Standards for Management Systems: A Comprehensive Guide to Content, Implementation Tools, and Certification Schemes (Management for Professionals) 3030358313, 9783030358310

Citation preview

Management for Professionals

Herfried Kohl

Standards for Management Systems A Comprehensive Guide to Content, Implementation Tools, and Certification Schemes

Management for Professionals

The Springer series Management for Professionals comprises high-level business and management books for executives. The authors are experienced business professionals and renowned professors who combine scientific background, best practice, and entrepreneurial vision to provide powerful insights into how to achieve business excellence.

More information about this series at http://www.springer.com/series/10101

Herfried Kohl

Standards for Management Systems A Comprehensive Guide to Content, Implementation Tools, and Certification Schemes

123

Herfried Kohl Erlangen, Germany

ISSN 2192-8096 ISSN 2192-810X (electronic) Management for Professionals ISBN 978-3-030-35831-0 ISBN 978-3-030-35832-7 (eBook) https://doi.org/10.1007/978-3-030-35832-7 © Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: © Kenishirotie/stock.adobe.com This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

To M., who’s always around.

Preface

This book is written for serious readers looking for a straightforward introduction to the topics mentioned in the title. Presenting the material, I employ a down-to-earth approach, however, without trivializing things. Standards for management systems and their respective certification schemes started to conquer organizations more than 25 years ago. At that time, they focused primarily on quality management issues. Over the years, their scopes substantially broadened, covering now almost all aspects of a modern management system: quality, environment, energy efficiency, information security, occupational health and safety, anti-bribery, social responsibility and more. Today most organizations—in what industry ever—find themselves pushed by customer requirements to pass successfully one or the other certification of their management system. Quality management is mainstream now. Depending on in what industry you are, other schemes may be a must. Fortunately, in the course of time the building principles for management system standards converged to a widely accepted set of basic ingredients: processes, risk-based thinking, continual improvement, commitment of top management and management by fact. This simplifies things and opens the way to design integrated management systems much easier and tailor them according to the individual needs of an organization. This book spans a relatively wide spectrum of topics. I’ll give an overview about the content and meaning of almost all currently existing standards for management systems one by one and discuss their interrelationships and interfaces. I always have a reader in mind who may easily get lost and discouraged sitting in front of a pile of standards being written in an abstract language. Trying to find an easy path through the stuff, some guidance may be welcome. I hope, to offer it. Why this book on management system standards and what distinguishes it from others? The main aspects include: • There are books out there on one or the other of the standards treated here. However, mostly they cover only single aspects like quality or environmental management and shed little or no light on the others. This approach seems to be

vii

viii

Preface

outdated now, as an organization usually must target several aspects of its management system simultaneously. • Most importantly, many of the management system standards have been updated very recently and some others are brand new. There’s little or no updated literature available yet, and some of the new standards haven’t been dealt in a book like this yet. • Writing this book, my philosophy was simple: Helping the reader to get a maximum of information out of one single volume and save him or her from collecting it from a variety of sources. • Management system standards define requirements for management systems. A few of these standards also include guidance material that may help the organization to better understand the intentions of the respective standard. However, in practice this will not suffice to establish and implement a management system complying with the respective standard and being beneficial for your organization. Instead, you should have a set of field-proved tools at your disposal that you may employ to get your daily issues done. With this in mind, I added an extensive chapter on the most important of these tools. They will, for example, be indispensable when you have to: – – – – – – – – –

Lead teams and organize improvement processes; Analyze and improve the performance of processes; Collect and analyze data; Identify and manage risks; Document processes and other issues of a management system; Organize trainings for staff; Evaluate the performance of subcontractors and suppliers; Audit your management system; Review your management system.

• Certification schemes for management systems, processes and products play an important role in local and global economies. In many cases, certificates for specific modules of the organization’s management system may be a prerequisite to become accepted by customers and other members of the supply chains. Managers and employees should, therefore, know enough about the content and requirements of certification schemes. • For many potential readers of the book, it is important to have a sound understanding of the TIC industry (TIC = Testing, Inspection and Certification), its rules and challenges, especially if you consider working in that industry or you already do. Therefore, I include a chapter on topics like accreditation and the international landscape of accreditation and certification organizations. • Internal and external audits play an important role when dealing with management systems and their certification. For that reason, there’s a chapter explaining the principles of planning, conducting and following up audits. • Some potential readers may be scared and find it even disgusting to see some formulas and mathematical stuff here and there in the book. I am aware that math isn’t everybody’s passion. Keep in mind, however, that quality management and quality assurance were from their very beginnings based on the

Preface

ix

application of mathematical statistics and other mathematical methods. If you want to dive deeper into some topics of management systems, the application of these methods cannot be avoided. Examples include: Reliability theory, testing of hypotheses, linear and nonlinear regression, estimation of parameters, confidence intervals, fault tree analysis and others. Not everybody working in the field needs these things, and those who don’t may neglect them. Be aware, however, that most of these things are accessible with standard college algebra and calculus. Chapter 9 is intended to serve as a refresher. The style of the book is straight to the point, avoiding talkativeness. Wherever it seems reasonable and makes things easier to understand, I use simple graphical illustrations. Often, a lengthy verbal discussion may be boiled down to a simple picture. No special prerequisites are needed to read this book. It may be used by anyone interested in the matter, but I’ve three groups of readers especially in my mind: • Practitioners at all levels; • Auditors who are involved in internal and external audits of management systems and • Students who want to get an overview about this important topic. Beyond these obvious target groups, I also address general readers. Sometimes, we are not sufficiently aware how much our daily life decisions get triggered by product certificates, quality statements and other certificates and assertions of all types. No matter where you go and where you check products and services or surf the net: Labels and certificates are everywhere. Are they trustworthy? What do they have to offer? Are they reliable? Are they just a promotional gimmick? How can they support you to make rational decisions? To answer these questions, everyone should have at least some basic understanding of standards, certification programs and the testing and certification industry. It really helps in daily life! A final word about how to read this book. Although it has a story to tell, starting with Chap. 1 and ending with Chap. 8, you may start reading wherever you want and just pick out those parts which are of immediate interest to you. Forget about the other parts or read them in a second turn. As each chapter starts with a short abstract, one approach could be to just read some of these abstracts first and then decide how you would like to proceed and what you’d like to study in detail first. You also may follow the navigation guide on the following pages. Erlangen, Germany

Herfried Kohl

Acknowledgements Working in the TIC industry for over 25 years, I found it exciting to follow its developments. At the beginning of this journey, I did work for German accreditation bodies. At that time, the accreditation organizations just started to establish their rules and I was lucky to have met the pioneers who did that. My thanks also go to the many professionals I met over the years in various industries. I owe a lot to all of them.

What Is in the Book and How to Navigate Through It

This book is written for those who are after a single introductory source on management system standards and the tools needed to apply those standards in real life. Readers will come from different fields, have different interests and bring individual prerequisites. Therefore, you should choose your individual path through the book. However, some guidance may be helpful. To get an idea what you can find in the book, check the following word cloud of randomly selected keywords (Fig. 1): Chapter 1 is a short introduction to the general topic of management system standards: Where do they come from and why are they needed? If you are new in the field, you should have a look at this chapter first. Chapter 2 offers an introduction to the most important generic management system standards and some standards closely related to them. These include ISO 9001, ISO 14001, ISO 17025, ISO 21001, ISO 22301, ISO 27001, ISO 31000, ISO 44001, ISO 45001, ISO 50001, ISO 55001, ISO 22316. These standards are discussed one by one in separate sections. You may pick just those sections first that discuss the standard you’re most interested in. However, in a second reading you should go through one after the other section of that chapter, to get a complete picture. Due to the now generally applied “high-level” ISO structure, you’ll find it easier to compare the requirements of each standard with those of the others. You should definitely read the section on ISO 9001, as this is considered to be the “mother” of all management system standards and serves as a model for all others. Chapter 3 is on industry-specific standards and certification schemes. It includes an overview about the schemes in the • • • • • •

Automotive industry; Aerospace industry; Railway industry; Information and telecommunication industry; Food, agriculture and forestry industry; Healthcare industry;

xi

xii

What Is in the Book and How to Navigate Through It

• Sustainable event industry; • Supply chain security management; • Facility management. If you are a newcomer to the field, I would recommend reading at least the section on ISO 9001 of Chap. 2, before you start with Chap. 3. It depends on your specific interests, which of the industry-specific standards you will look through first. Again, all sections of this chapter may be read independently. The chapter contains guidance to external sources (mostly to the scheme owners and their material) for those readers, who need to go into the details of the respective industry-specific schemes.

Fig. 1 What is in the book: Word cloud of randomly selected keywords

What Is in the Book and How to Navigate Through It

xiii

Chapter 4 gives an overview about important standards for compliance, anti-bribery and corporate social responsibility. The standards treated include: • ISO 19600; • ISO 26000; • ISO 37001. This chapter also gives a short overview about other corporate social responsibility schemes. Chapter 5 gives a very short discussion of special purpose tailor-made audit schemes and a short look at quality awards. Chapter 6 is on “how to get things done”. It contains a sketch of the Define-Measure-Analyze-Improve-Control (DMAIC) approach, which is employed in Six Sigma projects. It may be used very generally as a guidance scheme to organize implementation and improvement projects in the context of management systems. Mainly, however, this chapter includes a long list of practical tools which may be employed to analyze and solve issues of very different types. These tools are presented in alphabetical order and may be absorbed one by one, depending on individual preferences and needs. Chapter 7 is on the important topic of audits. Audits may be internal or external. As they are a requirement of each management system standard, I deal with the most important issues related to them in this separate chapter. If you are on the way to become an internal or external auditor, you may read this chapter separately, to see what expects you. Chapter 8 gives an overview about different forms of certification and the concept of accreditation. The rules behind the certification of management systems are discussed. You also will learn to understand the importance of accreditation and the principles how mutual recognition of certificates is achieved globally. A long list of organizations working in the field of accreditation and related areas is included in this chapter. Chapter 9 is on management system standards that come with requirements for measurements, quantifications, analysis and statistical methods. This chapter is designed to offer you some guidance which mathematical concepts will be crucial for your practical applications. My suggestion would be to go through and absorb the material at any time you feel so. It is mainly for reference and also offers some basic statistical tables (Fig. 2).

xiv

Fig. 2 Map of the book

What Is in the Book and How to Navigate Through It

Declaration

If not otherwise stated, all figures and tables in this book have been drawn and calculated by the author. The Microsoft Office 365 suite and Wolfram Mathematica 12 have proved to be more than helpful.

xv

Contents

1 Standards for Management Systems: Overview and Main Ingredients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Does the World Need Management System Standards? . . . . . . 1.1.1 General Motivation . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.2 Global Supply Chains . . . . . . . . . . . . . . . . . . . . . . . 1.1.3 Robust Processes and Reliable Process Management . 1.1.4 Globally Accepted Requirements for Management Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.5 Genuine Versus Industry-Specific Models for Quality Management Systems . . . . . . . . . . . . . . . . . . . . . . . . 1.1.6 Certification Schemes . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Where Do All These Management System Standards Come from? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.1 Why Are Most Management System Standards Global? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.2 ISO—International Organization for Standardization . 1.2.3 National Organizations for Standardization . . . . . . . . 1.2.4 The Role of Industry Organizations and Other Interested Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Processes: Why Are They in the Focus of Management Systems? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Risk-Based Thinking: A Cornerstone of Management System Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 Universal Design: The Architecture of Management System Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Generic Standards for Management Systems: An Overview . 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 ISO 9001—QMS—Quality Management System . . . . . . 2.2.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . . .

1 1 1 3 4

..

4

.. ..

5 6

..

7

.. .. ..

7 7 8

..

9

..

10

..

15

..

16

. . . .

19 20 21 22

. . . . .

. . . .

xvii

xviii

Contents

2.2.2 2.2.3 2.2.4 2.2.5 2.2.6 2.2.7

2.3

2.4

2.5

2.6

2.7

2.8

2.9

The Principles Behind ISO 9001 . . . . . . . . . . . . . . . . Discussion of the Clauses of ISO 9001 . . . . . . . . . . . Shortened Checklist for ISO 9001 . . . . . . . . . . . . . . . Frequently Asked Questions . . . . . . . . . . . . . . . . . . . Examples for Illustrational Purposes . . . . . . . . . . . . . Some Supportive Standards for Quality Management Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ISO 14001—EMS—Environmental Management System . . . . 2.3.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Discussion of the Clauses of ISO 14001 . . . . . . . . . . 2.3.3 Other Important ISO Standards in the ISO 140XX-Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.4 Shortened Checklist for ISO 14001 . . . . . . . . . . . . . . 2.3.5 Frequently Asked Questions . . . . . . . . . . . . . . . . . . . ISO/IEC 17025—Laboratory Management . . . . . . . . . . . . . . . 2.4.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . 2.4.2 Discussion of the Clauses of ISO 17025 . . . . . . . . . . 2.4.3 Frequently Asked Questions . . . . . . . . . . . . . . . . . . . ISO 21001—EOMS—Management Systems for Educational Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . 2.5.2 Discussion of the Clauses of ISO 21001 . . . . . . . . . . 2.5.3 Frequently Asked Questions . . . . . . . . . . . . . . . . . . . ISO 22301—BCMS—Business Continuity Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . 2.6.2 Discussion of the Clauses of ISO 22301 . . . . . . . . . . 2.6.3 Frequently Asked Questions . . . . . . . . . . . . . . . . . . . ISO 27001—ISMS—Information Security Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . 2.7.2 Discussion of the Clauses of ISO 27001 . . . . . . . . . . 2.7.3 Frequently Asked Question . . . . . . . . . . . . . . . . . . . . ISO 31000—RM—Risk Management . . . . . . . . . . . . . . . . . . 2.8.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . 2.8.2 Discussion of the Clauses of ISO 31000 . . . . . . . . . . 2.8.3 Implementation Hints . . . . . . . . . . . . . . . . . . . . . . . . 2.8.4 Frequently Asked Questions . . . . . . . . . . . . . . . . . . . ISO 44001—CBRMS—Collaborative Business Relationship Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . 2.9.2 Discussion of the Clauses of ISO 44001 . . . . . . . . . . 2.9.3 Frequently Asked Questions . . . . . . . . . . . . . . . . . . .

. . . . .

. . . . .

24 27 59 59 72

. . . .

. . . .

76 77 79 81

. . . . . . .

. 89 . 89 . 92 . 92 . 92 . 101 . 112

. . . .

. . . .

116 116 117 140

. . . .

. . . .

141 141 144 155

. . . . . . . . .

. . . . . . . . .

156 156 157 171 173 173 174 182 187

. . . .

. . . .

188 188 189 202

Contents

2.10 ISO 45001—OH&SMS Occupational Health and Safety Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . 2.10.2 Discussion of the Clauses of ISO 45001 . . . . . . . 2.10.3 Frequently Asked Questions . . . . . . . . . . . . . . . . 2.11 ISO 50001—EnMS—Energy Management System . . . . . . 2.11.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . 2.11.2 Discussion of the Clauses of ISO 50001 . . . . . . . 2.11.3 Frequently Asked Questions and Implementation Hints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12 ISO 55001—AMS—Asset Management System . . . . . . . . 2.12.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . 2.12.2 Discussion of the Clauses of ISO 55001 . . . . . . . 2.12.3 Frequently Asked Questions . . . . . . . . . . . . . . . . 2.13 ISO 22316—Organizational Resilience . . . . . . . . . . . . . . 2.14 Finishing This Chapter and Looking Forward to Chap. 3 .

xix

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

203 203 205 218 220 220 221

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

231 233 233 235 242 243 248

3 Industry-Specific Standards for Management Systems . . . . . . . . . 3.1 Introduction and Overview . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Automotive Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Aerospace Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Railway Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 ICT—Information and Communication Technology Industry . . 3.6 Quality Management Schemes for Food Industry and Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6.1 General Introduction . . . . . . . . . . . . . . . . . . . . . . . . 3.6.2 ISO 22000—FSMS—Food Safety Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6.3 More Standards for Food Industry and Agriculture . . 3.6.4 Concluding Remarks: Which Scheme to Choose? . . . 3.7 Forestry and Chain of Custody . . . . . . . . . . . . . . . . . . . . . . . 3.7.1 General Introduction . . . . . . . . . . . . . . . . . . . . . . . . 3.7.2 PEFC and FSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7.3 ISO 38200: Chain of Custody of Wood and Wood-Based Products . . . . . . . . . . . . . . . . . . . . 3.8 Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8.1 General Introduction . . . . . . . . . . . . . . . . . . . . . . . . 3.8.2 International ISO Standards for Healthcare . . . . . . . . 3.8.3 The European Standard EN 15224 . . . . . . . . . . . . . . 3.8.4 JCI—Joint Commission International . . . . . . . . . . . . 3.8.5 Case Study: Quality Management Initiatives in German Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .

. . . . . .

251 251 252 259 260 262

. . 267 . . 267 . . . . . .

. . . . . .

273 285 290 290 290 291

. . . . . .

. . . . . .

292 294 294 294 295 299

. . 303

xx

Contents

3.9

ISO 20121—ESMS—Event Sustainability Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9.1 Introduction to the Standard . . . . . . . . . . . . . . . . . 3.9.2 Discussion of the Clauses of ISO 20121 . . . . . . . . 3.9.3 Example to Illustrate Some Concepts of the ESMS 3.9.4 Beyond Event Sustainability . . . . . . . . . . . . . . . . . 3.10 ISO 28000—SCSMS—Supply Chain Security Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11 ISO 41001—FMS—Facility Management System . . . . . . . 3.11.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . 3.11.2 Discussion of the Clauses of ISO 41001 . . . . . . . . 3.12 ISO 39001—RTSMS—Road Traffic Safety Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 Standards for Compliance, Anti-bribery and Corporate Social Responsibility (CSR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 ISO 19600—CMS—Compliance Management System . . . . 4.2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.2 Discussion of the Clauses of ISO 19600 . . . . . . . . 4.3 ISO 26000—Guidance on Social Responsibility . . . . . . . . . 4.3.1 General Description of ISO 26000 . . . . . . . . . . . . 4.3.2 Integrating ISO 26000 into the Organization’s Management System . . . . . . . . . . . . . . . . . . . . . . 4.4 ISO 37001—ABMS—Anti-bribery Management System . . . 4.4.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . 4.4.2 Discussion of the Clauses of ISO 37001 . . . . . . . . 4.5 CSR—Corporate Social Responsibility . . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

. . . . .

305 305 306 310 312

. . . .

. . . .

. . . .

. . . .

313 319 319 320

. . . . 331 . . . . 334 . . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

335 335 336 336 337 347 347

. . . . .

. . . . .

. . . . .

. . . . .

351 352 352 353 362

. . . .

. . . .

. . . .

. . . .

365 365 368 369

5 Special Purpose Audit Schemes and Quality Awards . . . . . . 5.1 Special Purpose Audits Schemes . . . . . . . . . . . . . . . . . . 5.2 Quality Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 The Deming Prize . . . . . . . . . . . . . . . . . . . . . . 5.2.2 MBNQA—Malcolm Baldridge National Quality Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.3 The Continuum of National Quality Awards . . .

. . . . . . 369 . . . . . . 370

6 How to Get Things Done: A Practitioner’s Toolbox . . . . . 6.1 Introduction and Overview . . . . . . . . . . . . . . . . . . . . 6.2 DMAIC: Define-Measure-Analyze-Improve-Control . . 6.2.1 General Description of the DMAIC Approach 6.2.2 Detailed Steps of the DMAIC Approach . . . . 6.3 Integrated Management Systems . . . . . . . . . . . . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . .

. . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

373 373 375 375 376 382

Contents

6.4

xxi

Tools and Concepts in Alphabetical Order . . . . . . . . . . . . . 6.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.2 5S Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.3 5 Whys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.4 5W2H—5 Whys and 2 Hows . . . . . . . . . . . . . . . . 6.4.5 8D-Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.6 Acceptance Sampling . . . . . . . . . . . . . . . . . . . . . . 6.4.7 Affinity Diagrams . . . . . . . . . . . . . . . . . . . . . . . . 6.4.8 ALARP—As Low as Reasonably Practicable . . . . 6.4.9 ANOVA—Analysis of Variance . . . . . . . . . . . . . . 6.4.10 Balanced Scorecards . . . . . . . . . . . . . . . . . . . . . . 6.4.11 Bayesian Analysis . . . . . . . . . . . . . . . . . . . . . . . . 6.4.12 Bow-Tie Analysis . . . . . . . . . . . . . . . . . . . . . . . . 6.4.13 Brainstorming . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.14 Brainwriting—6-3-5 Method . . . . . . . . . . . . . . . . . 6.4.15 Causal Mapping and Relationship Diagrams . . . . . 6.4.16 CBA—Cost Benefit Analysis . . . . . . . . . . . . . . . . 6.4.17 Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.18 Check Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.19 C&E Matrix—Cause-and-Effect Matrix . . . . . . . . . 6.4.20 CIA—Cross-Impact Analysis . . . . . . . . . . . . . . . . 6.4.21 Control Charts, Process Capability and Process Sigma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.22 Correlation Analysis . . . . . . . . . . . . . . . . . . . . . . . 6.4.23 CTQ—Critical to Quality . . . . . . . . . . . . . . . . . . . 6.4.24 CVAM—Customer Value Assessment Matrix . . . . 6.4.25 Data Collection and Presentation . . . . . . . . . . . . . . 6.4.26 Decision Tree Analysis . . . . . . . . . . . . . . . . . . . . . 6.4.27 Delphi Technique . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.28 DOE—Design of Experiments . . . . . . . . . . . . . . . 6.4.29 Estimation of Parameters and Confidence Intervals 6.4.30 ETA—Event Tree Analysis . . . . . . . . . . . . . . . . . 6.4.31 Five Max Method . . . . . . . . . . . . . . . . . . . . . . . . 6.4.32 FMEA—Failure Modes and Effects Analysis . . . . . 6.4.33 Force Field Analysis . . . . . . . . . . . . . . . . . . . . . . 6.4.34 FTA—Fault Tree Analysis . . . . . . . . . . . . . . . . . . 6.4.35 HACCP—Hazard Analysis and Critical Control Points . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.36 Hazard Level Matrix . . . . . . . . . . . . . . . . . . . . . . 6.4.37 HAZOP—Hazard and Operability Studies . . . . . . . 6.4.38 HRA—Human Reliability Analysis . . . . . . . . . . . . 6.4.39 Involvement Matrix . . . . . . . . . . . . . . . . . . . . . . . 6.4.40 Interested Parties—Selection Criteria . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . .

383 383 384 387 388 389 392 399 401 402 409 411 412 413 414 416 418 419 420 421 422

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

424 442 449 453 454 457 460 461 465 490 493 494 499 500

. . . . . .

. . . . . .

. . . . . .

. . . . . .

505 506 507 511 512 514

xxii

Contents

6.4.41 6.4.42 6.4.43 6.4.44 6.4.45 6.4.46 6.4.47 6.4.48 6.4.49 6.4.50 6.4.51 6.4.52 6.4.53 6.4.54 6.4.55 6.4.56 6.4.57 6.4.58 6.4.59 6.4.60 6.4.61 6.4.62 6.4.63 6.4.64 6.4.65 6.4.66 6.4.67

Interviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ishikawa Diagrams—Root-Cause Analysis . . . . . . . Kaizen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kappa Index Calculation and Inter-Rater Agreement Markov Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . MEP—Maximum Entropy Principle and Probability Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mind-Mapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monte Carlo Simulation . . . . . . . . . . . . . . . . . . . . . NGT—Nominal Group Technique . . . . . . . . . . . . . Order Statistics and Distribution of Extreme Values . Pareto Analysis and Pareto Charts . . . . . . . . . . . . . . PDCA: Plan-Do-Check-Act . . . . . . . . . . . . . . . . . . PESTLE Analysis . . . . . . . . . . . . . . . . . . . . . . . . . PHA—Preliminary Hazard Analysis . . . . . . . . . . . . PMI—Plus-Minus-Interesting . . . . . . . . . . . . . . . . . Poka-Yoke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prioritization Matrix . . . . . . . . . . . . . . . . . . . . . . . . Process Flow Tools . . . . . . . . . . . . . . . . . . . . . . . . RACI Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Regression Analysis . . . . . . . . . . . . . . . . . . . . . . . . Reliability Theory . . . . . . . . . . . . . . . . . . . . . . . . . Sampling of Data and Surveys . . . . . . . . . . . . . . . . Scenario Analysis . . . . . . . . . . . . . . . . . . . . . . . . . SIPOC Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . Solution Selection Matrix . . . . . . . . . . . . . . . . . . . . Stakeholder Profile Matrix . . . . . . . . . . . . . . . . . . . Strategy Alignment with Operational Capabilities and Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SWIFT—Structured What-IF Technique . . . . . . . . . SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . Taguchi Loss Function . . . . . . . . . . . . . . . . . . . . . . Teams and Meeting Guidelines . . . . . . . . . . . . . . . . Testing of Hypotheses . . . . . . . . . . . . . . . . . . . . . . To-Do-List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tree Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . Visual Management . . . . . . . . . . . . . . . . . . . . . . . . VOC—Voice of the Customer . . . . . . . . . . . . . . . . VSM—Value Stream Mapping . . . . . . . . . . . . . . . . Y = F(X) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.4.68 6.4.69 6.4.70 6.4.71 6.4.72 6.4.73 6.4.74 6.4.75 6.4.76 6.4.77 6.4.78 Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

514 516 519 521 524

. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . .

528 531 533 540 542 544 547 547 548 550 551 552 553 562 564 575 596 600 602 603 606

. . . . . . . . . . . . ..

. . . . . . . . . . . . .

. . . . . . . . . . . . .

607 608 610 612 613 616 643 644 646 647 649 651 652

Contents

xxiii

7 Auditing the Management System . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Introduction: The Need for Performance Control and the Role of Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Audits: A Means to Control the Performance of Management Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.1 The Role and Content of ISO 19011:2018 . . . . . . . . . 7.2.2 Auditors: General Requirements . . . . . . . . . . . . . . . . 7.2.3 Audits: General Process . . . . . . . . . . . . . . . . . . . . . . 7.2.4 Determining Audit Time and Some Related Issues . . . 8 Certification and Accreditation: Types and Rules . . . . . . . . . . 8.1 Why This Chapter? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Types of Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Accreditation: Organizations, Rules and Achievements . . . 8.4 Organizational Requirements for Organizations Certifying Management Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 How to Select the Right Certification Body? . . . . . . . . . .

. . . .

. . . .

. . . .

. . 653 . . 653 . . . . .

. . . . .

654 654 660 662 664

. . . .

. . . .

669 669 670 671

. . . . . 674 . . . . . 688

9 Mathematical Methods and Statistical Tables . . . . . . . . . . . . . . . . 9.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Why Logic Is Important . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 Sets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.1 Introduction to Sets . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.2 Definition and Basic Properties of Sets . . . . . . . . . . . 9.3.3 Combinatorics and Principles of Counting . . . . . . . . . 9.4 Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4.1 Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4.2 Sequences and Limits . . . . . . . . . . . . . . . . . . . . . . . . 9.4.3 Maps and Functions . . . . . . . . . . . . . . . . . . . . . . . . . 9.4.4 Differential Calculus . . . . . . . . . . . . . . . . . . . . . . . . . 9.4.5 Integral Calculus . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 Algebra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5.1 Introductory Remarks on Algebra . . . . . . . . . . . . . . . 9.5.2 Matrices and Vectors . . . . . . . . . . . . . . . . . . . . . . . . 9.5.3 Determinants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5.4 Derivatives of Matrices and Vectors . . . . . . . . . . . . . 9.5.5 Boolean Algebra . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6 Probability and Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6.1 Why Is Probability Theory Important in Our Context? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6.2 The Intuitive Versus Formal Approach to Probability . 9.6.3 Conditional Probabilities . . . . . . . . . . . . . . . . . . . . . . 9.6.4 Bayes’ Theorem . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6.5 Random Variables, Probability Distribution Functions and Expected Values . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . .

