Making quality a priority
While quality is important to small distributors, the time and cost associated with ISO 9000 present tough challenges
By Victoria Frazia -- Industrial Distribution, 5/1/1999
Ralph Wismer's company isn't certified to ISO 9000, but the firm has been working toward that goal for several years. Zenmar Power Tools & Hoists, Wismer's Cockeysville, Md.-based distributorship, has an internal quality program that emulates the ISO system. Zenmar is steadily working to document all company procedures, most recently updating those of the shipping and receiving department . Not only do those procedures help Zenmar ensure timely and accurate deliveries, but they also help in training new employees. Not long after the department finished its procedures manual an employee left. Fortunately, the document doubled as a training manual for the new replacement.Documenting all company procedures is at the heart of ISO, the internationally recognized quality standard controlled by the International Organization for Standardization based in Geneva, Switzerland. The idea is that by having everything in writing, a company is able to follow a consistent path, thus ensuring a customer's order is correct every time. Another key element of the process is documenting mistakes and the actions taken to fix them. Zenmar Power Tools & Hoists does that as well. In 1995, the company developed a quality assurance form that all managers must fill out in the event of an error -- which could include something as simple as requiring a driver to make a delivery at 7 a.m. when the customer doesn't open their doors until 7:30. That's 30 minutes of wasted time, says Wismer.
While Zenmar has internalized the ISO process, the company is not ready to go through with the real thing just yet. As a small company (roughly $5 million in annual sales), Zenmar has to budget its projects. At the top of the list now is a possible computer system upgrade. Wismer is also looking to re-vamp the company's marketing strategy, which will include developing new sales tools, reviewing existing lines, and evaluating special services and how the company gets the message about those services across to customers. He hopes to begin the ISO 9000 process later this year.
Consultants, industry watchers and executives at companies large and small praise the benefits of the ISO system. But ISO implementation is costly and time consuming, and many small distributors are reluctant to go through with it unless a customer demands it. For some, it's advantageous to implement internal quality programs like Zenmar's. As Wismer explains, it allows a company to prepare for ISO, making it that much easier to implement the actual system when that big customer requests it.
The cost factor
Cost is what keeps many small companies from becoming ISO 9000 certified, according to industry consultants. Consultant and registrar fees can run upwards of $20,000 for the first year, says Jan Edmunds of International Quality Coaching, Inc. in Albany, N.Y. She adds that registration fees can run between $1,300 and $2,600 a year after that, depending on the size of the firm. To keep costs down some companies go through the process without a consultant, a move Edmunds and others say can cause the entire process to take considerably longer -- an average of two to four years as opposed to four to six months. On top of all that, companies that have gone through the ISO process say that even with a consultant you need to devote a full-time employee to the project, which only adds to the expense. However, Edmunds points out that the news is not all bad.
"Most registrars tell me that companies that go for ISO 9000, if they were to add up the savings they made in mis-shipments, catching mistakes ... they will have made up that money within a three-year period," she explains.
Wismer agrees, looking at the issue from a credibility standpoint. "It's a tremendous expense," he says, "but it's also a tremendous expense if you ship something wrong to Mack Truck." Mack Truck is one of Zenmar's largest accounts, and a company the firm has a formal partnership with. Still, Wismer says it wasn't customer demand that started him preparing for ISO.
"Going back to early in the company history, we made sure we were being [consistent] with the hiring process," he explains. "And it's evolved from there. While customers aren't demanding it, I see the writing on the wall. If we don't certify, we won't be here."
Harry Okros, president of B-H Tool & Supply in Sterling Heights, Mich., has seen the writing on the wall, as well. His $6.8 million distributorship became ISO certified a little over a year ago because a major customer -- Ford Motor Co. -- demanded it. The automotive industry has been a leader in the ISO movement, so Okros says he really didn't have a choice in the matter. "If you're not ISO certified, you're not in the game," he says, adding that other customers such as machine tool builders are also seeking to deal more with ISO certified distributors as well.
While the process was expensive and time-consuming -- it took B-H Tool about a year to become certified -- Okros says his company has reaped benefits above and beyond the ability to keep doing business with the auto industry. ISO has helped B-H Tool improve paperflow within the company and gain better control over inventory as it relates to customer complaints and problems. One of the biggest benefits, Okros adds, is the documentation of job descriptions, which has helped tremendously in training new employees.
While companies like B-H Tool & Supply are usually happy with the results of ISO 9000, they are often unlikely to go through with the process unless customers (like Ford) demand it. Liz Richards, executive director of the Material Handling Equipment Distributors Assn., says she receives few inquiries about ISO from her smaller members. Generally speaking, she says, small distributors need an immediate and direct benefit to justify the time and expense required to become ISO certified.
"I can't stress enough that it's definitely driven by the customer," Richards says. "[ISO] is certainly a large expense and very time consuming if it's not a necessity."
Richards says that doesn't mean quality is not an important issue for small companies, noting that many of MHEDA's smaller members have their own internal quality programs, some developed with the help of consultants. ISO 9000, she says, seems to be more of a concern for larger companies.
Indeed, Demos Stavros, a quality consultant with Team Inc., says ISO 9000 certification among smaller distributors has slowed down recently. He says he receives more inquiries to assist companies in the $10 to $20 million range with certification. Cost, again, is the primary barrier, though there are ways to cut those costs. Edmunds points out that some states offer funding -- for example, in the form of training grants -- that will support ISO certification. Industry leaders are also looking at other ways to reduce costs, such as networking among companies to cut consultants' and registrars' fees.
Despite the difficulties involved in attaining ISO certification, there are some ways in which the smaller company has an advantage, says Gary Buffington, executive director of the Industrial Distribution Assn. With ISO, he explains, each of a company's locations must be certified separately. So, if you're a one-location distributor, you only have to go through the process one time, which can translate into fewer headaches and less cost.
Okros offers another example. While larger companies often have an advantage in pursuing ISO because of sheer staffing -- they have the ability to devote an entire staff or department to the issue -- smaller companies may be able to get a better handle on what it means to be ISO certified since the company as a whole goes through the process together.
"We've got everyone involved in it, including myself" says Okros, who has nine employees. "As a larger company, the entire company doesn't always have a handle on it."
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