International Journal of Quality & Reliability Management

Quality system implementation process for business success

Michael Bell Vincent Omachonu

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Quality system implementation

process for business success

Implementation
process for
business success

Michael Bell and Vincent Omachonu

Department of Industrial Engineering, University of Miami, Coral Gables,
Florida, USA
Abstract

723
Received August 2010
Revised January 2011
Accepted March 2011

Purpose The purpose of this paper is to examine the implementation activities involved in
certifying a quality management system to the ISO 9000 quality management system standard. This
includes developing the best business performance measures that will serve as indicators of an
effective quality management system. This paper aims to establish a relationship between
implementation activities involved in the quality system and specific business performance measures
that can be used to assess the systems effectiveness.
Design/methodology/approach Data were collected using an online survey combined with
publicly available financial reporting information. Regression and other statistical techniques along
with text clustering and association of the survey comments were used to analyze the data.
Findings Emphasis on implementing a documentation system were found to be linked to business
performance as measured by the return on assets financial measure.
Research limitations/implications Future research should explore various documentation
system aspects such as knowledge management and information sharing in greater detail. A larger
sample focused on a specific industry might provide useful information for industry appropriate
performance indicators.
Practical implications The practical implications of this research focus on the design and
implementation of an organizations quality management system in areas that will provide the most
benefit to organizations seeking ISO 9000 certification. A baseline measurement can be used prior to
implementing the system to strategically manage the implementation process. By understanding how
best to implement the quality management system, fewer resources are wasted on ineffective quality
management system certification projects and some of the skepticism around the implemention of an
ISO 9000 certified quality management system is eliminated.
Originality/value Few quality system researchers target the implementation process for analysis.
Combining survey data and publicly held financial represents is a new method for studying ISO 9000
implementation.
Keywords Quality management, ISO 9000 series, Implementation process, Performance indicators
Paper type Research paper

1. Introduction
ISO 9001 is a standard developed by the International Organizations for
Standardization and serves as a framework for quality organizational management
systems. This framework is recognized by organizations and governments around the
world and has consequently grown into the de facto standard for management
systems. Organizations incur significant costs to obtain certification making it
worthwhile to study the process to better understand the pertinent measures for
certification success. ISO 9000 Quality Management System certification requires a
focus on performance measures underscoring that an organizations management
systems is a valuable, non-tangible asset. The right business performance measures

International Journal of Quality &

Reliability Management
Vol. 28 No. 7, 2011
pp. 723-734
q Emerald Group Publishing Limited
0265-671X
DOI 10.1108/02656711111150814

IJQRM
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724

help focus quality management systems to achieve desirable and required results
according to ISO 9000 certification standards. In this study, an analysis was created to
connect implementation activity with concrete and commonly used financial results.

1.1 Review of literature

This section contains a review of the current ideas from previous research in the area of
ISO 9000 quality management system implementation. This review will provide the
foundation and framework for developing new understanding and knowledge of the
process of effective management system implementation.
Previous studies in the quality arena have highlighted quality system elements that
impact on organizational performance. Mann and Kehoe (1994) examined the elements
of total quality management that impact business success. Their research highlighted
both procedures and a formal feedback system as two key components. Tsiotras and
Gotzamani (1996) emphasized periodic review, formal corrective actions, and process
focus as key elements of quality management systems that impact organizational
performance. Carlsson and Carlsson (1996) identified better processes and better
customer relations as benefits of implementing ISO 9000 in Swedish companies. Lee
and Palmer (1999) cite monitoring day-to-day adherence to documented procedures
and understanding of the corrective action process as significant challenges. Based on
the prominence of these elements in the quality literature, the following ISO 9000
system elements, have been chosen for further study in this research study:
.
4.2.3 Control of documents.
.
5.2 Customer focus.
.
5.6 Management review.
.
8.5.2 Corrective actions.
.
7.51. Control of provisioning.
.
8.2.1 Customer satisfaction.
Several past studies have focused on quality system implementation. Research by
Lapointe and Rivard (2006) on the acceptance of new information technology systems
in hospitals highlighted the importance of the implementation process. In addition,
there is a growing understanding that the process of implementing new systems and
execution of business systems are core competencies for companies today (Faull and
Fleming, 2005 and Griswold and Prenovitz, 1993).
Research to evaluate different quality management frameworks has been done by
Carl Johannsen as part of the 1993-1994 Nordic Quality Management Project
( Johannsen, 1996). Experiences from the Nordic quality management project suggest
that two important roles for management of successful implementation are;
disturbance handler and resource allocator. De Macedo-Soares and Neves (2002)
reports that creative application of quality elements in light of organizational culture is
critical for implementation success. McLachlan (1996) highlights four ISO 9000
requirements that seem to cause difficulty for implementers: records, training, internal
audits, and documentation. These elements can be tailored to the needs of each
organization and still meet the intent of the standard.

