Standards can help remove cost element

PUBLISHED : Monday, 08 May, 1995, 12:00am
UPDATED : Monday, 08 May, 1995, 12:00am

HONG KONG Quality Assurance Agency (HKQAA) director Lionel Wood says companies should consider applying for ISO 9000 for economic reasons.

He said an analysis of each area of the costs associated with design could result in quantification of costs, either after the event or on a projection basis using iteration.

Such an analysis involved the choice of methods used for manufacturing of the product and the allocation of resources, including human resources.

This applied especially in relation to mundane factors such as location, the quantity of available raw materials and the identification of potential difficulties from other sources such as labour problems.

Mr Wood said the design of products was the most important factor when quality costs were taken into account.

'Inadequate design can lead to redesign and reworking, which can be expensive,' he said. 'A caisson half a metre out of position can cost $2 million.

'With ISO 9000, quality costs can be identified as something which should not be there.' Mr Wood said while quality costs remained the most important indicator on the economic front on the value of ISO 9000 certification, there were other facets which could help customers and users.

'One example is in the field of marketing. Marketing provides an opportunity for highlighting some of the benefits of ISO 9000, which carries information on the value of the scheme on the company's operation,' he said.

'Because overseas customers often insist on ISO quality, achieving ISO certification is a clear way of announcing a company's standard to overseas buyers.

'However, a large proportion [of companies] which obtain the certificate for this reason still achieve the economic benefits, because quality costs will be identified if a company has ISO certification.' Mr Wood said there were about eight certification organisations in Hong Kong and about two - the HKQAA and Underwriters' Laboratories - which were non-profit-making.

'We [the HKQAA] are non-profit-making and I believe it should remain that way,' he said.

The HKQAA had an advantage in providing certification because of its initial links with the Government and its status as an independent agency.

Mr Wood said the majority of companies prepared for certification without consultants and most did not need them.

'Consultants will provide individual visits to identify what structure is needed, how to relate ISO to the real needs in the company and what procedures are being used, but this is nothing more than good management,' he said.

If a company understood what was required, implemented a system, tested it by internal audit and subsequently applied for a pre-audit by the certifying body, it should pass the final audit provided it had three months' complete records and had done the job right, he said.

'About 10 per cent fail the first time but few fail the second time. If they do, this is often due to attitude,' he said.

Auditors looked at the structure of a company's business and how it controlled the system to see that it complied with the ISO standard.

They also look at control of the company with respect to contracts signed with clients and the application of technical standards or codes of practice within a particular industry.