689 689 690 693 693 693 695 698 698 701 702 704 708 713 713 713 718 718 720 721

. . . .

. . . .

721 722 724 726

. . 728

xxiv

Contents

9.6.6

9.7

Functions of Random Variables and Their Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6.7 Approximations of Important Expectation Values . 9.6.8 Inequalities for Probabilities . . . . . . . . . . . . . . . . 9.6.9 Law of Large Numbers . . . . . . . . . . . . . . . . . . . 9.6.10 Characteristic Functions and Moment Generating Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6.11 CLT—Central Limit Theorem . . . . . . . . . . . . . . . 9.6.12 Important Discrete and Continuous Probability Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . Statistical Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7.1 Quantiles and Percentiles . . . . . . . . . . . . . . . . . . 9.7.2 Description and Usage of the Tables . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

732 732 734 736

. . . . . 737 . . . . . 740 . . . .

. . . .

. . . .

. . . .

. . . .

744 772 772 773

Suggested Further Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 793 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 795

About the Author

Dr. Herfried Kohl was born in Czechoslovakia and holds a Ph.D. in theoretical physics from the J. W. Goethe University of Frankfurt. He has more than 25 years of practical experience in the auditing and certification industry, holding several management positions in small and global certification bodies for products and systems. He is an experienced auditor and was actively involved in the development of management system standards, especially in the healthcare sector.

xxv

Abbreviations

ABMS ALARP AMS ANOVA BCMS BPM BRC CBA CBRMS CMS CoC CSR CTQ CVAM DMAIC DOE EMEA EMS EnMS EOMS ESMS ETA FMEA FMS FSC FSMS FTA GFSI HACCP HAZOP

Anti-bribery management system As low as is reasonably practicable Asset management system Analysis of variance Business continuity management system Business process management British Retail Consortium Cost-benefit analysis Collaborative business relationship management system Compliance management system Chain of custody Corporate social responsibility Critical to quality Customer value assessment matrix Define-Measure-Analyze-Improve-Control Design of experiment Error mode and effect analysis Environmental management system Energy management system Management system for educational organizations Event sustainability management system Event tree analysis Failure mode and effect analysis Facility management system Forest Stewardship Council Food safety management system Fault tree analysis Global Food Safety Initiative Hazard analysis and critical control points Hazard and operability analysis

xxvii

xxviii

HRA IAF IATF IFS ILAC ISMS ISO JCI LCL LSL MBNQA MSA NGT OHSMS OSH PDCA PEFC PHA QMS RM RMS RPN RTSMS SCSMS SDCA SFAIRP SIPOC SME SPC SWIFT SWOT TIC UCL USL VOC

Abbreviations

Human reliability analysis International Accreditation Forum International Automotive Task Force International Featured Standard International Laboratory Accreditation Cooperation Information security management system International Organization for Standardization Joint Commission International Lower control limit Lower specification limit Malcolm Baldrige National Quality Award Measurement system analysis Nominal group technique Occupational health and safety management system Occupational safety and health Plan-Do-Check-Act Program for the Endorsement of Forest Certification Preliminary hazard analysis Quality management system Risk management Risk management system Risk priority number Road traffic safety management system Supply chain security management systems Standardize-Do-Check-Act So far as is reasonably practicable Suppliers, inputs, process, outputs Energy management system Statistical process control Structural What-If Technique Strengths-Weaknesses-Opportunities-Threats Testing, Inspection and Certification Upper control limit Upper specification limit Voice of the customer

Chapter 1

Standards for Management Systems: Overview and Main Ingredients

In this chapter, you’ll • Get a basic motivation and overview about the topic called “management system standards”. • Learn where these standards come from and what’s the role and authorization of the national and international committees creating them. • Have a look at the important concept of “supply chain”. • Have a first look at the concept of “process” which plays a central role in all standards for management systems. • Understand the “high-level structure” which is shared by all standards for management systems. • Understand why risk-based thinking is important.

1.1 Does the World Need Management System Standards? 1.1.1 General Motivation Imagine you are part of the management team of an organization. Very likely, you will be confronted with questions like the following on a daily basis: • How can we improve the quality and efficiency of our production and service provision processes? • Are the quality levels of our products and services where we want to see them? • How can our organization comply with the continuum of requirements defined by customers and authorities? • What is our program to improve information security throughout the organization? • How can we reduce the negative impacts of our organization on the environment? © Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7_1

1

2

1 Standards for Management Systems …

• Is our energy performance state of the art? What can we do to improve it? • Are our response processes to potential disruptive events sufficient to ensure business continuity? • Do we have to improve our interaction with cooperating organizations and partners? • Are the assets of our organization well managed and what would be the opportunities for improvements? • Are our health and safety policies and processes state of the art or do they need improvement? • Do we really have a reliable oversight what risks and opportunities our organization faces? Are our risk management tools adequate? • Considering our organization’s corporate social responsibility policy: Do we ensure that it is supported by our suppliers? Management system standards may help you to find answers to these questions. These standards define requirements, offer guidance and show what you should do, to deal with your daily management issues in a rational and decisive manner. Of course, the standards themselves cannot directly deliver answers and solutions to all your management issues. However, they require you to have processes and organizational structures, to deal with your issues in a systematic way. This includes, for example: • The standards define frameworks for your management topics (quality management, environmental management, information security, etc.). • One of the intents of these frameworks is to enable your organization to implement a fact-based management approach. The standards require “management by fact”. Don’t base decisions and management on beliefs or cloudy assumptions, but on facts! • The standards focus on the processes of your organization and call for risk-based thinking. • The standards define requirements for your management systems. Some of them include industry-specific requirements (e.g. food, automotive, telecommunication, railway, healthcare). • The standards are built on the Plan-Do-Check-Act principle and call for continual improvement. • The standards define the basis for certification schemes of management systems (e.g. for quality, environment, information security). When you start reading management system standards for the first time, you very likely will not be overwhelmed by the style in which they are written. Most readers find it pretty abstract and not always easy to understand. Transforming formal requirements of standards into actions adequate to your organization may be even more difficult. It is one intent of this book, to make this translation process easier for you. However, we will stay reasonably close to the texts of the standards. Where needed, we shall illustrate requirements by examples. Let us have a look at some of the driving forces behind management system standards.

1.1 Does the World Need Management System Standards?

3

1.1.2 Global Supply Chains Supply chains are the backbone of modern industries. In a sense, the term “chain” is misleading, as it seems to imply that a supply chain is sort of a linear structure. However, this is not the case and most real supply chains are better represented by networks than by linear models. In addition, most of them are not limited to a local or national level but are global. Have a look at your smartphone and try to guess how many suppliers have been involved to finally assemble that piece of technology. The same holds in the food sector, automotive industry and basically any major industry you may consider. Supply chains are complex, and supply chain management has evolved to a topic with many special aspects: • • • • • • • •

Organizational; Financial; Legal; Logistics; Business continuity; Quality and environment; Information security; Social compliance;

and others. We don’t need and shall not go into the details of supply chain management in this book. However, our main topic of management system standards is strongly related to it and triggered by its needs. To ensure, for example, quality and environmental requirements to be fulfilled along a supply chain, agreements must be made among its members. Today, management system standards are very essential parts of these agreements. When, for example, an OEM in the automotive industry defines quality, environmental and social compliance requirements for its own organization, products and services, these requirements will be sent down the supply chain as requirements to be met by suppliers. Not being that formal and relying on hope, that suppliers will voluntarily comply with the OEM’s requirements, would make little sense and erode its own objectives. It’s here that management system standards enter the scene. Without quality management practices that are state of the art, quality objectives can’t be reached in a sustainable manner. The same holds for environmental issues, business continuity requirements and so on. Supply chain requirements are an important factor which triggers the development and diffusion of management systems. In today’s business relationships, management system requirements are fixed in contracts between organizations, its suppliers and customers. ISO 9001, IATF 16949, ISO 27001 and others are examples. For that reason, the practical needs of supply chains triggered the development and application of management system standards on the local and global scale, and they still do so.

4

1 Standards for Management Systems …

1.1.3 Robust Processes and Reliable Process Management Once upon a time, a production company or service organizations were fine, if its rejects were below one percent, say. Some of today’s industries would face a serious problem, if defect rates of products would not be at a one part per million levels. This is why: • Today’s organizations must continually work on the improvement of their processes. • Robust, efficient and capable processes call for the application of advanced tools like: – – – –

Design FMEA, process FMEA, product FMEA; Statistical process control; Risk assessment, evaluation and control methods; Reliability theory; and many others.

Processes and their management are in the focus of modern management system standards. You will see this kind of thinking in all of the standards discussed later in the book. The general requirements include: • • • •

Plan and design your processes adequately. Implement them. Control and monitor your processes. Improve them if needed.

Although these requirements may sound pretty logical, the real art in practice is to realize them under the constraints your organization may have in daily life.

1.1.4 Globally Accepted Requirements for Management Systems Supply chains and advanced requirements for processes aren’t something invented just recently. And of course, management system standards and their requirements have a long history. Predecessors of current standards may be found in the defense and aerospace industry, in the food sector, in the pharmaceutical industry and in others. These early examples of industry standards for management systems had their main focus on quality management and product quality issues. After the first release of ISO 9001 as a generic quality management system in 1987, the idea to create management system standards for other aspects of organization’s management issues became popular. Today, we see a whole bunch of generic and industry-specific standards with different scopes of application. Figure 1.1 shows some of the major current examples of generic management systems to be discussed in Chap. 2 of the book. All these standards are global ISO

1.1 Does the World Need Management System Standards?

5

Fig. 1.1 Generic management system standards (selection)

standards and genuine in the sense that they may be applied by organizations in any industry, irrespective of their size, ownership, complexity or other specifics. For that reason, you’ll find organizations referring to these standards all around the globe.

1.1.5 Genuine Versus Industry-Specific Models for Quality Management Systems Genuine management system standards are fine for most industries; however, for some core industries they were found not being specific enough. This holds true especially for industry-specific quality management requirements. For that reason, as we shall see in Chap. 3 of the book, some industries (including automotive, railway, telecommunication and others) decided to take ISO 9001 as a basis, but to enhance it with specific additional requirements for organizations in their industries. Some of these industry-specific quality management system standards even include requirements from other genuine standards as health and safety, business continuity or information security.

6

1 Standards for Management Systems …

1.1.6 Certification Schemes All management system standards (genuine or industry-specific) come with their associated certification schemes. The certification of the management system of an organization is basically based on a third-party audit of that system against the respective standard. The audit is done by an independent third-party organization, called certification body. In principle, anyone can do third-party audits. However, in order to demonstrate its independence, competence and global acceptance, the certification body shall have so-called accreditations for the respective type of audits. Details on this will be discussed in Chaps. 7 and 8 later in the book. What are certificates according to management system standards like ISO 9001 good for? The idea behind is that a certified organization can demonstrate its compliance with the requirements of the respective standard. In many areas, this type of certification is now a necessary requirement to become accepted as a supplier in business-to-business relationships. In industries like automotive or food, you’ll hardly find any organization not certified according to the respective relevant industry standards. In Chap. 8 of the book, you may learn more about certification (Fig. 1.2).

Fig. 1.2 Summary: Why management system standards?

1.2 Where Do All These Management System Standards Come from?

7

1.2 Where Do All These Management System Standards Come from? 1.2.1 Why Are Most Management System Standards Global? You may ask where all these standards for management systems come from and who has the authority to create them. As a rule, modern standards for management systems need to be agreed on an international scale. In the era of globalized business, it would make little sense to establish requirements for management systems solely on local needs or traditions. For that reason, standards like ISO 9001 for quality management systems or ISO 27001 for information security are global standards in the sense that their creation follows well-documented and transparent processes organized by national and international organizations. In this context, the International Organization for Standardization (ISO) plays the major role.

1.2.2 ISO—International Organization for Standardization lSO was founded in 1946, when representatives of 25 countries met in London and decided to create a new international organization with the goal to coordinate the creation and unification of industrial standards. Operation of ISO started in February 1947. In 2017, ISO had members from more than 160 countries and celebrated its 70th birthday. Its Central Secretariat is in Geneva, Switzerland. ISO is a federation of national standard bodies, which are its member bodies. The technical work of ISO (e.g. creating standards) is done in so-called ISO Technical Committees and working groups. Member bodies have the right to send representatives to these ISO committees. In addition, for important standards (e.g. ISO 9001), national standard bodies create so-called mirror committees with national representatives. Of course, management system standards are just one field of ISO’s activities. All sorts of technical standards are by far the bigger fields of output. ISO is usually little known in public, but literally any individual or organization is touched directly or indirectly by the results of ISO’s work. Standards are all around us, and they are needed to make a complicated technical world function. How are standards created? ISO has elaborated processes, described in the following documents: • ISO/IEC Directives, Part 1—Consolidated ISO Supplement—Procedures specific to ISO (9th edition, 2018); • ISO/IEC Directives, Part 2—Principles and rules for the structure and drafting of ISO and IEC documents (8th edition, 2018). Both papers may be found at www.iso.org. They are complemented by additional documents and sheets to be used along the process. We shall not go into the details

8

1 Standards for Management Systems …

of the relatively complex processes and organizational issues, but give the following sketch of the essentials: 1. To start the process of standard development, there must come from somewhere an idea for a new standard on a specific topic. These so-called new work item proposals (NWIPs) may be suggested by national standard organizations or other associated members of ISO. 2. If ISO decides to follow up the proposal, the respective standard development project is typically associated with a Technical Committee. A working group of experts is formed under the auspices of the respective Technical Committee. These experts are usually nominated by the national standard organizations, interested in the new standard. The task of the working group is to develop a Committee Draft (CD) of the standard. Remark You may find a complete list of existing Technical Committees and their scopes of activities on ISO’s homepage www.iso.org. Here, you also may follow the status of committee work for each standard. 3. If the CD is accepted by the Technical Committee (based on consensus found with the national standard organizations), a Draft International Standard (DIS) is developed. Comments received during the consensus phase of the CD will be taken into account. 4. Once the DIS is finished, the so-called DIS ballot is initiated and national standard bodies give their feedback. The DIS is accessible also to the interested public for comments. However, their comments are collected and communicated to ISO by the national standard organizations. 5. All that input and comments are evaluated, and the Final Draft International Standard (FDIS) is created. 6. The next step is an internal ballot within ISO and the national standard bodies. The interested public is not involved in that step. 7. The ISO standard is finished and published. For these individual steps and ballots, standardized timeframes are defined. Effective interaction between ISO and the national standard bodies is essential during the process. As may be seen, interested parties have the chance to influence some of the ballots. In the end, standards are the result of international voting. It may happen that single national standard bodies vote against a drafted standard, but the result is shaped by the majority’s voting. Typically, standards are updated every 5–7 years.

1.2.3 National Organizations for Standardization National organizations for standardizations develop and update national standards and collaborate in the development of international ones. The procedures followed

1.2 Where Do All These Management System Standards Come from?

9

are comparable to those sketched above for ISO, just applied on a local scale. In addition, national organizations for standardization decide if an ISO standard will be implemented as a national standard. If the reader is interested in the details, these procedures are typically published on the respective national standard organization’s homepage. As far as management system standards are considered, these are usually implemented as national standards by all standard organizations. Be aware, however, that it may take some time, until an ISO standard will be issued as a national standard. For that reason, if you want to be ahead of the time, the best information source is always ISO’s Web platform. Here, you may learn what standards are under design or published and which Technical Committee or working group is responsible for it. Also, if you’re looking for a copy of a standard, usually the ISO version is the first you may get. The same holds for the drafts of standards. It must be stressed on the other side that national standard organizations frequently initiate and drive the development of ISO standards. For example, in the field of management system standards, ISO 9001 or ISO 55001 may be traced back to British predecessors. It makes sense, therefore, to have an eye on the activities of your national standard organization or others, to see what’s going on.

1.2.4 The Role of Industry Organizations and Other Interested Parties As we shall see in Chap. 3 of the book, besides ISO and the national standard organizations, there are some more organizations, developing management system standards. Typically, these are associations of interested parties with special interests in certain industries and with the necessary empowerment, to set standards. Important examples include: • • • • • •

Automotive industry; Railway industry; Telecommunication; Food and feed industry; Forestry; Healthcare;

and others. We shall have a closer look on these developments in Chaps. 3 and 4.

10

1 Standards for Management Systems …

1.3 Processes: Why Are They in the Focus of Management Systems? Processes are the backbones of modern management system standards. What is a process and why do processes matter? Roughly speaking, a process is a transformation of an input into an output. For example, the input may be some physical material which is processed to get a defined output. It also may be information being transformed into other information. In a service process, nonmaterial activities may be combined with material stuff to make a process. As an example, think of the processes you may find in a hotel or hospital. Organizations are as diverse as they can be and so are their processes. It’s amazing, however, that despite this diversity, there is a solid common ground, techniques and methods, which allow you to design, analyze, control and optimize processes with certain general techniques and tools. Industries are changing rapidly and so do organizations. Processes which were adequate ten or twenty years ago will hardly do today. Business process management (BPM) became an important field that develops rapidly. For example, there’s hardly a business today which processes would not be deeply rooted in computer algorithms. For that reason, many of the essential process management techniques are strongly influenced by or even come from informatics and computer sciences. Figure 1.3 illustrates a typical classification of processes: • Management processes These include high-level management processes for strategy, finance and legal. • Core processes These are the value-creating processes of an organization, including production and service provision, design, operation management, supplier management, customer relation management and more. • Support processes These processes are supportive and include human resources, IT, financial department services and others. Supplier and business partners on the left of Fig. 1.3 symbolize input to the organization and its processes. Customers, stakeholders and interested parties on the right symbolize requirements and expectations on the organization’s processes, products and services. This type of process classification gives a nice overview about the type of processes one may find in an organization. It teaches us nothing, however, how processes should be designed, implemented, managed, controlled and improved. For this, one needs the repertoire of BPM. The toolbox of modern BPM is huge. In this book, we shall confine ourselves to some of those issues which are most important in the context of management systems. It should be clear, however, that very specific processes need their tailormade management tools. BPM should, therefore, not be considered as a fixed number of methods and recipes which offer a medicine for every disease, but as an evolving

1.3 Processes: Why Are They in the Focus of Management Systems?

11

Fig. 1.3 Typical classification of an organization’s processes

field that strongly interacts with the evolution of modern industries, rapidly changing organizational structures and technological needs. Another way to illustrate the importance of processes is the following sketchy example that brings us closer to concepts like statistical process control (SPC), key performance indicators (KPIs) and the like (Fig. 1.3). A flowchart is employed to represent this simple process. Flowcharts are a well-known and widely used tool to illustrate, design and analyze processes. They originate from computer sciences, where they are helpful to analyze the structure of algorithms or show the architecture of computer programs (see Sect. 6.4 for more details). Imagine an arbitrary process composed of five process steps like in Fig. 1.4. Walking down the process, let in each step be a certain probability (caused by whatever for the moment) that something goes wrong in that step. In the example given these probabilities are 5% in the first step, 2% in the second and so on. At first sight, you may think these failure rates aren’t that bad at least for some businesses—let’s say for a typical restaurant process. However, the risks (the probabilities to fail) in each step multiply and the total risk of the process is the product of all these partial risks:

12

1 Standards for Management Systems …

Fig. 1.4 Simple process with failure rates

Getting only 95% correct results out of step one, these are further discounted by two percent in step two and another five percent in step three and so on. In numbers, this leads to       5 2 5 10 10 1− 1− 1− 1− 1− 100 100 100 100 100 5    pk = 0.7164. 1− = 100 k=1 In this setting, we would get the desired correct output from the fictitious process only in 71.6% of the cases! This is not acceptable, no matter what business you may consider. Let us illustrate some additional important points with this oversimplified example: 1. How do we determine the failure rates mentioned in the example? Obviously by measurement. It’s done with the help of a sampling method counting the positive versus the negative outcomes in each step of the process. Push this approach to a more advanced level, and you get the idea of what’s called “quality control chart” in statistical process control—a standard tool in many industries. 2. Once you detected that failure rates of individual process steps and the output of the process in total aren’t acceptable, you should start a business process improvement program. A detailed analysis what’s going on in each process step

1.3 Processes: Why Are They in the Focus of Management Systems?

13

and what runs wrong will be part of such a program. Root-cause analysis is a keyword. There are field-proved approaches to do this type of analysis, and we shall come back to some of them later in the book. If you can’t wait, have a look at Chap. 6. 3. If you are in the situation that a new process must be designed and implemented, this should be based on a clearly defined list of requirements. Process design steps, planning activities and pilot studies will be needed. The establishment of the process must be done under controlled conditions. All management system standards define requirements concerning this issue. Chapter 6 shows you some crucial tools for getting things done. In a nutshell, the process approach promoted by all modern management system standards may be sketched as follows: 1. Understand process management! Have a sound understanding of the process approach in general and the relevant processes of your organization. Establish, implement, maintain and continually improve relevant processes and include the following characteristics: • • • • • •

Purpose; Input; Output; Clear definition and description of process steps (what is done and how?); Measurement and controlling elements; Ownership.

So-called turtle diagrams (Fig. 1.5) may be helpful to sketch these things in a single picture (see Chap. 6 for further details):

Fig. 1.5 Turtle diagram—elements of a process

14

1 Standards for Management Systems …

2. Identify and know your processes! Identify the relevant processes of your organization and categorize them. As mentioned before, frequently used categories include: • Core processes or customer-oriented processes; • Support processes; • Management processes. Management system standards address all three types, but core processes are especially in the focus. This is simply because these are the value-creating processes. The output of core processes is what customers buy. 3. Learn to model your processes! There are many ways how to model processes. Flowcharts are common, as they allow you to sequence the individual steps of a process. A flowchart may show the coarse-grained picture of a process or its fine structure, depending on your needs. You should get some maturity drawing flowcharts, as it is such an important tool. Software is available to make drawings of flowcharts easy. However, there are more tools available to model and manage processes. Some of them will be described later in the book, especially in Chap. 6. Be aware that advanced tools are employed in some industries. As an example, consider simulation software that is employed to model processes, design or redesign its elements and optimize them dynamically. Depending on the industry you’re interested in, you will need to master the respective approaches and techniques used. 4. Implement the process approach and create awareness! Ensuring staff understands the importance and details of relevant processes and follows them is an ongoing challenge for all organizations. Trainings and daily supervisions are important. Coming back to flowcharts, they are a good tool to be employed in awareness trainings, as they offer a simple pictorial way to illustrate processes, their critical elements and control points. Generally speaking, personnel should: • Have a good understanding of the relevant processes he/she is part of. • Understand, what are the criticalities of a process and what are the consequences, if one deviates from defined process flows. • Understand, who’s the owner of a process. This is the person (or group of persons), who is authorized to make decisions concerning the process. • Know precisely what’s his/her role in the process. Adequate trainings should be mandatory. In addition, documented information like process descriptions or standard operation procedures may be helpful or even required by the respective management system standard, by other sources or because the organization decides so.

1.3 Processes: Why Are They in the Focus of Management Systems?

15

Don’t consider these principles to be obvious and trivial. Many problems, inefficiencies and undesired events in organizations may be traced back to the point that one or more of these principles were not followed.

1.4 Risk-Based Thinking: A Cornerstone of Management System Standards Risk-based thinking is a critical ingredient to all modern management system standards. To get a clearer picture which risks are meant, let’s have a look at some important aspects: (a) Management system standards consider risks being effects of uncertainties. These effects may be positive or negative. Positive effects are usually called chances or opportunities. Uncertainties may come from lack of information, unpredictability, missing understanding and the like. (b) Risk management should be understood in a positive sense and enable the organization to harvest positive risks (chances). (c) Risk management should enable the organization to identify, control and possibly eliminate factors that may have negative impacts on the organization’s performance, efficiency of processes, quality of products and services, etc. (d) To give some random examples for risks in the context of ISO 9001: • Insufficient training of personnel. This is a risk, as insufficient trained staff may, for example, cause negative impacts on processes at all levels of the organization. Consequences may reach from being negligible to catastrophic. • Inadequate processes. May lead to unpredictable outputs, safety issues and more. • Wrong raw material is used in production. May have potential negative impacts on safety of employees and facilities. Likely negative impacts on product quality. • Lack of precision in contracts with clients. May lead to unexpected liabilities and other negative impacts. • Failures in the design and development process. May lead to design results that don’t conform with customer requirements, legal requirements, etc. (e) All standards for management systems address risks and risk-based thinking, specific to the needs of the respective standards. Examples include: • ISO 14001—Environmental management system For example: Environmental risks and risks that may endanger the planned environmental performance.

16

1 Standards for Management Systems …

• ISO 27001—Information security management system For example: Internal information security risks, as well as risks, that may impact customers and other business partners. • ISO 37001—Anti-bribery management system For example: Different types of bribery risks on different levels and for different functions of the organization. We shall see more details and examples throughout the book. Although management system standards require the implementation of risk-based thinking and adequate risk management techniques, these standards mostly don’t specify details. Instead, they leave them to the organization applying the respective management system standard. It is expected, however, that risk management techniques employed by the organization are adequate and reflect the needs of the respective industry and organization. For that reason, when it comes to quality management, you will expect from a food company a more elaborated risk management system than from a hotel, say. Management system standards don’t come with specific requirements for risk management and risk management techniques. However, the leading international guidance standard for risk management is ISO 31000 and we shall go into some of its details in Chap. 2. Mostly, it is this document that is employed by organizations to get guidance on risk management.

1.5 Universal Design: The Architecture of Management System Standards ISO decided in 2012 that all standards for management systems will follow the same template. This is an important step forward toward increased user friendliness of standards and their compatibility. In the past, management system standards published for different scopes (including quality management, environmental management and others) followed different paths and wordings. Practitioners found it difficult, to compare the requirements of standards. This also was felt as a hindrance factor to create integrated management systems in organizations. Management system standards written according to the new design rules all show the following general structure. Of course, the detailed content of individual clauses varies from standard to standard, but the unified template makes orientation easier and increases compatibility. Definitions of terms used in the standards as well as wordings are harmonized as much as possible (Table 1.1).

1.5 Universal Design: The Architecture of Management …

17

Table 1.1 Harmonized table of contents for management system standards Clause

Title of clause

Content includes …

1

Scope

Description of the scope of the standard and its fields of applications. Examples: quality management, information security, etc.

