ISO 9000 vs. TQM: Paradigms in Supplier Management
Daniel J. O'Leary, CQE, CQA, CRE
Daniel J. O'Leary, CQE, CQA, CRE, Product Quality Manager, Picker International Inc., Cleveland, OH 44143, 216/473-5112.
79th Annual International Conference Proceedings - 1994 - Atlanta, GA
ISO 9000 is a supplier management system that comes from a tradition based on Taylor's Scientific Management. Total Quality Management has challenged that way of viewing the world of work. This paper briefly describes the two systems, contrast some differences, and applies them to the supplier management strategy.
PARADIGMS AND PARADIGM SHIFTS
First, however, we need to understand the concept of a paradigm and what it tells us. A paradigm is a structure or scheme for characterizing information. It provides a framework to help us organize knowledge.
If you studied English grammar or a foreign language in school you may remember verb conjugations. This is an example of a paradigm providing structure, a way to organize the information we know. If you know the conjugation of a word, then you know how to form the correct version for use. The structure of conjugations is a paradigm. In fact, a standard example from each conjugation is often called the paradigm case.
The concept of paradigm entered the business world through the philosophy of science. Thomas Kuhn's influential book, The Structure of Scientific Revolutions, argues that science has a framework to organize knowledge, a paradigm. For example, Newton gave us a way to look at the world of physics. Later, Einstein developed a new way to look at the same facts, a new paradigm. In the scientific community, Newton's methods have been supplanted by Einstein's. Kuhn calls this a paradigm shift; the Newtonian paradigm has shifted away in favor of Einstein's paradigm. In geology a major paradigm shift occurred with the theory of plate tectonics. The view of earth with a solid crust has been replaced by a crust of small pieces that bump and collide creating earthquakes and volcanoes.
The business world has also been shaken by paradigm shifts. The most famous business paradigm shift was the Industrial Revolution. Another shift, important to this paper, is the introduction of Scientific Management by Frederick Taylor. In describing it Peter Drucker says:
Like all great insights, it was simplicity itself. People had worked for thousands of years. They had talked about improving work all that time. But few people had ever looked at human work systematically until Frederick W. Taylor started to do so around 1885. Work was taken for granted; and it is an axiom that one never sees what one takes for granted. Scientific Management was thus one of the great liberating, pioneering insights.
Other references to paradigm shifts may be found in the literature. Richard Schonberger tells us, "Those [quality effort] stirrings in a few companies in 1980 may someday be chronicled as the third major event in the history of manufacturing management. The first two: (1) coordinating the factory through the use of standard methods and times, Frederick W. Taylor, Frank Gilbreth, et al., circa 1900; and (2) showing that motivation comes in no small measure from recognition, the Hawthorne Studies at Western Electric, circa 1930."
For the Western world, a paradigm shift is taking place as Japanese industrial strength creates problems for U.S. markets, including domestic markets. As we compare the U.S. model to the Japanese model to see what lessons may be learned, we don't always understand what we see. This is characteristic of a different paradigm. In Newtonian physics gravity and light do not interact so a black hole cannot exist. Einstein's physics predicts the black hole and many other strange phenomena. Similarly, because Scientific Management divorces planning from doing, a quality team that allows workers to plan a process, resolve problems, and effectively operate the process cannot exist.
THE ISO 9000 MODELS
When we say ISO 9000 we typically mean a series of five standards issued by the International Standards Organization (ISO), a worldwide federation of national standards bodies. The United States member body is the American National Standards Institute (ANSI), a private company. Both ISO and ANSI issue standards in a wide variety of areas. For example, batteries conform to a set of ISO standards. All C-size cells have dimensions and voltage defined by a common standard which allows both battery manufacturers and electronic equipment manufacturers the knowledge that their products are compatible.
