The Application of ISO 9001 System in Hong Kong

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 1 of 11 The Application of ISO 9001 System in Hong Kong Gilbert C.S. Tam PhD Student in School of Management, Sun Yat-sen University, Guangzhou, China tgilbert@i-cable.com, tam.gilbert@gmail.com Prof. Neng-Quan Wu Professor of School of Management, Sun Yat-sen University, Guangzhou, China wnq@vip.163.com ABSTRACT The Dissertation is to analyze the improvement arising from the implementation of ISO 9000 management system in Hong Kong organizations. Through a survey by questionnaires in December 2001, the required data was collected from 25 organizations. Afterward, data from survey was collected, checked and analyzed and the conclusion was The implementation of ISO9000 system has formed a relationship of direct proportion and the advantage is more than the disadvantage after implementation of ISO9000 system. In January 2007, the same survey by questionnaire provided to the same 25 organizations, however some of the questionnaires can be collected due the change of the companies, staff and company policy. Hopefully, 16 of them are willing to answer the questionnaire. The survey in March 2001 was based on ISO9000:1994 version while those in January 2007 based on ISO9001:2000 version. The result shows that the improvement coming from implementing ISO9000 management system of the 16 companies is confirmed the survey in March 2001 and January 2007, but the improvement in January 2007 is not clear than those in March 2001. Keywords: ISO 9000, Application, Hong Kong 1.0 Introduction ISO9000 is a quality system popularly recognized throughout the world. Hong Kong is one of prosperous city in the world, so ISO9000 system is also popularly adopted. It has been applied in different type of business in Hong Kong, including construction, building, manufacturing, services and government department etc. Of course, each organization has its own reason for application of ISO9000 system. Likewise, when they implement ISO9000system, they will know what they gain or loss arising from this quality system and what the difficulty they are facing. This paper is to study something in connection with the application of ISO9000 system in Hong Kong with the change of time. ISO9000 System becomes one of the hot topics to Hong Kong people in this decade because many people have knowledge of and are interested in ISO9000. Likewise, when an organization promotes their products with quality due to obtaining ISO9000 certificate through television or newspaper, it indirectly promotes ISO9000. Why are the organizations willing to adopt ISO9000 system, what is the benefits? These questions are worthy to study. Besides, we also hear about some people having negative comment on ISO9000 system, i.e. it is clumsy or useless. They do not fully accept ISO9000. However, there is a perception behind them to go for or against ISO9000 system. Their perception may come from their own company culture. When they have joint an organization such culture may affect the organization s existing culture or be affected to form another company culture. A survey through questionnaires is to collect the data with regard to the pros and cons and improvement from the organizations certified to ISO9000 management system. 2.0 The History and Development of ISO 9000 The first attempt to standardize quality was in America where this expansion and its effects were greatest and the most significant. This standardization gave rise to MIL-Q-9858 which is a quality

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 2 of 11 system specification and MIL-I-45208 which specifies inspection system requirements. Both standards are still current and are invoked in American defence contracts, and elsewhere. The solution which came forth in 1979 was the first edition of BS5750. It was not only used in a contractual sense between buyer and seller but BSI introduced a third party registration scheme whereby they, as an independent organization, registered companies complying with the requirements of the appropriate part of the standards on behalf of all customers, actual and potential. After 21 years. the third edition was issued on 15 December 2000 and the series comprised only ISO9000, 9001 and 9004. ISO9002 and 9003 were deleted and combined into ISO9001. The quality management principles are stated in ISO9000 and the guideline for continual improvement in ISO9004. The following flowchart describes the development of ISO9000: US Mil Specs Def. Stans 05/21 05/24 05/29 AQAP 1 4 9 BS 5750:1979 Pt1 Pt2 Pt3 ISO 9000:1987 9001 9002 9003 ISO 9000:1994 9001 9002 9003 ISO 9000:2000 9001 3.0 The Development of ISO9000 in Hong Kong In 1980s, the business in Hong Kong was booming, especially in construction and manufacturing field. The competition was increasing and the new techniques were required for capturing more market shares. At that time, Information Technology was at an initial stage whilst ISO9000 was applied in some countries in the world. Meanwhile, ISO9000 was introduced to Hong Kong, but not popularly promoted and adopted since not too many people understood ISO9000 system at this time. With the growth of Hong Kong business, the need of ISO9000 was created. In early 1990 s, the ISO9000 became popular and began to be accepted and applied by some Industries and Construction Filed. Meanwhile, Hong Kong housing faced the quality problems, i.e. the defect of piling, structure of premises, materials etc.. Therefore, ISO9000 system as a tool was adopted by construction field in order to fix the quality problems. (In fact, the result was not good enough and the problem in quality of piling still was found in the housing constructed in Shatin and Tin Shui Wai, Hong Kong in year of 2000.) Afterwards, many manufacturers began to realize the importance of ISO9000. Thus the organizations would like to create a new image and promote