2

Normative references

References to other standards, relevant to this one

3

Terms and definitions

Definition of specific terms and definitions used in the standard

4

Context of the organization

Understand the organization and its context Understand the needs and expectations of customers and other relevant interested parties Determine the scope of the management system Reference to processes of the management system

5

Leadership

Top management shows leadership and commitment to the management system and its objectives Define the policy for the management system Define roles, responsibilities and authorities within the organization relevant to the management system

6

Planning

Management system shall be planned Risks and opportunities within the scope of the management system shall be addressed Objectives of the management system shall be determined, and plans to achieve them shall be implemented Changes of the management system shall be done in planned manner

7

Support

Determine and make available adequate resources, including financial, people, infrastructure, environment for the operation of processes Monitor and measure these resources Determine and manage organizational knowledge Ensure the competence of people and their awareness concerning the importance of the management system Determine necessary communication related to the management system Determine which documented information for the management system is needed

8

Operation

Defines requirements for operational planning and control as well as for the planning and implementation of operational processes This clause is very specific and individual for each management system. It describes requirements for processes of the management system and their controlling

9

Performance evaluation

Defines requirements for monitoring, measurement, analysis and evaluation of processes and the overall performance of the management system

10

Improvement

Describes requirements for continual improvement and the handling of detected nonconformities and corrective actions

Chapter 2

Generic Standards for Management Systems: An Overview

In this chapter, you’ll get an overview about the following generic management system standards, their content, meaning and requirements: • • • • •

ISO 9001:2015—Quality management system; ISO 14001:2015—Environmental management system; ISO 22301:2019—Business continuity management system; ISO 27001:2013—Information security management system; ISO 44001:2017—Collaborative business relationship management system; • ISO 45001:2018—Occupational health and safety management system; • ISO 50001:2018—Energy management system; • ISO 55001:2014—Asset management system. You will also learn about the special standards: • ISO 17025:2017—Laboratory management; • ISO 21001:2018—Management system for educational organizations. You will understand the risk management guidance standard: • ISO 31000:2018—Risk management guidelines. We also shall have a short look at: • ISO 22316:2017—Organizational Resilience. Numerous examples, checklists and other material are scattered in the text.

© Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7_2

19

20

2 Generic Standards for Management Systems: An Overview

2.1 Introduction Management system standards may be divided into two groups: 1. Generic management system standards; 2. Industry-specific management system standards. In this chapter, we deal with the first group. Generic standards don’t show any industry-specific requirements, but may be applied to any organization, no matter what’s its business or size. An advantage of these standards is their flexibility. A disadvantage may be seen in the fact that they are written in a somewhat abstract language and they don’t explicitly contain any industry-specific requirements. Sometimes it may be difficult for the reader, to translate one or the other of the standards’ requirements to its own special context. However, a little exercise will help and I hope this book will support the process. The most important industry-specific management standards will be introduced in Chap. 3. The overall philosophy behind generic management system standards is to offer organizations a framework for the establishment, implementation and continual improvement of their management systems. The reader should keep in mind the answers to the following three FAQs: 1. Why are there so many standards for different aspects of a management system? The intent is that the different standards are complementary to each other in their scope, and together they should cover the various aspects of the management system of an organization (Fig. 2.1).

Fig. 2.1 Modular system of management system standards

2.1 Introduction Table 2.1 Special use of certain verbs in management system standards

21 SHALL

This means a requirement

SHOULD

This means a recommendation

MAY

This means a permission

CAN

This means a capability or possibility

2. Does the concept of genuine management system standards make sense at all? It seems that very different organizations are forced to adopt one and the same management system, which reduces creativity and diversity. If that were the case, the standards wouldn’t make sense. However, that’s not what management system standards do. It is important to understand that each of these genuine standards defines requirements that shall be met by organizations, when they decide to comply with the respective standard. The standards leave it open, how organizations manage this compliance. It isn’t the intent of the standards, to standardize management systems. However, this sort of misunderstanding and prejudice may still be found frequently. If it occurs, it shows a big misunderstanding. 3. Concerning the language of the standards: Is there anything special? As mentioned before, management system standards are written in a specific “slang” which you should get used to. In this book, I’ll stay close to it, but try to explain and translate issues where it seems to be helpful. Especially, there are four verbs, which are used in a specific and precise way by the standards (Table 2.1). The reader should keep their meaning in mind. It makes a difference if something is a requirement or a recommendation, permission or capability! Reading the sections of this chapter should suffice to give you an overview about the individual standards and their content. However, if you’re a practitioner, a quality manager, say, the full text of the respective standards should be on your table sooner or later.

2.2 ISO 9001—QMS—Quality Management System This section includes: • • • • • •

A very short history of ISO 9001; Motivation, why ISO 9001 is important; A discussion of the requirements of ISO 9001:2015; Reference to the guide ISO/TS 9002:2016; Reference to the guide ISO 9004:2018; Some examples to illustrate the application of ISO 9001:2015 requirements; • An overview about the ISO 100xx-series.

22

2 Generic Standards for Management Systems: An Overview

2.2.1 Introductory Remarks In this section, we give an overview about the standard. • ISO 9001:2015—Quality management systems—Requirements. The international standard ISO 9001 for quality management systems may be considered as the mother of all management system standards in the modern sense. It had some predecessors in the defense and other industries, but it was mainly the British Standard BS 5750 which served as a model for the first edition of ISO 9001 back in 1987. Since then, the standard has been revised several times and the overall structure and details of requirements have changed. The latest release issued end of 2015 again brings some significant changes, including more user friendliness for a wide range of industries around the globe. As it should be, each release included the lessons learned from the applications of preceding editions. I will not go into details, how the requirements of the standard changed over time, as this is of little practical importance for today’s users. You just have to stick with the newest edition (Fig. 2.2). Here is a frequently asked question: How may one standard for quality management systems serve the needs of such different industries like food, agriculture, mechanical engineering and all type of service industries, to mention just a few examples? Well, the standard ISO 9001 does not define specific requirements for any individual industry but general requirements for a quality management system. For instance, the standard defines requirements concerning the personnel of an organization: Necessary knowledge, training needs, responsibilities and authorities of individuals. Obviously, these requirements will be very different from organization to organization and from industry to industry. However, all organizations have in common that they shall deal with the mentioned issues in a systematic and adequate manner. The same holds for all other requirements of ISO 9001. They are generic and each organization has to fill them with life. ISO 9001 strongly focuses on the organization’s processes. Again, the processes of an Internet retailer are very different from those of a hospital. However, ISO 9001 requires that processes shall be designed, established, implemented, controlled and improved properly, no matter what the details of the organization are. The primary intent of ISO 9001 is to guide you through a certain set of general requirements which are expected to hold for each and any business, no matter where it is located

Fig. 2.2 History of ISO 9001 revisions since its first release in 1987

2.2 ISO 9001—QMS—Quality Management System

23

or what’s its size. It is the task of each individual organization, to comply with these general requirements and to materialize them in an adequate way. A potential barrier which can make the practical implementation sometimes difficult is this: Because of the broad scope of industries addressed, ISO 9001 is necessarily written in a technical and abstract language. You will hardly find the specific technical terms used in your industry and organization in the standard. This makes it necessary for the novice, first to understand clearly the content, intent and the requirements of the standard. In a second step, all these should be translated into the specific language of your organization and its context. Although this may seem to be a somewhat awkward process, this kind of decoding and encoding helps to understand the standard and to comply with its requirements. Is it necessary to adopt the technical wording and slang of the standard in your quality management system? The answer is: No! Continue to use the wording and the specific technical slang of your industry as this is the language you and your people are used to. Make sure, however, you deal with the requirements of the standard in an adequate way. For example: If you run a hospital, you don’t need to start talking of “design and development planning”. However, if you are involved in clinical trials or the development of new therapy schemes, the general requirements of ISO 9001 for the design and development of products and services will matter for your organization. In addition, you will discover that these requirements will also matter, if you’re implementing in your organization therapy schemes developed elsewhere, as this should obviously be done in a planned and controlled way. In such and many other situations, ISO 9001 will offer guidance and define requirements at the same time (Fig. 2.3). Here are some more recommendations, how to get the hang of the standard: 1. ISO 9001 follows a simple logic: Understand the expectations and requirements of your customers and employ the quality management system model suggested

Fig. 2.3 Customers and interested parties trigger your quality management system

24

2 Generic Standards for Management Systems: An Overview

by ISO 9001, to achieve customer satisfaction and continual improvement of your organization’s quality performance. 2. Don’t get lost in the language and structure of ISO 9001! It is important to understand step by step its logic and requirements, but the trick is to let the standard work for you and not the other way around. You will have mastered the standard, if you don’t have to look up one or the other clause or requirement, but if you got its logic and apply it instinctively in each relevant step of your business. Just a remark in passing: You may even apply it to organize and improve your private life! Try it! It may be fun and it’s a good exercise! 3. Do everything, to get a gut feeling for the requirements of ISO 9001. Don’t stick too much with the text of the standard but try to get its spirit. 4. Exercise the application of ISO 9001 requirements not only in your own business but think what they mean for others. Imagine, for example, you prepare for a job interview. Your questions about your potential new employer might include Table 2.2: Ask these and other relevant questions, connect them with corresponding clauses of ISO 9001, and you already start thinking like a quality manager or auditor!

2.2.2 The Principles Behind ISO 9001 ISO 9001 is built on seven principles (Fig. 2.4). It is important to keep these in mind during the lifetime of your QMS. Here are some comments on these principles: 1. Customer Focus 1.1. If your organization wants to survive, focus on customers is critical. Main customers are usually outside of your organization. However, internal customers are important as well and must be kept in the focus. 1.2. Ensure you understand the (changing) requirements, needs and expectations of customers and other interested parties. Base your understanding on facts and data. 1.3. Ensure you can fulfill customer requirements and expectations. 1.4. Align your planning and target setting with customer needs and expectations. 1.5. Ensure your services and products offer value to your customers. 2. Leadership 2.1. Top management shall define the quality policy of the organization. An environment must be created that supports this policy and makes its realization feasible.

2.2 ISO 9001—QMS—Quality Management System

25

Table 2.2 Questionnaire for a job interview Your questions could include…

ISO 9001 calls it…

What kind of company is it? What are its strengths and weaknesses? What’s the perspective of this industry? How do customers rank this company? Who are the main competitors? Is it a national or multinational organization?

Context of the organization

Who is in the management of this company? Who is responsible for what? What are the management principles? What is the management style and culture of the organization?

Leadership

What are the plans of this company for the future? Did they reach their objectives in the past? What are the planning procedures of the company?

Planning

What kind of people do they employ and what are their perspectives in the company? How do employees think about the company? Of what quality are internal trainings? How is the work environment: Working conditions, facilities, equipment? Does the company spend on its human and other resources?

Support

How does the company perform in design and development? Of what quality are their production facilities and how do they deliver their services? What is their interplay with suppliers? What’s the quality of their products and services? How do customers rank products and services?

Operation

Are performance indicators available? What do they look like and how do they compare with those of the competitors? Are there benchmarking results available?

Performance evaluation

What’s the perspective of this company? Do they run continual improvement programs? From now in 10 years, where would this company be?

Improvement

2.2. Managers at all levels shall align with the organization’s objectives and targets. 2.3. The quality of services and products is a strategic factor. 2.4. Ensure the availability of adequate physical, human and other resources. 3. Engagement of People 3.1. Determine the necessary knowledge and competence of your staff. 3.2. Ensure your staff has the necessary knowledge and competencies needed. Train your staff.

26

2 Generic Standards for Management Systems: An Overview

Fig. 2.4 Basic principles behind ISO 9001

3.3. Ensure personnel is aware of the importance of quality and the quality management system and understands what it means for each single workplace. 3.4. Empower your people and encourage participation in quality programs. Stimulate quality improvement. 4. Process Approach 4.1. Identify quality-relevant processes and their interactions. 4.2. Manage your processes. This includes their establishment, implementation, control and improvement. Base the management of processes on facts and data. 4.3. Ensure that processes and their interactions are understood by personnel. 4.4. Control inputs and outputs of processes. 5. Improvement 5.1. Make sure quality improvement is a key issue for the organization. 5.2. Ensure personnel understands that improving processes, performance, service and product quality are key factors for further development. 5.3. Encourage risk-based thinking. 5.4. Propagate root-cause analysis, corrective actions and improvement techniques. 6. Evidence-Based Decision Making 6.1. Base decision on analysis, objective data and logical thinking. 6.2. Employ data from process control, customer feedback, complaints, benchmarking, audits and other relevant sources. 6.3. Validate your measurement methods. 6.4. Verify data before using them. 6.5. If you take actions, monitor impacts and results.

2.2 ISO 9001—QMS—Quality Management System

27

7. Relationship Management 7.1. 7.2. 7.3. 7.4.

Understand the importance of your business relationships. Implement criteria and methods for the evaluation of business relationships. Determine the critical business relationships for your organization. Establish your business relationships on mutual benefits and interdependence. 7.5. Work with your relevant business partners on the continual improvement of relationships. As simple as these principles may sound, they will have huge positive impact if they are followed on a continual basis and become part of the organization’s DNA.

2.2.3 Discussion of the Clauses of ISO 9001 In this section, we will discuss the requirements of ISO 9001 and illustrate them with some examples for illustrational purposes. Table 2.3 shows the table of content of ISO 9001:2015 for overall orientation. As mentioned before, ISO 9001 may be considered as the prototype of all management system standards and it has found worldwide acceptance and application. The standard looks back to a history of thirty years. As the topic of quality management is crucial for every organization, the discussion of ISO 9001 requirements will be sort of more extensive than the discussion of the other management system standards later in the book.

2.2.3.1

Context of the Organization

Understanding the organization and its context The context is the set of those internal and external issues that influence your organization and its ability to achieve the intended results of its QMS. This clause of the standard requires you to identify these issues and get a clear picture of them. Some aspects of the context are of general nature and influence many organizations in a similar way. However, most of them will be specific to your organization and reflect its very individual situation. Examples include: • Economic factors that influence your organization (e.g. general economic situation, inflation forecast, tax conditions); • General status of your industry; • Legal and regulatory conditions and expected changes; • Changing technologies in your industry; • (Changing) expectations of relevant interested parties.

28

2 Generic Standards for Management Systems: An Overview

Table 2.3 Table of contents of ISO 9001:2015 giving an overview about the requirement modules (the standard also contains two informal Appendices A and B, not shown) ISO 9001:2015—Table of contents 1 Scope 2. Normative references 3. Terms and definitions 4. Context of the organization 4.1. Understanding the organization and its context 4.2. Understanding the needs and expectations of interested parties 4.3. Determining the scope of the quality management system 4.4. Quality management system and its processes 5. Leadership 5.1. Leadership and commitment 5.1.1. General 5.1.2 .Customer focus 5.2. Policy 5.2.1. Establishing the quality policy 5.2.2. Communicating the quality policy 5.3. Organizational roles, responsibilities and authorities 6. Planning 6.1. Actions to address risks and opportunities 6.2. Quality objectives and planning to achieve them 6.3. Planning changes 7. Support 7.1. Resources 7.1.1. General 7.1.2. People 7.1.3. Infrastructure 7.1.4. Environment for the operation of processes 7.1.5. Monitoring and measuring resources 7.1.6. Organizational knowledge 7.2. Competence 7.3. Awareness 7.4. Communication 7.5. Documented information 7.5.1. General 7.5.2. Creating and updating 7.5.3. Control of documented information 8. Operation 8.1. Operational planning and control 8.2. Requirements for products and services 8.2.1. Customer communication

8.2.2. Determining the requirements for products and services 8.2.3. Review of the requirements for products and services 8.2.4. Changes to requirements for products and services 8.3. Design and development of products and services 8.3.1. General 8.3.2. Design and development planning 8.3.3. Design and development inputs 8.3.4. Design and development controls 8.3.5. Design and development outputs 8.3.6. Design and development changes 8.4. Control of externally provided processes, products and services 8.4.1. General 8.4.2. Type and extent of control 8.4.3. Information for external providers 8.5. Production and service provision 8.5.1. Control of production and service provision 8.5.2. Identification and traceability 8.5.3. Property belonging to customers or external providers 8.5.4. Preservation 8.5.5. Post-delivery activities 8.5.6. Control of changes 8.6. Release of products and services 8.7. Control of nonconforming outputs 9. Performance evaluation 9.1. Monitoring, measurement, analysis and evaluation 9.1.1. General 9.1.2. Customer satisfaction 9.1.3. Analysis and evaluation 9.2. Internal audit 9.3. Management review 9.3.1. General 9.3.2. Management review inputs 9.3.3. Management review outputs 10. Improvement 10.1. General 10.2. Nonconformity and corrective action 10.3. Continual improvement

2.2 ISO 9001—QMS—Quality Management System

29

Internal issues specific to your organization might include: • • • • •

Current and intended market position and overall performance of the organization; Infrastructure and equipment: Current status and future needs; Human resources: Current status and future needs; Current and future requirements and expectations of clients and business partners; Expectations of owners and stakeholders.

Organizations from small family business to big multinationals have or should develop their tailor-made approaches and toolboxes that help them to keep these issues on the radar and classify them according to their potential impacts and risk relevance. Although this requirement may seem simple at first sight, in real life it is frequently a challenge. For smaller organizations being less complex, topics should be easy to handle. For medium and large organizations, the task is complex and needs systematic approaches. Updating the “context of the organization” should be a fixed part of strategy processes (Table 2.4). SWOT analysis is a simple and widely used tool, to identify strengths, weaknesses, opportunities and threats of an organization. It may prove to be helpful when an organization determines its context. See Chap. 6 for more details (Fig. 2.5). Understanding the needs and expectations of interested parties Despite of your customers, other relevant interested parties may have expectations or define requirements for your organization. There may be many such parties, but the Table 2.4 Potential approaches to determine the context of the organization (examples) Size of the organization

Approaches could include

Small

Regular analysis and updates of relevant topics in a small team lead by the owner or manager of the organization

Medium and large

Continual analysis of changing customer requirements Analysis of competitor landscape Analysis of competitive technologies Analysis of legal and regulatory requirements Analysis of critical supply chains Analysis of performance (KPIs) SWOT analysis on a regular basis

Fig. 2.5 SWOT analysis tableau

30

2 Generic Standards for Management Systems: An Overview

Table 2.5 Relevant interested parties, their needs and expectations, and how to identify them Interested parties may include…

Relevant material may include…

Methods to research needs and expectations of interested parties may include…

• Customers • Members of the supply chain • Owners and shareholders • Unions • Nongovernmental Organizations (NGOs) • Cooperation partners • Competitors • Local authorities and community groups • Associations • …

• Customer requirements • Contracts with members of the supply chain • Agreements with local community administration • Agreements with NGOs or local community groups • Agreements with unions • Agreed codes of practice • …

• Systematic reviews of contracts received and signed • Systematic contact meetings with clients, potential clients, local communities, NGOs, authorities and other relevant interested parties • Clear established communication structures with relevant interested parties • Market surveillance • …

intention of the standard is to focus on those which may influence your organization’s ability, to supply products and services that comply with defined quality specifications (Table 2.5). Determining the scope of the quality management system The scope of the organization’s QMS shall be clearly defined. In practice, it may include the whole organization or only parts of it. Some examples may help to better understand: 1. A French-based multinational company runs a major production site in France and three affiliates in Spain, Germany and Italy. The site in Italy is urgently requested by its clients from the chemical industry, to demonstrate compliance with ISO 9001 within the next year. Although the headquarters already decided to implement an ISO 9001 QMS companywide within the next three years, the affiliate in Italy is prioritized and designed to go ahead. In this example, the scope of the QMS will change over time, starting with the affiliate in Italy. As the headquarters is in France, however, certain relevant parts and processes linking the Italian site to the headquarters shall be included in the QMS from the very beginning. 2. A hospital based in Prague, Czech Republic, with 1200 employees runs 10 departments. The management of the clinic decides to implement a QMS according to ISO 9001, however prefers a step-by-step approach. Reasons include to keep the project manageable and to learn from the ups and downs during the implementation process before the rollout of the project to other departments. For that purpose, the General Surgery and Intensive Care departments are selected to be the forerunners of the project. In this example, the organization and processes of the two chosen departments will be in the focus during the first

2.2 ISO 9001—QMS—Quality Management System

31

part of the QMS implementation. However, interfaces to clinic management and other departments shall be fixed. For example: • The top management of the clinic shall be involved and be part of the pilot project from the very beginning. • Interfaces to other parts of the clinic shall be fixed and dealt within the project. These will include, for example, the diagnostic departments, clinical laboratory and parts of the administration. 3. Company XYZ runs three production lines (A, B, C) for different products and customer segments. The management launches the project to implement a QMS for production line B, as specific quality requirements are defined for the products of this line by regulatory organizations and clients. Again, such an approach is possible, although the ultimate target should be to extend the QMS to the remaining production lines A and C. Interfaces to top management, administration and other departments shall be respected and dealt with even if the scope is first limited to production line B. It should be mentioned in passing that certification of management systems may and will be constrained to the scope of the QMS. In case 3 above, for example, an ISO 9001 certification of Company XYZ with Scope Production Line B would be possible. On the other hand, some processes and activities shall not be excluded. If for line B (in case 3) design and development processes are essential, they cannot be excluded from the QMS for line B, as being an important part of that line. Quality management system and its processes This clause states the formal and overall requirement that an organization that wants to comply with ISO 9001 shall establish a QMS and implement, maintain and improve it according to the requirements of the standard. As pointed out before, the biggest focus by far is on the organization’s processes that influence its capability to produce products or deliver services at the quality level requested by its customers and relevant stakeholders. In detail, this means for the QMS: • • • • • •

Identify the processes needed for the organization’s QMS. Determine inputs and outputs of these processes. Determine the individual steps of the QMS processes. Determine monitoring and measurements needed, to control QMS processes. Determine ownerships, responsibilities and authorities for QMS processes. Determine the risks to be addressed by the processes and ensure that processes achieve intended results. Manage the risks. • Determine interactions between QMS processes throughout the organization. • Ensure that necessary resources are available. • Ensure that QMS processes are continually improved, if needed.

32

2 Generic Standards for Management Systems: An Overview

Translating these requirements into practical actions will typically start with: • Listing of all relevant QMS processes: Key, support and management processes. • Listing of additional QMS processes, required by ISO 9001 (e.g. internal audit processes, process to determine stakeholders and other systemic processes). Process mapping techniques as described in Chap. 6 of the book may be employed in this step. Examples include: • Flowcharts; • Turtle diagrams; • SIPOC diagrams. Software programs are available to assist in doing the process mappings.

2.2.3.2

Leadership

ISO 9001 requires top management of the organization to be accountable for the effectiveness of the organization’s QMS. This is the central message. The other requirements of this clause follow more or less by straightforward logic. Leadership and commitment In most cases, it follows from the organization’s legal structure, who is top management. As a rule, legal entities require a nominated top management. In practice, top management of an organization may be represented by the CEO (chief executive officer), general manager, managing owner, managing partners and others. Whatever the details of the organizational setting, in each case, top management is accountable for the QMS. Depending on size and other aspects of the organization, top management will implement a clearly defined management structure with defined responsibilities for individual aspects of the QMS. Top management shall: • Make clear that it is accountable for the effectiveness of the QMS. • Top management shall encourage other management functions with respect to the QMS. • Ensure that a quality policy and quality objectives are established and met. • Ensure that personnel know the quality policy, defined quality objectives and understand their importance. • Ensure that the processes of the QMS are part of the real management system. Their interactions with other management processes shall be specified. Remark This requirement may sound weird at first sight. However, practice shows, it is much needed. Too often organizations implement sort of a shadow organization for quality management which is designed to impress customers and certification companies but has little to do with daily reality. • Ensure that necessary resources are available during the whole lifetime of the QMS.

2.2 ISO 9001—QMS—Quality Management System

33

• Ensure that risk-based thinking and the process approach of ISO 9001 is understood by employees and practiced. • Promote continual improvement of the QMS. Due to these requirements, top management will continue to play the major role during the whole lifetime of the QMS. Customer focus The leadership expected from top management shall include the following: • Ensure that regulatory, statutory and customer requirements are systematically determined and met. • Ensure that risks and opportunities with potential impact on the conformity of products and services as well as on customer satisfaction are determined and managed. • Ensure that the organization focuses on customer satisfaction. Policy The quality policy of the organization shall be established, implemented and maintained by top management. It shall form a framework for the setting of quality objectives and be appropriate to the context and strategic direction of the organization. The policy shall include a commitment to comply with applicable requirements, as well as a commitment to continual improvement of the QMS. The quality policy shall be communicated and applied within the organization. It shall be available as documented information and to relevant interested parties. Remark These requirements are clear, and it should be no problem to translate them into practice. However, too often quality policies are mainstream documents, without any real reference to the individual organization. Statements which boil down to something like “We’re just a great company” will not do and organizations should work a bit harder on it. A good quality policy is authentic and contains statements that can be verified. The organization shall ensure that personnel doing work under the QMS understands the importance of the quality policy. Organizational roles, responsibilities and authorities ISO 9001 requires top management to ensure clear assignments of authorities and responsibilities for the QMS throughout the organization. Remark No matter what’s the size and complexity of your organization, a clear assignment of managers and other staff to tasks relevant to the QMS is required. The primary intention is not to reduce people’s degrees of freedom and narrow down their creativity to a minimum, but to keep the organization transparent and have clarity, who is responsible for what. The more complex an organization and the more diverse its tasks, the more important becomes a one-to-one assignment of responsibilities. Whereas in small organizations assignments may be done verbally and perhaps even

34

2 Generic Standards for Management Systems: An Overview

on a daily basis, in medium and large organizations written assignments and empowerments should be the standard. Keep in mind: Organization is there to reduce chaos and arbitrariness. Figure 2.6 shows a typical organization chart as you may find it in many organizations. It is useful to give a general overview about department structures and main management roles. However, it is usually of no use, to show assignments in process-oriented organizations, as required in the context of a QMS. Although not the only means, RACI matrices are a field proved tool to make clear assignments. The idea behind RACI is simple: Processes are the backbone of an organization, and they are made of sub-processes and individual tasks. Tasks may be activities, decision makings, control activities and more. If processes are to be unambiguous and clear, assignments of persons to each individual process step must be established and communicated. Hereby roles and corresponding tasks should be defined as clear as possible. Using the RACI-model is just one way of many, to achieve precisely this. Most organizations employing the model use it with the four functions R-A-C-I and roles described in Table 2.6. Some others want to underline the importance of Quality Review activities and for that reason implement another Q-role. However, this role also can easily be assigned to one of the other RACI-functions. It’s more a psychological issue to expose and underline the role of the quality function.

Fig. 2.6 Typical organization chart

Table 2.6 RACI(Q)-Matrix and its functions Function

Description

R

Responsible

Person who works on activities

A

Accountable

Person with the authority to decide

C

Consulted

Stakeholder who should get involved in activities and decisions

I

Informed

Person who gets informed about decisions and actions made

Q

Quality review

Person who checks fulfillment of quality management requirements

2.2 ISO 9001—QMS—Quality Management System

35

Another important point which should be respected is this: Assigning roles and responsibilities is important. However, it should also be ensured that roles are clearly communicated and understood. This is super important if critical functions and responsibilities are assigned to a person. For more details, see Chap. 6.

2.2.3.3

Planning

Actions to address risks and opportunities The primary intent of a QMS is to achieve the quality objectives and planned qualityrelated results of the organization. Obviously, this can’t be reached by a random approach, but needs a clear design of the QMS and adequate planning of its processes and other details. This is what the current clause of ISO 9001 is about. Based on the requirements and expectations of clients and relevant interested parties, the organization shall establish, implement and maintain its QMS tailormade to its needs. The details of this process will be as diverse as organizations and its businesses are. However, any organization will have to consider its: • • • • •

Processes; Equipment, facilities and infrastructure; Personnel; Suppliers and subcontractors; and other issues.

