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Business Standards > Articles

Tackling 2009: beating the storm

30 Jan 2009
Topics: Quality management, ISO 9001, Integrated mgt, PAS 99, Environment, ISO 14001, Health & safety, OHSAS 18001, Six Sigma, Business continuity, BS 25999, Risk management, BS 31100, Kitemark®

It's official: we're in the midst of what some believe could be a prolonged recession. How should businesses respond? Above all, argues Hector Nairn, don't do nothing - and look to standards for undiscovered opportunities.

In the headline writers' version of events, a recession is very bad for business. However, it can also be useful to the level-headed. For example, a reduction in GDP is not a complete halt; business isn't stopping, just slowing down. There's reason to believe that by responding sensibly to the challenge, well run businesses will survive and even lay down the foundations for future prosperity once the storm has passed.

What then is a sensible response? Experts and commentators broadly agree on the fundamentals. Businesses need to control costs and decrease them where possible by eliminating inefficiency. They need to hold on to current customers and find new ones to grow share as markets shrink. They need to hold on to the best employees, those who deliver the business effectively. Finally, perhaps above all, they need to stay in business and keep selling.

Cutting the cost

Stripping out unnecessary cost (the kind that doesn't add value) is half of the equation. Reducing necessary cost is the other half. Those who use standards argue that, properly applied, standards play a useful role in both.

For FloPlast, a leading manufacturer and supplier of plastic building and plumbing systems in the UK, cost is at the centre of its operation: "Our goal is to get the assembly cost out of manufacturing in the UK, so we can compete with competitors from Asia/China," says Stewart Norris, managing director of FloPlast. "If we are able to do this and we then buy our materials for roughly the same price, we can compete on a level playing field. We then offer added value with a high quality product, innovation and a customer focused approach."

To this end the company has invested heavily in automation to streamline its manufacturing and warehousing operations. It employs state-of-the-art material handling and conveying systems, and robotics in its injection moulding plant. In addition, a computerized warehouse management system enables the business to stock and pick finished products accurately and efficiently. Underlying all of this activity sits certification to ISO 9001.

"This enables us to manage our processes in the business to be accurate and consistent," says Neil Harrison, FloPlast's quality control manager. "We also show our employees the way to work and maintain consistent standards - which makes us more cost effective and efficient when we repeat processes."

These sentiments are echoed by Andy Nairn, quality, health and safety manager of Gray and Adams. The company manufactures refrigerated, temperature-controlled and dry freight vehicles for supermarkets and food supply companies, from the biggest in the UK to one-vehicle companies.

The company recently achieved certification to PAS 99 from BSI Management Systems UK - an integrated management system that combines ISO 9001 for quality, ISO 14001 for environment and BS OHSAS 18001 for health and safety.

"The standards have helped us to focus on areas where efficiencies can be made to reduce risks and costs in the business," says Nairn.

Standards save money directly as well. Certification to ISO 14001, for example, calls for all significant impacts to be identified and controlled. As a result businesses minimize waste to landfill, and use raw materials and natural resources like water and energy more sparingly. For Gray and Adams, ISO 14001 changed many of its processes and led to partnerships with local companies, allowing it to make significant savings in waste management and energy consumption.

Nairn adds, "We're increasing those savings all the time, finding better ways to work which not only benefit the environment but the company's profitability."

A survey carried out by BSI Management Systems UK showed that cost savings derived from certification to ISO 14001 can be significant. R S Clare & Co Ltd, a long-established manufacturer of industrial lubricants, reported that, since implementing ISO 14001, it had saved more than £50k on its energy bills and over £20k on materials.

Darchem Engineering, which offers engineered solutions to high temperature issues primarily in the aerospace industry, reported that its waste has reduced by more than £100k since implementing ISO 14001 in 2000.

DST International Output Ltd, which specializes in large scale customer communications, reported: "The waste management performance of the company has improved by about 80 per cent. The electricity management has improved so that we now use approximately 25 per cent less electricity per unit output since implementing ISO 14001 in 2000."

Cost savings also accrue because standards help get products to market more quickly. They also reduce errors and the cost of errors. Product standards can reduce R&D costs and material costs where over-engineering is stripped out. Inventory control, which becomes very important in a recession, is aided particularly by Six Sigma and Lean, working in tandem with ISO 9001.

Satisfying the customer

Perhaps even more important than containing costs, standards retain customers and help find new ones. For one thing, they help a business stand out from the crowd. For another, certification is closely identified with quality and when money is tight, customers feel the need to spend wisely. Finally, standards are all about customer requirements; they embed customer focus.

Garlands Call Centres, a leading outsourced contact centre operator, is a clear example. The company competes against a diverse range of international organizations from "basic" contact centre operators in low wage countries to sophisticated Western European competitors. Quality means offering a competitive price and adding value through things like high levels of first call resolution, call elimination strategies and sophisticated data analysis.