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 3 of 11 their quality. Besides, some organizations wanted to improve their management system and were requested by their customers for the improvement on quality, so ISO9000 was applied in manufacturing field. Several years later, it was adopted by all types of business nature up to now. Basically, the impression of ISO9000 management system can be benefit to the organizations in the following three perspectives. 3.1 Quality Culture in Hong Kong We always say no gain, no pay and pay more, get more, Hong Kong people sometimes want to get the maximum but paying the minimum. Often such attitude is applied in the organization in line with to certify ISO9000. Some of them would like to get the certification with minimum effect. It is quality culture planted in Hong Kong for many years. In fact, to obtain the certification is not a difficult job because ISO9000 system is the basic requirements with regard to the management and operation of an organization. Another type of habit in Hong Kong is when a problem happened, the staff would say I have done so for couple of years, it is not my fault. Staff sometimes is unwilling to change their out-dated practice and confess their mistake. Anyway, the change or improvement of quality culture can lead to an improvement of process management so as to meet customer requirements and satisfaction effectively. 3.2 Customer Focus and Satisfaction Quality System can be organization s organs whereas customer is their lifeblood. Likewise, customer definitely is a key factor to an organization. To satisfy customer s requirements, some of the organizations adopt ISO9000 system. From several years ago Hong Kong Housing Authority requested that all the main contractors must obtain ISO9000 certification. Thus, many main contractors are willing to adopt ISO9000 system in order to for bid tenders for Hong Kong Housing Authority. Besides, many of them want to enhance their marketing image to attract customers to place orders. Because, when the customers in oversea search new suppliers, it may not be practical for them to visit the supplier s premises to evaluate the quality of product. ISO9000 certification may be one of the criteria of their evaluation, so organizations will have the opportunity of developing their business. 3.3 Business Development and Internationally recognized To keep pace with Business Development and growth, organizations need to improve their quality and ability to capture more market shares. ISO9000 certification is a way to do it. Through ISO 9000 certification, the organization can create its image and enhance quality. Meanwhile, organizations can establish a better management system to avoid the mistake from chaos and diminish the loss arising from mistakes. In fact, from the study in management, and we can gain a lot of good management concept and knowledge generated from the Management Scholars, i.e., Scientific Management from Frederick Taylor and Modern Operational Management Theory from Fayol. However, their theories do not be adopted popularly because their theories are not changed to follow the development of the society. To the contrary, the requirements of ISO9000 system are modified periodically to meet the business development in the world. It also is an internationally recognized quality system and becomes popular, so the organizations are willing to implement this system. 4.0 Methodology 4.1 Research Method The research was done by a survey with questionnaires. The questions have been asked through telephone call, facsimile or e-mail. In March 2001 telephone call to the selected organizations until the 25 questionnaires completed, so the quantity of reply can be guaranteed. It also can eliminate the misunderstanding of the questionnaires through direct telephone conversation. The telephone calls have been conducted in February to March 2001. The telephone list will mainly come from Buyer s Guide 1999 of Hong Kong Quality Assurance Agency and DNV. In January 2007, the similar questionnaire will be provided to same organizations, 16 of which were willing to answer the questionnaires. All collected data have been analyzed to make a conclusion.