The overall objective is: The organization shall reach confidence based on evidence that its quality management system is robust and suitable to achieve the intended results. However, there will be risks which challenge the organization and its QMS. These risks shall be determined in a systematic way. Risk-based thinking is required once again. There are tools out there which may support you to determine potential risks, to rank them and to initiate preventive actions to avoid them (see also Chap. 6). Some of these tools are: • FMEA—Failure Mode and Effects Analysis is an established tool in many industries, including automotive and aerospace industry, where it’s even a must. The same holds true for FMECA—Failure Mode and Effects and Criticality Analysis. • HACCP—Hazard Analysis of Critical Control Points is a tool widely applied in food processing industries. • In many cases, matrix schemes like the one shown in Fig. 2.7 may help to get an overview about risks and potential impacts. In this scheme, risks are classified according to their likelihood of occurrence into groups “high, medium, low”. Potential impacts are also grouped into “high, medium, low”. In this way, risks may be classified into priority classes. See Chap. 6 of the book for more details.

36

2 Generic Standards for Management Systems: An Overview

Fig. 2.7 Risk priority matrix

ISO 9001 does not require the organization to implement a full risk management system according to ISO 31000, to manage its risks. However, there is the requirement, to identify risks and keep them under control. For that reason, the organization should implement at least a risk management toolbox, which fits its specific needs (Table 2.7). Two additional remarks are important: 1. An organization may be influenced by many different types of risks and threats. ISO 9001 focuses primarily on those risks that may have negative or positive impacts on quality of its products and services. 2. ISO 9001 requires the organization to deal with risks. At the same time, however, the standard wants the organization to identify and deal with opportunities. Table 2.7 Examples of potential risks Potential risk

Potential action/comments

Risks deriving from inadequate processes

Process reengineering is needed to change processes

Unreliable subcontractors or suppliers

Launch projects to streamline collaboration, or exchange subcontractors and suppliers, if possible

Inadequate facilities

This is a critical issue, as it may require major investments to change the current situation For example, production shall take place under clean room conditions and existing infrastructure doesn’t comply with higher requirements

Insufficient skills of employees

This is always an issue and continuous training initiatives may be part of the solution

2.2 ISO 9001—QMS—Quality Management System

37

You should keep in mind that ISO 9001 considers risks and opportunities being the two sides of the medal. For that reason, opportunities are considered as being “positive risks”. Quality objectives and planning to achieve them There isn’t something like an abstract QMS without objectives! It’s the objectives which give the system the direction. ISO 9001 expects quality objectives to be consistent with the organization’s quality policy, measurable and relevant to achieve conformity of products and services. Quality objectives shall include applicable requirements from customers and relevant interested parties. It is expected that planning of quality objectives includes: • • • • • •

Clear definition of quality objectives; Determination of necessary resources to achieve quality objectives; Specifications, how quality objectives shall be measured; Responsibilities/accountabilities; Time schedules; Methods how to evaluate and monitor achievements.

It is obvious, but still worthwhile to mention, that quality objectives shall be communicated to and known and understood by relevant personnel. Examples for measurable quality objectives: • Products and services of the organization fulfill customer specifications. • Products of the organization comply with national directives of importer’s country. • An organization intends to achieve less than 0.1% customer complaints for its services. • A hospital intends less than 5% complication rates for a specific surgical intervention. • Delivered services fulfill service-level agreements. Quality objectives need to be defined and implemented at relevant levels and for relevant functions. Typical examples include: • Objectives for processes: Stability, robustness, process capability, reproducibility, processing times, time from receipt of order to dispatch; • Objectives for personnel: Qualification of personnel, job satisfaction, number of people on sick leave, age structure; • Objectives for equipment: Technological standards, reliability, downtimes; • General client satisfaction: Fulfillments of contracts, client complaints versus positive feedbacks. ISO 9001 shifts the well-known statement: “You can only manage what you measure” to a higher level. It is a requirement that quality objectives must be measurable. This is straightforward if they may be traced back to physical, chemical or other measurable parameters. In other cases, however, it may be more difficult to implement adequate measurement methods. As an example, take the measurement

38

2 Generic Standards for Management Systems: An Overview

of therapy results in medicine. Although methods are available, their application is not straightforward and may require advanced statistical studies. Some more examples: • To measure patient satisfaction is a complex topic, for example, heavily depending on how and when patients are asked for feedback. • Guests of a hotel may be satisfied with the service or not. However, what precisely are their criteria and how can you measure them in a reproducible manner to compare the results with those of other hotels? To make it short, meaningful measurement methods must be selected with care and expertise. Planning of changes Once implemented, a QMS will not do forever. Changing customer or other requirements, changing technologies and other reasons will call for a redesign of the QMS. ISO 9001 requires that these changes shall be done in a planned manner. This includes: • Fix the reason, purpose and extent of changes. • Determine the resources needed to plan and implement the changes. • Define responsibilities and authorities for the involved project management and other staff. • Get a clear picture of the transition process of the QMS. Ensure transition plans are reasonable and manageable. Again, these requirements may sound obvious; however, they are not always easy to fulfill. Obstacles may include (Fig. 2.8): • An implemented QMS typically shows some inertia. To initiate and implement necessary changes may be hard, as some managerial functions may refuse to support.

Fig. 2.8 QMS: Planning of changes

2.2 ISO 9001—QMS—Quality Management System

39

• Change projects are not easy to manage. Frequently they are impacted by unforeseen issues. • During the change process of the QMS, product or service quality may suffer and not comply with requirements. This must be avoided, of course.

2.2.3.4

Support

This clause of ISO 9001 is a collection of requirements for various types of support elements. Figure 2.9 shows an overview about the different categories. Resources: General Remarks ISO 9001 distinguishes the following types of resources: • • • • •

People; Infrastructure; Environment for the operation of processes; Monitoring and measuring resources; and Organizational knowledge.

At first sight, one might wonder why financial resources are not addressed here. However, they are implicitly contained in the requirements for all of the mentioned resources. In addition, financial resources have been already addressed in the “Leadership”-clause discussed above: Top management is responsible to make available adequate resources for the QMS, including financial. The availability and capability of the organization’s resources shall be determined, as well as their constraints. Only those resources are to be addressed, which are relevant to the organization’s QMS. Resources include those provided by external providers, as far as relevant. Note, the type of resource management required by this clause is continual and for all phases of the QMS. Resources: People The organization shall determine and ensure the availability of personnel necessary to implement and maintain the QMS and to operate the organization’s processes.

Fig. 2.9 Support elements of ISO 9001

40

2 Generic Standards for Management Systems: An Overview

Resources: Infrastructure To ensure the conformity of its products and services, the organization shall determine and provide the necessary infrastructure for the operation of its processes. Infrastructure includes buildings, equipment, production facilities, IT hardware, software, transportation resources and more. Keep in mind, ISO 9001 expects riskbased thinking and requires process-oriented approaches. Depending on context and complexity of the organization, compliance with this ISO 9001 requirement for infrastructure may need substantial effort and project management. Resources: Environment for the operation of processes The organization shall determine and continually provide the environment needed for its operation. Hereby the term “environment” is not limited to physical, but includes human, social and potentially additional aspects. Examples include: • Physical aspects: Temperature, cleanliness, hygiene, light; • Psychological aspects: Stress-reduction, workload balance, prevention of burnout; • Social aspects: Nondiscrimination or cultural issues. Resources: Monitoring and measuring resources During production and service provision, the organization has to do the necessary monitoring and measurements, to ensure compliance with product and service requirements. Doing so, adequate measuring resources shall be available and employed. It is expected that these resources are planned and maintained to ensure correct functioning. Measurements and corresponding measurement equipment may be very different in type and include: • Physical measurements: Measurement of mass, length, time, electric charge, temperature, concentration, force, field strength and other physical quantities. Measurement equipment shall be calibrated or verified at adequate intervals. Records for this shall be available. • Checklists: A widely used tool to check issues. They also offer an easy way to document results. Frequently used in service industry and beyond. • IT-based (automated) measurement control: Used in many different variations and include statistical process control methods, quality control charts, etc. Measurement resources shall be treated with care and safeguarded from misuse and damage. Measurement resources showing malfunctions shall be adequately marked and protected from unintentional use. In many cases, measurement results shall be traced back to international or national standards. For the measurement of physical quantities, this is usually done based on national calibration or verification schemes. For this kind of measurement equipment, the status of calibration or verification should be marked on the devices or be available otherwise. In industry, measurement devices are mostly registered in a database which shows the status of calibration and other information for each device in use.

2.2 ISO 9001—QMS—Quality Management System

41

It should be mentioned that establishing an adequate management of measurement tools, including their calibration, is a demanding topic. It is a frequent source of nonconformities in third- and second-party audits. Besides technical measurements, others are of importance. As an example, take hotel rooms getting prepared for the next check-ins. Frequently a room maid with a checklist in her hand walks through at least a sample of rooms to check cleanliness and other things. The process of checking is a measurement in the spirit of ISO 9001, and the checklist used is a measurement tool. Even in this simple example holds: The checklist should be complete and contain the right topics, and the process of checking should be done by a trained person who knows what to look at and how to fill the checklist correctly and honestly. Resources: Organizational knowledge Roughly speaking, organizational knowledge is that knowledge of an organization that is needed to run its QMS and operate its processes, to achieve the organization’s quality goals and to deliver products and services that comply with requirements. The intent of this clause of ISO 9001 is to stress the dependence of the organization on relevant knowledge and the need for implementing adequate means to maintain that knowledge in the organization. The processes and actions needed will heavily depend on the details of the organization’s business, size, processes and other aspects. Let’s illustrate the consequences of these requirements by two simple examples: • An IT company serves clients from various industries. The knowledge of its IT experts includes: – General IT background like software, hardware and network architecture. – Specific background about the IT landscape of clients, including overview about running projects and more. This type of knowledge is the major capital of the IT service company. It shall be saved and developed. Risk-based thinking is required again, to determine priorities. • A general hospital runs departments for internal medicine, surgery and gynecology. What’s its organizational knowledge? It includes: – Individual professional knowledge and expertise of doctors, nurses and other personnel. – Team knowledge: The knowledge of a good team is not just the sum of knowledge of its individuals. In addition, there is the collective experience and knowledge, which make teams strong and successful. If parts of the team would get lost, this knowledge may disappear. The idea is to maintain as much as possible of it. This, however, needs adequate planning. Again, risk-based thinking is required, as certain knowledge may be more critical than others. Keep in mind: The knowledge of the organization includes the knowledge needed to run the organization today. However, the management shall also focus on the knowledge necessary to develop the organization and to make it fit for future needs.

42

2 Generic Standards for Management Systems: An Overview

If you wonder, why ISO 9001 for QMS includes this issue, think of the following example. A major customer relies on your organization to develop and provide certain products or services. If this customer intends to keep a long-lasting business relationship with your organization, it will be of utmost importance to him that your organization manages its organizational knowledge issues. It would not be acceptable that you suffer a breakdown if three of your experts retire or leave the company. It also wouldn’t be acceptable if your organization fails to hire the personnel needed for future crucial developments. For that reason, your organization shall make organizational knowledge and competence part of its critical QMS processes. Competence The intent of this clause is: • The organization shall determine the necessary competence of personnel which has influence on quality of products and services. All persons doing work under the QMS are addressed: Full-time employees, freelancers, subcontractors and others who contribute to processes. All levels and functions are involved. • The organization shall ensure the competence of personnel. Competence may be based on education, professional experience or other evidence. • When needed, trainings or other actions to increase or maintain competence will be ensured. • Documented information will be available on the competence of personnel. Again, risk-based thinking is required: Functions, which have high impact on the quality of products and services shall be more in the focus. Awareness People working under the QMS of the organization shall be made aware of: • • • • •

The intent and importance of the QMS and its objectives; The quality policy of the organization; The QMS-relevant processes; Their role and contributions to the QMS; Consequences of not following the QMS.

Triggered by top management, actions are expected, to implement and keep alive the “spirit of quality” in the organization. Real life shows, you’ll hardly be able to bring all people of your organization on board and make them understand and live the quality spirit. However, you should reach a critical mass of convicted. In addition, coming back to risk-based thinking: Functions in the organizations that are critical and associated with an increased risk level shall fully understand and support the processes of the QMS. Communication The intent of this clause is to define structures for internal and external communication on QMS-relevant issues. This includes topics like: Who will communicate what, when, how and to whom.

2.2 ISO 9001—QMS—Quality Management System

43

Simple as it may sound, there are some incredibly important things touched by these requirements. Imagine a food processing organization which shall initiate a recall of some of its products because of suspected contamination. In this case, national and international retailers and other interested parties must be involved, as well as consumers in a wide geographical area. It is of utmost importance, to establish adequate communication structures and methods in advance, to have them in place, if needed. There are less dramatic, yet important other topics to communicate with respect to the QMS and its objectives. Examples include: • The marketing department just finished a customer survey. Who will communicate internally which part of the results to whom and how? • A market analysis shows that a major competitor completed its next step toward further digitalization of the business with significant improvement of quality indicators. Should the organization communicate this internally? Who, how, when? • Out of sudden a product of the organization is discussed negatively on public media. How to process this information? How is the organization going to deal with it? Speed of action is key in such a situation, and for that reason, you should have a plan in your pocket in advance. In addition, there may be a multitude of quality-related information to be communicated internally, which derives from the monitoring of processes, internal audits or other sources. One example may suffice to illustrate: • Monitoring of products or raw materials coming in from a supplier shows a too high variance of certain physical parameters. How to deal with it? Who needs to be informed first by whom? Typically, a cascaded process will be defined and followed in case of such adverse events. It should be added that in some industries regulatory bodies define requirements for external quality-related communication. Among them: Food, pharmaceutics, medical devices, medicine. These shall be respected by an organization’s quality management and communication regulations. Details may vary between countries. Last but not least, the internal communication of the intent and content of the QMS shall follow fixed rules. Information must flow in predetermined channels to relevant personnel and functions and not follow an erratic process. This applies also when changes of the QMS must be communicated in a timely and reliable manner. Documented information The intent of this clause is to define requirements concerning documented information related to the QMS. The standard distinguishes between two types of documented information: • Documented information required by ISO 9001 itself. This includes, for example: – Quality policy; – Communication procedures (see remarks in last clause); – Qualification requirements for employees;

44

2 Generic Standards for Management Systems: An Overview

– Management review; – Audit reports; – etc. • Documented information which is determined by the organization and other relevant parties. These include, for example: – – – – –

Documentation requested by laws and regulatory bodies; SOPs—standard operation procedures; Work instructions; Documentation concerning the performance of the QMS; etc.

Creation, distribution, withdrawal and storage of documented information shall follow defined processes. These include: • A scheme of identification of documents (e.g. reference number, title, date, author or source). • Format of the documentation may include paper form and others. • Review, approval, release, withdrawal and saving of documents. During the years, ISO 9001 got more and more flexible with respect to what is required as documented information. Organizations are pretty flexible now, to choose adequate formats and contents of documentation. Of course, this reflects today’s reality and practical needs. Documented information may include formats like: • • • • •

Paper form; Photo or video; Apps; IT-based systems; Others.

When it comes to work instructions and operation procedures, a good choice of their format is key. Be aware, you can’t reach everyone by written paper. In many cases, video or photo material may do a much better job. A lot of information may be better transported by media than by paper. Consider the following two examples: • The manager of the Banquet Department of a conference hotel wants to instruct employees about standard table arrangements for various conference settings. He/she will likely document several arrangements from previous conferences and document them by photo. With some additional written information, these photos may be part of a work instruction and used for training of employees. • A best practice surgical intervention may perfectly be recorded on video and serve for the instruction of surgery teams. In practice, the right choice of format and depth of documentation depends on the business, the skills of employees and other factors.

2.2 ISO 9001—QMS—Quality Management System

45

A short remark on the history of documented information In the nineties, the early days of ISO 9001, the standard required organizations to have a “quality management handbook” which was a manual, describing its QMS. Usually, it was composed of a general part describing the principles of the QMS and extensive appendices containing standard operation procedures, work instructions and other documents. Unfortunately, in these days the prejudice emerged, that ISO 9001 and quality management is mainly about documentation. Consultants appeared on the scene and supported organizations during the implementation of their QMS and its documentation. Sorry to say, but too many of these consultants made a living from writing stupidly long documentations which too often weren’t used then by personnel. Frequently documents were found to be too abstract, and too complicated for daily use. From these days dates a certain aversion to ISO 9001 which still may be felt in some organizations. Fortunately, this heretic approach to quality management gets extinct as its proponents. However, still you may find offers around where “universal quality management documentation” is sold in paper or electronic form. Just ignore it! You may get inspired by others and their achievements in quality management. But there’s no such thing like a universal QMS or its documentation. Documented information is fine and important, but it’s by no means the heart of quality management. The organization shall have processes for the control of documented information. This includes mainly the following aspects: • Which documented information does the organization control? • How does the organization make documented information traceable? • How is documented information created, updated, distributed, withdrawn and saved? • How does the organization ensure that the newest release of relevant documented information is available where and when it is needed to authorized persons? No matter what formats are used for documented information, some type of classification is usually employed to structure it. A very popular and widely used classification scheme is given in Table 2.8. Be aware, however, there’s no need to stick neither to this terminology, nor to this classification of documented information. It’s just used here for illustrational purposes.

46

2 Generic Standards for Management Systems: An Overview

Table 2.8 A model for documented information Document type

Comment

Quality manual

This is typically a document giving an overview about the quality management system of an organization and its structure. Some use it as a handout for customers, suppliers and subcontractors Nowadays many organizations implement not only a QMS, but additional management systems for environment, business continuity, information security and others. In this case, they often have a document at the top of their documented information which offers an overview about their integrated management system. In such cases, the manual helps to navigate through the integrated management system of the organization and get a first overview

Quality management procedures

These procedures offer detailed descriptions of specific points of the QMS. Examples include: • Structure of the QMS and its organization (may be complex in bigger organizations, e.g. multinationals) • Instructions how internal audits are to be conducted • Statistical methods applied

SOPs—standard operation procedures

These are in-depth process description and comparable documents. Usually linked to a process landscape for better overview

Work instructions

These contain detailed descriptions which usually are applied at a workplace. May include among others: • How work is done • Equipment maintenance procedures • Environmental characteristics for the work • Measurement, calibration and similar procedures

Quality records

Records defined to be made along the processes and which usually are to be retained. May include among others: • Internal audit protocols, nonconformity protocols, etc. • Calibration protocols, quality control charts, etc. • Maintenance records • Instruction protocols of personnel

2.2.3.5

Operation

This clause defines requirements for the planning, implementation and control of an organization’s production and service processes. The storyline of its subclauses is sketched in Fig. 2.10. Let’s have a look at the details! Operational planning and control The organization shall plan, implement and control its production and service processes. The objective is to make processes capable to transform defined inputs

2.2 ISO 9001—QMS—Quality Management System

47

Fig. 2.10 ISO 9001—operation clause and its subclauses

into desired outputs. Output requirements (product and service specifications) are determined by customers and other relevant interested parties. What has been said above during the discussion of the clause on “Planning” holds here as well. Basically, the organization shall follow the following steps: 1. Determine all requirements for products and services to be produced and delivered. 2. Determine criteria for processes. 3. Determine acceptance criteria for products and services. 4. Determine the resources needed to achieve conformity with requirements for products and services. 5. Control processes, products and services using the criteria determined in steps 2 and 3. 6. Determine the needed documented information. Maintain it, to show evidence that processes are carried out as planned and products and services conform with their respective requirements. The language of this and the following subclauses may sound sort of technical, but the message is simple: Given the features and characteristics of products and services to be produced and delivered, plan, implement and run stable processes. Control your processes, products and services to keep compliance with requirements.

The reader may refer to the toolbox in Chap. 6 of this book, to get more detailed information about processes, including their design and control. In addition to the mentioned controlling activities concerning processes, the organization shall also control planned changes of processes and their consequences. As far as unintended changes happened, the organization shall monitor them as well

48

2 Generic Standards for Management Systems: An Overview

and mitigate potential adverse effects deriving from them. The importance of these additional requirements should be obvious. Requirements for products and services In daily business life, much trouble may derive from insufficient communication with customers. Customers should define their requirements and expectations on products and services they intend to buy from the organization as clearly as possible. On the other hand, the organization (supplier) needs to develop a clear picture if it may fulfill those requirements and expectations. Therefore, communication between the two parties is an important thing. Critical requirements concerning communication with customers include: • Provision of sufficient information relating to products or services to be delivered. • Clear processes for the handling of enquiries, contracts and orders. These shall include the management of changes of enquiries, contracts and orders. • Implementation of processes for customer feedback and complaints. • Processes for handling customer property. (Example In some cases, customers may temporarily hand over property to the organization. Think of your broken car which you leave at the repair service to get it fixed.) • If relevant, implementation of contingency action plan. The organization is required to ensure that products and services offered to customers will comply with applicable regulatory and statutory requirements and others, which may be considered as being important by the organization. The organization shall be able to meet the requirements for products and services it offers to customers. This is an important requirement, as too often organizations promise everything to get the order, however are unable to deliver. A typical reason for this could be that the sales department and production don’t communicate properly and sales representatives often get their bonus just for selling. It is for these and other reasons, that ISO 9001 requires the organization to have formal review processes in place, to check and ensure its ability to meet the requirements for products and services. Requirements may come from different sources, including: • Requirements defined by customers; • Requirements, although not defined by customers, still important for the specified or intended use of products; • Statutory, regulatory and comparable requirements; • Requirements defined by the organization itself. It may happen in practice that final contracts or order requirements differ from previous drafts. The organization shall resolve such differences and make sure that the content of the final order is understood and agreed between the parties. In complex organizations, this requires formal processes, as different departments may be involved, communication may not get forwarded to all people involved and so on. In case, when once agreed requirements have been changed, the same agreement

2.2 ISO 9001—QMS—Quality Management System

49

Fig. 2.11 ISO 9001—design and development of products and services—subclauses

procedures will be necessary. Adequate documented information will be available to document these procedures. Design and development of products and services Organizations with design and development activities shall establish, implement and maintain adequate processes for this important topic. ISO 9001 does not suggest nor prefer any specific processes or methods. Instead, the respective clauses of the standard should be understood as generic requirements for design and development processes of an organization, no matter in which industry it is or what’s its size. For that reason, Fig. 2.11 just shows the typical milestones of a design process. Details will depend on the specific needs of the individual organization. Respecting the standard requirements of ISO 9001 will make design and development processes of an organization more robust and state of the art. In real life, design and development frequently will not follow a linear process. Instead, the process will have ups and downs and forward and backward loops. However, it is exactly this type of situations, when the requirements of ISO 9001 will bring some order and reliability into the overall process. It is worthwhile to mention that previous editions of ISO 9001 left it to the organizations to decide, if they wanted to include design and development in their QMS or not. The current version of the standard does not offer this degree of freedom, and organizations having design and development activities shall include them into their QMS. Of course, the degree of relevance will strongly depend on the individual organization. However, in modern rapidly changing businesses, it will be hard to find an organization, which wouldn’t have the need to align its products and services to changing customer and other requirements. Table 2.9 summarizes the requirements of ISO 9001 for the different steps of the design and development process. They should be self-explanatory enough and not need further explanation.

50

2 Generic Standards for Management Systems: An Overview

Table 2.9 ISO 9001—requirements for the design and development process Design and development planning • Is the nature, complexity and duration of the design and development project clear? • Are the project stages fixed and do they include review stages of the design and development project? • Are validation and verification activities considered? • Are responsibilities and authorities of the project fixed? • Are the resources for the design and development project determined?

• Are interfaces between persons involved in the project determined? • Is the need for customer involvement in the design and development project determined? • Are requirements determined for the subsequent provision of products and services? • Is the level of control by customers and other relevant interested parties determined? • Is the necessary documented information for the project determined?

Design and development inputs • Are design requirements for products and services fixed precisely enough? • Do these include functional and performance requirements? • Is available information from previous comparable design and development projects considered?

• Are regulatory and statutory requirements considered? • Are standards, codes of practice and other relevant documents the organization commits to consider? • Are consequences of potential failures of products and services considered during the design and development process?

Design and development controls • Are control processes implemented to ensure that design and development results are defined? • Are reviews conducted to control, if design and development results show the ability to meet the requirements? • Are verification activities conducted to ensure that design and development results match input requirements?

• Are validation activities conducted to check, if designed and developed products and services meet the requirements and expectations for specified applications and intended use? • Are actions taken if problems are detected during reviews, verification or validation activities? • Is documented information about control activities available?

Design and development outputs • Does the organization ensure that input requirements are met by design and development outputs? • Are design and development results adequate to the envisaged provision processes of products and services?

• Do design and development outputs include specifications of products and services that are required for their intended use and safe and proper provision? • Is documented information on design and development output available?

Design and development changes • Does the organization identify, review and control changes of design and development during or after the design and development process? • Does the organization ensure that no adverse impact on conformity is implied by the design and development changes?

• Does the organization retain documented information, concerning: - Changes of designs and developments? - Results of conducted design and development reviews? - Changes and its authorization? - Taken actions to prevent adverse undesired impacts?

2.2 ISO 9001—QMS—Quality Management System

51

Control of externally provided processes, products and services Most organizations find themselves somewhere in a supply chain, delivering products and services to their customers. To do so, they buy products and services from other organizations and feed them into their own processes. Consequently, such an organization depends heavily on the quality of products and services of its suppliers. In addition, organizations frequently outsource some of their processes to subcontractors and again become dependent on their quality and reliability. Due to the importance of these topics, ISO 9001 comes with some specific requirements, including the following: • The organization shall ensure that processes, products and services provided by external organizations comply with requirements. This implies, of course, that the organization shall determine these requirements and communicate them to suppliers and subcontractors. • The organization shall determine controlling methods and apply them to products, services and processes delivered by external organizations or subcontracted to them. These controlling methods shall be adequately chosen and include criteria for the selection, evaluation and monitoring of the performance of suppliers and external providers. Typically, three types of constellation are frequently found: – Products and services from suppliers are incorporated into products and services of the organization. – Products and services from suppliers are delivered directly to customers of the organization by external providers on behalf of the organization. – Processes or some of its parts are provided by external providers. How should an organization survey and control its suppliers and subcontractors? A risk-based approach shall be applied. The overall target shall be: The organization shall ensure that externally provided processes, products and services will not negatively influence the organization’s ability to deliver products and services complying with defined requirements to its own customers. In practice, the methods of surveillance and control selected by an organization will depend on the criticality of products and services provided by its suppliers and the type and criticality of outsourced processes. Once again, risk-based thinking is required and the controlling and surveillance methods employed shall be sensitive, to control these risks. If those methods are intended to lead statistically significant results, statistical methods will be applied. We shall come back to this in Chap. 6. Another tool of choice is supplier audits (also called second-party audits), which are widely used in all industries. In Chap. 7, you’ll find some details about several types of audits. The topic of choosing, surveying and controlling subcontractors and suppliers is of utmost importance in today’s economy with its high degree of labor division. One may even say that ISO 9001 has its roots in the intricacies of relationships between organizations and their suppliers. As such relationships are typically fixed in contracts, these contracts used to have extensive appendices containing requirements on the supplier’s QMS. ISO 9001 is the nitty-gritty of these requirements. Parts of

52

2 Generic Standards for Management Systems: An Overview

those appendices are nowadays replaced by the requirement, that the supplier shall hold a certificate according to ISO 9001. However, often such a certificate will be considered as a necessary, but not sufficient criterion by the organization. It cannot completely replace second-party audits or other surveillance methods. Especially with critical suppliers and subcontractors, the organization shall implement continual communication with the focus on: • Detailed information about the products and services of the organization and its requirements, especially concerning quality aspects; • The organization’s requirements and expectations concerning the supplier’s and subcontractor’s approval procedures for provided products, services and processes; • Necessary competence and qualification of personnel; • Rules for the interaction and communication between the external provider and the organization; • The organization’s controlling and monitoring procedures of the external provider. As external providers also may have suppliers and subcontractors, this type of requirements will be handed further to them, as far as relevant. This is what is often called the quality chain.

