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An overview for buyers and sellers of businesses in the changing and evolving printing and related industries.

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Rock Around the Block - The Blog of Rock LaManna

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The Danger of Being an Ad Hoc Printing Owner

The Danger of Being an Ad Hoc Printing Owner resized 600

Are you a printing owner who shoots from the hip? Early on in a company’s growth, the “ad hoc” approach to management is critical to your success.  But as business expands, you need to grow with it.  That’s where ISO 9001 enters the picture.

In our previous post on ISO 9001, lean operations guru Ed Klaczak and I introduced you to the core concepts of this certification.  To recap, ISO is a set of internationally held best practices, and ISO 9001 - Quality Management Systems focuses on management best practices across the organization!

Uh oh.  I can sense you pulling away from the computer screen at the mention of “management best practices.”  Most entrepreneurs like to run their own show, and they don’t want anyone telling them how to do it. 

Well, that’s great if you’re a one-man band.  With a smaller company, you can employ this “ad hoc” style of management.  “Ad hoc management” means you make decisions on the fly, and monitor the quality of work of a handful of employees as it's outputted.

However, when your company grows, you no longer have that ability with multiple employees or a layer of management.  The more people you hire, the further removed you are from the output, and the more you lose direct control.

That’s when quality issues really start to surface, and the need for ISO 9001 really kicks in. 

ISO 9001 Isn’t Just About Getting ‘Lean’ Manufacturing Processes

If I mention lean operations, you probably think I’m talking about manufacturing improving efficiencies and reducing waste.  ISO 9001 is about efficiencies, sure, but it's also about improving the organization’s overall business systems.  This includes its:

  • Quality Management System, including the documentation structure of your processes and systems controls.
  • Management Responsibilities, such as management, ownership, accountability, policies, systems reviews, and procedures.
  • Resource Management, or how you utilize resources, competence training and the work environment.
  • Product Realization, which includes your new product design, purchasing, and production/service operations.
  • Monitoring and Measurement, including operational metrics, customer satisfaction, internal audits, and more.

Okay, that looks great, sounds great, but who the heck has time to implement it?

According to Ed Klaczak, most smaller companies don’t understand the value of ISO 9001, or any types of quality management system, for that matter.  Ed believes there are two reasons for this:

1. They’re so overwhelmed with the four or five problems right in front of them they don’t have time to find a systemic way to resolve an issue.


2. It just looks like a bunch of extra work (or bureaucratic documentation).

For #1, this is the paradox for most owners.  How can they focus on long-term issues without dealing with short-term problems?

Klaczak’s response is that transitioning to an ISO 9001 paradigm is not an all-engrossing, resource-depleting endeavor.  “It all has to make sense within the business model and there needs to be a commitment for improvement,” he said.  

In other words, transitioning to a systems-based quality model doesn’t mean you need to shut down for two months and plan anew.  You will need to make an iron-clad, long-term commitment to implementing quality improvements, however. This must occur both in terms of allocating hours to fixing the immediate issue, and staying true to the ISO 9001 best practices by implementing long-term permanent solutions to guarantee that the problem doesn’t resurface.

And therein lies another issue when it comes to focusing on quality.  Most of us operate in crisis-mode.  We’re continually running from one fire to the next.  And believe it or not, some organizations tend to drop their ISO 9001 programs when there are no fires to put out.

Quite frankly, this is absurd.

When you have a commitment to quality, you’re continuously refining and improving processes.  It’s almost like ongoing maintenance, but instead of just making sure something works, you’re always looking for ways to make it work better.

In this state, things will function smoothly.  What appeared to be “extra work” (in objection #2) will now become part of your standard operating procedure.  Business will continue to grow, and you’ll get better. As your business grows, your operational processes and procedures will have to grow.

Think of it this way. You would run a $1M/year business much differently if it became a $100M/year business, and differently again when it became a $1B/year business.  So businesses are constantly growing and changing how they deploy their employees and manage their Quality Management System (polices, processes, procedures).

