SURVEY OF ISO 9000 USERS IN NEW ZEALAND DRIVERS and BENEFITS
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1 SURVEY OF ISO 9000 USERS IN NEW ZEALAND DRIVERS and BENEFITS A descriptive analysis Pavel Castka University of Canterbury Michaela A. Balzarova Lincoln University John Kenny Board member, New Zealand Organisation for Quality December 2006 For more info visit:
2 Christchurch, December 2006 Dear participants, New Zealand Organisation for Quality and University of Canterbury, College of Business and Economics partnered to conduct a survey of ISO 9000 users in New Zealand. Our aim was to determine what drives New Zealand companies toward ISO 9000 certification and to what extent the companies benefit from this. During August and September 2006, we sent 1774 questionnaires to quality professionals who have a leadership role, a co-ordination role or some level of responsibility for ISO 9000 in their respective organisations. This sample represents all NZ ISO 9000 certified companies according to Joint Accreditation System of Australia and New Zealand (JAS-ANZ). We have received 472 valid responses giving us 27% response rate. We would like to thank you for your participation in this survey and offer to you a descriptive analysis of this research. Other papers and discussion of the results will be available at in March Should you have any further questions, suggestions or should you wish to comment on the results, please contact through our s. Best wishes, Pavel Castka, Michaela A. Balzarova and John Kenny Pavel Castka University of Canterbury Nominated Expert, ISO/TMB/WG SR pavel.castka@canterbury.ac.nz Michaela A. Balzarova Lincoln University balzarom@lincoln.ac.nz John Kenny Board member New Zealand Organisation for Quality john.kenny@nzoq.org.nz Castka, Balzarova and Kenny (2006) Survey of ISO 9000 users in New Zealand Drivers and Benefits 2
3 Part 1: Basic company data This section of the report provides an overview of companies that took part in this survey. We have received 472 valid responses. Figures give details about our sample. In general, most of the participating companies were either manufacturing or services (90% of our sample) and NZ owned (only 16% of companies were foreign owned). Most of the companies were small facilities (76%) but many of these were part of larger companies (50% of participating companies were classified as large). In line with previous studies, we classified small facility as having 100 employees or less working at the facility and small company as having 100 employees or less working for the company globally. This classification will allow us to conduct comparative studies at the international level. Finally, we offer descriptive statistics regarding certification bodies and a year were companies were first certified to ISO In our sample, the majority of companies were certified by Telarc (51%) and the peak in ISO 9000 certification seems to be around Construction 9% Software 1% 43% State owned 8% Foreign ownership 16% Publicly owned 15% 47% Figure 1.1 Companies by sector Figure 1.2 Companies by ownership Privately owned 61% Large facility 24% Large company 50% Small company 50% Small facility 76% Figure 1.3 Companies by size Figure 1.4 Facilities by size 80 LRQA SAI Global SGC-S&SC VNZ NCSI ICL Telarc 30 GCS 20 DNV BVQI 10 BC AGRIQUALITY Figure 1.5 Companies by certification body (in our sample) Figure 1.6 Companies by year first certified (in our sample) Castka, Balzarova and Kenny (2006) Survey of ISO 9000 users in New Zealand Drivers and Benefits 3
4 Part 2: Geographies of ISO 9000 certified companies In question 5 of the survey, we asked for the location of your immediate customers by indicating how important sales in various geographic regions are for your company. In Figure 2.1 we present the mean scores from our data. The results indicate that most NZ ISO 9000 certified companies have their immediate customers based in New Zealand. Australia, Asia, Europe and North America are important for some manufacturing and software companies. However, the results for software companies must be treated with a caution due to a small number of software companies participating in this survey (1%, see Figure 1.1). Asia Japan NZ - South NZ - North Australia Africa Software Construction Europe S America N America 5.00 Figure 2.1 Customer bases 1=not important at all 2=not important 3=moderately important 4=important 5=very important In question 7a we asked how many customers in various regions require ISO 9000 certification. In Figure 2.2 we present the mean score from our sample. In general, the data suggests that very few companies do require ISO Asia Japan NZ (South) NZ (North) Australia Africa Software Construction Europe S America N America Figure 2.2 Customers requiring ISO =none 2=few 3=some 4=most 5=all Castka, Balzarova and Kenny (2006) Survey of ISO 9000 users in New Zealand Drivers and Benefits 4
5 Part 3: Motivations for certification In question 8 we asked to what extent your company s success depended on ISO 9000 certification. The results (Figure 3.1) suggest that ISO 9000 played an important role (48%), it was not important for 18% of our respondents. quality improvement marketing advantage extremely important 18% not important at all 4% not important 14% corporate image customer pressure capturing workers' knowledge relations with authorities major competitors certified benefits experienced by other companies important 30% somewhat important 34% relations with communities avoid potential export barrier Figure 3.1 Contribution of ISO 9000 to company s success Figure 3.2 Reasons for ISO 9000 certification In question 9b we asked you to specify your motivations to seek and maintain ISO 9000 certification (the same scale as for Q8 was used). Figure 3.2 indicates that the main reasons are related to quality improvement, marketing, corporate image and customer pressure. Figure 3.3 provides a comparison across sectors. Here, service companies seem to be more motivated in terms of quality improvements [important] and relations with authorities [somewhat important] and relations with communities [not important]. Even though the last two elements