1.2 Implementation process

Murakami (1994) describes the steps that companies must take to attain ISO 9000
certification for their quality management system. In conjunction with the works of
Smith (1994) and Jodoin (1998), the path to certification is clearly defined by these nine
steps.
(1) Gaining management commitment.
(2) Employing external consultants.
(3) Conducting an awareness campaign.
(4) Creating an overall quality system manual.
(5) Developing a documentation system.
(6) Training employees on the system.
(7) Creating work processes and procedures.
(8) Conducting system wide reviews.
(9) Pre-assessment audit.
Organizations seeking certification may not necessarily use all of these steps,
employing only some of these activities to varying degrees. Greater or lesser emphasis
is placed on any one of these activities depending on the amount of resources applied in
each area. Our hypothesis is that more emphasis on a subset of the implementation
activities will correlate to one or more performance measures.
1.3 Performance measures
Performance measures that actually demonstrate the value of an organizations
management systems can be difficult to develop, use, and interpret. Some
organizations simply treat the cost of implementing quality management systems as
a business overhead expense often hidden inside various budgets. However, the ISO
9000 quality management system and its associated industry specific standards
remain popular as evidenced by the increasing numbers of certifications awarded each
year (ISO Central Secretariat, 2008). Critics of the ISO 9000 standard contend that even
certified organizations produce poor quality output ( Johannsen, 1996). Implying that
certification is meaningless. However, the right business performance measures can
help to focus the quality management system certification process to be more efficient
and result in a more effective system. The cost and the benefits of implementing a
quality management framework can be substantial. In the 1990s, many organizations
demanded that their suppliers have a certified quality management system despite the
financial and time considerations involved. In 1997, the typical cost of preparing a
medium-sized US firm for ISO 9000 certification was $250,000. Obtaining management
system certification can take up to a year of preparation. Given its widespread use and
economic implications for industry, the ISO 9000 management system framework
must be researched to understand which aspects are most beneficial to organizations
and to identify the best ways to measure the benefits derived from adopting a
management system framework.
Various performance measures have been used to quantify the impact of
certification on organizational performance. Some of these indicators include those
shown in Table I.

Implementation
process for
business success
725

Table I.
Performance measures
investigated by
researchers

Marquadt, 1992
Ebrahimpour et al., 1997
Quazi and Padibjo, 1998
Beattie and Sohal, 1999
Casadesus and Gimenez, 2000
Haversjo, 2000
Singel et al., 2000
Aarts and Vos, 2001
Heras et al., 2002

Author/year

726

Return
Profit
Debt
Return
on
margin Return
to
Net
Return
on
Sales per Stock
on
common
on
on
Sales Market equity Earnings profit Operating
sales employee price
costs
sales capital equity
assets increase share ratio per share margin