But without a crisis, it always seems like someone in the accounting department will invariably say, “Hey, do we need all this emphasis on quality?  That’s a lot of overhead.”  And BLAM, the ax drops, the quality commitment is gone.

What happens next?  You guessed it. In six months, the wheels start coming off the wagon, and you’re right back in crisis mode.  Sigh.

What Does That Smoothly Running Machine Look Like?

If you’d rather have the smoothly running machine instead of putting out fires, here’s a glimpse of what the system would look like.  

This organization must be metrics-driven and results-focused.  With an emphasis on corrective/preventive actions and a continuous improvement philosophy, the organization reduces waste/inefficiencies within all functional areas.  

The result is a lean enterprise.  Here’s how it permeates the entire organization:

  • Manufacturing focuses on continuous improvement actions (driving down mfg. costs)
  • Design works to bring new products to market faster (better customer satisfaction and revenue)
  • Purchasing focuses on reducing supplier costs and improving delivery (reduced material costs)
  • Management assures adequate resources are available and properly trained (minimized mistakes and/or delays)
  • Internal/external audits validate that existing processes and procedures are being followed (minimized errors), etc.

The Management Team regularly monitors the actions, progress and improvements within each area.  The actions are prioritized by ‘impact to the bottom-line.’  This drives down operational costs, increases productivity (within each functional area) and ultimately increases ROI and profits.

And what’s the alternative?  What does the organization look like that doesn’t have this orientation?

Here’s the likely scenario:  Let’s say you had a print job come in, and you gave the job to five different people, gave them full access to your equipment, and said “Have at it.”

Each person would do things differently.  They might all finish the project, but they’d arrive at the finish lines at different times, with varying degrees of quality and costs.  The end product might look different every time.  

That, more than anything else, is what ISO 9001 is all about.  It’s not designed to squash your management style, or stifle your innovation.  It’s simply in place to help you do what you’re currently doing better.   As Klaczak said, it’s not about deviating from your business model.  It’s about enhancing your business model.

The Common Mistakes Most Companies Make with ISO 9001

So why don’t companies all over the world embrace ISO 9001?  That’s a good question.  As I mentioned above, the ad hoc guys are either too swamped to get to it, or they simply don’t understand it or they just view it as a cost overhead.  If you’re an owner who fits that m.o. and you’re reading this, I give you credit.  You’re way ahead of the curve.

I believe the simple truth is that companies can’t commit to ISO 9001 is because they’re shortsighted.  They might want to stay with what works for them, thinking that the ad hoc management method yields the most control and profit.

A mature company would laugh at that way of thinking.  They know that ISO 9001 is precisely the way you control variability.  It also benefits the bottom line.

In the article that appeared in a July 2005 edition of Management Science entitled “The Financial Impact of ISO 9001 Certification in the United States: An Empirical Analysis,” the authors concluded:

“Firms seeking ISO certification experienced significant abnormal improvements in financial performance,” and “evidence supports the view that careful design and implementation of a consistent and documented Quality Management System can contribute significantly to superior financial results.”

In a 2002 Manufacturing News article, it was graphically concluded that the percentages of “COGS/SALES, SALES/ASSETS and ROA” were positively impacted when firms pursued ISO 9001 certification.

Ad hoc management is how you built your company, no doubt about it.  It’s how most companies start.  But now it's time to consider what it will take to push your company to the next level.  It’s time for you to take a closer look at ISO 9001.

Photo by: quinn.anya.

Rock LaManna is the President and CEO of the LaManna Alliance.  The LaManna Alliance helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic transition – including mergers, acquisitions, organic growth, and exit / succession plans.

Comments

Thank you Bill for the kind comments. I will take a peak at your leadership blog. Thank you for sharing.
Posted @ Monday, March 11, 2013 6:58 AM by Rock LaManna
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