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 4 of 11 4.2 Research Planning We ought to know the general situation and changes after the organizations obtaining an ISO9000 certified organization. Therefore, the certification in 2000 or 2001 is not selected because the period after certification is quite short and the improvement or change may not be come out. The questionnaire for the survey in March 2001 and January 2007 is similar and the main different is the wording for March 2001 is ISO9000:1994 and for January 2007 is ISO9001:2000 The questionnaire includes 19 questions, of which, 15 are multiple-choice questions and 4 open questions. The answer to the question of multiple choice has 7 degrees from one to seven. One means strongly agree whereas seven means strongly disagree. Score 1 Strongly agreed Score 2 Agreed Score 3 Fairly agreed Score 4 Fair Score 5 Fairly disagreed Score 6 Disagreed Score 7 Strongly disagreed There are four open questions regarding the comment on ISO9000 system. The sample of questionnaire is attached in Appendix 1. 4.3 The limitation of survey Since the sample size of the survey is 16, the results in the survey can not represent the population of the organizations certified to ISO9000 in Hong Kong. Meanwhile, the questions answered by the interviewees with different level in the organization including director, manager, officer, secretary and engineer, so their opinion may not same as the opinion of their top management. 4.4 Implementation of survey 16 organizations certified with ISO9000 are selected to reply the questionnaires. The nature of their business can be classified as three big groups that are includes manufacturing, food industry, construction and servicing. Manufacturing includes printing, plastic products and paper products; food industry including sauce and bakery; construction includes piling and infrastructure and servicing includes trading business and gas service. After collection of data in March 2001 and January 2007, the effectiveness of them was checked and reviewed to ensure that the data collected was useful, effective or conflicting. After review, It was found acceptable. The data was grouped and analyzed and the conclusion was made in Section 5 and 6. 5.0 Data Analysis and Survey Results All data collected was confirmed as useful and valid, data grouping and analysis have been proceeded to find out the factual evidence regarding the problem statement. Statistic was applied to calculate the mean, standard deviation and factual status. Afterwards, the statistic data were analyzed to make the survey result and conclusion to be addressed in this section and Section 6. The data from 16 questionnaires were analyzed by means of the mean, standard deviation and confidence interval with confidence level. 5.1 Multiple-choice questions In the 15 questions, the mean is between 2.06 and 3.81, the standard deviation between 0.62 to 1.52 and the average mean is 2.83 from the questionnaire in March 2001, while the mean is between 2.44 and 3.88, the standard deviation between 0.63 to 1.42 and the average mean is 3.01 from the questionnaire in January 2007 The result is shown on the following table and detailed data are attached in Appendix 2 and 3. The grade from 1 to 7 means strongly agree and strongly disagree respectively. Therefore, if the grade is equal to or less than 3, we can treat it as agree that it becomes the advantage to the organization through implementation of ISO9000 system. To the contrary, if the grade more than 3, we can treat it as fair and disagree that it becomes the disadvantage to the organization. Out of fifteen questions, the quantity of grade equal to or less than 3 is 190 out of 234 equal to 81% for March 2001; while the quantity of grade equal to or less than 3 is 164 out of 240 equal to 68% for

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 5 of 11 January 2007. Thus, it seems that basically the organizations can gain the improvement from ISO9000 system. Nevertheless,