IJQRM
28,7

Return on assets (ROA), sales increase, and market share have been used most
frequently. Return on equity (ROE) is considered one of the four key financial ratios
used to measure earnings performance. However, equity can be difficult to parse out to
divisions of a large corporation so ROA is more commonly used (Kristy, 1994). ROA
can be used to characterize the efficiency of an organization and is often used as an
industry standard to indicate what the organization is capable of given what it has to
work with; ROA indicates how many dollars of profits the organization can achieve for
each dollar of assets the company controls (Sun, 2000). An organization with less
rework and scrap is expected to have financial performance superior to organizations
with higher levels of rework resulting from out-of-control and poorly documented
processes. Therefore, an organization with an effective management system is
expected to be more efficient with its resources than organizations without effective
management systems. This research survey data will demonstrate whether a
connection exists between ROA, and a quality management system implementation
process.
From the literature, the approaches used to study management systems have relied
on collecting data via surveys, case studies, and examination of publicly available
records such as financial reports and stock price records
2. Data collection
The data for this study were collected over a 12-week period using an online survey
form. Survey invitations were e-mailed to members of the Benchmarking Exchange
and also placed in two consecutive issues of the Quality Digest electronic newsletter.
Using this method of data collection, 150 responses were received.
2.1 Survey instrument
The survey instrument consisted of 15 questions separated into four sections. Before
the first set of questions, the company name and city were requested to assist with
verifying the certification status of the respondent. Also, the respondents title and
department name were collected along with the number of employees in the
organization. A report of the survey findings was offered as an incentive for
completing the survey so the respondents name and e-mail address were requested.
The first section concerned the certification status, other quality initiatives
undertaken by the organization, and motivation for seeking certification. By asking
which sections of the standard were excluded from certification, a profile of the
organization was developed in terms of the scope of quality management system and
their focus on domestic or international markets. The second section focused on the
process used for certification. Nine activities were presented as potential components to
their path to certification. The respondents provided data on how much emphasis was
placed on these activities or if the activities were simply not used at all. Unstructured
free text comments were also collected about their experience with the certification
process. The third section focused on the performance of the quality management
system in five key areas. Respondents checked boxes on a scale to indicate their
systems performance. An area was provided for text comments about the system
performance. The last section of the survey listed 17 performance measures and asked
respondents to indicate whether each measure was an important measure, somewhat
useful, or not useful at all for assessing organizational performance. At the end of the

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728

survey, the respondents selected their industry code from a drop-down list. The 2002
North American Industry Classification System (NIACS) categories were used.
3. Data analysis
Subjects rated their use of the implementation activities on a Likert scale ranging from not
done to very large degree. The adjective descriptors were converted to numerical values
on a 1 to 5 scale and the average ratings were evaluated. Table II shows the ratings of the
implementation activities sorted from highest usage to lowest usage. Examination of the
data concerning the ISO 9000 implementation activities indicate that the use of external
consultants was the implementation activity with the lowest mean and median, and is the
implementation activity most often excluded. The use of external consultants also had the
largest respondent rating variation. A non-parametric 1 sample sign test was performed
with the null hypothesis that the median was less than 4, using alpha level 0.05.
External consultants, quality management system training, and useful documentation
system were rated significantly less than the other implementation activities.
3.1 Environment factors
Further examination of the data were undertaken to compare the responses in relation to
four environmental factors: large business vs. small business, internally motivated
certifications versus externally motivated certification, newer certifications versus older
certifications, and manufacturing organizations versus non-manufacturing
organizations. Table III shows the results of a Kruskal-Walis median test of the
environmental factors effect on implementation activities. The management
commitment implementation variable was not affected by any of the environmental
factors. Reason for certification (internal or external) had an effect on the rating of most
of the implementation activities. Also, the industry (manufacturing or
non-manufacturing) had an effect on the rating of most of the implementation activities.
The survey asked participants to rate the usefulness of the performance measures
that were commonly used to assess organizational performance. A plot of the ranking
is shown in Figure 1. The four measures that were rated most useful were operating
costs, net profit margin, sales increase, and defect rates.
The financial measures were examined in relation to four environmental factors;
large business versus small business, internally motivated certifications versus
externally motivated certifications, newer certifications versus older certifications, and
manufacturing versus non-manufacturing industry. Operating costs, sales increase,
cost of quality, return on sales, collection period, return on equity, and sales per
employee were not rated significantly different with respect to any of the
environmental factors using a Kruskal-Walis median test (0.05 p-value).
3.2 Financial measures
The survey respondents company data were matched with publicly available financial
measures from Mergent Online. This company provides detailed financial reports of
companies throughout the world and is an independent source of data that is processed
through a rigorous multi-stage validation process (Mergent Online, 2009). Mergent
provided financial data on 22 of the 120 companies represented by the sample. Five
financial measures from the survey were available in the Mergent system; return on
equity, return on assets (ROA), profit margin, operating margin, and annual revenue

Mean
Median
Mode
Std dev.

