John Nolan The ISO 9001:2015 quality management standard is designed to be applied across many sectors in the business world, and if applied correctly, can bring many benefits to the overall performance of a business. One recent sector of ISO 9001:2015 “realization” and growth is the retail industry, which is a sector of business that accounts for millions of dollars turnover per annum and an ever-growing percentage of many nations’ gross domestic products. Given the amount of revenue generated and the pressure on margins due to competition via internet retail, it really is no surprise that small and large retailers alike now realize that ISO 9001:2015 is not only an effective tool for improving processes, but also a reliable way of driving down associated costs and improving margins. So, is there a particular part of the standard that we can use in the retail sector to help us improve performance?
Making improvements in the supply chain to benefit your business
There are several parts of the ISO 9001:2015 standard that can help a business drive improvement from its supply chain. Let’s look further at how your business can derive benefit from these processes:
- Control of external services and providers: The standard has a section that deals with this process, but it is not overly prescriptive. Phrases such as “in accordance with requirements” are used, but this is an opportunity for your business to improve its supply chain. Why not establish periodic reviews with your major suppliers to ensure you are meeting your “stated criteria,” in terms of delivery, quality, and price? Use these reviews as a basis to establish whether your supplier can improve waste and drive down costs, which will result in a better deal for your organization. There may be areas of delivery with associated costs that could be improved to your benefit; think cost of packaging, raw materials, and logistics – most large businesses can find process and cost savings in these functions if inspired to do so. You can read more about this topic in the article How to evaluate supplier performance according to ISO 9001:2015.
- Supplier audits: Why not use the supplier audit function to try and identify some of the possible savings that we mentioned above? Many times, a new pair of eyes or a fresh mind can see process improvements that are not obvious to people who manage the process every day, and savings can be realized. Also, this means that you are truly taking some control of your external suppliers and working together on producing a better product at a more competitive price, and critically, building an improved relationship with that key supplier. You can find out more about the audit process in the article First, Second and Third Audits, what are the differences?
- Risk and opportunity: This more expansive topic is given greater importance in the 9001:2015 standard, and considering risk and opportunity in terms of your supply chain can also improve your business performance greatly. Is your business too reliant on one part of your supply chain? Can a secondary supplier be sourced? Can your existing price and quality be improved? Is there a possibility of outsourcing this process to another region for a lower cost? This is not always a popular option, but in some sectors it can be the difference between staying in business or ceasing to trade because of lack of margin and increased supply chain cost. Constant re-evaluation of risks and opportunities surrounding your supply chain can position your business better than ever before, and ensure that margins are maximized at all times without any degradation of quality. You can learn more about this topic in the article Methodology for ISO 9001 Risk Analysis.
The ISO 9001:2015 standard has clauses addressing such issues as “planning,” “evaluation,” and “improvement,” and obviously, these can all be used to drive external suppliers to improved performance levels, but the aspects mentioned above are more directly related. Even the increased demands on leadership can help drive improvement; after all, the involvement of a company’s CEO in discussions, review, and negotiations has caused many a supplier to “sharpen the pencil” when contract negotiations take place and prices are agreed upon.
External suppliers and continual improvement, can they be related?
In answer to the above question, yes they can. If you treat the management of your supply chain the same as you treat the rest of your Quality Management System, then that continual improvement you drive through your supply chain can yield financial benefits to your organization. In most organizations the supply of the finished product is by far the greatest cost, and therefore the one area that has potential for improvement. If you manage your suppliers “passively,” then your greatest area for potential improvement and cost savings will remain outside of your control, and any modern retail business that wants to remain competitive and maximize margins cannot afford that. Adopting compliance and certification according to the ISO 9001:2015 standard can give you the ideas, knowledge, and ability to manage the parts of your business that are vital in a proactive and efficient manner. And to think, some aspects of the business community once thought ISO 9001:2015 was only about “quality management”!
To find out more about ISO 9001, why not enroll in a free ISO 9001:2015 Foundations Course?