are of less importance to service companies, these are significantly different to manufacturing companies. companies, on the other hand are different to services in their focus on marketing advantage [important], customer pressure [somewhat important], avoid potential export barrier [somewhat important] and major competitors certified [somewhat important]. This suggests that manufacturing companies experience more coercive pressures from their industry to become ISO 9000 certified that services do. However the pressure does not seem to be very strong as all of these issues are somewhat important. Similar to service sector, construction companies are more motivated in terms of relations with authorities and relations with communities. Furthermore, construction companies report stronger reasons to get certified because of major competitors have already certification and because of. Finally, software sector reports avoid potential export barrier as a much more dominant reason for ISO 9000 certification in comparison to other sectors. However, results related to software and construction sector should be treated with caution due to the number of these companies in our sample (10% combined). Differences between services and manufacturing (as described above) are statistically significant. quality improvement quality improvement marketing advantage marketing advantage corporate image corporate image customer pressure customer pressure capturing workers' knowledge capturing workers' knowledge relations with authorities Total Construction relations with authorities Total major competitors certified major competitors certified benefits experienced by other companies benefits experienced by other companies relations with communities relations with communities avoid potential export barrier avoid potential export barrier quality improvement quality improvement marketing advantage marketing advantage corporate image corporate image customer pressure customer pressure capturing workers' knowledge capturing workers' knowledge relations with authorities Total relations with authorities Total Software major competitors certified major competitors certified benefits experienced by other companies benefits experienced by other companies relations with communities relations with communities avoid potential export barrier avoid potential export barrier Figure 3.2 Reasons for ISO 9000 certification (by sector) Castka, Balzarova and Kenny (2006) Survey of ISO 9000 users in New Zealand Drivers and Benefits 5
6 Part 4: Implementation In New Zealand, the main drive for ISO 9000 certification comes from several groups in a company; typically from CEO & top management and quality department (Figure 4.1). Other departments, such as marketing play less significant role. In the one hand, this is in line with the most dominant reason to seek ISO 9000 certification (i.e. quality improvement). On the other hand, less significant role of marketing department is somehow surprising given that marketing advantage and corporate image were also amongst the main reasons to seek ISO 9000 certification. whole organisation 7% R&D, design, development department 2% quality department 18% environmental, H&S department 3% % 28% 0-20% 40% marketing 10% CEO, top management 47% operations 13% 61-80% 9% 41-60% 10% 21-40% 13% Figure 4.1 Groups initiating ISO 9000 certification Figure 4.2 Employees receiving training for ISO 9000 In question 11 we asked about the percentage of employees that received training for ISO On average between 40-60% of all employees receive training (for detailed breakdown see Figure 4.2). In comparison to the results obtained globally, on average NZ companies seem to be more relaxed about training for ISO 9000 than their counterparts in other countries. For instance, in Canada or the US the most companies report % of employees receiving training for ISO In question 12a of the survey we asked about the importance of several factors for successful implementation and how much effort did it take. The results in Figure 4.3 suggest that all factor are seen as highly important apart from training (between medium and high importance) and capital investment (between some and medium importance). In comparison, the actual effort that the implementation took, companies mostly reported medium effort. The exception is documentation and redefining of standard procedures that are seen as requiring a high effort to complete. Noticeable is a difference between an importance assigned to top management commitment and the effort it actually took. Castka, Balzarova and Kenny (2006) Survey of ISO 9000 users in New Zealand Drivers and Benefits 6
7 implementation of corrective action following standard procedures periodic audits workers' commitment middle management commitment top management commitment capital investment training documentation (re)defining standard procedures Effort Importance 1=none 2=some 3=medium 4=high 5=very high identification of quality aspects Figure 4.3 Factor affecting successful implementation importance and effort In question 13a we asked whether quality management systems are implemented exactly as required by ISO Here, we wanted to find out whether NZ companies go beyond the compliance with the standard. On average our respondents disagreed, which suggests that mostly NZ companies go beyond the requirements. This is in particular significant for service and manufacturing sector (Figure 4.4) Q13A 1=strongly disagree 2=disagree 3=neutral 4=somewhat agree 5=strongly agree strongly agree 22% somewhat agree 27% strongly disagree 4% somewhat disagree 5% 2.50 neutral 42% 2.40 Construction Software Mean Figure 4.4 QMS implemented as required by ISO 9000 Figure 4.5 ISO 9000 as facilitator of ISO Question 13c we asked whether ISO 9000 has facilitated ISO certification. 113 companies (25% in our sample) responded to this question. For 75% of the remaining companies this question was not applicable as these companies did not seek ISO certification. The results suggest that ISO 9000 can be seen as a contributor to ISO implementation. In questions 13d and e we sought an understanding about the coercive pressures in supply chains. In other words, we wanted to know whether ISO 9000 companies in NZ exert any pressure on their suppliers. Here, most respondents indicated that they in general do not require their suppliers to seek ISO 9000 certification (Figure 4.6). This is similar across all industries apart from software. Here again, the result should be treated with caution as the number of software companies in this survey was very low. Castka, Balzarova and Kenny (2006) Survey of ISO 9000 users in New Zealand Drivers and Benefits 7
