Purchasing's Preparedness for ISO 9000 International Quality Standards

PURCHASING AND ISO 9000 The ISO 9000 international quality standards encompass 20 elements that affect quality assurance in design and development, production, installation, and servicing of a product. The purchasing function has a critical impact on the overall ISO 9000 preparedness of a firm because the quality of purchased materials, components, and services has a direct bearing on the quality of the end product. This relationship can be appreciated more fully when one notes that U.S. manufacturers spend an average of 55 cents of each sales dollar on purchased materials.[1] And further, that historically up to 50 percent of a firm's quality problems have been traced to defective purchased materials.[2] While much attention has been focused on purchasing's role in cost control and its leveraging effect on earnings, purchasing's effect on the overall quality of a firm's products is perhaps even more important. Preparedness of the purchasing function for ISO 9000 certification involves quality assurance procedures covering the following elements: 1. Assessment and selection of qualified vendors 2. Incorporation of quality requirements in the purchase order, and communication of quality expectations in general 3. Analysis of quotations from the perspective of quality 4. Monitoring of quality at suppliers' plants 5. Inspection and verification of incoming material 6. Provision of supplier training and assistance to forge enduring partnerships for quality assurance as well as efficiencies 7. Procedures for reporting defects and resolution of quality-related disputes with suppliers 8. Review of supplier performance, and follow-up action for unsatisfactory performance In this study, preparedness of the purchasing function for ISO 9000 standards is measured on the basis of the purchasing executives' self-assessment of the extent to which the various elements mentioned above are included in their current quality management system, and the extent to which they meet or exceed requirements in terms of their planning and execution. The better prepared purchasing department should have all or almost all of the elements included in its operating system and should meet or exceed ISO 9000 expectations regarding purchasing planning and execution. The purpose of this research study was to: 1. Assess awareness and attitudes of purchasing executives regarding ISO 9000 international quality standards. 2. Examine the extent of preparedness of the quality management system to meet the ISO 9000 standard for purchasing control. 3. Identify the relationship of ISO 9000 preparedness to inward (sourcing) and outward (exporting) internationalization of a firm. 4. Identify barriers to ISO 9000 certification from the perspective of purchasing executives. KEY RESULTS OF PRIOR RESEARCH With the increasing globalization of competition, many purchasing executives have adopted a strategy of international sourcing. U.S. imports experienced an exponential growth from $40 billion in 1970 to $664 billion in 1994.[4] The percentage of firms engaged in international sourcing for selected items is significant, ranging from 59 percent for components to 9 percent for MRO items.[5] It appears that reliance on offshore purchases will continue to be strong in the years ahead. In a recent national survey, 58 percent of the participating purchasing executives indicated that their firm would increase offshore purchases while only 10 percent expected a decline.[6] Initially, the use of international sourcing was a defensive approach designed predominantly for cost minimization in meeting the threat of foreign competition. Subsequently, purchasing managers began to use international sourcing as a proactive approach to gain competitive advantage not only in terms of cost, but also in non-cost variables such as quality, technology, and flexibility. …