ISO 9001 Quality Management System Guide
Download the Smithers ISO 9001 Quality Management Guide to improve your knowledge base around the ISO 9001 standard, its structure, terminology, and its most important clauses.
ISO 9001 Certification, ESG, the U.S., and Supply Chain Quality
An internationally recognized standard, and the foundation for many quality management systems and quality best practices, globally, ISO 9001 helps organizations to define, structure, document, and implement procedures that help companies work in a more efficient way. This can have a profound and far-reaching impact on not only the end-results, but long-term customer relationships and retention.
With quality management and continual quality improvement at the core of the ISO 9001 standard, and its international presence, it would be more than fair to question why, when it comes to adoption, does the United States lag compared to the great majority of the rest of the world? What does this have to do with ESG? And how does it affect supply chain quality?
In 2018, Scott Dellana and John Kros conducted a study on ISO 9001 and supply chain quality in the United States where they sought to better understand ISO 9001 certification in the USA and how it affects an increasingly global supply chain.
ISO 9001 Adoption Rate in the US
According to Dellana (2018) & Kros (2018), historically, ISO 9001 organizational adoption has seen strong growth rates in Europe and East Asia, while making substantially fewer gains in the USA. In fact, the last time that ISO 9001 certification was on an upward trend in the USA was just before the start of 2006. (pp.297-298) Later in the study, when the results are presented, Dellana (2018) & Kros (2018) suggest plausible reasons for a slower adoption of the standard in the USA, including:
“…the motivation to adopt ISO 9001 is coming from the final assembly manufacturer on their supply base and not from the retailer backward.” (p.311)
Supply Chain Quality May Drive Rate Change
Dellana (2018) & Kros (2018) discovered that all is not lost for ISO 9001 in the USA:
“This is not to say that US companies are not interested in formal quality management systems. Quality management systems, such as TQM and Six Sigma, have been widely adopted in the USA during the past 20 years and are embodied in the popular Malcolm Baldrige National Quality Award and a host of State and regional quality awards. Several US-based organizations have even won the prestigious Deming Prize. These include Florida Power and Light, AT&T Power Systems, and Sanden International (JUSE, 2014).” (p.298)
Additionally, US-based organizations are beginning to consider ISO 9001 from a different perspective - how it applies to the supply chain. Dellana (2018) & Kros (2018) found:
“Interest in quality systems adoption in supply chains is increasing due to the growing importance of global supply chains. While global interest in quality programs such as TQM, Six Sigma, and ISO 9001 has been increasing for some time, there are many recent notable examples of breakdowns in global supply chain quality, such as the Toyota recall for defective accelerator mechanisms (Cole, 2011). Global supply chain pressure may be the culprit in the breakdown of quality management practices in this case (Cole, 2011; Piotrowski and Guyette, 2010). Kang (2010) investigated Japanese auto companies and the correlation between rising recalls from poor quality and movement of manufacturing overseas. Such studies suggest that quality problems increase as supply chains stretch globally (Tang, 2008; Kang, 2010), underscoring the need for active management of quality in the supply chain (Ni et al., 2015; Foster and Ogden, 2008; Kaynak and Hartley, 2008). Therefore, ISO 9001 has great potential as a system suitable for use in the active management of supply chain quality.” (p. 298)
What’s the Motivation for ISO 9001 Certification Beyond the Supply Chain?
There are two classification types of motivations for most companies when considering ISO 9001 certifications, internal and external. In an earlier article, ISO 9001 Certification Motivations and Realized Benefits – Does Organizational Size Matter?, we touched on these motivations and expounded on them: according to the Bravi (2021), & Murmura (2021),
“…the major reason cited (for seeking ISO 9001 certification) is to improve corporate image (4.36), followed by the necessity to obtain internal organizational improvements (4.04). However, considering company dimension (size), …organizational improvements have been a major driver for Small and Medium-sized enterprises compared to “Micro” ones. Medium companies are also driven to get the certification due to customer pressure and avoid potential barriers to export(ing).” (p. 8)
In the Dellana (2018) & Kros (2018) study, their findings supported this sentiment:
“It was discovered that US firms were part of a group of countries in which certification to ISO 9001 was motivated more so by quality improvement (i.e. internal motivation) than by corporate image (i.e. external motivation). This supports the idea that motivations are mainly internal toward ISO 9001 certification in the USA and possibly for the purpose of true quality improvement. Beyond market image, external motivation may also be prompted by government pressures that require suppliers to become certified to do business in their areas.” (p.300)
A Summary of the Study, ISO 9001 and Supply Chain Quality Findings
Boiled down to its core, the study conducted by Dellana (2018) & Kros (2018) on ISO 9001 and Supply Chain Quality (in the USA), sought to explore the thinking that organizations wishing to gain ISO 9001 certification based on an internal motivation for quality improvement are more likely to be classified with a higher quality management maturity, compared to those seeking certification for other reasons. And that these quality mature organizations are more likely to expect their suppliers to have quality management maturity and ISO 9001 certification. (p.300).