Useful
procedures
3.90
4
4
0.95

System
manual

4.10
4
5
1.11

3.80
4
5
1.27

Management
commitment
3.77
4
4
1.15

System
reviews
3.64
4
5
1.60

Preassessment
audit
3.62
4
4
1.27

Awareness
campaign
3.55
4
4
1.27

Useful doc.
system

3.46
4
4
1.14

Quality management
system training

2.17
2
0
1.81

External
consultants

Implementation
process for
business success
729

Table II.
Use of ISO 9000
implementation activities

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730
Table III.
Test of environmental
factors effect on
implementation elements
(p-values)

System manual
Useful procedures
Management commitment
System reviews
Pre-assessment audit
Awareness campaign
Doc. system
System training
External consultants

Large vs
small

Recent vs old
certification

0.444
0.449
0.344
0.891
0.064
0.784
0.653
0.567
0.5

0.404
0.963
0.17
0.383
0.783
0.611
0.506
0.072
0.028

Primary reason for

certification
(internal vs
Manufacturing vs nonexternal)
manufacturing
0.016
0.041
0.077
0.018
0.729
0.009
0.015
0.004
0.861

0.227
0.045
0.17
0.009
0.02
0.26
0.402
0.024
0.61

Figure 1.
Ranking of performance
measures

growth. The distribution of financial data, were assessed to determine its suitability for a
regression model. The ROA variable was the only one of the financial five figures, which
were found to be normally distributed, based on an Anderson-Darling score of 0.218
(p 0:815). Subjects ranked ROA tenth out of 17 as a useful measure (see Table IV).

Table IV.
Normality test of
financial measure data

Anderson-Darling score
p-value

Return on
equity

Return on
assets

Profit
margin

Operating
margin

Annual revenue
growth

4.79
0.005

0.22
0.815

1.85
0.005

1.55
0.005

1.35
0.005

ROA is an indicator of how effective the companys assets are used to produce profit.
Merchant calculates the ROA from annualized net income and is expressed as a
percentage of the average total assets. ROA data from 2006 through 2008 was
downloaded from the Merchant system and analyzed.
A regression equation was calculated to explore the connection between
implementation activity and financial results. The emphasis placed on creating a
useful documentation system during quality system implementation is predicted to
have a statistically significant effect on the organizations ROA. Tables V and VI
display the regression output for ROA and documentation system. The p-value of the
ANOVA (0.021) indicates that the relationship between ROA and documentation
system use is significant at the 0.05 level. The R 2 value shows that 25.1 per cent of the
variation in ROA is explained by the documentation system implementation activities.
An equation relating the emphasis placed on creating a user friendly documentation
system during management system implementation to the organizations ROA seems
to be valid.
The survey also included a free text area so that respondents could provide
comments about their experience becoming certified. A small percentage of these
comments (12 per cent) were related to the amount of paperwork, procedures or
documentation involved in certification.

Implementation
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731

4. Discussion of results
Only the documentation system implementation had a significant connection to ROA.
The documentation system has been one of the elements of ISO 9000 that causes many
complaints from implementers and results in audit findings (McLachlan, 1996). The
regression output shows that the overall model fits the data; the slope of the equation is
negative indicating companies that place a greater emphasis on creating a user friendly
documentation system have lower ROA when certifying their quality management
system. Larger, asset intensive companies might put greater emphasis on creating the
documentation system during the management system certification process in order to
become certified. This suggests larger companies that are very asset-intensive and
The regression equation is: ROA three year avg. 20.43.78 documentation system
Predictor
Coef.
SE coef.
T
Constant
Documentation system

20.409
2 3.777

5.313
1.498

3.84
22.52

p
0.001
0.021

Notes: S 8.29767; R-sq. 25.1 per cent; R-sq.(adj) 21.1 per cent

Source

DF

SS

MS

Regression
Residual error
Lack of fit
Pure error
Total

1
19
3
16
20

437.47
1,308.18
220.43
1,087.74
1,745.65

437.47
68.85
73.48
67.98

6.35

0.021

1.08

0.385

Table V.
Regression data for ROA
versus documentation
system

Table VI.
Regression data for ROA
versus documentation
system analysis of
variance

