need to offset increases in operating costs for maintaining work instructions, procedures, and documents. Many benefits are hard to assign a dollar value.
2. To have a QMS is a basic business decision most owners or managers must make. To have an effective system simply makes good business sense.
3. Far too many companies skipped the systemic opportunities of ISO in earlier years and sought only the credential of certification and the hollow dream of more sales. A too-often sight in the U.S. in past years is the shut down factory that still shows "ISO 9000 Certified" on their sign or a tattered 9001 flag out front.
4. ISO guarantees neither the customer a good product nor the supplier fair profits. Certification has earned the customer perception of reducing risks of quality problems. Integration of ISO as the cornerstone of an effective, ever-improving QMS and with Lean Enterprise helps to drive benefits to exceed costs.

As a long-time Quality Manager with a pile of certifications plus experience, I've grown the opinion that ISO can see a company document the daylights out of a poor process, be fully compliant yet produce an inferior product. The "Continuous Improvement" requirements cannot be expected to drive change fast enough to save a company. Wise business decisions are always appropriate.

ISO is no guarantee that you presently have a good QMS. If used properly any QMS or ISO compliant system will help save a company money and retain customers. ISO, AS, and other systems require a great many records. Records require labor cost or electronic file space at the very least. Customers see no value in these records (do not want to pay for records but may expect you to retain them). They see value in receiving only good product, on time. Some potential customers require a specific certification as many members have discovered at one or more of WIRE-Net's supply chain entry events the past two years - certification integration with a Marketing Plan can lead to increased sales with increased profits. If you have questions, call Mark Pinto at 216.588.1440 ext. 103.

So bottom line is that a good QMS is a no-brainer: got to have it! Go the added expense of ISO certification: only if the net profit from related sales has been received or is shortly expected.

ISO Internal Audit Training for All Companies

Have you been thinking about ISO compliance? WIRE-Net can help you decide between compliance and registration. Either process provides opportunities to fix gaps and refine business processes in your company. Stronger teams, fact-based decision making, and continuous improvement are common side benefits.

WIRE-Net provides ISO Internal Audit Training open to all companies. If you have a small staff or are interested in bringing just a few of your people up to speed do conduct internal audits, this program is for you. We are planning a program in the Cleveland area. Three, half-day, morning sessions (Monday, Wednesday and Friday) will cover:

Half day 1: Groups will explore and learn how to use the 9001:2008 ISO Standard

Half day 2: Learn all about being an Auditor and auditing, includes workbook and PowerPoint presentation

Half day 3: Practical experience with small-scope audits to build Auditor confidence plus your first real audits that count for ISO compliance.

Are you a Cleveland-area company interested in hosting this event? Let us know. As a benefit to the hosting company, participants will audit your processes. What they produce . . . you keep! For more information on this program, contact Mark Pinto at 216.588.1440 ext. 103. Even if you're outside the Cleveland area, give us a call. We may be able to help in your location.

You May Already Have the Answers

Innovation is about creating more prosperity for you, your company, and the supply chain. Often we look outside our own backyard for innovative opportunities when it is right in front of us.

I worked with a company a few years ago who, after decades of success producing and selling products in prosperous markets, found themselves in decline after the markets they supported began to consolidate due to global and economic pressures. In a session with their management team, one thing became clear, they were experts in their field and often called upon by customers, current and past, for advice on the capabilities of the products, as well as the raw materials that went into their products. When I asked if they considered selling these as services, they found it inconceivable. This was a normal course of business, selling expertise and advice was unheard of.

I was recently reminded of this when reading an article in the May 2008 Harvard Business Review (I don't have a subscription, but our regional library system is incredible). Entitled "How to Sell Services More Profitably" (Page 91) it addresses not only that a product company can sell services for a fee, but how to do it and make a profit. The article addresses four key initiatives:

1. Recognize you are already a service company - like my past client, who was already providing value as a course of business. The difficulty was they were not only providing it to paying customers, but to those who were no longer a source of revenue.
2. Industrialize the back office - what is value-added and what isn't? This implies instituting measures that companies often do not have, then evaluating what does and does not create a win/win for customer and company.
3. Create a service-savvy sales force - long gone is the process of establishing a customer based on filling and delivering orders alone. Today's sale force needs to add value based on expertise of product, market, and process and be capable of providing value-added service and insights to its customer beyond meeting delivery dates.
4. Focus on customer process - what do you know about your customer and how can you make their lives easier by your actions? Reverse engineering is just one example of looking at a customer process and designing to eliminate unnecessary work and workarounds.

If you would like to investigate this concept more, give us a call. Contact Mark Pinto at 216.588.1440 ext. 103.

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