Production and service provision Control of production and service provision The main intent of this clause is to define some specific requirements for the production and service provision processes of the organization. As is the whole layout of ISO 9001, these requirements are generic in nature and each organization must interpret them according to its own context. The requirements include: • Documented information shall be available which defines the characteristics of products to be produced and services to be provided. • Suitable monitoring and measurement methods and resources shall be implemented. These include, where applicable, in-process controls to verify if outputs are conforming with acceptance criteria. • Infrastructure and the production environment are adequate and comply with defined requirements. • Competent personnel with adequate qualifications are available. • Production and service processes are validated and periodically revalidated if this seems necessary and respective process outputs cannot be verified by other means. Example Imagine a production line in a sausage factory. You can’t check each sausage for contamination with bacteria, but must ensure that the process avoids it. • Implement preventive actions to avoid human errors. • Implement and maintain processes for release, delivery and post-delivery of products and services.

2.2 ISO 9001—QMS—Quality Management System

53

Identification and traceability Traceability, status control during production and service provision, and the identification of products and services are important issues in each industry. In some industries, however, it is of crucial importance. A car manufacturer shall know which breaks with identification number such and such have been built into your car. A medical doctor must be able to tell, which medicine a patient received when, during his treatment process in the hospital. ISO 9001 comes with some general requirements: • The organization shall implement suitable processes and methods to identify process outputs where necessary. Conformity of products and services with requirements shall be ensured. • The organization shall implement measurement and control points during the production of products and provision of services to identify (trace) its status. • Where traceability is required, the organization will retain documented information on the unique identification of outputs and the corresponding results of measurement and control. In some industries, these general requirements are enhanced with very specific additional requirements. Property belonging to customers or external providers This subclause of ISO 9001 addresses property which is under control of the organization or being used by it, but belongs to its customers or other parties, like subcontractors or suppliers. The intent of these requirements is to ensure that property not belonging to the organization, but wholly or partially under its control is protected. Requirements include: • The organization shall have processes for identification and protection, as well as for safeguarding such property. • In case named property is lost, damaged or otherwise unusable, the organization shall inform the owner. Documented information shall be available showing details. Typical examples include: • Consider an IT company which manages hardware and data networks of its customers. In this case, things handled (but not owned) by the organization would include: Hardware and data of customers. • A cleaning company offers services in office buildings. The cleaning processes imply doing work with other’s properties (facilities, furniture, etc.). • Subcontractors having equipment and stored material in the facility of the organization. Preservation This subclause addresses the requirement that the organization shall ensure the preservation of products and services during all stages of the production or service delivery process.

54

2 Generic Standards for Management Systems: An Overview

The topic is critical to many operations, as some examples may help to illustrate: • In food processing organizations, ingredients shall be preserved (e.g. stored under defined conditions before being used in the production process). • Retailers shall preserve goods adequately before selling or sending. • Process to assemble parts: Parts shall be kept in defined conditions. Post-delivery activities In many cases, the responsibility of an organization for its output doesn’t end with the provision or delivery of products and services. ISO 9001 addresses this issue in subclause “Post-delivery activities”. The requirement simply means that an organization shall determine the extent of its post-delivery obligations and activities. For example, these may be triggered by: • • • •

Statutory, regulatory, warranty or contractual requirements; Unexpected and undesired consequences and events with products and services; Customer requirements and customer feedbacks; The organization’s own after-sales services like offering a product and service hotline.

Control of changes This subclause defines the requirement that the organization has to implement processes to monitor and control changes that may occur during production and service provision. Such changes may have a variety of reasons. Examples include: • Due to a downtime, part of the main production facility had to be replaced by another. • One of the organization’s supplier reports a quality problem, which may have direct impact on the organization’s products. • Caused by recent high staff turnover in the hotel, the manager expects high variations of service quality. It’s obvious that these and other issues may have an essential impact on the quality of products and services and, therefore, need to be controlled. Release of products and services The release of products and services is a critical and formal step. ISO 9001 demands that only products and services that comply with requirements are released. A release shall be preceded by adequate checks, which may reach from simple cross-checks or acceptance sampling to intensive testing of individual products and services, involvement of third parties and so on. Documented information shall be retained on the release process. Some examples may help to illustrate: • If a customized ship diesel engine is to be released, extensive tests and measurements will be needed, involving the customer, third parties and others. Documentation will likely be extensive.

2.2 ISO 9001—QMS—Quality Management System

55

• If you buy a laptop from a retailer, he may find it necessary just to double-check if it’s the right model, storage size and color. Documentation is the bill containing the product specification. • Buying a cheeseburger in a fast-food restaurant could mean that the service guy just checks its temperature. Needless to mention that the release process has a lot to do with potential guarantee claims. For that reason, the organization shall have adequate documented information about the status of released products and services. Control of nonconforming outputs If products or services don’t comply with requirements, the organization shall take appropriate actions and prevent their unintended release, delivery or use. The details of actions to be taken depend strongly on the details of the case, contractual agreements, legal requirements and others. Some examples may illustrate the wide range of potential cases: • Due to professional malpractice, a surgical intervention went wrong. In this case, the service has already been delivered, but the hospital is requested, to act. Professional needs and legal requirements will typically shape the boundary conditions for actions to be taken. • The quality engineer of a brewery has indications that the batch of beer which left the production line this afternoon may be contaminated by chemicals. He stops the delivery process. Part of the batch is already delivered to three local restaurants and bars. Due to the traceability system of the brewery, he’s able to identify the delivered items and call them back.

2.2.3.6

Performance Evaluation

This clause of ISO 9001 is critical, as it deals with the effectiveness of an organization’s QMS. It includes requirements for: • • • •

The monitoring of customer satisfaction; Analysis and evaluation of quality-related data and events; Internal audits; Management review.

As was mentioned before, the overall philosophy of the standard is management by fact and data. For that reason, organizations shall implement measurable quality objectives at relevant levels and for relevant functions. Especially, there shall be adequate key performance indicators for processes in place. Monitoring, measurement, analysis and evaluation Keep in mind, all requirements of ISO 9001 focus only on the quality management system of an organization and nothing else. For that reason, don’t mix them up with

56

2 Generic Standards for Management Systems: An Overview

Fig. 2.12 Monitoring, measurement analysis and evaluation—main dimensions

other requirements coming from other areas. The organization shall identify quality objectives and indicators that matter and monitor them. If you look back on our discussion of ISO 9001 so far, we met a whole bunch of data that shall be considered by the organization. Just to repeat some of the more important types: • Overall quality objectives and quality indicators of the organization; • Quality indicators for support processes and resources; • Operational planning and controlling data. These include primarily data from design, development, production and service delivery processes. The quality data to be collected and analyzed shall be meaningful and relevant to the evaluation and further development of the organization’s QMS. Cemeteries of collected meaningless data should be avoided, as they lead you nowhere. In more advanced organizations, something like a “management cockpit” is typically available, showing aggregated data of different kind, including quality data and their development. Special software is on the market that may be employed to support the collection and analysis of quality-related data (Fig. 2.12; Table 2.10). Remember, the intent of all the monitoring, measurement, analysis and evaluation activities is primarily the following: • What do data and analysis results say concerning the conformity of the organization’s products and services? • What is the response of customers? What’s their degree of satisfaction? • How does the QMS perform and what’s its effectiveness? • Have risks and opportunities been addressed effectively? • Was planning for the QMS effective? • How do external providers and subcontractors perform? • What are needed improvements of the QMS?

2.2 ISO 9001—QMS—Quality Management System

57

Table 2.10 Checklist—measurement, monitoring, analysis and evaluation of quality data Checklist for measurement, monitoring, analysis and evaluation (1) What quality-related data needs the organization to measure and monitor? (2) What methods need to be employed to achieve meaningful and correct quality relevant data? (3) What are the methods for monitoring, measuring and analysis of quality relevant data? (4) When is measuring and monitoring of quality relevant data done? (5) When are collected measuring and monitoring data analyzed? (6) How are the results of the analysis employed to get a clear picture of the effectiveness and performance of the QMS? (7) What kind of documented information is retained concerning measurement, monitoring, analysis and evaluation to show evidence of achieved results?

Internal audit The organization shall conduct internal audits of its QMS. These audits shall focus on the general requirements of ISO 9001 and additional issues, defined by the organization itself. When planned, conducted and evaluated correctly, internal audits are a powerful tool to detect nonconformities and opportunities for improvement. ISO 19011 offers guidance on how audits should be conducted and Chap. 7 of this book deals with the details. Management review As explained above in Sect. 2.2.3.2, top management shall demonstrate commitment and leadership concerning the organization’s QMS. Regular management reviews of the QMS done by top management are an important part of this. The main intent of the review is a systematic evaluation of the organization’s QMS, especially considering its effectiveness and alignment with the strategic and general directions (Table 2.11). Management reviews are usually done at least once a year. However, the frequency is determined by the organization. There’s no specific format required for management reviews, but the organization should create a standard report layout, to make comparisons of reviews from different periods easier. It should be stressed that the management review of an organization is an extremely important document and part of the required documented information. From its content, you may see if an organization takes its QMS seriously and really follows the path of customer orientation. During certification and surveillance audits, management reviews will be checked.

2.2.3.7

Improvement

This clause of the standard deals with three issues: • General requirements concerning the improvement of the organization’s QMS; • Requirements concerning nonconformities and corrective actions; • Requirements concerning the continual improvement of the QMS.

58

2 Generic Standards for Management Systems: An Overview

Table 2.11 Management Review: Inputs and outputs

Input to the management review includes… • What is the status of actions initiated after previous management reviews? • Are there any changes of internal and external topics that have impact on the QMS? • Performance data derived from the quality management system, including ✓ Customer satisfaction data ✓ Feedback from other parties ✓ Data about quality objectives ✓ Quality performance data of processes ✓ Data on conformity of products and services ✓ Nonconformities of the QMS and resulting corrective actions ✓ Results of monitoring and measurements ✓ Findings from internal, second- and third-party audits ✓ Performance of suppliers and subcontractors • Resources: Are they adequate? Are there needs to adapt them? • Are risks and opportunities addressed adequately? Output from the management review includes… • Opportunities for improvement? • Corrective actions needed? • Necessary changes to the QMS? • Resources adequate or is adaptation needed?

Once an organization implemented a QMS according to the general requirements of ISO 9001, it shall not just let it go, but strive for its improvement. In real life, there will be many factors triggering improvements, including, for example: • • • •

Requirements and expectations of customers; Requirements defined by relevant interested parties; Changing risk and opportunity landscape; The organization’s attempts to continually improve its products and services.

ISO 9001 leaves it to the organization to define its quality initiatives and quality level. However, there is the clear requirement, to identify those opportunities for improvement, which derive from customer requirements and the organization’s own objectives. Such requirements typically include (Fig. 2.13): • Improve products and services to meet requirements of existing customers and to address needs and expectations of further customers. • Improve products and services to reduce undesired events. • Improve the overall performance of the QMS. When the organization detects nonconformities, it has to define and follow up adequate corrective actions. The crucial thing is to deal with them systematically. In Chap. 6 of the book, you may find a potpourri of techniques that can be applied

2.2 ISO 9001—QMS—Quality Management System

59

Fig. 2.13 Improvement actions in a nutshell

to do so. So-called 8D-Reports are just an example. The requirements of ISO 9001 include the following: • Detected nonconformities (concerning products, services, the QMS in general) shall be resolved. Analyses shall be made if detected nonconformities have impact on other parts of the QMS. Remark Root-cause analysis methods are a good tool to deal with this in a systematic manner (see Chap. 6). • Check the effectiveness of corrective actions made. • Cultivate and practice risk-based thinking. Use it to manage risks and opportunities. • Change the QMS where needed. • Retain adequate documented information on these topics and achievements.

2.2.4 Shortened Checklist for ISO 9001 Remark The intent of this shortened checklist is not to cover all requirements of ISO 9001. Instead, we highlight the most important ones only. When your organization applies for certification for the first time, based on international requirements, you’ll have to pass a so-called stage one audit prior to the certification audit. The content of this shortened checklist is roughly what you will be asked by your auditor during the stage one audit, to check readiness of your organization for certification. Be prepared that additional (e.g. industry-specific) issues may be covered in such an audit as well (Table 2.12).

2.2.5 Frequently Asked Questions What’s the essence of ISO 9001 in a nutshell? Let’s try to give a short answer: (1) Quality management isn’t just a bundle of random requirements defined by ISO 9001. Instead, it should be part of any organization’s DNA that hopes to survive.

Context of the organization

Understanding the organization and its context

Understanding the needs and expectations of interested parties

Determining the scope of the quality management system

Quality management system and its processes

4

4.1

4.2

4.3

4.4

Shortened checklist for ISO 9001

Table 2.12 Shortened checklist ISO 9001:2015

(continued)

✓ Does the organization have a QMS that is well established, implemented, maintained and continually improved? ✓ Are all quality-relevant processes identified? ✓ Does the organization take into consideration the mutual interaction of these processes? ✓ Is risk-based thinking a pillar of the QMS? ✓ Are objectives, measures and KPIs in place to control the performance of the QMS? ✓ Do process performance data form input to continual improvement of processes? ✓ Is documented information available that describes details of relevant processes (flowcharts, performance data, owners of processes, etc.)? ✓ Is the QMS compliant with the general requirements of ISO 9001?

✓ Is the scope of the QMS clearly defined? ✓ Does it include the products and services to which the QMS applies? ✓ Which parts of the organization are included in the QMS? ✓ Are the requirements and expectations of relevant interested parties (concerning the scope of the organization’s QMS) respected?

✓ Does the organization determine relevant interested parties that have impact on its QMS? ✓ Does the organization have full overview about quality-relevant requirements and expectations of its interested parties?

✓ Does the organization determine internal and external issues that impact its business, strategies and QMS?

60 2 Generic Standards for Management Systems: An Overview

Leadership

Leadership and commitment

Policy

Organizational roles, responsibilities and authorities

Planning

Actions to address risks and opportunities

5

5.1

5.2

5.3

6

6.1

Shortened checklist for ISO 9001

Table 2.12 (continued)

(continued)

✓ Is the QMS designed to achieve planned results? ✓ Are risks and opportunities (relevant to QMS) adequately addressed?

✓ Are assignments of responsibilities for the QMS adequate? ✓ Do these assignments show the responsibilities for the conformity of the QMS with ISO 9001? ✓ Are reporting lines on the performance of the QMS defined? ✓ Are the responsibilities for the promotion of the QMS defined? ✓ Are the responsibilities for the integrity of the QMS defined (including change situations)?

✓ Is the quality policy adequate with respect to context and strategy of the organization? ✓ Is the quality policy communicated within and outside of the organization?

✓ Does top management show commitment and leadership, concerning the QMS? ✓ Does top management promote the process approach and risk-based thinking as essential pillars of the QMS? ✓ Does personnel get adequate training to understand the importance of the QMS? ✓ Are necessary resources available (human, financial, material and others)? ✓ Is customer focus a driving force behind the QMS?

2.2 ISO 9001—QMS—Quality Management System 61

Quality objectives and planning to achieve them

Planning of changes

Support

Resources

6.2

6.3

7

7.1

Shortened checklist for ISO 9001

Table 2.12 (continued)

(continued)

✓ Does the organization provide necessary resources during all phases of the QMS? ✓ Do these resources include: – Human resources; – Financial resources; – Infrastructure; – Environment for operation? ✓ Does the organization have adequate measuring and monitoring resources in place? ✓ Where needed: Is traceability of measurement ensured? ✓ Is the necessary organizational knowledge determined and maintained? ✓ Are changing needs of organizational knowledge determined and addressed?

✓ Are changes to the QMS carried out in a controlled and planned manner?

✓ Is quality planning a structured process, addressing all relevant aspects? ✓ Is quality planning concrete enough (who will do what, what are the needed resources, what exactly will be done, what are the timelines of actions, etc.)? ✓ Are relevant quality objectives and quality indicators defined and are they measurable? ✓ Do they comply with customer requirements and expectations? ✓ Are quality objectives and quality indicators communicated and understood?

62 2 Generic Standards for Management Systems: An Overview

Competence

Awareness

Communication

Documented information

7.2

7.3

7.4

7.5

Shortened checklist for ISO 9001

Table 2.12 (continued)

(continued)

✓ Is documented information required by ISO 9001 available? ✓ Did the organization determine which additional documented information it needs to run the QMS? ✓ Are processes on how to create, distribute, update and control documented information in place?

✓ Does the organization have implemented processes for internal and external communication related to the QMS?

✓ Does the organization ensure that staff is aware of the importance of the QMS? ✓ Personnel understand their roles and contribution to achieve quality objectives? ✓ Personnel understand the consequences of not achieving quality objectives?

✓ Does the organization determine the necessary competence of personnel for all positions and responsibilities affecting the QMS? ✓ Does the organization ensure that personnel have the necessary competence? ✓ Is staff sufficiently trained? ✓ Is documented information on these competence issues available?

2.2 ISO 9001—QMS—Quality Management System 63

Operation

Operational planning and control

Requirements for products and services

Design and development of products and services

8

8.1

8.2

8.3

Shortened checklist for ISO 9001

Table 2.12 (continued)

(continued)

✓ Does the organization have processes in place for all phases of its design and development activities? These include: – Design and development planning; – Input to design and development; – Control of design and development; – Output from design and development; – Changes of design and developments.

✓ Are communication processes with customers concerning enquiries, product and service requirements, contracts, changes of requirements, etc., in place? ✓ Does the organization ensure that requirements for products and services are clearly defined? ✓ Does the organization ensure it can meet product and service requirements? ✓ Does the organization systematically review product and service requirements? ✓ Does the organization have processes to handle changing requirements for products and processes?

✓ Does the organization plan, implement, maintain, improve and control its processes for production and service delivery? ✓ Are these processes adequate to comply with product and service requirements? ✓ Are quality control processes in place? ✓ Are necessary resources available?

64 2 Generic Standards for Management Systems: An Overview

Control of externally provided processes, products and services

Production and service provision

8.4

8.5

Shortened checklist for ISO 9001

Table 2.12 (continued)

(continued)

✓ Does the organization ensure production and service provision under defined and controlled conditions? ✓ Does this include the control of infrastructure, environment, personnel and other relevant factors? ✓ Are adequate control and measurement methods employed? ✓ Are processes for release, delivery and post-delivery implemented and followed? ✓ Does the organization have implemented processes for identification and traceability? ✓ Are processes for dealing with customer property in place? ✓ Where necessary, are methods for the preservation of process outputs during production in place?

✓ Does the organization control its externally provided processes, products and services? ✓ Does the organization ensure that externally provided processes, products and services comply with defined requirements? ✓ Does the organization ensure that externally provided processes are under the control of its QMS? ✓ Does the organization have validation and verification processes for externally provided processes, products and services? ✓ Are adequate control mechanisms for these issues in place? ✓ Are adequate communication processes with external providers in place?

2.2 ISO 9001—QMS—Quality Management System 65

Release of products and services

Control of nonconforming outputs

Performance evaluation

Monitoring, measurement, analysis and evaluation

8.6

8.7

9

9.1

Shortened checklist for ISO 9001

Table 2.12 (continued)

(continued)

✓ Did the organization determine what needs to be monitored, measured, analyzed and evaluated? ✓ Are these activities based on reliable and validated processes and methods? ✓ Do these processes and methods include clear information about: What needs to be done when, how, how frequently and by whom? ✓ Does the organization measure customer satisfaction and are the methods employed adequate? ✓ Are information and data analyzed with the purpose to improve processes and results (e.g. improvement of efficiency and customer satisfaction)?

✓ Does the organization have processes in place, how to deal with nonconforming products and services? ✓ Do these processes include the information of customers? ✓ Is adequate documented information concerning nonconforming outputs available?

✓ Does the organization have adequate processes for the release of products and services at defined control points?

66 2 Generic Standards for Management Systems: An Overview

Internal audit

Management review

Improvement

General

Nonconformity and corrective action

Continual improvement

9.2

9.3

10

10.1

10.2

10.3

Shortened checklist for ISO 9001

Table 2.12 (continued)

✓ Does the organization systematically determine the needs and opportunities for improvement? ✓ Does the organization monitor the effectiveness and adequacy of its QMS?

✓ Does the organization have processes in place for dealing with nonconformities and corrective actions? ✓ Do these processes include root-cause analyses? ✓ Are implemented corrective actions adequate and efficient? ✓ Is documented information on these actions available?

✓ Is there evidence that the organization successfully improves its processes, products and services?

✓ Does top management review the QMS of the organization regularly? ✓ Are ISO 9001 requirements concerning management reviews met?

✓ Does the organization conduct internal audits? ✓ Are audits conducted by competent and sufficiently objective and independent personnel? ✓ Concerning nonconformities found during internal audits: Are adequate corrective actions, root-cause analyses and other necessary steps done reliably?

2.2 ISO 9001—QMS—Quality Management System 67

68

2 Generic Standards for Management Systems: An Overview

(2) No matter in what industry you are: Your organization must comply with customer and other requirements (statutory, regulatory, etc.). The quality of its products and services is a key issue for any organization. The core of ISO 9001 is customer orientation. (3) ISO 9001 offers a framework for any organization’s QMS. Details must be filled by each individual organization. This is because each organization is special and different industries have different needs. (4) Keep in mind, certification of your QMS may be one of the objectives of your organization. However, it isn’t the most important one. It’s a nice side effect. If the QMS doesn’t create value for your organization, neither will do its certification. (5) Don’t misuse your QMS by just documenting your processes. Use it to continuously control and improve your processes and performance. This is a necessary condition for your organization to survive, although not a sufficient one. Establishing a QMS according to ISO 9001: Should the organization involve a consultant? Establishing, implementing, maintaining and continually improving the QMS is a massive project. It needs know-how and a broad spectrum of skills to make it a success. In this process, consultants may be helpful. However, you should consider the following: • Generally speaking, ISO 10019—“Guidelines for the selection of quality management system consultants and use of their services” may be helpful to deal with QMS consultants. • However, having a QMS may be considered as a core requirement for any organization. For that reason, an organization should have the resources and know-how necessary for all phases of the QMS’ life cycle. Top management should ensure that the necessary staff is on board. Recall, organizational knowledge includes the one needed for the QMS. • Still, in some cases, it may be valuable to buy in external resources. In this case, you should ensure: – Prior to calling a consultant, your organization determines, what exactly is the expected service of the consultant. Define your input to the consulting project and the expected output. – Ensure the consultant has profound experience in your industry and with organizations of your type. Check references and previously accomplished successful projects. – Select the team that will work closely with the consultant. – Sign a confidentiality agreement. After all, you don’t want that confidential information from your organization will find its way into the consultant’s next consulting project. At the same time, of course, you shouldn’t expect confidential information from other projects to be delivered by the consultant to your organization.

2.2 ISO 9001—QMS—Quality Management System

69

– Ensure that your staff gets trained by the consultant. The results of the consulting project should become part of your organization’s knowledge and DNA. Is ISO 9001 helpful for very small organizations? Yes. The main ingredients of ISO 9001 like: • • • •

Customer orientation; Risk-based thinking; Process-oriented approach; Continual improvement and the PDCA-cycle as a driving motor,

are useful and necessary for organizations of any size and no matter in which industry. It’s true, however, the more complex an organization, the bigger will usually be the benefits of a QMS according to ISO 9001. In a big organization, there will be likely more requirements, risks and opportunities for improvement to be addressed. There will be more processes and complexities, and likely more opportunities for improvement. Previous editions of the standard often scared small organizations because of the additional workload and documentation requirements. Its current edition is very flexible, and organizations have many degrees of freedom to customize their QMS. However, always keep in mind: The QMS should support your organization and not the other way around. Don’t get lost in formalities, don’t document processes that are not the real ones and don’t collect useless data. Keep reflecting where you really need to get concerning quality! Certification of the QMS: Is it really needed or recommendable? If you establish, implement, maintain and continually improve your QMS, that should be beneficial to your organization. Why to go for certification? The following may be two helpful guiding principles: • The benefits created by your QMS depend on how you live it. Don’t deal with ISO 9001 only because you want to get certified, as this likely will lead you sooner or later to a disappointment. This holds, by the way, for the certification of any of the management systems treated later in this book. • Customers may expect your organization to be certified and you should comply with that requirement. However, the QMS is primarily for your organization and it must help you to stay competitive. Certification of the QMS may be important, but it is second in line. Choosing your certification body: What are critical criteria? You should select your certification body with care. Here are some arguments, why: • Contracts with a certification body are usually signed at least for three years. Therefore, choosing your certification body, you start a business relationship that should work for several years.

70

2 Generic Standards for Management Systems: An Overview

• Be sure your certification body has all necessary accreditations for the standards against which you want to get audited. Note, although accreditations may be available, the certification body still may have little experience in your industry or with organizations of your type. Check for references! • If you have affiliates in other countries, make sure the certification body can really serve you there. • Auditors of the certification body may be full-time employees or freelancers. Check who would be your auditor(team). If you need audits to be done in several countries, check if the certification body has appropriate auditor resources. Before signing a contract, you should have a look on auditor profiles. • Check the contract with your certification body with care. Make sure that all costs are transparent and there are no hidden or unclear clauses. The offer for your certification project should include all costs for the full lifetime of your certificate (usually 3 years). • Selecting your certification body, price should not be your only selection criteria. • Be aware: Even though certification bodies may have all required accreditations, they still are not equivalent, as their reputations in different industries and countries may differ. Some certification bodies may be better recognized than others. Specify your selection criteria and what’s important for your organization! • Ensure the certification body has a clear compliance policy. Your organization intends to implement an integrated management system (e.g. according to ISO 9001, ISO 14001 and ISO 27001). Should you proceed one by one or which path of implementation would be preferable? That’s difficult to say, because details will heavily depend on the individual organization and there is no universal answer to the question. However, decision criteria may include the following: • All modern standards for management systems show the same structure and there are many overlapping requirements: Determine your context, commitment of top management, risk-based thinking and so on. For that reason, synergies may and should be used. • However, different teams will usually have to work on issues concerning ISO 9001, ISO 14001 or ISO 27001. This is because expert knowledge will be needed for each component of the integrated management system. As an example, consider the specific process requirements of each of the standards. This will hold true for the whole life cycle of an integrated management system. • As management system standards like ISO 9001, ISO 14001 and ISO 27001 should be considered as complementary components of an integrated management system: – Top management shows commitment to all three modules of the management system. This includes ensuring necessary resources, taking responsibility for the overall organization, promotion within and outside of the organization, formulating harmonized policies and objectives, reviewing the respective management system modules, etc.

