5.1 Purpose of Standardization and Quality Management Procedures
The purpose of these procedures is to produce products and deliver services at a predictable, affordable and best quality way.
Establishing these procedures may be done by the quality officer, production manager, or quality team of the organization, or a combination of both.
What is Standardization?
Standardization in general terms is the formulation, publication, and implementation of guidelines, rules, and specifications for common and repeated use, aimed at achieving optimum degree of order or uniformity in a given context, discipline, or field.You may find this nebulous and difficult to use in a business environment. I do. Let’s, however, make things easier for us.
One general definition I have seen some business consultants use is: ‘Standardization refers to the degree to which an organization specifies how decisions are to be made so that the behavior of all employees becomes predictable’.
I think this is valid. I have, nevertheless, used the following definition in my consulting assignments related to production:
‘Standardization in production terms is the process of developing and implementing technical standards, with the main objective being to improve all aspects of the production process: Inputs, Processing, Outputs, Resources and Storage, by making the creation of products more predictable, with better quality and less costly’.
5.2 Standardization Procedures
In practice there are five things a business organization can standardize according to the production (IPORS) model presented in lesson 1: inputs, processing, outputs, resources and storage.
- Standardization of input: This is the first area of standardization in production. Inputs are raw materials, semi-finished goods, sub-assemblies, parts, ideas, information, data, knowledge, etc., used in production. One way you can control inputs is to standardize and inspect their characteristics before they enter the production process. This means you must screen inputs according to pre-established criteria or standards and then decide which inputs to allow into your company and production process. At the company level, your corporate governance and other administration policies and procedures handle this standardization. At the production level and for raw materials (for example), your production-related managers (e.g., purchasing manager) ensures this via the execution of production policies and procedures for purchasing. Raw material standardization can apply in a manufacturing unit to sheet-metal fabrication, molding, casting, protective coatings, and programmable chips. Likewise, standardizing how dates should be inputted into all the production computerized applications may be done by IT systems on the requirements of production, etc..
- Standardization of processing: This is the second area of standardization in production. Processing is the use of several methods, techniques, systems and tools and a well-defined set of step-by-step sequence of activities that must be followed in the same order to correctly perform a conversion task. The aim of standardizing processing activities is to program work activities so that they are done the same way time and time again. For example, healthcare and medical companies use the standardization methods of ‘the good manufacturing practice (GMP)’. This is a production and testing practice that helps to ensure a quality product. Many countries have legislation enforcing pharmaceutical and medical device companies to follow GMP procedures, and have created their own GMP guidelines that correspond with their legislation. GMP guidelines are not prescriptive instructions on how to manufacture products. They are a series of general principles that must be observed during manufacturing. Standardization, as an example, is implemented greatly when companies release new consumer products or software to market. For example, compatibility is important for digital products to be successful; many digital devices coming out recently must have various interfaces like USB, or other standard types of connection. This allows consumers to use their new items along with what they already own.
- Standardization of output. This is the third area of standardization in production. Output consists of a pre-determined number of finished goods and services that provide value to customers and society. To ensure that your products are standardized, you may apply quality control and use various criteria to measure this standardization. One criterion might be the number of goods returned from your customers or the number of customers’ complaints. On production lines, periodic sampling of products can indicate whether they are meeting performance characteristics. In output reports of computerized production systems standardization means that all these reports should present the data in the same format, etc.
- Standardization of resources. This is the fourth area of standardization in production. Resources are the required managers, staff, industrial and knowledge engineers and other workers, land, plants, tools, equipment, supplies, IT systems, tools, etc., to execute the production process and produce the pre-defined goods or services. One way in which an organization can control the behavior of both people and resources is to standardize their definition and use by the company’s production function. This means that managers set corporate criteria or standards for all resources and then decide which resources should be used in production. If production employees are the resource in question, for example, then one way of standardizing them is to specify which qualities and skills in production they must possess and then to select only those applicants who possess them.
- Standardization of storage. This is the last area of standardization in production. Storage is the location (or locations) where raw inputs or finished or semi-finished goods are placed for possible use at a later point in time or to be shipped to customers. Standardization here means that you apply the same warehousing controls and security procedures for all warehouse locations. For IT production facilities, standardization means that you store all computerized output data by the use of the same storage-type facilities; that you backup all your production and corporate data by the use of the same IT procedures; and that you use the same digital means to store your data.
To give you, however, a better and more practical idea of what standardization means to companies, please see the following two examples:
- One example of standardization would be the case of McDonald’s. They have standardized procedures for bookkeeping, purchasing, dealing with employees and customers and food preparation and serving identical food products around the world.
- Another example of standardization would be the Generally Accepted Accounting Principles. These apply to all companies listed on U.S. stock exchanges much adhere. GAAP is a standardized set of guidelines created by the Financial Accounting Standards Board (FASB) to ensure that all financial statements undergo the same processes so that the disclosed information is relevant, reliable, comparable and consistent.
5.3 Standardization Methodology
Standardization in business terms, like any other tool, or procedure can have many benefits if used properly, or can be harmful if poorly designed or misapplied.