8 Q13D Q13E Q13D Q13E Q13D Q13E Q13D Q13E Q13D Q13E Q13d We require our key suppliers to have ISO 9000 certification Q13e We require all our suppliers to have ISO 9000 certification Construction Software Mean 1=strongly disagree 2=disagree 3=neutral 4=somewhat agree 5=strongly agree Figure 4.6 Supplier required to seek ISO 9000 certification In question 13f we asked whether internal audits contribute to improvement of companies business. The results in Figure 4.7 confirm the important role of internal audits for companies success. This is particular true for service organisations that report the highest score in this area. Q13F Construction Software Mean 1=strongly disagree 2=disagree 3=neutral 4=somewhat agree 5=strongly agree Figure 4.7 Internal audits contributing to companies success Part 5: Benefits The majority of NZ companies find ISO 9000 certification beneficial and 41% enjoy substantial benefits from ISO 9000 (Figure 5.1). Only 1% of companies have no benefits and 16% report only minor benefits (this is more or less similar for each sector). A sector analysis provides very similar results. very substantial benefits 5% no benefits 1% minor benefits 16% substatial benefits 36% moderate benefits 42% Figure 5.1 Overall benefits from ISO 9000 certification Castka, Balzarova and Kenny (2006) Survey of ISO 9000 users in New Zealand Drivers and Benefits 8
9 Figure 5.2 provides more focused view on the specific benefits from ISO 9000 certification whilst Figure 5.3 shows differences between software, construction, manufacturing and service sectors. improved internal procedures quality improvements increased customer satisfaction improved corporate image increased on-time delivery to customers improved relations with authorities increased productivity improved employee morale increased market share maintained/increased profit margin environmental improvements 1=no benefits 2=minor benefits 3=moderate benefits 4=substantial benefits 5=very substantial benefits improved relations with communities Figure 5.2 Specific benefits from ISO 9000 certification improved corporate image improved relations with communities improved relations with authorities improved employee morale 1=no benefits 2=minor benefits 3=moderate benefits 4=substantial benefits 5=very substantial benefits improved internal procedures maintained/increased profit margin increased market share increased customer satisfaction increased on-time delivery to customers Total Software Construction environmental improvements quality improvements increased productivity Figure 5.3 Specific benefits from ISO 9000 certification by sector For further analysis, we highlight and compare the results from manufacturing and services. Here the number of respondents allowed us to draw statistically significant results. Figure 5.4 outlines specific benefits that ISO 9000 certified manufacturing and services reported. The respondents indicated that they enjoy substantial benefits in terms of improved internal procedures and quality improvements and moderate benefits in terms of increased customer satisfaction and improved corporate image. There was a statistically significant difference in, improved relations with authorities, improved relations with communities and improved corporate image. Here, service sector seems to experience more benefits in terms of improved relations with authorities [moderate benefits], improved corporate image [moderate benefits], improved relations with communities [minor benefits] all of these in fact externally focused. sector, on the other hand, enjoys more benefits than service sector even though overall this is only a Castka, Balzarova and Kenny (2006) Survey of ISO 9000 users in New Zealand Drivers and Benefits 9
10 minor benefit. improved corporate image improved relations with communities improved relations with authorities improved employee morale improved internal procedures maintained/increased profit margin increased market share increased customer satisfaction increased on-time delivery to customers environmental improvements quality improvements increased productivity 1=no benefits 2=minor benefits 3=moderate benefits 4=substantial benefits 5=very substantial benefits Figure 5.4 Specific benefits from ISO 9000 certification manufacturing and services Conclusion In this research we aimed to map fingerprint characteristics of NZ ISO 9000 certified companies. We contacted 1774 companies with ISO 9000 certification and asked them about their motivations and benefits gained through the adoption of the ISO 9000 standard. Data collected through 472 responses suggest that NZ ISO 9000 certified companies are motivated to get ISO 9000 certification because of improved quality, marketing benefits and improved corporate image. The benefits gained after the ISO 9000 certification seem to be largely of internal nature such as improved internal procedures and improved quality. NZ patterns of ISO 9000 certification are comparable with patterns identified in other developed countries such as US, Australia, France. The results outlined in this document provide preliminary descriptive statistics. We plan to further analyse the data and focus at: sector analysis comparison and analysis of the results of this study and similar study conducted in 2001 global comparison ISO drivers and benefits Going for gold : profiles of NZ companies that enjoy substantial benefits from ISO 9000 More info will be available at Please contact us if you have further comments and suggestions. Castka, Balzarova and Kenny (2006) Survey of ISO 9000 users in New Zealand Drivers and Benefits 10
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