2.2 ISO 9001—QMS—Quality Management System

71

– One process landscape for all management system modules should be used as a backbone. – Although there are processes that are solely relevant to the QMS, EMS and ISMS, most other processes interact and managing them will require collaboration of the respective teams. – Training of staff on the organization’s QMS, EMS and ISMS should be harmonized. The overall message is that an organization should employ the synergies offered. It should be stressed at this point that there will be hardly an organization in real life that would need to start the implementation of a QMS, EMS or ISMS from scratch. Any existing organization has some kind of management system. The question is, how big are the gaps to comply with standards like ISO 9001, ISO 14001 or ISO 27001? These gaps will differ from organization to organization. For example, whereas the QMS of an organization may be largely compliant with ISO 9001, there may be huge gaps concerning the ISMS. A full gap analysis before starting the project is strongly recommended. Based on its results, the next milestones and details may be planned. What is the value of certification, if there are so many certified organizations out there, providing bad services and products? Sadly, this question is very justified, and the claim can easily be verified. However, the issue is complex and here are some remarks: • Keep in mind, a certified QMS as such doesn’t say much about the quality of products produced and services provided under that system. Quality requirements for products and services must be defined separately. The QMS is there, to achieve a defined quality level. If the defined level is low, and the QMS enables the organization to achieve that low level, the QMS is fine. It is for that reason that organizations with a certified QMS are not allowed to show their certification status on products. Potentially misleading expectations must be avoided. Example 1 If you buy an electric device for your household and after a few weeks you get completely dissatisfied with it, don’t blame it right away on a useless and misleading ISO 9001 certification of the producer or retailer, as it says nothing about the quality of products they produce or sell. However, if you complain about the quality of the product and the retailer’s customer service is irresponsive, something is wrong with its QMS. Also, if it should turn out that the product doesn’t comply with safety or other defined requirements, the QMS of the producer failed. Example 2 If you book an ISO 9001 certified hotel and after your arrival get shocked that hundred meters away there is a huge and noisy construction, don’t blame ISO 9001 certification. You’ll find no requirement on that issue in the standard. • In B2B relationships, the situation is different: Clear specifications concerning products and services to be delivered are (or at least should be) defined. The QMS is expected to enable the supplier to comply with those requirements. If that’s not the case, the QMS and the ISO 9001 certificate of the supplier may be

72

2 Generic Standards for Management Systems: An Overview

questioned. Customers of certified suppliers may send their complaints not only to their supplier, frequently they also address its certification body which shall have processes how to follow up such complaints.

2.2.6 Examples for Illustrational Purposes This section is a short collection of sketchy examples, to illustrate some aspects of ISO 9001 by examples. You may work them out in greater detail, just following the logic of the standard and its requirements. It’s a great exercise to get familiar with ISO 9001, if you select real organizations around you and ask yourself questions like: • • • • •

What’s the context of this organization? What could be relevant requirements and expectations of its customers? What are the core processes of this organization? How to measure the performance of these processes? What could be the KPIs? What about training needs of staff?

2.2.6.1

Industrial Cleaning Company

Let’s illustrate how some of the ISO 9001 requirements matter for an industrial cleaning company. Imagine there’s one legal entity “IC Industrial Cleaning”, and its business is divided into three divisions. Each of these divisions serves clients in specific areas: Hospitals, office facilities and public areas. As requirements of clients in these three business fields are very different, IC Industrial Cleaning manages its business in separate divisions. In addition, there is a Central Services department, which offers internal services like Human Resources, Bookkeeping, Financial Controlling and Sales for the three business divisions. Top management is also hosted in this Central Services department and so are the quality managers (Fig. 2.14). The company faces an average staff fluctuation of 30% per year. Having on the average 2500 employees in total, this implies something like 800 new staff members per year. Let’s pick just some of the special challenges the quality managers of IC Industrial Cleaning likely will face. 1. Requirements from customers and regulators vary from division to division. Respective contexts differ (partially) as well. For example, hygiene requirements are highly important for customers of Division 1. This calls for well-trained staff with special knowledge in this area. Continuity and low staff fluctuation should be achieved in this division. 2. Concerning the scope of the QMS, the organization could decide to establish and implement a QMS for Division 1 first, as this seems to be its high-risk area

2.2 ISO 9001—QMS—Quality Management System

73

Fig. 2.14 Example—IC Industrial Cleaning’s organization chart, also showing some main clients

and customers expect it. Other divisions would follow later. Such an approach absolutely makes sense and you’ll see it frequently in practice. Once a QMS compliant with ISO 9001 is established for Division 1, a certification of the QMS of “IC Industrial Cleaning” for that division is possible. Later on, when the remaining divisions will have finalized their QMS, the certification process may be extended to them step by step. For the organization, this has the advantage that the area of maximum risks is covered first. In addition, the quality team members have a “laboratory”, where they can test the efficiency of their approaches in a well-defined part of the organization. 3. What about processes and process descriptions? Processes and working instructions will differ between the three divisions. ISO 9001 leaves it largely to the organization, how extensive its documented

74

2 Generic Standards for Management Systems: An Overview

information will be. Of course, general requirements of the standard must be met. Work instructions are widely used in organizations like this one. Keep in mind that personnel in this industry typically speak different languages and the organization must ensure that documents are available in the languages needed. Instruction and training on the job is another approach. Training videos may be more efficient in some cases than paper formats. 4. How to audit “IC Industrial Cleaning”? When auditing the QMS of “IC Industrial Cleaning”, you should keep the following in mind. In this industry, services are delivered at the customer’s site. Big cleaning companies have hundreds or thousands of objects, where they provide their services. During an internal or external audit, a representative part of these objects should be visited. Things to consider include the following: • Understand the overall design of the QMS. • Check how customer requirements and expectations find their way into the QMS. Typically, a cleaning company closes detailed contracts with its customers containing service requirements for each of the objects serviced. (Remark For an office building, for example, you’ll find detailed requirements how often office tables or windows shall be cleaned.) The challenging part is then how these specifications interact with the QMS and how the organization ensures compliance with customer requirements under often difficult conditions. Quality audits are definitely not the only and not even the best way to control quality issues in this industry. Foremen are often employed to check performance on a daily basis. 5. Exercise What sort of KPIs would you expect to make sense for “IC Industrial Cleaning”?

2.2.6.2

Tax Consultant and Accountant Office

In some countries, tax consultant and accountant offices are popular. These organizations offer services for small and medium companies: Consultancy services (including support doing tax declarations), accounting and others. They also offer services to individuals, especially concerning tax declaration issues. Frequently such offices have affiliates in a few locations. In Germany, for example, many of these offices adopted ISO 9001 as a framework to optimize their internal organization and QMS already some twenty years ago, although it was not a requirement defined by their customers. Very often they did so with considerable success. Some of the offices even joined experience exchange cycles with other offices, organized benchmarking, etc. This is mentioned here as an example for a QMS initiative, triggered primarily by the office’s management.

2.2 ISO 9001—QMS—Quality Management System

75

Fig. 2.15 Typical organization chart of a tax consultant and accountant office

The guiding idea behind simply is: Good organization and customer focus pays (Fig. 2.15).

2.2.6.3

Hotel

Hotels are nice to illustrate some special aspects concerning ISO 9001. (1) How may a two-star hotel get certified according to ISO 9001, as may a five-star hotel? This is a good example to understand that checking the compliance of a hotel’s QMS with ISO 9001 requirements says little about the quality level of provided services. If a hotel works on a 5-star level, its QMS shall ensure the hotel’s capability to do so on a continual basis. However, the same holds if the hotel works on any other x-star level. Once again: The conformity of a QMS with ISO 9001 does say nothing about the level of service provision or service portfolio. However, there is nothing bad or ambiguous about this. Whereas some people like the 5-star service, some others are fine with three stars. This said, a certificate according to ISO 9001 should ensure you that the respective service level is provided with a QMS behind it. Question What is the probability that you get disappointed because the hotel deviates (due to what reasons ever) from their own standards and processes during the weekend you spend in the hotel? ISO 9001 certification doesn’t answer that question. (2) In many hotels you’ll find B2B and B2C business. Does this have any impact on the QMS according to ISO 9001? Yes, it does. B2B business is frequently based on individual contracts between business partners, specifying in detail, what services on what level are requested.

76

2 Generic Standards for Management Systems: An Overview

As an ordinary guest of the hotel, you’ll usually have little to no influence to “shape” the hotel service. If you are a traveling agency, booking hundreds of rooms per month, the situation is different. For that reason, you typically will find two layers of the hotel’s QMS: Standard business and tailor-made service packages. This will also require specific processes for the two business fields and both are part of the hotel’s QMS.

2.2.7 Some Supportive Standards for Quality Management Systems There is a group of supportive standards which is little known even by many practitioners but may be helpful during the whole life cycle of a QMS. It should be stressed: • All these standards are guidance documents. • They do not define requirements and may not serve as a basis for certification. • The standards may be applied by organizations of any size and irrespective of their industry. We give a short guide to these standards. The first edition of the standard • ISO/TS 9002:2016 Quality management systems—Guidelines for the application of ISO 9001:2015 was published in November 2016. This document offers guidance for application but doesn’t add or otherwise modify the requirements of ISO 9001. ISO 9002 may be helpful as an additional aid to understand better the individual clauses of ISO 9001. It is highly recommended for newbies in the field of QMS and for those who want to become auditors. The 4th edition of the standard • ISO 9004:2018 Quality management—Quality of an organization—Guidelines to achieve sustained success was published in April 2018. This document may be used in the context of ISO 9001, as it offers additional guidance how to make your organization fit for sustainable success. The overall structure of the standard is sketched in Fig. 2.16. To each of the items shown, the standard offers short guidance. ISO 9004:2018 employs the term “Quality of an organization” which is understood as an organization’s ability to fulfill customer’s and interested parties’ needs and expectations in a sustainable way. It should be stressed that ISO 9004:2018 may be helpful in the context of ISO 9001 applications; however, as the standard addresses the quality of an organization, it also may be employed in the context of other management system standards like ISO 14001, ISO 27001, ISO 50001 and others.

2.2 ISO 9001—QMS—Quality Management System

77

Fig. 2.16 Structure of ISO 9004:2018

ISO 9004:2018 includes a self-assessment checklist which contains entries for each topic shown in Fig. 2.16. Assessment results are classified according to maturity levels: Maturity level 1 (base level) to maturity level 5 (best practice). This is a nice tool to identify opportunities for improvements, concerning the quality of the organization. The ISO 100XX-series contains a bundle of guidance standards on a variety of topics. They may be especially useful in the context of ISO 9001. The following list gives an overview and some short remarks on each standard (Table 2.13).

2.3 ISO 14001—EMS—Environmental Management System This section includes: • An introduction to ISO 14001:2015 and its requirements; • Comments to illustrate the application of ISO 14001:2015; • Overview about other important standards in the ISO 140XX-Series.

78

2 Generic Standards for Management Systems: An Overview

Table 2.13 Some important standards of the ISO 100xx series Standard

Title

ISO 10001

Quality management—customer satisfaction—guidelines for codes of conduct for organizations

This document addresses organizations that want to design, implement, maintain or improve a code of conduct focusing on customer satisfaction. It does not address other types of codes of conduct ISO 10002

Quality management—customer satisfaction—guidelines for complaints handling in organizations

This document addresses organizations, which want to create, maintain and improve a complaint management system. Focus is on complaints that are related to the organization’s products and services ISO 10003

Quality management—customer satisfaction—guidelines for dispute resolution external to organizations

Organizations that work on the design, implementation, maintenance and improvement of their dispute resolution processes may find this document helpful ISO 10004

Quality management—customer satisfaction—guidelines for monitoring and measuring

To have in place a measurement system for customer satisfaction is a crucial requirement of ISO 9001. This standard gives guidance how to get it done ISO 10005

Quality management systems—guidelines for quality plans

Quality plans are an important requirement of ISO 9001. These guidelines may help to comply with this requirement. The standard focuses mainly on quality plans for processes, products, projects and contracts ISO 10006

Quality management systems—guidelines for quality management in projects

This is not a guide to project management, but a guide to quality management in projects. Hereby projects may be of any type of complexity and duration ISO 10007

Quality management systems—guidelines for configuration management

Configuration management is an important issue in complex process environments. This standard will help organizations to find better solutions and to optimize their approaches ISO 10008

Quality management—customer satisfaction—guidelines for business-to-consumer electronic commerce transactions

This standard offers guidance for the whole life cycle of a business-to-consumer electronic commerce transaction system within an organization. Key issues include: Security, transparency and efficiency of such systems ISO 10012

Measurement management systems—requirements for measurement processes and measuring equipment

The main scopes of this standard include: Management of measurement processes, metrological confirmation of measuring equipment and compliance with metrological requirements. These topics are crucial to comply with standards like ISO 9001 or ISO 14001 ISO/TR 10013

Guidelines for quality management system documentation

This document may help to create an adequate documentation of the organization’s quality management system ISO 10014

Quality management—guidelines for realizing financial and economic benefits (continued)

2.3 ISO 14001—EMS—Environmental Management System

79

Table 2.13 (continued) Standard

Title

This standard may be interesting background reading, if you try to get out financial and economic benefit of your quality management system ISO 10015

Quality management—guidelines for training

In each or any organization, there will be training needs during the whole life cycle of a quality management system. This document offers guidance, how to proceed ISO/TR 10017

Guidance on statistical techniques for ISO 9001:2000

As this document refers to a previous edition of ISO 9001, it needs to be updated. However, until this will be done, the document still contains interesting guidance on statistical methods that can be used ISO 10018

Quality management—guidelines on people involvement and competence

An effective quality management system needs, among other things, the right involvement of people. In addition, the competence of personnel must be balanced with the requirements of the quality management system. This standard offers guidance on these two issues ISO 10019

Guidelines for the selection of quality management system consultants and use of their services

At any time of the quality management’s life cycle, the involvement of a consultant may be beneficial. However, the organization should have a clear picture, how the consultant will be selected and how collaboration will be organized. This guideline helps to answer these questions

2.3.1 Introductory Remarks In this section, we give an overview about the standard • ISO 14001:2015—Environmental management systems—Requirements with guidance for use. As ISO 9001 is the core standard for quality management systems (QMS), ISO 14001 is the globally accepted standard for environmental management systems (EMS). Also driven by the PDCA-cycle, risk-based thinking and process management, ISO 14001 focuses on the organization’s environmental issues and suggests a systematic approach to manage them and reduce its negative impacts. The first edition of ISO 14001 was published in 1996 and its content can be traced back to the British Standard BS 7750 which was published in 1992. Only two revisions of ISO 14001 were published since then (Fig. 2.17).

Fig. 2.17 History of ISO 14001 revisions since its first release in 1996

80

2 Generic Standards for Management Systems: An Overview

Fig. 2.18 Storybook of ISO 14001

The environment in the sense of ISO 14001 is the total of an organization’s surroundings in which it operates. This includes water, air, land, humans, flora and fauna, natural resources and interrelations between them. Sometimes the surrounding of the organization will be described with other terms like biodiversity, climate, ecosystems and others. Whatever terminology you may use, the intent of an EMS is to minimize negative impacts on the surrounding. This is done by complying with legal and other relevant environmental requirements, as defined by local authorities. Based on these requirements, an organization shall define its own environmental objectives and plan and implement its processes such that these objectives may be achieved. The storybook of ISO 14001 is similar to those for all modern management system standards and may be sketched as follows (Fig. 2.18). The main objectives of ISO 14001 include: • • • • •

Prevent or at least mitigate adverse impacts on the environment. Prevent or at least mitigate adverse impacts of the environment on the organization. Comply with compliance obligations. Improve the environmental performance of the organization. Employ a life cycle perspective. Control and influence: – The design, manufacturing, distribution and consumption of products and services; – How products and services are disposed; – Unintentional shift of products and services to elsewhere within the life cycle.

• Realize operational and financial benefits from the implementation of environmentally relevant alternatives. • Communicate your relevant environmental information to interested parties.

2.3 ISO 14001—EMS—Environmental Management System

81

It is important to understand that ISO 14001 intends primarily three things: • The systematic improvement of the organization’s environmental performance; • The fulfillment of the organization’s compliance obligations; • The achievement of the organization’s environmental objectives. However, the standard does not state specific criteria for the environmental performance. This is understandable, as ISO 14001 defines a framework for organizations of any size in any industry and in any country. ISO 14001:2015 consists of two parts: 1. The first part describes the requirements of the standard. Organizations which plan a certification of their EMS according to the standard will be audited against these requirements. An organization does comply with ISO 14001 only if it complies with all of its applicable requirements. Therefore, the organization can’t be picky. 2. In addition, ISO 14001 includes an annex for informational purposes, which doesn’t define any additional requirements compared to the main part of the standard. However, the comments and suggestions in this annex are designed to offer additional comments and hints to better understand the requirements defined in the main part. If top management of an organization decides to establish, implement and continually improve an EMS complying with ISO 14001, there will be a concrete motivation and strategy behind. Maybe the organization is expected by its customers to implement an EMS and top management decides to do so at a low level, just compliant with legal requirements plus perhaps some additional objectives, defined by the organization itself. On the other side of the scale, an organization may decide to distinguish itself from its competitors by the implementation of advanced technologies saving resources and having minimal impact on the environment. There is a wide range between these two approaches, but you will find them realized in practice. This implies that an ISO 14001 certificate as such does not tell you at what level the EMS of the respective organization really is. You need to look behind the curtain. This is pretty similar to what was discussed in the context of QMS and ISO 9001. Next, we have a closer look at the requirements of ISO 14001. It is strongly recommended that you had a prior look at the section on ISO 9001, as many of the generic requirements of management system standards will not be repeated here with the same degree of detail.

2.3.2 Discussion of the Clauses of ISO 14001 2.3.2.1

Context of the Organization

The context of the organization defines the boundary conditions which shape its approach to EMS. There will be internal and external issues which affect the organization’s context. Legal requirements and requirements of local authorities will

82

2 Generic Standards for Management Systems: An Overview

mark the baseline in each case. Be aware that these requirements vary from country to country and, in some cases, even within one country from region to region. (Remark: Once more, this makes EMS certificates difficult to compare.) Other aspects of the context include: State of the art of environmental technologies, positioning of competitors with respect to environmental issues, expectations and requirements of relevant interested parties. The organization shall systematically determine the interested parties relevant to its EMS. These include NGOs (Nongovernmental Organizations), global and local initiatives, customers, consumers and others. Considering the variety of influencing parties, the organization shall determine, which of their needs and expectations will become part of its compliance obligations. It is obvious that compliance obligations will vary with time and the organization shall update them on a regular basis. This sounds trivial, but it is not in practice. A systematic approach is necessary. The organization shall determine the scope of its EMS. Doing so, it has to consider: • • • •

The organizational units of the organization, affiliates, production sites, etc.; Production or service lines; The compliance obligations, the organization subscribes to; Additional relevant aspects.

The scope of the organization defines the organizational units, production and service lines and other aspects included in the EMS. If the organization strives for a certification of its EMS according to ISO 14001, this certification will address the scope as well: Organizations get certified for a well-defined scope. The scope of the EMS is a formal thing and shall be maintained as a documented information. It will also be available to interested parties. Organizations that seek compliance with ISO 14001 shall comply with all of its requirements. This includes: Establish, implement, maintain and improve your EMS! Don’t consider this as a trivial point. It includes a chain of actions: The organization has to ensure that the EMS “keeps staying alive”.

2.3.2.2

Leadership

As required by all management system standards, top management of the organization shall demonstrate leadership concerning the EMS and be accountable for its effectiveness. This is not only a formal requirement of ISO 14001, but derives even from legal requirements. After all, the top management of an organization has the overall responsibility for the organization. The objectives of the EMS and its processes will strongly interact with and have impact on the strategy of the organization and its other processes. Top management shall ensure, therefore, that processes and objectives of the EMS will be integrated into the organization and will not contradict other organizational settings. Top management shall ensure that needed resources will be available to run the EMS effectively. This includes financial, physical, human and other relevant resources.

2.3 ISO 14001—EMS—Environmental Management System

83

Top management shall communicate the importance and objectives of the EMS to employees and interested parties. Staff must understand the importance of the EMS, its processes and objectives. It must also understand the consequences of noncompliance. An environmental policy shall be established and implemented by top management. This policy shall be defined for the full scope of the EMS. The environmental policy shall include a commitment to protect the environment as well as to fulfill the compliance obligations of the organization. It shall also include the organization’s commitment to continual improvement of its EMS. The environmental policy shall be communicated within the organization and be available to interested parties. It shall be part of the documented information. Top management shall assign authorities and responsibilities for the EMS within the organization. This includes: • Who is responsible for what concerning the EMS? • How is the responsibility for the EMS cascaded down from top management to all involved management and other functions?

2.3.2.3

Planning

Planning of the EMS is expected to include certain considerations (sketched in Fig. 2.19) and risk-based thinking. Having defined the scope of its EMS, the organization shall determine the environmental aspects of its processes, products, services and activities. Risk-based thinking is expected, and the organization shall focus on environmental aspects with significant impact on the environment. This may be an iterative process and not just linear, as suggested in Fig. 2.19. Having defined the scope, a first determination of environmental aspects may uncover needs to widen or narrow the scope of the EMS. When the organization determines the aspects having significant environmental impact, established methods and criteria shall be employed. Significant environmental aspects shall be communicated between the relevant levels and functions of the organization. The organization shall have available and keep up to date documented information of

Fig. 2.19 Aspects when planning the EMS

84

2 Generic Standards for Management Systems: An Overview

Fig. 2.20 Internal and external compliance obligations versus environmental objectives

• Its environmental aspects and their impacts; • The criteria and methods used to determine significant impacts on the environment; • Its significant environmental aspects. The organization shall have full access to compliance obligations defined by parties outside of the organization and, of course, to those, set by the organization itself. This is by far not a trivial aspect as one might think, especially if the organization shows an international setting in an area with significant environmental impact topics. The simple message of Fig. 2.20 is: 1. Consider your internal and external compliance obligations and environmental aspects and impacts. 2. Balance them by adequately defined environmental objectives and robust actions to realize those objectives. The main output from planning how to achieve the organization’s environmental objectives will be clear processes, including: • • • • •

What exactly will be done? What are the resources needed? Who will be responsible for what? When will the actions be completed? How are actions monitored and how are results evaluated?

In practice, one very often will find interactions and interdependencies between the EMS and the QMS of the organization and perhaps with other aspects, like the energy efficiency management. In addition, the organization will always have to balance needs and opportunities of the EMS with its financial and operational capabilities. It is obvious that environmental objectives are of utmost importance for an organization and its EMS. They shall: • Be established at relevant levels and functions of the organization.

2.3 ISO 14001—EMS—Environmental Management System

85

• Include the compliance obligations of the organization, refer to its relevant environmental aspects and consider environmental risks and opportunities. • Be measurable and monitored if possible. • Be communicated to relevant functions and parties. • Get updated, if needed. • Be part of the documented information of the organization. A clear determination of needed resources (material and immaterial) shall be part of the planning. The whole planning for the EMS shall follow a formal project management, including responsibilities and accountabilities, timelines, methods of evaluation and monitoring, and other aspects as needed.

2.3.2.4

Support

The requirements of this clause don’t go beyond the standard requirements for other management systems, as for ISO 9001. To summarize: • As already mentioned above, it’s one of top management’s tasks, to provide the necessary resources needed for establishing and running the EMS. This holds for all phases of the EMS. • Competent personnel shall be available, to fulfill the tasks associated with the EMS. Adequate training of staff shall be done. • Personnel working under the EMS shall: – Be aware of the intent of the EMS. – Understand the environmental policy and the significant environmental aspects of the organization. – Understand the implications of not fulfilling the organization’s environmental objectives compliance obligations (coming from external as well as internal sources). Communication is a key topic within the context of the EMS. The organization shall implement clear communication procedures for internal and external communication, which include: What, when, with whom and how communication related to the EMS will happen. The organization also shall respond to (relevant) communication concerning its EMS and environmental issues. For example, it would not be acceptable that residents or an NGO approaches the organization with questions about its emissions without receiving any reasonable reaction. The subclause on documented information requires that the organization shall have available: • The documented information, which is required by ISO 14001 (e.g. environmental policy, compliance obligations, audit reports, management reviews, etc.); • The documented information, which the organization finds necessary for running the EMS (e.g. process descriptions, recordings of environmental aspects, etc.).

86

2 Generic Standards for Management Systems: An Overview

The organization is pretty free, in which format documented information is created, updated and filed (e.g. paper form, electronic form, etc.). It is important, however, that there are clear processes in place, which allow adequate distribution of updated information, withdrawal of outdated information and other important aspects of document control. It is expected that traceability of documented information is given where needed or reasonable.

2.3.2.5

Operation

ISO 14001’s clause on operation contains two subclauses: 1. Operational planning and control; 2. Emergency preparedness and response. As ISO 14001 is process oriented as are all management systems standards, the organization shall implement and keep alive the processes that are needed to meet the general requirements of the standard and the environmental objectives of the organization. Surveillance procedures shall be employed to monitor and control processes and other aspects of the EMS. In practice, many of these measurements and controlling activities will be based on physical measurements. Planned changes (e.g. of processes, material, human behavior, etc.) shall be controlled by the organization. Unintended changes shall be analyzed and evaluated. In both cases, this is done with the intention to avoid or mitigate negative impacts on the environment as well as other adverse effects. It is a requirement of the standard that the organization shall practice adequate management and controlling of its outsourced processes. The details and extent of these activities shall be defined, described and be part of the EMS. Details and intensity depend, of course, on the criticality of outsourced activities. This is an important requirement, as it prevents that essential parts of the operational processes and activities with negative impacts on the environment may be outsourced by the organization to elsewhere and escape control. As a result: The outsourcing organization shall keep control of its outsourced processes. This goes hand in hand with another requirement: Once your organization decides to implement an EMS and to comply with ISO 14001, it makes more than sense, to have an intensive look at your supply chain and identify suppliers having a significant impact on the environment. It’s the logic of ISO 14001: If your organization implements an EMS, you should redefine your requirements for your suppliers. When one member of the supply chain implements an EMS, related requirements will soon be sent up and down the supply chain. In fact, this is one of the most important intentions behind ISO 14001. ISO 14001 requires that the organization has a life cycle approach to its products and services. This has some important implications. Primarily, it means that the organization addresses already in the design and development processes for its products and services, that environmental requirements and aspects are respected, even though these may become relevant only during a later life cycle stage of those products or

2.3 ISO 14001—EMS—Environmental Management System

87

services. To give an example: When the organization designs and develops a new product, it shall keep in mind its recycling at the end of the life cycle. In this context, the organization shall also determine and consider: • Environmental requirements for the procurement of products and services; • What sort of communication (with external partners, customers, etc.) concerning environmental requirements is needed; • What information about potential environmental impacts associated with transportation of products and services will be communicated (depending on significance); • What information concerning the disposal of products and services and end-of-life treatment needs to be provided. These requirements concerning the life cycle of products and services may have a huge positive impact on the environment, if interpreted correctly. During certification audits, some auditors have their difficulties to evaluate if these requirements are met or not. Auditors need to have a real understanding of the organization’s context, product and service spectrum, and related environmental issues. The other important requirement of the operation clause is on emergency preparedness of the organization and its response to emergencies. The organization shall: • Plan actions for emergency situations. Prevention and mitigation of adverse environmental impacts are in the focus. • Ensure its ability to respond to emergency situations. • Take actions: Prevention or mitigation of consequences of emergency situations. • Test its planned response activities on a regular basis. • Regularly review and if needed revise its planned response actions. • Provide information about the results of training activities and emergency preparedness to relevant interested parties. • Have available documented information on topics related to emergency preparedness. When establishing and implementing the respective processes, the organization shall include existing requirements of local authorities and relevant others.

