ISO
certification can be used to streamline the internal business processes of a
company e.g. by decreasing the time required to perform specific activities in
business functions, by reducing waste, decreasing procurement costs and by
increasing productivity. Research has indicated that the contribution of
certification to the gross profit ranges from 0.15% to 5 % of annual sales
revenues.
In some
companies standards serve as the basis for innovation in business processes,
and allow companies to expand the network of their suppliers or to introduce
and manage new products efficiently and effectively. In other companies
standards helped reduce the risk in introducing their products in national
markets.
Certification
has also been used as the basis for new product development, entering new
markets, both domestic and export, supporting the increased demand and creating
new markets. In exceptional cases the effect of standards has exceeded the
figures given above by a wide margin with companies obtaining a gross profit
contribution of up to 33% of their annual sales revenue. This helped them to
position themselves as leaders in their field for a certain time period.
Examples of a
few companies around the world who gained competitive edge through ISO certification are given below:
PTT Chemicals is
a major petrochemicals company in Thailand. Its main products are polyethylene,
polymers, ethylene oxide based performance products and olefins. The main
standards that it uses are ISO 9001, ISO 14001, OHSAS 18001, ISO 17026 and
various technical standards. The economic benefits to it by the standards are
USD 9.4 million annually which is equal to 3% of annual sales revenue. The key
benefits are that the standards brought about a steady increase in the plant’s
output. ISO 9001 played a key role in developing Good Manufacturing Practices
in the plant and contributed to plant reliability and reduction of wastes.
Vinakip is an
electric devices manufacturing company in Vietnam. Its products are sockets,
wires and cables, plugs, switches etc. The most important standard it uses in
ISO 9001 and various national standards. The economic benefits it achieved from
the standards is USD 370 500 which is equivalent to 38% of annual sales
revenues. Using standards allowed Vinakip to reduce the product lines to a
small number of standardized products. Improving the quality of material
provided by suppliers through better control, sharing information more
efficiently between internal departments, reducingthe production cost and
decreasingthe generation of waste, improving the training of staff by referencing
the standards, unifying documentation and labelling practices for most of its
products, developing a culture of continuous improvement in the organization.
ISO 9001 helped
the company define its business processes clearly and to share information
about product characteristics, key activities and performance indicators as
well as good practices. The result was improvement in processes, reducing the
product variety and improving cooperation with suppliers
which led to better quality inputs less waste and lower number of repairs. The
use of testing standards allowed the company to meet customer expectations and
legal requirements while ISO 9001 certification improved the company’s
reputation and the confidence of customers in its products.
Festo Brazil is
a German subsidiary and a provider of pneumatic and electrical drive
technology, making integrated systems and services for factory and process
automation. The standards that the company uses are ISO 9001, ISO 14001 and
OHSAS 18001 as well as many automotive industry standards like ISO 16949 and
VDA 6.4. The economic benefits of the standards were USD 27 million annually
amounting to I.9 % of sales revenue. Using the standards helped Festo Brazil to
implement an efficient procurement method resulting in work saving, saving 30%
in purchase by buying standardized parts, by optimizing and reducing the design
time of its engineers, improving communication between different departments,
streamlining manufacturing by instilling a company-wide continual improvement
drive.
These
improvements were brought about by using standards in procurement and
standardized parts resulting in 30% saving in costs. Due to clever use of
advanced standards the design time by engineers and the overall project time
was reduced which allowed new and customized products to reach the market in a
shorter span of time. ISO 9001 was implemented very thoroughly and combined with
technical, managerial and organizational improvements was responsible for
increased productivity and quality in manufacturing and thus the company became
a world class producer.
Lobatse Clay
Works is a company operating in Botswana and makes face bricks as well as
window sills and pavers. It uses BOS 28 Burnt Clay masonry units Standard, ISO
9001 and OHSAS 18001. The economic benefits of standards to the company were
USD 256213 annually equivalent to 2.63 percent of company sales revenue. The
major benefits for LCW of using standards were Calibration of equipment,
increase in conformance of material from suppliers, improvement in production
process and reduce in the number of health and safety incidents. Standards
helped LCW to focus on a limited number of brick types which it process at a
high consistent quality. Quality Procedures that define its processes like
excavation of clay soil to production of bricks and their storage, packaging
and delivery to customers have helped in streamlining the production processes
of the company.
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