ISO developed a system of quality standards through its technical committee ISO/TC 176. This committee prepared standards, issued by ISO, that define quality systems. Just as in the battery example we can buy AAA, AA, or A size cells we can also buy ISO 9001, ISO 9002, and ISO 9003 quality systems. To carry the analogy further, one brand of battery may be better (longer life) than another but both conform to the standard. One company's quality system may be more effective than another, but both conform to the standard.
ISO standards are reviewed at regular intervals. The initial quality system standards were issued in 1987 and revised in 1993. The 1993 revisions do not substantially change the quality system requirements.
The ISO 9000 series consists of five standards, ISO 9000 to ISO 9004. ISO 9000 is a guide for selection and use telling how to use the system, select the standard, and tailor the model to particular applications. ISO 9001 to ISO 9003 provide models for a supplier's quality system by defining the quality system components expected to be in place. ISO 9004 provides guidance to the supplier to implement the quality system.
In developing a contract with a supplier the buyer uses one of the ISO 9000 models to ensure the supplier has a quality system. This is typically imposed in a set of quality clauses on the purchase order. The supplier is then expected to implement and maintain a quality system that conforms to these requirements. By following the quality model the supplier implements the elements necessary to satisfy the contract. This expectation of ISO 9000 can be easily traced to the military quality systems where the customer imposes contract clauses that require the supplier to have a formal quality system e.g. MIL-I-45208A or MIL-Q-9858A.
Having imposed a quality system the customer has some obligation to ensure the supplier conforms. This obligation is typically discharged in one of three ways: self certification by the supplier (we take their word for it), supplier conducted audit (send an audit team to check), or third party audit (the customer and supplier agree on a third party who checks). The U.S. military uses a Quality Assurance Representative (QAR) to verify the quality system. In addition, defense contractors often audit their supplier's quality system. In fact, a company with both defense contracts and subcontracts will be audited multiple times during the year against the same quality standards. In addition, the company may be required to house a resident QAR. They all check for the same thing, but must do so independently.
The ISO 9000 practice has settled on an accredited third party auditor to certify quality system conformance and issue a registration certificate. A customer can ask for a copy of the registration certificate and, thereby, know the supplier's quality system conforms to the standard. This eliminates the multiple audit problem.
TOTAL QUALITY MANAGEMENT
Total Quality Management (TQM) is not as well defined as the ISO quality system models. Neither ISO nor any other standards body has issued a TQM model. When we go to the TQM literature we find a conflict. For example, some may argue that Motorola's Six Sigma program is TQM so if you want TQM you must have a Six Sigma program. Others make the same argument about the Malcom Baldrige National Quality Award, the Deming prize, and a whole flurry of other programs. In addition, virtually every TQM book has a different definition. Some even claim that ISO 9000 is a TQM system.
In this amorphous state of affairs, the author feels safe defining TQM for this paper. Rather than a dictionary style definition, the paper enumerates some characteristics we expect in a TQM system. Let's imagine we go on a plant tour of a manufacturing company that claims TQM. The next day, over coffee, some friends discuss what they saw. One says, "They said they have a TQM system, so I expected to see lots of measurement charts posted in the work areas, but they were not there. What's going on?" This question is a TQM expectation -- measurement charts posted in the work area. In a similar fashion we can identify the major TQM expectations. We must also account for negative expectations. The conversation could continue, "Did you see that large inspection area with all the benches lined up in rows? I didn't expect to see that in a TQM company."
In a TQM environment we expect to find elements derived from the overarching themes of listening to workers, controlling and reducing variation, and empowering the workforce. We expect to see the following:
- Measurement charts in the work area -- The status of the work process is
measured and the results known to the people who do the work.
- Improvement goals defined for work processes -- The work processes are not
stagnant over time, but part of a continuous improvement plan with well
- Worker control of the process -- The process is controlled by the people who
perform the work without reliance on a separate inspection function.
- Team problem solving -- Problems are solved by cross functional teams
instead of individuals from a specific discipline.
- Structured problem solving -- Problems are solved following a specific
method (problem solving paradigm) with well defined steps.