2.3.2.6

Performance Evaluation

The organization shall evaluate systematically and on a regular basis, if it fulfills its compliance obligations and if the implemented EMS is effective. Obviously, this must be done on the basis of monitoring and measurement. The organization shall determine: • What needs to be measured and monitored and how will it be done (e.g. how often, which methods will be employed, who will do it);

88

2 Generic Standards for Management Systems: An Overview

• Criteria against which the effectiveness of the EMS will be evaluated (e.g. compliance obligations are fulfilled, compliance with ISO 14001 criteria is given, requirements of clients are fulfilled, defined economic criteria are met, etc.); • How results of monitoring and measurement will be evaluated. The organization shall communicate information of environmental performance internally and externally, following its communication processes. A large part of the measurement and surveillance activities will be of technical and physical nature. When it comes to this kind of measurement, calibration and verification of measurement devices are of utmost importance. In each country exist established and accepted paths for the traceability of measurement and calibration processes to national and international standards. It is expected that these processes are applied. You may find some more information in Sect. 2.4 of this book, where we discuss ISO 17025 and general requirements for laboratory management. It cannot be stressed enough: Continual checking of the EMS’ effectiveness is super important and one of the driving forces behind environmental management. Internal audits are another standard method to check the performance of an EMS, to look for nonconformities and opportunities for improvement. In Chap. 7 of this book, you may find more details about audits, their planning, conduction and other aspects. It should be stressed that the audit program of the organization should be designed with great care in order to harvest a maximum of insight from the audits. Unfortunately, quite often audits are done in a very charming manner, not drilling too deep into matters. As the EMS fosters risk-based thinking, audits should be designed to focus on relevant risks and opportunities. As all standard for management systems do, ISO 14001 requires a formal management review of the EMS, done by top management on a regular basis. Once a year is standard, in between, however, performance data of the EMS should be reported to top management in an adequate format. The management review is one of the ways, how top management shows its commitment and involvement in the EMS. Inputs to the review are all type of relevant environmental performance data, including results from internal and external audits. The effectiveness of corrective actions taken since the last review shall be considered. The adequacy of assigned resources to the EMS shall be evaluated. Based on the management review, the next steps of the evolution of the EMS shall be determined. Again, this sounds trivial, but it isn’t in daily life. It takes discipline and real commitment of top management, and those responsible for the effectiveness of the EMS. Unfortunately, too often management reviews are done with little ambition.

2.3.2.7

Improvement

Identifying options for continual improvement is one of the engines driving management systems. External and internal requirements, new technologies and other issues change over time, and the organization will find it necessary to lift its EMS to

2.3 ISO 14001—EMS—Environmental Management System

89

higher levels. The main requirements of the standard concerning improvement are the following: • The organization shall systematically determine its opportunities for improvement and define which of them will be realized. The necessary actions how to do this shall be determined and implemented. • When nonconformities are detected, the organization shall react to them. This shall include necessary actions to control and to correct them. The organization shall also deal with the consequences of nonconformities (e.g. mitigation or prevention of adverse impacts on the environment). • Nonconformities shall be analyzed in detail and root-causes determined. The intent is – To prevent the repetition of the nonconformities; – To understand their causes; – To determine if comparable nonconformities could occur elsewhere or exist not yet being detected. • The organization shall implement corrective actions and monitor their effectiveness. • The organization shall determine if and what type of changes of the EMS must be made. • Documented information shall be available about nonconformities, implemented corrective actions and the monitoring of their effectiveness. Besides of this systematic reaction to detected nonconformities, the organization shall work actively and continually on the improvement of its EMS and on preventive actions.

2.3.3 Other Important ISO Standards in the ISO 140XX-Series When dealing with your EMS and especially with ISO 14001, it may be helpful to consider the following standards, which offer additional guidance and requirements for special topics. It should be stressed, however, that there is a huge number of international and national standards relevant to environmental issues. The short list below focuses on some aspect being directly relevant to EMS and ISO 14001 (Table 2.14).

2.3.4 Shortened Checklist for ISO 14001

Remark The intent of this shortened checklist is not to cover all requirements of ISO 14001. Instead, we highlight some of the most important requirements only. When your

90

2 Generic Standards for Management Systems: An Overview

Table 2.14 Some selected standards of the ISO 140XX-series Standard

Title

ISO 14002-1

Environmental management systems—guidelines for using ISO 14001 to address environmental aspects and conditions within an environmental topic area—Part 1: general

This new standard is part of a series of ISO 14002-xx standards and was published in 11/2019. It is meant as a supplement to ISO 14001 and ISO 14004. Its intent is to support organizations to identify and address relevant and significant environmental topic areas ISO 14004

Environmental management systems—general guidelines on implementation

Issued in 2016, the standard offers helpful guidelines on the implementation of an EMS. It may be considered as a companion standard to ISO 14001 ISO 14005

Environmental management systems—guidelines for a flexible approach to phased implementation

This standard was first issued in 2010 and revised in 05/2019. It may be supportive to all organizations, which choose a gradual or stepwise approach to establish, implement, maintain and continually improve their EMS. Although the ultimate goal should be an EMS complying with all requirements of ISO 14001 and that includes all parts of the organization, there may be reasons to choose a gradual path to get there: Large organizations may be too complex to manage the implementation of an EMS with full scope at once. Small and medium-sized organizations may lack resources or there may be other reasons for developing things step by step. This guidance standard may help to design such a step-by-step approach ISO 14006

Environmental management systems—guidelines for incorporating ecodesign

First published in 2011, the standard is currently (12/2019) under revision. It may be used by organizations which want to better integrate the principles of ecodesign. The standard also may be used to link EMS principles to other management systems (e.g. quality management, energy efficiency, etc.) and to integrate the principles of ecodesign in all of them ISO 14007

Environmental management—guidelines for determining environmental costs and benefits

This standard was published in 10/2019 ISO 14008

Monetary valuation of environmental impacts and related environmental aspects

This new standard was published in 03/2019. The standard offers methodological frameworks for the monetary valuation of environmental and related impacts ISO 14009

Environmental management systems—guidelines for incorporating material circulation in design and development

This standard is currently (12/2019) under development ISO 14020

Environmental labels and declarations—general principles

This standard defines development and application principles for environmental declarations and labels ISO 14021

Environmental labels and declarations—self-declared environmental claims (Type II environmental labeling)

This standard was published in 2016. It defines requirements for self-declared environmental claims with regard to products ISO 14024

Environmental labels and declarations—Type I environmental labeling—principles and procedures (continued)

2.3 ISO 14001—EMS—Environmental Management System

91

Table 2.14 (continued) Standard

Title

The new version of the standard was published in 02/2018. It defines rules, principles and procedures for the development of (voluntary) Type I environmental labeling programs. The standard also addresses the development of respective certification procedures. The basic idea behind the standard is to create general rules for the ecolabeling of products ISO 14025

Environmental labels and declarations—Type III environmental declarations—principles and procedures

This standard defines principles and procedures for environmental Type III declarations and declaration programs. It is mainly intended to be used in B2B relationships but may also be employed in B2C relationships ISO 14031

Environmental management—environmental performance evaluation—guidelines

Environmental performance evaluations play a crucial role in the context of ISO 14001 and beyond. This standard gives guidance how to design and apply such evaluations. It may be applied by organizations in any industry, no matter what’s its size or complexity ISO 14040

Environmental management—life cycle assessment—principles and framework

Life cycle assessments play an important role within the ISO 14001 context. This standard defines principles ISO 14044

Environmental management—life cycle assessment—requirements and guidelines

Life cycle assessments play an important role within the ISO 14001 context. This standard offers guidelines and specifies requirements ISO 14045

Environmental management—eco-efficiency assessment of product systems—principles, requirements and guidelines

This standard specifies principles and guidelines and defines requirements for eco-efficiency assessments. This includes all phases: Definition of scope, environmental assessment, product-system assessment, eco-efficiency quantification, interpretation of results, quality assurance of assessments, reporting and review ISO 14046

Environmental management—water footprint—principles, requirements and guidelines

Based on the life cycle assessment approach, this standard gives principles, guidelines and requirements for water footprint assessments ISO 14063

Environmental management—environmental communication—guidelines and examples

Adequate environmental communication is a crucial requirement of ISO 14001. This standard offers guidelines and examples. Currently (12/2019), the standard is under revision ISO 14067

Greenhouse gases—Carbon footprint of products—requirements and guidelines for quantification

The recent release of this standard was published in 08/2018. The standard defines requirements and guidelines for the carbon footprints of products quantification and reporting

92

2 Generic Standards for Management Systems: An Overview

organization applies for certification for the first time, based on international requirements, you’ll have to pass a so-called stage one audit prior to the certification audit. The content of this shortened checklist is roughly what you will be asked by your auditor in that stage one audit, to check the readiness of your organization for certification. Be prepared, additional (e.g. industry and technology specific) issues may be covered in such an audit as well (Table 2.15).

2.3.5 Frequently Asked Questions

Is ISO 14001 in country A the same as in country B? Yes and no. The requirements defined in ISO 14001 hold globally. However, as was explained above, the standard refers to the local legal and other relevant environmental requirements and these may differ from country to country. Establishing and implementing an EMS in a region with less stringent environmental requirements implies that the compliance obligations of an organization may be on a lower level as well. It should be stressed that organizations might voluntarily decide to comply with the highest level of requirements, as defined in more advanced countries. However, you’ll seldom find that in reality. You should keep this in mind, comparing ISO 14001 certificates from different countries. They are not straightforwardly comparable. You always have to look behind the curtain and see at which level organizations put its EMS. In this respect, it may look weird that although certificates are internationally recognized (e.g. via IAF agreements), they are by no means all equivalent in the sense just mentioned.

2.4 ISO/IEC 17025—Laboratory Management This section includes: • A sketch of the special roles that laboratories play; • An introduction to ISO/IEC 17025:2017 and its requirements.

2.4.1 Introductory Remarks Laboratories and their services play an extremely important role in the context of management systems, accreditation and certification. It is important, therefore, to

Context of the organization

Understanding the organization and its context

Understanding the needs and expectations of interested parties

Determining the scope of the environmental management system

Environmental management system

Leadership

4

4.1

4.2

4.3

4.4

5

Shortened Checklist for ISO 14001

Table 2.15 Shortened checklist ISO 14001:2015

(continued)

✓ Is your organization’s EMS well established, implemented, maintained and improved if needed? ✓ Did your organization determine the relevant processes of its EMS and their interaction with other processes? ✓ Does the EMS conform with the general requirements of ISO 14001?

✓ Is the scope of the EMS clearly defined? ✓ Does the scope refer to the compliance obligations? ✓ Are the organizational units that are within the scope of the EMS clearly defined? ✓ Are relevant products, services and activities of your organization considered when defining the scope of the EMS?

✓ Do you determine the interested parties that are relevant to your organization and its EMS? ✓ Do you have adequate overview about requirements, expectations and needs of these interested parties? ✓ Do you determine which of these requirements become compliance obligations?

✓ Do you determine the internal and external issues that impact your organization and its ability to achieve the intended results of the EMS?

2.4 ISO/IEC 17025—Laboratory Management 93

Leadership and commitment

Environmental policy

5.1

5.2

Shortened Checklist for ISO 14001

Table 2.15 (continued)

(continued)

✓ Is the environmental policy of the organization adequate compared to the scope of the EMS? ✓ Does it define a framework for the EMS and the strategic development of the organization? ✓ Is the environmental policy communicated inside and outside of the organization?

✓ Does top management show commitment and leadership, concerning the EMS of the organization? ✓ Does top management take accountability for the effectiveness of the EMS? ✓ Does top management ensure the establishment of an environmental policy that is harmonized with the strategic plans of the organization? ✓ Does top management ensure that EMS requirements are integrated into relevant business processes? ✓ Does top management ensure the resources needed for the EMS? ✓ Does top management communicate the importance of the EMS and its objectives? ✓ Does top management ensure that the EMS delivers the planned outcomes? ✓ Does top management promote continual improvement? ✓ Does top management support management roles relevant to the EMS?

94 2 Generic Standards for Management Systems: An Overview

Organizational roles, responsibilities and authorities

Planning

Actions to address risks and opportunities

5.3

6

6.1

Shortened Checklist for ISO 14001

Table 2.15 (continued)

(continued)

✓ Does the organization have structured processes to plan its EMS? ✓ Are risks and opportunities related to the environmental aspects of the organization determined? ✓ Do the planning processes for the EMS cover its full scope? ✓ Are the organization’s compliance obligations considered? ✓ Does the organization ensure that the EMS can achieve its planned results? ✓ Are processes in place to prevent or reduce undesired effects on the environment? ✓ Is the EMS oriented toward continual improvement? ✓ Does the organization determine potential emergency situations? ✓ Does the organization consider normal and foreseeable abnormal conditions and their relevance to the EMS? ✓ Does the organization maintain documented information on its environmental aspects and their impacts, including criteria how to determine them? ✓ Does the organization have processes to determine relevant compliance obligations? ✓ Are these compliance obligations considered when planning for the EMS? ✓ Is the effectiveness of planning actions evaluated?

✓ Does top management ensure clear assignments of responsibilities and authorities for EMS issues? ✓ Are responsibilities and authorities for the compliance of the organization’s EMS with ISO 14001 assigned? ✓ Are responsibilities and authorities for the reporting of EMS-relevant issues to top management assigned?

2.4 ISO/IEC 17025—Laboratory Management 95

Support

Resources

Competence

7

7.1

7.2

Environmental objectives and planning to achieve them

6.2

Shortened Checklist for ISO 14001

Table 2.15 (continued)

(continued)

✓ Does the organization determine the necessary competence of staff working under its control and having impact on its EMS? ✓ Does the organization ensure that persons working under the EMS do have the necessary competence? ✓ Does the organization determine training needs? ✓ Are personnel trained and is the efficiency of trainings evaluated?

✓ Does your organization provide the necessary resources (financial, human, infrastructure, etc.) for the full life cycle of the EMS?

✓ Are environmental objectives established: – At all relevant organizational levels? – For all relevant functions? ✓ Do environmental objectives include the organization’s significant environmental aspects? ✓ Are the organization’s environmental objectives relevant and in conformance with the environmental policy? ✓ Are the environmental objectives measurable and monitored? ✓ Are environmental objectives communicated and updated if necessary? ✓ Does planning for the EMS include in detail – What will be done by whom? – What are the necessary resources? – How are responsibilities distributed? – Timelines? – Monitoring, evaluation and reporting of results?

96 2 Generic Standards for Management Systems: An Overview

Awareness

Communication

Documented information

7.3

7.4

7.5

Shortened Checklist for ISO 14001

Table 2.15 (continued)

(continued)

✓ Does the organization have the documented information as required by ISO 14001? ✓ Did the organization specify, which additional documented information it needs with respect to the EMS? ✓ Are processes in place how to create, distribute, update and control documented information?

✓ Does the organization have implemented efficient processes for EMS-relevant communication and are they maintained and updated? ✓ Do these processes include EMS-relevant communication procedures on “who will communicate on what, when and how”? ✓ Are processes in place, how EMS-relevant information will be communicated internally?

✓ Does the organization ensure that personnel working under the EMS is aware of the environmental policy? ✓ Do persons working under the EMS understand the organization’s environmental aspects and the environmental impacts of their work? ✓ Does personnel understand its contribution to the EMS’ effectiveness?

2.4 ISO/IEC 17025—Laboratory Management 97

Operation

Operational planning and control

Emergency preparedness and response

8

8.1

8.2

Shortened Checklist for ISO 14001

Table 2.15 (continued)

(continued)

✓ Does the organization have implemented and maintained processes for its preparedness and response to emergency situations? ✓ Does the organization plan actions for the prevention and mitigation of adverse environmental impacts resulting from emergency events? ✓ Are these actions proportional to potential magnitudes of emergency events and their impacts on the environment? ✓ Are response actions to emergency events regularly tested? ✓ Are these processes regularly updated, if needed? ✓ Does the organization provide training and information on emergency preparedness and response (to staff and relevant interested parties)?

✓ Did the organization determine the necessary processes of its EMS? ✓ Are these processes established, implemented, controlled and maintained? ✓ Are processes and methods for the monitoring and measurement of EMS-related issues in place? ✓ Does the organization control (planned) changes of operational processes? ✓ Does the organization ensure that outsourced processes are adequately controlled and influenced? ✓ Does the organization address environmental requirements in the design and development phase of products and services? ✓ Does this include life cycle considerations? ✓ Does the organization determine environmental requirements for its products and services? ✓ Are these requirements communicated to suppliers and contractors?

98 2 Generic Standards for Management Systems: An Overview

Performance evaluation

Monitoring, measurement, analysis and evaluation

Internal audit

Management review

9

9.1

9.2

9.3

Shortened Checklist for ISO 14001

Table 2.15 (continued)

(continued)

✓ Does top management of the organization review the EMS? ✓ Does the input to the management review include all relevant data and information (e.g. environmental performance data, results from internal audits, results of risk assessments, input from interested parties, determination of significant environmental aspects, resource needs)?

✓ Does the organization conduct internal audits? ✓ Are internal audits based on adequate audit programs? ✓ Are audits conducted by competent and sufficiently objective personnel? ✓ Are adequate corrective actions, root-cause analyses, etc., done in a reliable professional manner?

✓ Does the organization monitor, measure, analyze and evaluate its environmental performance? ✓ Does this include – Methods and their application – When and how these methods will be applied and by whom – How, when and by whom measurements and monitoring results will be evaluated? ✓ Are performance data communicated internally and externally (how, by whom and when)? ✓ Does the organization have processes for the evaluation of its fulfillment of the compliance obligations?

2.4 ISO/IEC 17025—Laboratory Management 99

Improvement

General

Nonconformity and corrective action

Continual improvement

10

10.1

10.2

10.3

Shortened Checklist for ISO 14001

Table 2.15 (continued)

✓ Does the organization systematically determine the needs and opportunities for improvement of its EMS? ✓ Does the organization improve the effectiveness and adequacy of its EMS?

✓ Does the organization have processes in place for dealing with nonconformities and corrective actions? ✓ Do these processes include root-cause analysis? ✓ Are implemented corrective actions adequate and controlled for efficiency? ✓ Is documented information on these actions available?

✓ Does the organization determine the opportunities for improvement for its EMS and its intended outcomes on a regular basis?

100 2 Generic Standards for Management Systems: An Overview

2.4 ISO/IEC 17025—Laboratory Management

101

include some basic information about them at this point. As mentioned repeatedly in other parts of this book, standards for management systems like ISO 9001, ISO 14001, ISO 50001 and others require measurements and surveillance of processes, products and other issues. These measurements shall be reliable and many of them are measurements done by or in laboratories. We’ll give a short overview here and the reader is referred to the more specialized literature, if needed. The leading international document defining requirements for the operation of laboratories is • ISO/IEC 17025:2017—General requirements for the competence of testing and calibration laboratories and was published in 11/2017. The standard has its roots in former versions whose history can be traced back at least to the early nineties of the last century. According to ISO 17025, a laboratory is an entity that performs: • Testing; • Calibration; • Sampling, which will be followed by testing or calibration activities. Within the global schemes of accreditation and certification, laboratories will not get certified, but accredited for a specific scope. Accreditations are granted by national accreditation bodies and designed to show the competence of the laboratory within its scope of accreditation. Accreditations are typically granted for five years. After that period, a reaccreditation is needed. During the time of validity of a laboratory’s accreditation, regular surveillance activities will be planned by accreditation bodies. These include onsite audits in the laboratory, successful participation in inter-laboratory test and more. ISO/IEC 17025 is the basic standard for laboratory accreditation. However, additional requirements going beyond this standard may be defined by accreditation bodies or other relevant organizations in specific fields. In addition, for some areas complementary standards exist. As an example, we mention • ISO 15189—Medical laboratories—Requirements for quality and competence. This is the leading standard for medical laboratories. It is also applied to pathological institutes.

2.4.2 Discussion of the Clauses of ISO 17025 The structure of ISO 17025 standard is sketched in Table 2.16. We shall make a very fast walk through the crucial requirements of the standard. According to ISO 17025, a laboratory is an impartial competent entity, which receives samples, performs tests and delivers test reports that document the test results (Fig. 2.21).

102

2 Generic Standards for Management Systems: An Overview

Table 2.16 Modules of ISO/IEC 17025 General requirements

Structural requirements

Resource requirements

Process requirements

Management requirements

Impartiality

General

Review of requests, tenders and contracts

Confidentiality

Personnel

Selection, verification and validation of methods

Facilities and environmental conditions

Sampling

Equipment

Handling of test or calibration items

Metrological traceability

Technical records

Externally provided products and services

Evaluation of measurement uncertainty

Option A 1. Management system documentation 2. Control of management system documents 3. Control of records 4. Actions to address risks and opportunities 5. Improvement 6. Corrective actions 7. Internal audits 8. Management reviews

Ensuring the validity of results Reporting of results Complaints Nonconforming work Control of data and information management

Fig. 2.21 Role of a laboratory

Option B Implementation of QMS according to ISO 9001

2.4 ISO/IEC 17025—Laboratory Management

103

The laboratory shall ensure its impartiality. In a nutshell: This means that a laboratory shall not have any self-interest in the testing and calibration services it provides, especially not in the results. If the laboratory is part of a larger organization, for example a production company, still it shall be organized such that impartiality is guaranteed. An obvious potential conflict of interest could arise, for example, if the laboratory is testing the organization’s products, its parts or ingredients, and its personnel is subordinated to the responsible for the production process. It’s important to understand the reason for the impartiality requirement clearly, as it is one of the pillars of ISO 17025. The laboratory shall systematically identify potential risks that could harm its impartiality. Another important requirement is confidentiality. In a nutshell: The laboratory shall ensure that confidential information (e.g. of its customers) is handled as such. Note that confidentiality requirements impact the organization as a whole: Its personnel, processes for handling data and so on. They also apply to subcontractors of the laboratory, if any. A laboratory may be forced by legal requirements or authorities to release information, but even then, usually the customer has to be informed first. Important structural requirements include the following. The laboratory: • Shall be a legal entity, or part of a legal entity. Governmental laboratories are considered to comply with this requirement by their status. • Shall have a management that has the overall responsibility for the laboratory. Clear definitions of responsibilities shall also be cascaded down to all other relevant functions of the laboratory. This includes especially personnel with management responsibilities, performance and verification tasks. • Shall have a clear organizational structure, including defined interfaces to external organizations like subcontractors. The laboratory shall fix precisely that part of its organization, to which ISO/IEC 17025 applies (scope definition!). The laboratory cannot claim compliance with ISO/IEC 17025 for activities, which are outsourced on a routine and permanent basis. Remark As a consequence, the laboratory can’t go for an accreditation for testing areas and procedures, which it subcontracts and doesn’t provide them with the own organization. • Shall ensure that personnel have the skills, resources and authority, to keep the laboratory management system running at the level needed, to identify deviations from the standard and to initiate countermeasures. • Shall ensure that when changes of the management system are being implemented, its integrity is maintained. Remark Potential cases could include the change of test equipment, implementation of new software, changing organizational structures, etc. Concerning the resources of the laboratory, the overall requirement is their availability according to the needs. (Remark Be aware that such general requirements in a standard may sound trivial at first sight, but in an accreditation audit, they may turn out to be really critical, as they are sort of far reaching and leave room for ad hoc

104

2 Generic Standards for Management Systems: An Overview

Fig. 2.22 Resource categories according to ISO 17025

interpretations). ISO 17025 groups laboratory resources into the following categories (Fig. 2.22). Personnel of the laboratory is expected to act impartially, to be competent and to work in compliance with the laboratory’s management system. This includes, for example, to follow the standard operation procedures of the laboratory. The competence and skills needed for jobs and functions in the laboratory shall be specified and records shall be available. Supervision of personnel is required, as are training opportunities for personnel. These requirements hold for internal and external personnel. Formal authorization of personnel shall be provided. This holds especially for those functions that have impact on the performance of the laboratory, as, for example, the development, modification or validation of test and standard operation procedures and other critical laboratory activities. Facilities and environmental conditions are crucial for the adequate performance of a laboratory and will strongly depend on the kind of testing activities it performs. As the scope of laboratories may include, for example, food analytics, all type of chemical testing, microbiological and medical tests, testing of EMC (electromagnetic compatibility), mechanical testing, nondestructive testing using ultrasound or X-ray and many others, ISO/IEC 17025 defines only general requirements for facilities and environmental conditions. Requirements will also derive from other relevant sources and must be included in the laboratory management system. Generally speaking, relevant requirements depend on the specific needs of the individual laboratory’s work. They can be found in national and international test and calibration standards, requirements defined by local authorities (e.g. for microbiological laboratories) and others. ISO 17025 just requires very generally that facilities and environmental conditions shall be adequate to the intended use. It is always implicitly assumed that relevant specific additional requirements are considered and followed. Environmental conditions shall be adequate and controlled. This is critical, as controlled environmental conditions are a prerequisite for almost every laboratory test.

2.4 ISO/IEC 17025—Laboratory Management

105

Special requirements address the access to laboratory facilities: Only authorized personnel shall have access to them. Preventive actions are expected to avoid unintended cross-contamination of test material. Parts of the laboratory with incompatible activities shall be separated. Equipment in the sense of ISO/IEC 17025 includes measuring instruments, auxiliary apparatuses, measurement standards, reference material and data, software, reagents and other items that are needed for testing and can impact results. General requirements for the equipment of laboratories include: • The laboratory shall have access to necessary equipment and that equipment is under its control. Even when equipment is outside of its permanent control, the laboratory shall ensure that it complies with the requirements of ISO/IEC 17025 and other relevant requirements. • The laboratory shall implement procedure for the handling, maintenance, calibration and other relevant activities concerning equipment. • The laboratory shall maintain records on the equipment with information including, but not being limited to: – Identification number and manufacturer of the equipment, type information, software version (if applicable); – Maintenance history; – Location of the equipment; – Information on calibration; – For reference material: Expiration date, results achieved with it, etc.; – Others, depending on the equipment. This type of information is typically available in the laboratory’s database, but other types of documentation are possible. • When needed, calibration procedures for the equipment shall be available and applied. • The laboratory shall establish calibration programs to ensure metrological traceability of results. This program will be reviewed and kept up to date. The calibration status of equipment shall be visible and documented. • Equipment which has been handled incorrectly, delivers questionable results, is defective, etc., shall be marked and taken out of service. Unintended use shall be prevented. • Reference material shall be carefully selected for the purposes of the laboratory. Due to the fact that laboratory equipment may be very diverse, specific approaches will be needed in many cases to conform with the general requirements of ISO/IEC 17025. Other sources may define relevant requirements for laboratory equipment and shall be respected. Specifications delivered by the producer of equipment are an example. The metrological traceability of measurement results shall be established by the laboratory. Unbroken chains of calibration shall link measurement results to appropriate references. Measurement results shall be traceable to the International System of Units (SI). This may be achieved via different paths:

106

2 Generic Standards for Management Systems: An Overview

• Calibration or certified reference materials (traceable to SI); • Direct realization of SI units ensured by comparison with respective national or international standards. In those cases, when traceability to SI units isn’t possible, the laboratory shall demonstrate traceability of measurement results to another reference standard, as for instance certified values of certified reference materials provided by a competent producer. (Remark If a producer of reference materials complies with “ISO 17034:2016—General requirements for the competence of reference material producers”, competency may be assumed). The laboratory is fully responsible for externally provided products and services. Special attention shall be on those that are somehow incorporated into the activities of the laboratory. This includes, for example, subcontracted tests. Another important case is products and services bought in and provided directly to customers of the laboratory. Examples for services and products also include measurement equipment, reference materials, testing and calibration services, maintenance services for laboratory equipment and environment, etc. The laboratory shall determine its requirements for externally provided products and services. These requirements shall be evaluated and updated regularly. Criteria for the evaluation and selection of external providers shall be defined. Performance evaluation of providers is a must. Details depend on the individual case and laboratory requirements. Example If the laboratory defines the requirement, that a subcontracting laboratory shall participate regularly on inter-laboratory and proficiency tests, the logical next step should be to check if the subcontracting laboratory really passed these tests successfully. It should be clear that the laboratory shall communicate its requirements and acceptance criteria for services and products to external providers. These may and often do include explicit requirements on the provider’s personnel. Process requirements form the biggest part of ISO/IEC 17025. We shall briefly sketch the main requirements in form of Table 2.17. In addition to the abovementioned clauses of ISO/IEC 17025, the standard defines requirements concerning the (quality) management system of the laboratory. This is to enable the laboratory to comply with the requirements of the standard in a robust and sustainable way. For that purpose, the laboratory has two options: Option A: The laboratory establishes and maintains a management system, which complies with the requirements of ISO/IEC 17025 discussed above and in addition with some basic elements of a quality management system, sketched in Table 2.18. Option B: The laboratory establishes and maintains a management system according to ISO 9001 and the specific requirements of ISO/IEC 17025 discussed above.

