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ISO 9001:2015 Case study: Context of the organization as a success factor in manufacturing company

Clause 4.1 of ISO 9001:2015 is causing lot of ambiguities and raising more questions than answers to most quality practitioners. Defining context of the organization basically means determining the foundation of your QMS and where your company stands in terms of internal and external issues related to the QMS. This requirement of clause 4 can seem too general, and there is a risk of going too wide when defining the internal and external issues. In fulfilling this clause, you should focus only on issues that can affect the customer satisfaction and delivery of quality product and/or service.

This simple example will help you understand how to determine context of the organization according to ISO 9001 in small or midsize production company and give some inspiration in your implementation project.

Case study

Small company from the South East Europe, let’s call it ABC Company, produces terrace and staircase metal fences and exports its products for some time in Germany. Since the projects are being more and more lucrative, their German customers required implementation of ISO 9001. First milestone in implementation of the standard was definition of context of the organization.

Internal context

 The country where ABC Company is located is not an EU member and yet over 90% of its products are exported to Germany, particularly metal fences. Their product delivery includes not only the production of the metal fences but also installation on the buildings and production of metal fixtures for furniture industry. Considering that the company employees cannot stay in Germany more than three months without getting a working visa, the employees are organized into teams where one team is abroad in charge of installation of the products while other two teams are working at home location on production and assembly of the fences. Once this three months period expires, the team abroad switch with one of the teams located at home location. Each team has a mechanical engineer in charge and several shift managers that control and supervise the rest of employees. Employees are highly skilled for the operation they conduct so there is no so much formalism in reporting and getting instructions from superiors.

External context

Since the most of the products are delivered to Germany, the company is obliged to apply German and EU regulations regarding product quality, environmental protection and occupational health and safety. Being present on German market for 5 years, the company identified all legal requirements together with requirements of their customer which is one big German construction company and they are one of the subcontractors. Domestic market has far less requirements but it is struggling and prices on the foreign markets are more favorable so the future direction of the company is to meet requirements of it foreign customer and try to find another customers in EU countries.

Documenting context of the organization

The CEO of ABC Company decided to conduct SWOT analysis to furtherly examine the context of the organization and ensure inputs for further identification of risks and opportunities.

Strengths Weaknesses
  • Highly skilled employees
  • Competitive product
  • Good relations with the German customer
  • Visa issue
  • Not enough teams to cover entire year
  • Dependence to only one client
  • Lack of marketing activities in EU countries
  • Lack of capacities to engage with other EU customers
Opportunities Threats
  • Low price of our product makes us highly competitive on EU market
  • Home country is favorable towards the export and opened founding for exporting companies
  • Expansion to other EU markets
  • Competition from other EU countries
  • Bad economic situation of our main supplier
  • Failure to meet demands of our customer because of limited capacities
  • Unfavorable loan conditions

Table: SWOT analysis

The CEO decided that the records of SWOT analysis will be included in QMS documentation; however, he did it reluctantly since information in the SWOT analysis can be considered as sensitive and he doesn’t feel comfortable showing them to the third party (e.g. certification auditor) but he did it at the insistence of Quality Manager. The final solution was to require from the certification body an NDA (Non Disclosure Agreement) and make sure that the information provided during the audit will be confidential and protected.

What’s next?

Information gathered through process of defining context of the organization will be used as an input for further phases in implementation of ISO 9001. The fact that only one kind of product is delivered to the customer who requires ISO 9001 certificate can influence the decision about the scope of QMS (for more information, see: How to define the scope of the QMS according to ISO 9001:2015), other issues identified can lead to actions to address risks and opportunities (for more information, see: How to address risks and opportunities in ISO 9001) or can even influence the business plan and overall strategy of the company in the future years in terms of expanding to another markets and seeking for more reliable suppliers.

To learn more about ISO 9001 requirements and particularly context of the organization, try our free online training:  ISO 9001:2015 Foundations Course.

Advisera Strahinja Stojanovic
Strahinja Stojanovic

Strahinja Stojanovic is certified as a lead auditor for the ISO 13485, ISO 9001, ISO 14001, and OHSAS 18001 standards by RABQSA. He participated in the implementation of these standards in more than 100 SMEs, through the creation of documentation and performing in-house training for maintaining management systems, internal audits, and management reviews.