There are many studies examining the benefits and advantages of well-known ISO standards. Based on many studies around the world, it is suggested that both standards have clear benefits on operational, people and customer results and that the effects on financial performance.
In this article, we summarise some of these studies with relevant citations.
Firms that implement QM (Quality Management #qualitymanagement), focus on providing more value for their customers and improving the efficiency of processes. Continuous improvement of processes and product quality leads to increased revenues (through product reliability) and reduced costs (through process efficiency)*.
In turn, customer satisfaction leads to increased revenues because it enables the firm to gain a market advantage*. Similarly, EM (Environmental Management #Environmentalmanagement) affects firm performance positively. This positive effect results from the positive impact on firm costs and differentiation levels. Pollution prevention allows savings in input and energy consumption and increases demand among environmentally sensitive consumers.
In this context, management system standards (MSSs) have enjoyed enormous success over the last years, both in the sphere of QM (ISO 9001) and in that of EM (ISO 14001).
Over the last years, ISO 14001 certification has experienced great international growth. Suffice it to say that, by the end of 2020, more than one million ISO 9001 certificates had been issued worldwide, and the number of ISO 14001 certificates was very close to a million.
As various authors point out (e.g., Delmas, 2001; Braun, 2005), the ISO 9001 and 14001 standards do not refer to compliance with a given goal or result. In other words, they are not performance standards measuring the quality of a firm’s products or services or a firm’s environmental results; rather, they are standards, setting out the need to systematize and formalize a large number of corporate processes within a set of procedures, and to document such implementation.
It must also be remembered that the implementation of this type of standard is a voluntary one, although in some sectors it has become an obligatory measure, given the coercive influence of customers*.
The purpose of this article (paper) is to determine the similarities and differences between the benefits derived from implementing the ISO 9001 and the ISO 14001 standards (implemented separately).
A. Benefits of the ISO 9001 standard
Many scholars have analyzed the benefits of the ISO 9001 standard in several performance dimensions (e.g. operational benefits, customer results, etc.). On this basis, the following list shows which of these benefits are dealt with by each of the 82 studies examined, classified into the following 13 benefits:
· Market share (#marketshare) · Exports (#export) · Sales and sales growth (#salesandgrowth) · Profitability (#profitability) · Improvement in competitive position/competitive advantage (#competitiveadvantage) · Improvement in systematization (improved documentation, work procedures, clarity of work, improvement in responsibilities) (#systematization) · Efficiency (productivity, savings in costs, reduction in mistakes and rework, shorter lead · time, improved management control) (#timacontrol) · Improved quality in product/service (#productcontrol) · Improved image (#brand) · Improvements in employee results (motivation, satisfaction, teams, communication, knowledge) (#employeeresult) · Improved customer satisfaction (reduction in complaints, etc.) (#customersatisfaction) · Improved relationships with suppliers (#suppliers) · Improved relationships with authorities and other stakeholders (#stakeholders)
Further studies and analysis show that the three benefits most frequently analyzed by researchers are "improved efficiency", "improved customer satisfaction" and "improvements in relations with employees".
In order to analyze these benefits arising from the ISO 9001 standard, some authors examine its effects through a list of benefits, whereas others base themselves on, or even propose, the classification of such benefits. Such is the case of Lee, who classifies benefits into:
- benefits gained with respect to internal operations (better team spirit, less staff conflict, reduced wastage, increased efficiency, shorter lead time),
- benefits gained with respect to customer relations (improved sales through new customers, longer contracts with existing customers, less control from existing customers, fewer complaints from existing customers), and
- benefits gained with respect to subcontractor relations (subcontractors to become certified, better relations with subcontractors, more stringent control over subcontractors)
Casadesús and Giménez (2000) in another study show that these benefits are people results (work satisfaction, suggestions system, health/safety, turnover, absenteeism), operation results (errors and defects; order processing; reliability; costs; on-time-delivery; cost savings; lead time; stock rotation), customer results (customer satisfaction; complaints; repeat purchases) and financial results (market share; sales; return on sales; return on assets)
Based on this review, in general terms, the ISO 9001 standard creates benefits related to customer satisfaction #customersatisfaction (for instance, fewer complaints and improved customer satisfaction), improvement in staff management issues (for instance, more training for employees), and improved efficiency, documentation and clear knowledge of tasks by employees.