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 6 of 11 5.2 Open questions There are four open questions from question 16 to question 19 in line with the useful tool, improvement area and useless tool in ISO9000 system. The comments on useful tools and improvement areas were similar in these two survey.the useful tools are mainly in quality system and documented procedures and work instruction to let the staff to follow to avoid from making mistake. The improvement areas are mainly in production process, operation process and project management. For the useless tool, the survey in 2001 was a lot of quality records, but no such comment in the survey in 2007. It may prove that the organizations know the meaning of quality records and the improvement from ISO9001:2000 version. 6.0. Conclusions Based on the data analysis and survey result from survey in March 2001 and January 2007, it is concluded that the implementation of ISO9000 system has formed a relationship of direct proportion and the advantage is more than the disadvantage after implementation of ISO9000 system, because the data show us that the organizations can gain the advantage from application of ISO9000 to improve operation and performance. Nevertheless, it is found that overall score in January 2007 is higher than those in March 2001.The score from 9 of 16 companies is higher than before and the mean of 13 of 15 questionnaires is also higher than before. It means that the improvement of overall operation and performance in January 2007 is not clear than those in March 2001. it includes goods returned, handling of nonconforming products, product quality, staff s awareness of ISO9000 etc, especially the relationship with supplier, the score from 2.69 changed to 3.25.Anyway, there are two points better than before, which are the rate of late delivery and quality record, especially quality record, the point is down to 2.75 in January 2007 compared with 3.81 in March 2001. It also proves why they do not think the useless tool in ISO9000 system is record in the survey in 2007. Through the survey data from the sixteen organizations, it shows that the advantages of the implementation of ISO 9000 system in Hong Kong is more than the disadvantages and the improvement arising from implementing ISO9000 management system is confirmed. Nevertheless, according to the trend of improvement, the organizations have a slow and decreasing improvement. Such decreasing improvement may affect the process management and business development due to the economic and globalization factors affecting the Hong Kong market. The organization should try to improve their process management in order to gain the benefits from an effective and efficient production and service processes, cost control and customer satisfaction. Otherwise the organization may not survive because of high competition from globalization. Therefore, staff training and practice can be a key to improvement quality culture of the company in order to make a stable pace of improvement on process management and customer satisfaction so as to providing an opportunity of market and business development. References P-E Handly-Walker (1994), Lead Auditor Training Program ISO/TC 176 (1994), ISO9000:1994, 2 nd Edition ISO/TC 176 (2000), ISO9000:2000, 3 rd Edition

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 7 of 11 Appendices Appendix 1.1 Questionnaire regarding ISO9000 (March 2001) Name of Company : Nature of Business : Contact person : Position : Telephone no : Year of Certification : 1. The rate of late delivery is improved 2. The rate of goods returned is improved 3. The ability of handling NC products is improved 4. The customer complaint is decreased 5. The business volume is increased 6. The quality of product is improved 7. The quality of product meets organization s objective 8. The relationship with suppliers is improved 9. The record is prepared mainly for quality, not for certification. 10. Staff s awareness of ISO9000 is sufficient 11. The internal communication is improved 12. The quality culture is improved 13. The image of organization is improved 14. Overall performance is improved 15. The certification of ISO9000 is useful and worthy Strongly Disagree Strongly Agree 7 6 5 4 3 2 1 16. What is the most useful tool in ISO9000:1994 system? 17. What is the most useless tool in ISO9000:1994 system? 18. When will your organization convert ISO9000:1994 into ISO9000:2000? 19. Any other comment? Thank you for your kind assistance!

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 8 of 11 Appendix 1.2 Questionnaire regarding ISO9000 (January 2007) Name of Company : Nature of Business : Contact person : Position : Telephone no : Year of Certification : 1. The rate of late delivery is improved 2. The rate of goods returned is improved 3. The ability of handling NC products is improved 4. The customer complaint is decreased 5. The business volume is increased 6. The quality of product is improved 7. The quality of product meets organization s objective 8. The relationship with suppliers is improved 9. The record is prepared mainly for quality, not for certification. 10. Staff s awareness of ISO9000 is sufficient 11. The internal communication is improved 12. The quality culture is improved 13. The image of organization is improved 14. Overall performance is improved 15. The certification of ISO9000 is useful and worthy Strongly Disagree Strongly Agree 7 6 5 4 3 2 1 16. What is the most useful tool in ISO9000:2000 system? 17. What is the most useless tool in ISO9000:2000 system? 18. The key improvement process / areas after award of ISO9001:2000 certificate. 19. Any other comment? Thank you for your kind assistance!