According to Dellana (2018) & Kros (2018), the findings showed odds ratios that indicated ISO 9001 certified organizations are generally more likely to use suppliers that have greater quality maturity and/or generally more likely to use ISO 9001 certified or are capable of gaining ISO 9001 certification, than non-certified companies. (p.309) No surprise there. Additionally, Dellana (2018) & Kros (2018) also found:
“On average, about 70 percent (of suppliers (of respondents) reported as capable of achieving ISO 9001 certification.” (p.305)
Dellana (2018) & Kros (2018) continue with their findings summary, adding that assembly manufacturing organizations are much more likely to be ISO 9001 certified than those companies that operate in the distribution/retail supply chain. (p.310) The study also highlights that ISO 9001 certification is more prevalent upstream in the supply chain, Dellana (2018) & Kros (2018) then extrapolate:
“It is possible that specific industries in particular supply chain positions have been the main drivers of this upstream diffusion of ISO 9001 globally (e.g. automotive and electronics manufacturing) and are overshadowed in this research of the US market by the many industries that have not embraced ISO 9001 as a requirement in their supply chains. This is not surprising given the history of ISO 9001 as a primarily manufacturing-oriented certification.” (p.310)
How ESG Fits In
ESG is an acronym that stands for environmental, social, and governance, representing non-financial related factors that are used to measure an organization’s sustainability or viability. Lately, these elements are being looked at more by potential investors or larger companies, and from a corporate image perspective for smaller organizations.
When each category is broken out, “environmental” examples are things like what a company is doing to combat carbon emissions, air pollution, and deforestation, while “social” refers to organizational policies supporting gender equality, diversity, human rights, and data security. Many organizations are tackling these things head on by marketing their policies, partnerships, or initiatives that support environmental and/or social causes. However, “governance” is where there appears to be something missing. Under the governance banner, things like political contributions, internal corruption, legal issues are often brought up for how a company can put together plans to address these potential concerns. What about a mature quality management system, where process are in place to address threats to governance, as well as general quality?
The standard for an environmental management system, ISO 14001, has been mentioned as an excellent framework for the “environmental” element of ESG, likewise a quality management system certified to ISO 9001 should be viewed in a similar light for “governance”.
Final Thoughts
The study by Dellana (2018) & Kros (2018), ISO 9001 and Supply Chain Quality, highlighted that in the USA – Mostly medium to larger sized, quality mature, manufactures reported successful ISO 9001 certification with perceptions of improved quality performance. However, there is still a major gap between ISO 9001 adoption and the overall supply chain’s awareness and/or motivation to gain certification, with many of the companies downstream less likely to be certified, despite medium-to-larger organizations with mature quality management systems to be more likely to select suppliers that were ISO 9001 certified.
Perhaps ISO 9001 certification needs to be viewed in a different light. The message needs to be conveyed that it’s not just for manufacturers, but for those organizations that supply them, as well as companies that are concerned with quality maturity and governance.
Interested in ISO 9001 Certification for Your Organization?
Our "No Surprises" approach ensures honest and consistent communications from the start. We'll get to know your business and use that knowledge to facilitate your preparation for ISO compliance. Contact us now for any questions regarding our ISO 9001 services or request a quote to get started.
Citations to referenced studies:
* Laura Bravi & Federica Murmura (2021): Evidences about ISO 9001:2015 and ISO 9004:2018 implementation in different-size organizations, Total Quality Management & Business Excellence, DOI: 10.1080/14783363.2021.1954900
**Dellana, S., & Kros, J. (2018). ISO 9001 and supply chain quality in the USA. International Journal of Productivity and Performance Management, 67(2), 297–317.
