IndustrialConnect

Standards for Small Business

By Thomas R. Cutler

There is no shortage of standards. There are standards which define how something should be made versus standards related to processes, such as ISO 9001. According to the International Organization for Standardization (ISO) standards that provide requirements or give guidance on good management practice are among the best known of ISO's offerings. Having achieved truly global status and thoroughly integrated with the world economy, ISO 9001:2000 (the transition to ISO 9001:2008 is now taking place) gives the requirements for quality management systems; it is established as the globally implemented standard for providing assurance about the ability to satisfy quality requirements and to enhance customer satisfaction in supplier-customer relationships.

The ISO catalog includes over 18000 International Standards on a variety of subjects as well as some 1100 new ISO standards published every year. The full range of technical fields is extensive, yet it is the process standardization that may most impact the small business owner who has endured rollercoaster business cycles over the last decade due to dramatic market fluctuations. To hone their competitive edge and improve their eligibility for bids in key market sectors, many of them are finding they must also drive efficiency and consistency in their products and services. By adopting recognized standards for operations and processes, such as ISO 9001, small to medium-sized businesses are better equipped to engage new customers, instill confidence in stakeholders and boost the bottom line.

At the most basic level, standards are simply the application of tried and tested best practices. Standards focus on the products or services delivered, the business processes followed, and the way the business is managed as a whole.

The NIST (National Institute of Standards and Technology) accurately states the simple truth: manufacturing matters in the U.S. It creates wealth in the form of economic growth, increased jobs, and robust trade in world markets. According to the Bureau of Labor Statistics, in 2008, the United States had one the largest increases in productivity of 17 countries despite the dramatic downturn in the economy.

BSI is a leading global provider of standards, management systems, business improvement and regulatory approval information. The firm is also one of the world's leading providers of training, conferences, information and knowledge on a wide range of standards. According to Robert Whitcher, a Product Manager for BSI, “Standards provide a practical framework for the small business owner and employees to examine, review and continuously improve any area of a business. Depending on the depth, scope, and needs of each organization, these standards can be followed informally as a best practice or on a more formal level with external confirmation from a recognized independent certification body.”

Standards Provide Solid Benefits to Small Business

Whitcher explained why ISO 9001, which helps business develop a quality management system (QMS) is most popular, noting, “An effective QMS provides a framework needed to monitor and improve performance. Led by a company’s top management, ISO 9001 ensures a strategic approach to reviewing the management system. Investing in a quality management system leads to increased operational efficiency, improved customer services, increased sales, higher returns and greater profitability. Today, there are over 670,00 businesses in 154 countries using ISO 9001.”

When small enterprises take advantage of standards, solid benefits can be realized. Whitcher described how BSI has identified several examples of how ISO 9001 can help small business. Standards -

  • Provide a competitive advantage
  • Improve business performance and manages business
  • Attract investment
  • Enhance brand reputation
  • Remove barriers to trade
  • Streamline operations, reduce waste, save money
  • Encourage internal communication and raise morale
  • Increase customer satisfaction

NIST suggested that today’s economy is characterized by a shifting U.S. Gross Domestic Product (GDP) that continues to see manufacturing remain an enormous and vital component. U.S. Department of Commerce statistics show that in 2008, manufacturing directly accounted for nearly 11.5% of GDP and about $1.6 trillion. U.S. manufacturing firms employ over 13 million people in high-paying jobs with benefits; represent roughly two-thirds of total U.S. research and development expenditures; and account for more than 80 percent of all U.S. exports.

BSI concurs with the NIST assertion that, small and mid-sized firms, are facing new and significant challenges. Efficient shop floor operations are a large part of competitive manufacturing, but efficiency alone is not enough in today’s global marketplace. Cost and productivity cannot be the only or even primary measures upon which U.S. manufacturers compete.

There is no disputing the argument that U.S. manufacturers need to revisit their strategies to leverage their capabilities, reduce their costs and demonstrate their advantages to attract new customers and investors. The NIST urges, Manufacturers must rapidly adopt new technologies and develop innovative products as part of these strategies. Manufacturers must also look to be more efficient with their processes and resources. 

Every ambitious business strives for quality, consistency, efficiency and best practice. Standards help ensure small manufacturers are getting the best results from their processes and demonstrate commitment to continuous improvement.

Formal and informal standards

Some people think standards are only for big business or involve significant costs. Not true—standards are valuable to even the smallest organizations. Every business uses some type of standard. Some are simply more formal than others. Standards set the tone for how a business should be managed to deliver the quality and service it wants to project to its customers.

Informal standards can be as straightforward as having company guidelines on how phone calls should be answered, or following a trade association’s code of practice. While informal, these standards are essential in achieving specific objectives and can be easily managed in-house.

Formal standards— which most people think of when standards are mentioned—go a step further by setting out criteria agreed within the industry. These standards draw together best practice from industry experts, government representatives, and certification organizations, academics, consumer groups, trade unions and most importantly, businesses.

The price of instituting a standard practice varies, but is often far more cost-effective than small industrial concerns anticipate. Considering the business benefits of applying the standard, often it offers some of the best value for money a small business can receive. 

With formal standards, companies can use certification services from respected third parties, giving independent verification and confirmation that the organization is meeting or exceeding best practice. Standards are easy to implement, and training is readily available to help a customer understand.

What formal standards cover…

Formal standards can cover goods or services detailing how to create, manage and deliver them to meet customers’ needs. They can also focus specifically on the quality management systems currently in place underpinning a small business. 

Finding the best standards for Small Business

BSI’s Whitcher suggests “Identifying the most suitable standards is easy if an organization which knows the business goals and objectives. A methodical approach and clear examination of these goals allows for a simple path to finding the best standard.”

Many small manufacturing concerns begin by talking to their appropriate trade association to find out if there are any essential requirements or recommended standards in the sector. It is also wise to check out the competition.

Perhaps raising service levels will attract more customers—or maybe a reduction in the returns rate of a product would have a significant impact.  In a marketplace where competitors are already using standards, it is crucial to see which standards they are using, and why.  Many small businesses have to examine if they too would receive a competitive boost from adopting the same standard—or not.

Many small manufacturers discover ISO 9001 to be the most beneficial because it incorporates a “Plan-DO-Check-Act” cycle for continuous improvement, preventing business operations and processes from becoming rote and stale. Obtaining certification can provide solid opportunities to tender for contracts or join supply chains that would otherwise be closed.  If part of a supply chain where standards are used throughout, small businesses can be sure that products, processes, and technologies are going to be compatible with the businesses throughout the supply chain.

The Next Step

Once a small business has identified the areas that would benefit most from the application of standards, like ISO 9001, working with knowledgeable experts will keep the process affordable, provide the training that is vital to appropriate implementation, and demonstrate rapid return on investment.

Author Profile:

Thomas R. Cutler is the President & CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc, (www.trcutlerinc.com). Cutler is the founder of the Manufacturing Media Consortium of three thousand five hundred journalists and editors writing about trends in manufacturing. Cutler is a member of the Society of Professional Journalists, Online News Association, American Society of Business Publication Editors, Committee of Concerned Journalists, as well as author of more than 400 feature articles annually regarding the manufacturing sector. Cutler is the co-founder and contributor to a new business industrial library series found at www.Pemble.com/library. Cutler can be contacted directly at trcutler@trcutlerinc.com.

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