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 9 of 11 Appendix 2.1 Data from 16 Questionnaires in March 2001 Question No. of Questionnaire 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Mean 3 2 2 2 1 3 3 2 1 1 3 3 3 2 3 1 2.13 4 6 6 3 3 3 3 4 5 2 3 3 2 1 3.38 5 2 3 1 1 3 1 1 3 3 3 2 3 1 2 3 2.13 7 4 3 3 4 4 3 2 3 3 3 3 3 2 3 3 3.07 8 4 2 2 2 4 3 2 3 3 2 2 2 2 3 3 2.60 9 3 5 3 3 2 6 3 3 4 3 2 3.36 13 4 4 4 4 3 4 3 3 6 3 2 2 2 3 3 3.33 14 3 2 3 2 3 2 3 4 3 4 3 3 2 3 2 2.80 15 3 2 3 3 4 3 2 3 4 3 3 3 2 3 3 2.93 16 5 6 6 6 7 2 3 3 5 2 4 2 3 3 1 3.87 20 3 1 1 1 1 1 1 1 2 2 1 2 1 1 1 1.33 21 3 3 1 1 4 2 2 1 5 3 3 3 2 2 2 2.47 22 4 2 1 4 4 3 1 4 4 5 4 4 3 3 2 3.20 23 2 3 3 2 7 3 2 2 2 3 3 2 2 3 2 2.73 24 3 2 2 3 3 2 3 3 5 3 3 3 2 2 2 2.73 25 3 3 4 3 4 3 3 3 4 3 3 3 3 4 2 3.20 X 3.40 2.93 2.63 2.81 3.80 2.53 2.25 2.69 3.81 2.94 2.81 2.81 2.07 2.69 2.06 2.83 σ 1.12 1.44 1.36 1.52 1.52 0.83 0.77 1.01 1.47 0.77 0.75 0.66 0.62 0.70 0.77 X Note : The blank means that the organization did not reply the question.

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 10 of 11 Appendix 2.2 Data from 16 Questionnaires in January 2007 Question No. of Questionnaire 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Mean 3 3 3 1 4 4 1 1 2 1 4 3 3 1 1 1 2.20 4 4 4 4 2 3 3 3 2 3 2 2 3 2 3 2 2.80 5 4 4 4 3 4 3 3 4 3 3 4 4 3 3 3 3.47 7 2 2 2 3 4 3 2 2 3 3 3 3 3 2 2 2.60 8 5 4 3 5 5 3 3 4 2 4 3 3 3 4 4 3.67 9 3 2 2 2 4 3 3 4 2 3 4 3 3 3 3 2.93 13 5 5 3 4 5 4 4 4 4 5 3 3 2 4 4 3.93 14 3 2 3 2 3 2 2 4 2 3 2 2 3 2 2 2.47 15 2 3 3 3 3 2 2 2 2 2 2 3 3 2 1 2.33 16 5 6 5 5 4 5 6 4 2 3 4 4 5 5 3 4.40 20 1 1 4 4 4 3 4 5 4 3 3 3 3 3 2 3.13 21 4 4 4 3 4 4 4 3 4 4 3 4 4 3 4 3.73 22 3 5 4 2 5 3 3 5 4 3 4 3 3 3 3 3.53 23 2 2 3 2 4 2 2 3 4 2 3 2 3 3 1 2.53 24 2 2 3 4 4 3 3 2 2 3 3 3 3 3 3 2.87 25 2 2 1 2 2 1 1 2 2 1 1 2 1 2 1 1.53 X 3.13 3.19 3.06 3.13 3.88 2.81 2.88 3.25 2.75 3.00 2.94 3.00 2.81 2.88 2.44 3.01 σ 1.26 1.42 1.12 1.09 0.81 1.05 1.26 1.13 1.00 0.97 0.85 0.63 0.98 0.96 1.09 X

12-ICIT 9-11/4/07 in RoC Going for Gold ~ Quality Standards: ISO 9000, etc. Paper #: 02-02 Page- 11 of 11 Appendix 3 Diagram 1 5 Comparison of the score by organization in March 2001 and January 2007 Score 4 3 2 Data in Mar 2001 Data in Jan 2007 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Organization Comparison of the score by question in March 2001 and January 2007 Score 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Question Data in Mar 2001 Data in Jan 2007