One methodology I have effectively used to standardize production aspects, and minimize potential failures7, is presented in Figure 3.
1. Understand your business operating model and production model very well
2. Understand your industry and its regulations and standards very well
3. Document all your business overhead and production processes in terms of their flows (business, data), systems, procedures, interfaces, problems and bottlenecks
4. Involve all your key personnel in the process
5. Develop standardization procedures for the processes selected
6. Test standardization procedures before implementation
7. Review and improve your standardization procedures on a periodic basis and when a problem arises
Figure 3: How to Standardize
5.4 The Standardization Coin
In various consulting assignments on improving business processes and IT systems, I have used the following concept of ‘The Standardization Coin’.
One side of the coin has to do with the policies, procedures, rules, guidelines, practices and standards that promote quality in products, services and systems.
The other side of this coin represents trust, confidence and faith. Each side of the coin complements the other side.
You need policies, procedures and standards to impart quality in everything you do.
When the producer has quality, you, the customer trusts and has confidence and faith in the products and services given to you.
When you exhibit and feel trust, confidence and faith in your producer, you expect their products and services to be of the highest quality.
This issue, quality, is further detailed next.
Quality Management Controls
But one may wonder: ‘What is quality?’
Quality, in general terms, denotes a characteristic or feature that someone or something has. Quality, according to the ISO quality standard (ISO 8402) means ‘the totality of features and characteristics of a product or service that bears its ability to satisfy sated or implied needs’. Quality is a perceptual, conditional and somewhat subjective attribute and may be understood differently by different people. Consumers may focus on the specification quality of a product/service, or how it compares to competitors in the marketplace. Producers might measure the conformance quality, or degree to which the product/service was produced correctly. Support personnel may measure quality in the degree that a product is reliable and maintainable.
I have used the following seven characteristics to define quality in an IT production system (ITPS):
- Conformity: Conform to the ITPS’s initial design specifications.
- Efficiency: The software of the ITPS should use resources in the best way.
- Reliability: The hardware and software of the ITPS should function without errors, defects or other anomalies.
- Portability: The software of the ITPS should be developed in such a way that it makes it possible for it to be used in other installations (in case of disaster recovery situations).
- Flexibility: The software of the ITPS should cover new needs easily.
- Maintainability: The errors and defects related to the hardware and software of the ITPS should be easily researched and corrected.
- Documentation: There should be full documentation on all hardware and software of the ITPS.
How is practice related to all of these? I found that quality is not easily achieved, and in many cases this is the reason companies have disastrous results in this regard.
Regardless of how you define it, however, if your production system does not provide quality products and services to the market you will not survive for very long. You will lose your customers quite quickly. You must therefore act.
5.5 Developing quality management controls
Establishing the quality management process (in general terms) should be done by your board. The actual detail quality management controls may be developed by your quality officer, production manager, or quality team of your business enterprise. Also the audit program and checklists in appendix 10 of Part 2 may be used to support the design, implementation and post-implementation review of the quality controls for the specific organization.
In practice, quality in producing products and providing services, can be implemented in all parts of the production (IPORS) model presented in lesson 1: inputs, processing, outputs, resources and storage. This is carried out by developing a quality policy and associated procedures (quality management, quality inspection, quality testing, etc., termed ‘quality controls’) for your company and by specific duties exercised by your staff at all level.
5.6 Main Responsibilities for Quality
The main quality responsibilities of your company include the roles, duties and responsibilities, as summarized next:
- Production quality officer: The duties, role and responsibilities of a typical production quality officer, in general terms, are described in lesson 2 (production management controls).
- The CEO of the organization and the Compliance Officer (if one is established) are responsible for ensuring compliance to this policy.
- A Senior Manager assigned by the board, is responsible for coordinating, designing, implementing, reviewing, improving, communicating and monitoring quality reports and controls.
- The human resources function is responsible for obtaining the necessary funds and for coordinating all the required quality training for all staff of the organization.
- Department and other level managers (i.e., higher, lower, team, project, etc.) are responsible for carrying out their duties according to this quality policy.
- Employees are responsible for fostering quality in the execution of their daily tasks and for self-development to ensure total customer satisfaction.
- Other stakeholders of the organization (i.e., shareholders, external consultants, vendors, etc.) are responsible abiding by this policy.
- The internal audit function is responsible for including quality reviews into their annual (or ad hoc) audit program.
In conclusion, when you think of the standardization and quality management procedures outlined in this lesson and what they may mean to you and your company, consider the following quotation by Henry Ford, in 1926:
‘Today’s standardization is the necessary foundation on which tomorrow’s improvement will be based. If you think of ‘standardization’ as the best you know today, but which is to be improved tomorrow, you get somewhere. But if you think of standards as confining, then progress stops’.
Recommendation 5: Manage your standardization and quality processes so that they do not become your white elephants (useless and expensive). Only your excellent quality in products will provide your company with a Midas touch (ability to make money). Your business is bound to have its halcyon days (days of happiness and prosperity) when it also delivers and supports your products and customers in all aspects, in an integrated way.