These results indicate that most firms experience improvement in these issues, due to the fact that the ISO 9001 standard allows them to reduce mistakes and rework, save on costs and improve the management of the firm.
Many firms also attain these benefits because ISO 9001 allows for an improvement of the documentation and work procedures, and greater clarity of work.
Other benefits obtained by many firms are an improved image and an improved service or product quality, because the fact that they possess a certificate enhances their image in the eyes of their customers. In turn, the greater control exercised upon their internal processes allows them to improve the quality of the product or service.
B. Benefits of the ISO 14001 standard
As in the #ISO9001 standard field, the benefits associated with the implementation and certification of the #ISO14001 standard have also been extensively analyzed in the academic literature. The main benefits identified in the empirical literature are similar to ISO 9001, 13 benefits discussed above, but in addition to these an extra specific benefit has been identified, environmental performance (ENVP), because scholars have used it extensively.
Further analysis shows that the three benefits most considered by the studies identified are:
Other benefits which have also merited great attention are "improved image", "improvement in customer satisfaction", "improved staff results", "improved competitive edge" and "improved relations with stakeholders".
As was the case with the studies on ISO 9001, some studies analyzing the ISO 14001 standard have also proposed several groups of benefits. For instance, Poksinska Dahlgaard and Eklund (2003) pointed out three groups of benefits:
internal performance benefits (cost reductions, environmental improvements, increased productivity, increased profit margin, improved internal procedures, improved employee morale)
External marketing benefits (improved corporate image, increased market share, increased customer satisfaction, increased on-time delivery to customers)
Relations benefits (improved relations with communities, improved relations with authorities).
Consequently, within this framework, both standards show clear benefits on certain issues, such as efficiency, employees, systematization, customers and other stakeholders, which indicates that, in general terms, certified firms improve people, operational and stakeholder performance.
Considering the circumstances, there are few articles that suggest certification in itself leads to few benefits. However, when a firm really applies the quality system underlying the standard, and there is a real commitment to quality and to the environment, that is, when the standards are interiorized, communicated and well-performed, there is an increased possibility of attaining the benefits listed, including the financial ones.
Multiple studies on ISO 14001 that emphasise this idea can also be found. Link and Naveh point out that, for this standard to be really effective, it must be made a part of daily work.
Considering the for and against of QM & EM, these significant benefits can be expected from applying the knowledge acquired about QM to environmental issues. Moreover, an integrated system adds a number of benefits to those achieved by each of the systems alone. Among these benefits, the literature highlights the following* :
· An improvement in the efficiency and effectiveness of the organization, avoiding the duplication of efforts, · A reduction of bureaucracy by eliminating duplication of policies, procedures and registers, · The alignment of goals, processes and resources, · A reduction in the costs of internal and external audits, and · The availability of joint training and improved communication between all organizational levels
In the end, we conclude the benefits of QM & ES are far greater than the cost and effort needed to establish and perform them. If you consider these standards for your business, contact PrimaPerfect to discuss more.
This article is a summary of "Benefits of the ISO 9001 and ISO 14001 standards:
A literature review" Juan José Tarí1, José Francisco Molina-Azorín2, Iñaki Heras3
1University of Alicante, 2University of Alicante, 3The University of the Basque Country UPV/EHU (Spain)
Reference: Journal of Industrial Engineering and Management – http://dx.doi.org/10.3926/jiem.488
1- (Klassen & McLaughlin, 1996; King & Lenox, 2002; Al-Tuwaijri, Christensen & Hughes, 2004; Moneva & Ortas, 2010)
2- (Kaynak, 2003; York & Miree, 2004)
3- (Braun, 2005; Mendel, 2006).
4- (Wilkinson & Dale, 1999a, 1999b; Poksinska et al. 2003; Zeng, Tian & Shi, 2005; Zutshi & Sohal, 2005)