IJQRM
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732

require expensive equipment to generate a profit have a greater need for information
and process documentation to effectively use those assets. Also, return on assets was
rated differently as a key performance measure based on company size; it was rated
less useful by smaller companies than by larger companies.
The ROA is useful for understanding the implementation process, however, it was
not ranked by the subjects as one of the more important measures. In addition, the
research demonstrates that the purely financial measures used in previous studies
might not be applicable across all industries. Operating costs and sales increase were
robust across all of the environmental factors (company size, industry, length of
certification) can also be appropriate measures of system performance. Companies
should select a performance measure or a set of measures to monitor prior to engaging
in quality management initiatives to focus their implementation.
The management commitment implementation variable was not affected by any of the
environmental factors. The survey instrument described management commitment as:
Management commitment for the ISO 9001 certification was evident in that; executives,
supervisors and employees demonstrated support through their words and behaviors.

This might suggest a universal understanding of the concept and its importance that
transcends industries, company size, and time. Emphasis on management commitment
would provide leverage during implementation due to its strong correlation to all of the
other implementation activities.
Although critics of the ISO 9000 standard contend that an organization can become
certified and still produce poor quality output, business performance measures could
be used to focus quality management system certification to achieve better results. Top
management from the early-adopter organizations may not have understood that their
organization could experience greater results by focusing on the right performance
measures. Organizations that are now following in their footsteps through ISO 9000
certification can learn from past mistakes and develop a cogent set of measures to
ensure proper measurement throughout the process of certification; even small
businesses can benefit from this advice. Knowledge management and information
sharing throughout the organization can be a benefit of implementing a quality
management system.
5. Implications of results
New organizations are seeking ISO 9000 certification each year with no decrease in the
rate of new certifications occurring. The knowledge gained from this research will
enable organizations seeking certification to prioritize and focus their resources on
areas that will provide the most benefit. Quality managers should customize their
quality system by understanding the information needs of their documentation
system. The research highlighted the interaction and utility of the activities in the ISO
9001 certification process. The study also provided an analysis of environment factors
affecting management system certification, including industry, motivation, and size.
6. Study limitations and future research
Areas of study to continue this research are to focus on very small businesses to
enhance understanding of quality management processes. The research did not show
significant differences due to the size of the business in the rating of element

performance. However, smaller businesses continue to be an area of interest for quality

management. The global recession of 2008-2010 has shown that larger businesses will
not be quick to hire employees until long after an economic recovery so that economic
growth will likely take place in smaller businesses. Businesses of 50 employees or less
would benefit from more study due to their increasing significance in the global supply
chain. Counterfeit or poor quality components hidden inside the subsystem of a major
manufacturer can have a bullwhip effect on supply chain quality. Implementing and
maintaining an effective quality management system is an imperative for small
businesses.
Other areas for research are to look into the nuances of documentation systems to
understand how this area can be implemented to provide the most benefit for a quality
management system. Documentation system implementation was correlated with
training and with useful procedures, so exploring the interaction between these three
system elements will be worthwhile. Keeping the documentation up to date is an area
of concern for all implementers of management systems. Advances in information
technology continue to change the way quality objectives, work instructions, and
policies are deployed and updated throughout the work environment. Therefore,
capturing knowledge and lessons learned for continuous improvement must be applied
to keep pace. Future research will also involve a larger sample to conduct a detailed
analysis of industry classifications.
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About the authors
Michael Bell is a PhD student at the University of Miami. His work history includes Industrial
Engineer in the electronics manufacturing industry, Business Management System Manager for
the National Aeronautics and Space Administration and Instructor for the University of Phoenix.
Michael Bell is the corresponding author and can be contacted at: [email protected]
Vincent Omachonu is an Associate Professor of Industrial Engineering at the University of
Miami. His research interests include quality management, health care delivery systems,
productivity management, and process re-engineering. He has published books on total quality
management and received the IIE Joint Publishers Award Book-of-the-Year Award.

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