- Customer satisfaction -- Customer reactions are feedback to the people who
make the product as part of the improvement process.
In our TQM plant we find work areas with charts describing the status of the processes and responsibility for day to day quality resting with the people who make the product. We find strong evidence of teams working on significant problems (not what color to paint the cafeteria), following a problem solving model, and using quality tools, e.g. Pareto charts, fishbone diagrams, SPC, etc. We find workers who know what the customer concerns are and how the work process impacts those concerns.
CONTRACTS: TQM vs SCIENTIFIC MANAGEMENT
The concept of TQM came into the American culture as we faced the problems created by increased Japanese strength in world markets. Having a culture of "Yankee ingenuity", winning WW II, and dominating political power in the post-war world, we could not understand how a small defeated island nation could challenge America's industrial strength. We looked, we saw, but we did not understand; the Scientific Management paradigm stood in the way.
The Scientific Management paradigm is simple (at the risk of being overly simple in the explanation).
- There is only one correct way to do a job -- All work is divided into small
steps that can be studied, understood, and optimized to learn the only correct
- Planning and performing work are different -- Work is planned by people who
understand planning and they are different from the people who do the work.
Work is not planned by the people who do it.
- Specialization -- The content of work requires specialists to understand the
complex nature. This means that specialty disciplines arise and are organized
in functional departments.
The primary difference between Scientific Management (SM) and Total Quality Management (TQM) is the control of work. In SM work is divided into small pieces, planning is done outside work, and process knowledge resides with a specialist. In TQM work is unified, the same people plan and perform work, and process knowledge resides in the work area.
The change from the SM system to a TQM system represents a major paradigm shift. The whole nature of work changes when the shift is made from SM to TQM.
THE SUPPLIER CASE
Imagine that you want to choose a supplier to manufacture some product. In the traditional case, you would locate a supplier through word of mouth, the Thomas Register, etc. This supplier would have some kind of quality system and the buyer would have some way to measure it. Hopefully, the quality system is effective. Today, in the same circumstances, we expect an appropriate ISO 9000 system registered by an accredited registrar. While this gives some level of protection, we again hope that the system is effective.
When we look for a supplier with one of these formal quality systems, what can we expect? ISO 9001:1987 provides some clues.
In the contract review element the supplier is expected to review each contract for capability to conform. The paradigm here is the individual order, not the long term relationship with the customer.
The control of nonconforming material element discusses segregation and disposition of material, continuing the paradigm that work is inspected and rejected.
The concept of prevention does not appear in the 1987 version, but a weak form is added in the 1993 version.
Improvement over time, team concepts, goal setting, and measurement do not appear in the standard; they came from a different paradigm.
In defense of the standards, they do not prohibit TQM as described above. Separate inspection by independent employees, for example, is not required. A separate quality department need not exist. The standard does, however, warn that care must be taken to ensure independence of the people who make quality decisions. The type of corrective action system is not prescribed so team orientated, structured problem solving methods are allowed.
The ISO 9000 quality standards advance quality by providing an international model that all companies can follow. For U.S. companies, they provide a better model than the current military standards. The model, unfortunately, continues the Scientific Management paradigm which has dominated Western industrial thinking in this century.
Total Quality Management has provided a new paradigm that can help us exceed the gains originally demonstrated by Scientific Management. Unfortunately, a TQM standard does not exist. While companies can operate a TQM system inside the ISO 9000 framework, it is neither required nor encouraged.
When selecting a company as a supplier, the buyer should always expect an ISO 9000 quality system; specify it as part of the terms and conditions. ISO 9000, because it does not require a TQM system, can fail to be effective as a quality management tool.
- Drucker, Peter. The Practice of Management. New York: Harper & Row, 1954.
- Kuhn, Thomas. The Structure of Scientific Revolutions, 2nd Edition. Chicago: The University of Chicago Press, 1970.
- Schonberger, Mark. World class Manufacturing. New York: The Free Press, 1986.