How to use the ISO 9001 standard to improve stock efficiency and increase profit

Most people correctly assume that ISO 9001 is purely a quality management standard, and while this is technically correct, applying the principles from the standard can bring many other benefits to a business. In our previous article: Six key benefits of ISO 9001 Implementation, we examined some of the benefits that ISO 9001 implementation can bring to a business, but there are also more tangible benefits that can be accrued, like improving stock efficiency with the associated profit increases that accompany prudent inventory management. So, what parts of the 9001 standard can help us here, and how exactly can we apply them for maximum benefit?

ISO 9001 – What sections are significant to us?

Section 6 of the ISO 9001:2015 standard deals with the planning element, which can be critical to a business that wants to control stock efficiency and maximize profit. Risk and opportunity is a staple part of this element, and it is within this sphere that most organizations can use ISO 9001 principles to their benefit. In the previous blog: How to address risk and opportunity in ISO 9001, we examined why and how businesses should approach this topic, but for businesses with ambitions to improve stock control and increase profit, we can be more specific:

  • Risk – Poor stock control, purchase of stock not in demand by customers, stock residing in your warehouse for long periods before use, unnecessary amounts of money spent on stock that cannot be sold quickly, aged stock decreasing in value because it is being superseded by a new version or model – these are all situations that many managers will be all too used to, and all bring risk to a business’s cash flow and profit.
  • Opportunity – The other side of risk is opportunity. If your stock is organized more efficiently, the “cycle time” or inventory turnover can be reduced greatly, and the less money a business has tied up in residual stock, the stronger its position. More efficient stock control usually means quicker and more accurate fulfillment to the customer and a shorter delivery time, which can give a business significant advantages over the competition.

How to do it?

So, now that we have an idea of why this segment of the ISO 9001 standard can help us, what level of planning can help us achieve our objectives? Section 6 of the standard also mentions planning to achieve quality objectives, and the following section 7 deals with such issues as competence, awareness, and communication, among other elements. So, is there a way of taking these ISO 9001 elements and putting them together to benefit a business’s stock control and profit? Let’s examine:

  • Establish your objectives in terms of inventory costs, cycle times, and internal re-order quantities so that your business can sustain to trade efficiently and maximize its cash flow.
  • Plan the resources required to deliver this fundamental, but vital task objective mentioned above.
  • Plan and establish your warehouse layout – ensure your layout eliminates the need for double handling and facilitates safe storage of your goods, as this will increase your efficiency and reduce expected delivery times. Do you need to use “first in first out” principles, for example?
  • Consult, communicate, and ensure your staff’s knowledge and understanding of your objectives are excellent – we have already looked at the effect of leadership in the article: How to comply with leadership requirements in ISO 9001:2015, and ensuring that your staff are aligned with the company’s objectives is the perfect reason to enlist the help of the top management team.
  • Section 9 of the standard deals with performance evaluation. As with any aspect of any business, reviewing your results and adjusting your processes to improve your results is both sensible and critical. Treat your warehouse function exactly the same, and your sales and margin will benefit.

So, we can now see that using parts of the ISO 9001 standard can help improve stock control and positively affect the bottom line of a business. So, are there any other tips that can help us achieve improved profits through better stock control?

Smarter stock control equals bigger profits

Many segments of the ISO 9001 standard can help a business improve efficiency and profitability, but perhaps the biggest lesson of all a business can learn is through the application of the “Plan, Do, Check, Act” cycle, which we examined in more detail in the article: Plan-Do-Check-Act in the ISO 9001 Standard.

Completing the stages of the cycle faithfully and accurately can help any business to understand its own workings accurately, and improve them as a result. Use this template in your warehouse, and you can drive efficiency up, cycle time down, and satisfy customers and maximize profit accordingly.

Why not use our free  Gap Analysis Tool to measure your quality management  against the ISO 9001 standard?

Advisera John Nolan
John Nolan
John Nolan is a Fellow of the Institute of Leaders and Managers in the United Kingdom, and Prince 2 accredited with a background in Engineering and Electronics and Data Storage and Transfer. Having studied and qualified as both a Mechanical and Electronic Engineer, he has spent the last 15 years designing and delivering Quality Systems and projects across many sectors in the UK, including both national and local government.