"In this tough marketplace, we've built a strong reputation as a company that delivers high quality," explains quality compliance manager, Martin Stevens. "A major contributing factor to our success has been our investment in quality systems, technologies and processes. Ever since our initial certification in March 2005, ISO 9001 has played a significant part in this success."

For FloPlast, the company makes its commitment to quality highly visible to the market by using the Kitemark. FloPlast already has two licences under its belt and a further two are planned.

As managing director Norris explains, "We use the Kitemark and other quality marks in the marketplace to distinguish us."

In FloPlast's experience, the Kitemark is recognized as an important differentiator in the UK and abroad. According to Norris, recent work on developing its European distribution demonstrated that "50 per cent of the time when they ask what standards you're using and you say Kitemark, they recognize it as a benchmark and the confidence is there. It's very much accepted."

For Gray and Adams, ISO 14001 is particularly important to customer relations, because so many consider green issues a priority. For Nairn, the certification makes it easier for customers to place business and helps strengthen the relationship: "In the current challenging climate, our customers are looking for a supplier who can work efficiently to deliver top quality vehicles, while taking our responsibilities to our employees and the environment seriously," Nairn explains. "PAS 99 in conjunction with our three certifications demonstrates this effectively."

Keeping the best staff

In a recession, staff become more important than ever, simply because well-motivated staff are likely to produce more customer satisfaction than de-motivated staff. And when the worst of the recession is over, good staff will drive the business forward. Better to hang on to the ones you've got than shed them now and go hunting along with everyone else later.

Andy Nairn of Gray and Adams is firm in the belief that skilled and productive staff are the core of his company's success. Moreover, he notes, "Our commitment to quality, health and safety and the environment enhances our reputation as a good employer. Involving all of our workforce increases motivation and commitment, helping us retain our staff and attract skilled people to work with us to develop our business."

Michael Gray from Garlands agrees, adding: "We work to create an environment that people want to work in, one in which we can get the best out of our people. They're motivated, skilled and knowledgeable about what they're doing. Certifications underline and help build the right environment for us."

Keeping the wheels turning

Finally, perhaps above all, companies need to stay in business and keep selling in a recession. One standard that comes to mind in this respect is BS 25999 Business continuity management, if only because the things that happen anyway - floods, fires, power failures - are just as likely to still occur in a recession. And some things, like the loss of key suppliers, become more likely.

As Julian Thrussell, BSI Management Systems UK product manager for BS 25999 puts it: "Now is a very good time to look at critical suppliers and identify strategies to work around their unavailability." Moreover, when an incident stops production or service delivery and reserves are depleted, getting back to normal quickly becomes more important than ever.

One of the key processes of BS 25999 is business impact analysis - if something goes wrong, what would be the impact to business or customers and how extensive would it be? BS 25999 enables companies to prioritize the most important areas and, where money is limited, to spend it on defending only what is critical. A spin-off benefit is that, as Thrussell points out, your business continuity plans and processes are linked in with your customers' so you are maintaining a relationship. "It then becomes more difficult for them to walk away."

The new risk management standard, BS 31100, could also be useful. It identifies opportunities where taking risks might benefit the organization - calculated decisions based on good information. Also, like other standards, it protects reputation and enhances stakeholder confidence - a key attribute in a recession. Finally, in common with all other standards, it makes sure that everyone in your organization is headed in the same direction, at the same speed.

Facing the future

FloPlast aims to beat the recession by continuing to focus hard on not being complacent. In addition to new Kitemark certifications, work is ongoing to achieve certification to ISO 14001 with BSI.

"We're open-minded and positive," says Norris. "While our competitors are generally down, we're still growing our market share. We're passionate and enthusiastic about what we do." He should add "confident" to the list: in 2009, FloPlast plans to launch five new product ranges and 10 new products, a total of 110 new items.

Meanwhile, when asked why an organization would invest in standards during a recession, Andy Nairn of Gray and Adams is clear: "When money is tight, customers are looking to spend it wisely with a company they can trust to deliver what they want. Having BSI certification assures all our current and prospective customers that, at Gray and Adams, we are determined to satisfy our customers. We deliver commercial vehicles perfectly suited to the customers' needs, built to the highest standard and delivered on time."

When the going gets tough - well, you know the rest? and standards can be a key part of the equation.

For more information on management systems certification: www.bsigroup.com/jan09certification

For more information on Kitemark certification: www.bsigroup.com/jan09kitemark

Business Standards © 2010. Editorial produced by Caspian Publishing in association with The British Standards Institution. Editorial opinions expressed on are not necessarily those of BSI Group or Caspian Publishing. Neither Caspian Publishing nor BSI Group accept responsibility for advertising or editorial content, nor for that appearing on linked third-party websites. Reproduction in whole or in part is forbidden without written permission from BSI Group or Caspian Publishing.

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