2.4 ISO/IEC 17025—Laboratory Management

107

Table 2.17 Laboratory process requirements according to ISO/IEC 17025 Process requirements Review of requests, tenders and contracts The laboratory shall implement a procedure for the review of requests, tenders and contracts. The main intent is • To ensure that requirements are described completely and fully understood by the laboratory • The laboratory ensures to have the needed capabilities and capacities • Testing methods and procedures are selected correctly and may meet the requirements of the customer The laboratory informs customers in case that required testing methods are inappropriate (e.g. outdated) Make sure that conformity statements based on test reports and requested by customers will be marked as such by the laboratory. The method, how the conformity statement was made, will be shown. (This is, because a laboratory is considered primarily as a competent organization to deliver test results. Conclusions based on them are a different issue.) The laboratory will ensure that test requests are clearly stated. This implies that differences between requests and contracts, verbal information, etc., will be clearly resolved Reviewing requests, tenders and contracts, the laboratory shall determine those laboratory activities that will be provided by external laboratories. Customers shall approve formally any subcontracting to external providers. The laboratory remains responsible for the external laboratory services, unless the customer itself or, e.g. regulatory authorities specify the external laboratory Selection, verification and validation of methods Selection and verification of methods Laboratory work (tests, calibrations, etc.) is usually done following procedures. These procedures may derive from national or international standards and many other sources, including published methods in journals. Procedures shall be documented in an adequate way. When needed, they shall get transcribed to operation procedures, adapted to the specific requirements of the laboratory (equipment, skill level of personnel, etc.). If published standards and methods are explicit enough, transcriptions may not be needed Even when test procedures are explicit enough, the laboratory shall follow a formal process to implement them in the daily routine. Trivially, reading and understanding a method isn’t equivalent with its robust application In case when own development of methods is needed, this will be a planned and structured activity, including the validation of the methods If required, testing methods shall come with statistical methods What has been said about testing methods holds for calibration methods respectively Validation of methods Methods which are nonstandard have been developed by the laboratory, or methods deriving from standards, but have been significantly changed, shall be validated Validations of methods shall be performed by the most experienced personnel, as it requires significant background and experience, including statistical methods, when needed The validation of method shall be documented, and the documentation kept available (continued)

108

2 Generic Standards for Management Systems: An Overview

Table 2.17 (continued) Process requirements Validation of methods may be financially demanding. However, the objective is to end up with robust and reliable methods Inter-laboratory comparisons are often employed as an additional tool of quality assurance Comparison of results obtained with other validated methods may be needed or helpful Considerations of measurement uncertainty are a must Sampling In practice, the laboratory may be responsible for the sampling of the material to be analyzed or sampling is done externally, e.g. by the client Choosing the right sampling process may have a critical impact on test results and their interpretation Example Imagine soil from a contaminated area is to be investigated. Decisions whether the area needs to be decontaminated will be based on the test results. It is of utmost importance that the sampling method applied makes sense and is correctly executed If the laboratory offers sampling, it shall have methods for it. Sampling shall follow adequate procedures. For sampling procedures, the same holds as for the testing procedures mentioned above. There may be standard sampling procedures in some cases; in others, the laboratory shall develop adequate methods and sampling plans In both cases, sampling procedures shall be documented Remark In accreditation processes, sampling is typically considered as a specific area. Laboratories may go for accreditation including sampling methods or excluding them For that reason, watch the scope of the laboratory, if you select one as a potential supplier Handling of test or calibration items Handling of test and calibration items requires special attention of the laboratory. Depending on the type of laboratory and performed tests or calibrations, processes for handling test or calibration items may become relatively tricky. Imagine a toy with electrical components needs to be tested against regional regulations. In this case, laboratory tests may include electrical safety, electromagnetic compatibility, chemical, mechanical, usability tests and more. The laboratory will need to receive one specimen of the toy or several, as destructive tests will be included. Division of the specimen will likely be needed Traceability of test items in the laboratory shall be given at each single moment, starting with the receipt and ending with the storage or return of the specimen For that reason, a laboratory shall implement clear and effective identification schemes and processes for the handling and traceability of test materials during their life cycle in the laboratory Details will vary, depending on types of tests and calibrations. Schemes for handling in a microbiological laboratory will differ a lot from those in a laboratory for mechanical destructive testing. Both have in common, however, that processes for the handling of items shall be in place Upon receipt, the laboratory shall check the status of the test or calibration item. Deviation from expected and agreed on status shall be clarified with the customer Remark Imagine, as an example, that the laboratory observes that sampling of specimens was inadequate, but not in its responsibility. This is a typical example where clarifications with the customer are urgently necessary. As another example, consider incoming chemical test material, which has not been transported under adequate environmental conditions (e.g. temperature). This may severely impact test results and the situation shall be clarified with the customer When test items require specific environmental conditions, the laboratory shall ensure them (continued)

2.4 ISO/IEC 17025—Laboratory Management

109

Table 2.17 (continued) Process requirements Technical records Laboratory activities connected with testing or calibration shall get documented. This documentation shall be comprehensive, describe what has been done, when and by whom. The documentation shall be detailed enough, to enable replication of the respective laboratory activities Remark In practice, this means that raw data shall be part of the records In case when amendments are made to technical records, they shall be traceable to former versions Evaluation of measurement uncertainty A laboratory shall identify the issues and factors that influence uncertainties of its measurements and calibrations. This includes calibrations of own equipment Measurement uncertainties shall be evaluated for testing and sampling methods When rigorous calculations of measurement uncertainties are not possible, estimations based on practical experience and theoretical principles shall be made When sampling and test methods include established specifications of measurement uncertainties, these may be adopted by the laboratory and included in its reports and instructions Ensuring the validity of results The laboratory shall implement adequate and effective quality procedures, to monitor and control the validity of its results These procedures will depend strongly on the kind of activities the laboratory performs. However, the following are expected where appropriate and may be supplemented by others, where adequate • Use reference and other quality control materials (if available, preferably from producers which comply with ISO 17034) • Use alternative calibrated measurement devices for comparison • Check correct functioning of measurement devices • Employ control charts, when applicable and meaningful • Make regular check of devices • Use the same or other test and calibration methods for replication • Retest or recalibrate retained items • Correlate results for different characteristics of items • Review and reinvestigate data by experienced personnel • Perform intra-laboratory comparisons • Perform blind test The laboratory shall participate, where possible and meaningful, in proficiency tests and other inter-laboratory comparisons Results from these and other quality assurance activities will be used to implement corrective actions and continual improvements if needed Reporting of results General (continued)

110

2 Generic Standards for Management Systems: An Overview

Table 2.17 (continued) Process requirements Remark: As mentioned before, according to ISO/IEC 17025 the main intent of a laboratory is to deliver test or calibration results. These results shall get adequately documented and usually are summarized in a test or calibration report Reports may be issued in paper or electronic form, but shall comply with some basic requirements, sketched in the following Reports shall include all relevant information agreed on with the customer Sometimes reports are issued in simplified form. Even in these cases, the information required by the standard shall be available Common requirements for reports (test, calibration or sampling) Remark: Reports on calibrations are often called calibration certificates in practice Reports on test, sample or calibration activities shall include the following information as a minimum • Title, to state what it is about (testing, etc.) • Laboratory: Name, address, legal entity • Location(s) where the laboratory activities were performed • Identification number of the report/calibration certificate (shall be unique) • Name of the customer (incl. address, contact persons, etc.) • Used methods (description or (if applicable) name of test or calibration standards) • Identification and clear description of the item tested or calibrated • Statement, when items were received by the laboratory or when samples were taken • Statement, when laboratory activities were performed • Statement, when the test report or calibration certificate is issued • When relevant: Information about the sampling plans • Statement that test reports or calibration results relate only to the items mentioned in the report • Results of tests and calibrations (incl. measurement units) • Person who authorized the report/calibration certificate • Statement, which results are from external providers The laboratory is responsible for the statements in the report/calibration certificate Where input information was provided by the customer, these shall be clearly stated Remark When, for example, sampling wasn’t done by the laboratory, the report should include this information and state that the test results apply to the material received Specific requirements for test reports In some cases, additional information may be needed and shall be included then in the test report. Examples include • Information on environmental and other special test conditions • Statements of conformity shall be included in the test report if required (incl. specifications) • Measurement uncertainties are of utmost importance and shall be included in the test report whenever needed • Opinions and interpretations shall be included, if needed • Additional relevant information Specific requirements for calibration certificates (continued)

2.4 ISO/IEC 17025—Laboratory Management

111

Table 2.17 (continued) Process requirements In addition to the general common requirements mentioned before, calibration certificates shall include additional information, especially the following • Measurement uncertainties • Conditions that may influence the calibration and statement of the conditions under which calibration was done • Statement on the metrological traceability of results • If repairs or adjustments of items were needed, statement on the calibration results before and after (if available and needed) • Where needed, statements on opinions and interpretations Calibration certificates shall not contain recommendations on calibration intervals. Exception: It has been agreed on with customers Reporting sampling—specific requirements When the laboratory did the sampling, the following information shall be added to the report • Statement, when the sampling took place • Identification of sampled specimen • Statement, where sampling took place • Statement about sampling plans and procedures • Environmental conditions relevant to describe the sampling • Information relevant to determine measurement uncertainty Reporting statements of conformity When the laboratory makes a statement of conformity in its report, employed decision rules and risk levels concerning the decision shall be included Statements of conformity shall be reported by the laboratory such that • It is made clear, to which results conformity statements apply • Which standards or specifications are met (or which parts are met) • On which decision rules the conformity statements are based Reporting opinions and interpretations When test or calibration reports contain opinions or interpretations, they shall be based on results gained from items tested or calibrated. Comments and interpretations shall be indicated as such Opinions and interpretations will be made by especially authorized personnel only The basis on which opinions and interpretations are made shall be documented Amendments to reports In cases that issued reports need to be changed, the changes shall be identified Once a report has been issued, amendments will be made in the form of new supplementing documents Amendments shall be clearly identified and reference to the original report shall be made Complaints The laboratory shall implement a process for the handling of complaints A description of this process shall be available to relevant interested parties (continued)

112

2 Generic Standards for Management Systems: An Overview

Table 2.17 (continued) Process requirements The process for handling complaints shall at least refer to the following issues • Description how complaints are received and analyzed and how actions are taken • System how to track complaints and actions taken • How complaints are dealt with properly The laboratory is responsible to collect and validate necessary information that is needed to deal with the complaint Complainants will be informed about the progress made with complaints and its outcomes Complainants will be informed about the closure of the complaint, if possible Outcomes of complaints shall be worked out or at least approved by personnel, not involved in the laboratory activities, the complaint is about Nonconforming work The laboratory shall have implemented procedures how to deal with nonconforming work These procedures shall include the following issues • Who is responsible and authorized to manage nonconforming work? • Based on the risk levels established by the laboratory, what actions have to be taken? Remark This may include repeating work, withdrawing reports, etc. • What is the impact on previous and other work? What actions derive from the identified nonconforming work? • Do customers have to get identified? Recall of previous work necessary (e.g. test reports, calibration certificates)? Responsibilities and authorities for these decisions shall be nominated Records on actions taken considering nonconforming work shall be available Control of data and information management The laboratory shall have a system to manage its data Remark This is typically done using one or more laboratory information management systems (LIMS). LIMS may be computerized (standard today) or noncomputerized Basic requirements for the LIMS include • Protect the LIMS from unauthorized access • Preventive actions to avoid loss of data • Define the environment in which the system is operated. Hereby follow the procedures of the laboratory and those that may be defined by customers • When external providers operate or have access to the LIMS, they shall comply with the respective requirements of ISO/IEC 17025 • Instructions and manuals for the personnel working with the LIMS shall be available • Data transfers and calculations shall be checked systematically Remark This holds especially for the interfaces between measurement equipment and different parts of the LIMS or with other measurement equipment

2.4.3 Frequently Asked Questions

What can you expect from a laboratory accredited according to ISO/IEC 17025? Working with an accredited laboratory as a provider of laboratory services should bring a couple of benefits, including the following:

2.4 ISO/IEC 17025—Laboratory Management

113

Table 2.18 Management system requirements according to ISO/IEC 17025:2017—option A Requirement

Sketch of details

Management system documentation and control of management system documents

The laboratory shall establish, maintain and document a management system, which addresses the requirements of ISO/IEC 17025, especially impartiality, competence and consistent operation Required documentation (e.g. process descriptions, standard operation procedures, competence requirements, etc.) according to ISO/IEC 17025 shall be included The laboratory management shall commit to the management system documentation and personnel shall have access to and follow it Documentation shall include internal and external (e.g. international or national standards) documents Documents shall be adequately approved before being released and distributed. Reviews of documents shall be done on a regular basis Documents shall be distributed and withdrawn in a controlled manner by authorized personnel It shall be ensured that personnel have access to the relevant and updated parts of the documentation A system of document identification shall be implemented

Control of records

The laboratory shall maintain adequate records of test and calibration activities, as required by ISO/IEC 17025 and other sources (legal, customers, etc.) Records (no matter if in electronic or paper form) shall be traceable and archived. Relevant legal requirements shall be respected

Addressing risks and opportunities

Risks and opportunities associated with laboratory activities shall be considered and evaluated Plans to address and deal with risks and opportunities shall be in place Reduction of risks and working on continual improvements shall be in the focus The laboratory’s management of risks and opportunities shall address relevant actions compared to the risk profile of the laboratory (continued)

114

2 Generic Standards for Management Systems: An Overview

Table 2.18 (continued) Requirement

Sketch of details

Improvement of the management system

Opportunities for improvement shall be systematically identified and corresponding actions implemented Feedback received from customers and other interested parties shall be fed into the improvement cycle

Corrective actions

The laboratory shall react to nonconformities with adequate corrective actions Corrective actions shall be based on root-cause analyses Analyses of nonconformities shall include potential impacts on other processes, tests, calibrations, etc. Nonconformities and corrective actions shall be documented The effectiveness of corrective actions shall be controlled and verified

Internal audits

Internal audits are a must Details for internal audits may be found in Chap. 7 of this book Remark Considering the technical specialties for individual test and calibration activities, auditors shall have a real understanding of the respective test and calibration equipment, processes, etc. In practice, it will make little sense, if a chemist from the chemical laboratory department will go to audit the EMC measurement facilities and vice versa

Management reviews

The management of the laboratory shall evaluate the laboratory management system on a regular basis All quality and performance data shall be considered to determine if the management system is effective and the set laboratory objectives are met Feedbacks from customers and other relevant parties will be considered, so will complaints Evaluation of resources and their allocation shall be part of the management review Evaluation of risks and opportunities deriving from the laboratory’s activities shall be considered Readjustment of targets and objectives shall be made

2.4 ISO/IEC 17025—Laboratory Management

115

• • • •

Competent personnel; The laboratory has the relevant technical equipment and facilities; The equipment is maintained correctly; Testing and calibration methods are validated, and the laboratory has routine to apply them; • Release of test and calibration reports is done by authorized personnel; • The laboratory has adequate internal quality assurance programs and participates in relevant external programs. Can you be sure that an accredited laboratory doesn’t deliver wrong results? No, you can’t. However, fulfilling the bundle of requirements defined by ISO/IEC 17025, the laboratory substantially reduces the risks to deliver wrong results. You want to work with a laboratory that is not accredited. How should you check its ability to deliver quality services? Honestly, if a laboratory offers services to external bodies, having an accreditation should be the standard now. Still, it may happen that due to what reasons ever, the selected organization doesn’t have it (yet). In this case, it may make sense you conduct a second-party supplier audit against ISO/IEC 17025. Note that some accreditation bodies offer checklists for the standard for free download from their homepage. Can the national accreditation body which accredited the laboratory get sued in case an accredited laboratory delivers wrong laboratory services? Usually no. An accreditation body is not responsible for individual results delivered by an accredited laboratory. Although during the accreditation process the accreditation body confirms the technical competency of the laboratory for a defined scope of accreditation, this does not imply any guarantee that no wrong test reports will leave the laboratory. However, the probability for it will be drastically reduced. Are test reports of an accredited laboratory globally recognized? In Chap. 8 of this book, we sketch the international system of mutual recognition of management system certificates. This system is mainly rooted in the network of contracts national accreditation bodies have with IAF (International Accreditation Forum). Certificates issued by certification bodies being accredited by a national accreditation body which has signed an agreement with IAF are usually recognized without problems. There are several mutual recognition programs for laboratories. The most important one is driven by ILAC—International Laboratory Accreditation Cooperation (www.ilac.org). If you select a laboratory as a supplier of testing services, it may make sense to ensure it is accredited by an accreditation body which signed the ILAC agreement. Note, however, that there are more mutual recognition networks for special laboratory areas.

116

2 Generic Standards for Management Systems: An Overview

2.5 ISO 21001—EOMS—Management Systems for Educational Organizations This section includes: • An introduction to ISO 21001:2018 and its requirements.

2.5.1 Introductory Remarks The first edition of the standard • ISO 21001—Educational organizations—Management systems for educational organizations—Requirements with guidance for use was published in May 2018. It is designed to be the leading global management system standard for educational organizations offering their services and products to learners and other beneficiaries. It’s not applicable to other organizations, like those which only produce products used by educational organizations. However, still the scope of the standard is huge and addresses all type of organizations from kindergarten to high school and universities. ISO 21001 is a generic standard. There are no specific requirements for any type of educational organization. Therefore, organizations that want to comply with the standard have to fill the requirements with life, according to their individual contexts and needs. This is pretty much the same situation as with ISO 9001, ISO 14001 and others. Following the high-level structure of modern management standards, ISO 21001 focuses on: • Risk-based thinking Be aware of the risks that could endanger the quality of planned outputs of the educational organization and manage them! • Customer orientation. The educational organization has to address learners, beneficiaries and other relevant interested parties. • Process orientation. The standard pushes educational organizations to have a clear picture of their processes and how to manage them. • PDCA-cycle and continual improvement. The PDCA-cycle has been chosen to be one of the driving forces of the EOMS. • Management by fact and based on performance data. The standard encourages and requests to measure the performance of the educational organization and its processes.

2.5 ISO 21001—EOMS—Management Systems …

117

Fig. 2.23 Guiding principles of ISO 21001

ISO 21001 is based on a set of guiding principles, and the most important of them are sketched in Fig. 2.23. ISO 21001 is a Type A standard. This means, the EOMS of an educational organization can be audited against the standard. In addition, it can be used as the basis of certification programs, offered by certification bodies. ISO 21001 is a standalone standard, but its requirements are widely aligned with those of ISO 9001. If needed, it can be straightforwardly combined with other management system standards like ISO 27001, ISO 14001 and others.

2.5.2 Discussion of the Clauses of ISO 21001 2.5.2.1

Context of the Organization

Determine the context of the educational organization and understand the needs of its interested parties The context of the educational organization is the set of all internal and external issues that impact its strategy, social responsibility, its purpose and doing. In other words, the determination of the organization’s context is critical and indispensable to understand the needs and expectations of all its interested parties. These include: • Learners (e.g. pupils, students, trainees, apprentices); • Staff of the educational organization (e.g. full-time employees, volunteers, lecturers); • Beneficiaries (e.g. governmental organizations, parents, organizations of the labor market);

118

2 Generic Standards for Management Systems: An Overview

• Other organizations and individuals (e.g. shareholders, commercial and noncommercial partner organizations, other educational organizations, external providers of services, society in general, media). The organization shall have processes and tools to determine and analyze its context. The context is the framework which defines the boundary conditions for the organization’s EOMS. Learners, staff and beneficiaries formulate requirements and expectations which are crucial inputs to the EOMS, and the organization shall consider and understand them. (Remark Although that might sound to be trivial, in practice it’s not. There are so many organizations out there which actually lost contact with their interested parties or at least relevant parts of them.) Determine the scope of the EOMS The organization shall determine the scope of its EOMS. The scope is essentially that part of the organization, to which the EOMS applies. In practice, the scope may include the whole organization or parts of it. The organization shall make clear in form of documented information, which parts of the organization and which services and products are within the scope and which are not. Determining the scope of the EOMS, one has some degrees of freedom. For example, the organization could run different segments of educational activities and for what reasons ever decide that for the moment being, the EOMS will be established and implemented in only one of these segments. Later the scope will be extended and include all organizational parts. Such an approach is possible and perhaps even a good choice, in order to collect experience with the EOMS and to limit potential mistakes which might occur during the implementation phase to only a part of the organization. On the other hand, only meaningful scopes are acceptable. It wouldn’t make sense, for example, to exclude the human resource processes from the EOMS. In fact, that would prevent the EOMS from functioning. Determining the scope of the EOMS, the organization shall keep in mind the expectations and requirements of its interested parties. Establish, implement, maintain and improve the EOMS Trivially: Establishing, implementing, maintaining and improving the EOMS is formulated as a specific requirement of the standard. If an organization wants to comply with ISO 21001, it shall implement an EOMS and keep it alive. ISO 21001 is process oriented, as all other management system standards and the organization shall determine its processes which will be part of the EOMS. What has been said about processes in other parts of this book applies here as well. Dealing with the organization’s processes means: • Determine inputs and outputs of the processes and the sequence of its process steps. • Monitor and control processes and determine measurable performance criteria, wherever needed and meaningful. • Determine and make available the resources needed for operating the processes.

2.5 ISO 21001—EOMS—Management Systems …

• • • •

119

Fix responsibilities and authorities for processes and their sub-processes. Determine and address risks associated with processes. When needed, improve processes and the respective parts of the EOMS. Have documented information about the processes available, where needed or helpful. Make this documented information available with the right content to the relevant people at the right location and time.

2.5.2.2

Leadership

Leadership and commitment of top management ISO 21001 requires top management to be accountable for the effectiveness of the EOMS. This requirement is crucial in several ways. Mainly, however, it implies that top management can’t escape to be the motor of the EOMS. Top management shall ensure that: • The EOMS objectives of the organization and its EOMS policy are in agreements with the needs deriving from the organization’s context and strategic direction. • The requirements of the EOMS are integrated into the processes of the organization. • Risk-based thinking and thinking in processes are part of the organization’s culture. • Necessary resources (financial, human, others) are available to run the EOMS. • The importance of the EOMS and its requirements are understood by staff and other relevant persons. • Personnel is supported and motivated to engage and make the EOMS a success. • The EOMS of the organization meets its objectives and targets. • Continual improvement is a part of the EOMS and of the organization’s culture. • Management at all levels is supported and encouraged to play their roles within the EOMS. • Needs and requirements of learners of all type are systematically identified and addressed. • The organization has a strategic plan which is updated according to the needs. • Principles of social responsibility are considered and respected. Top management is responsible that risks and opportunities which may influence the performance of the EOMS, and the conformity of the organization’s services are determined and effectively addressed. It is also part of top management’s responsibility that expectations and needs of learners and other relevant interested parties are determined and met. ISO 21001 addresses some additional requirements for special needs education. Hereby special needs learners are defined as those which have additional or other educational needs that can’t be satisfied with the regular processes for instruction and assessment. The standard requires that the management of the organization ensures the availability of resources and trainings that support the special needs learners’

120

2 Generic Standards for Management Systems: An Overview

access to learning environments. This includes adequate accommodation of these learners to promote their access to facilities and educational environments. Educational organization policy ISO 21001 requires that top management defines, implements and keeps updated an educational organization policy. This policy is expected to be adequate, supportive to meet the organization’s objectives and not to be in contradiction with its context and strategies. It also shall provide a framework for setting objectives. The policy shall include commitments to comply with applicable requirements (including legal and regulatory) and to continually improve the EOMS. It shall refer to didactic, pedagogical, technical and scientific developments, as far as relevant to the organization. The policy shall include commitments concerning the management of intellectual property and social responsibility of the educational organization. Where needed, expectations and requirements of interested parties shall be addressed. The organization’s policy shall be available in documented form and communicated within the organization, as well as outside to interested parties. Defining responsibilities, authorities and organizational rules Top management is responsible that relevant management roles of the EOMS are assigned and communicated within the organization. The overall intent of these assignments is that the EOMS of the educational organization complies with the general requirements of ISO 21001 and that its processes are suitable and deliver the desired outputs. Management roles and responsibilities that shall be defined include: • Monitoring and continual improvement of the EOMS performance; • Reporting the performance of the EOMS to top management; • Ensuring the focus on learners and other beneficiaries and interested parties (including the requirements of learners with special needs); • Ensuring that changes of the EOMS (e.g. changes of processes) do not harm the integrity of the EOMS); • Management of communication within and outside of the organization; • Management of documented information connected with the EOMS. Keep in mind that all management system standards require the formulation of policies adequate to the organization. It is an important document to align the thinking inside of the organization and to communicate essentials of the respective management system to external parties.

2.5.2.3

Planning

The main intent of this section of ISO 21001 is to define a framework for the planning requirements listed in Table 2.19.

2.5 ISO 21001—EOMS—Management Systems …

121

Table 2.19 ISO 21001: Requirements concerning “Planning” the EOMS Requirements

Action items

Address risks and opportunities

• Based on its context, the educational organization shall plan the EOMS such that its intended outcomes may be achieved, and stakeholder requirements may be met • Risks and undesirable effects shall be identified and treated adequately (prevent, mitigate, reduce) • Opportunities shall be identified and addressed • Defined actions shall be integrated into the EOMS

Plan objectives of the educational organization

As the EOMS is based on “management by facts”, it is expected that • The educational organization establishes objectives (for processes and relevant functions). These will give the EOMS its direction • Objectives shall be measurable, monitored, communicated, updated when needed, relevant concerning the services of the organization and, of course, not contradict the organization’s overall educational policy • The organization’s objectives are documented and part of its documented information Concerning EOMS objectives: The organization shall determine what will be done by whom, when and what resources will be required To be short, objectives shall be followed up consistently and in a systematic manner Remark Objectives are not just fantasies, once mentioned and forgotten three weeks later. Objectives are real and it is one of the advantages of an EOMS to have objectives clearly defined and followed up in a transparent manner

Planning of changes

When the EOMS needs to be changed (e.g. triggered by internal or external requirements, strategy changes, etc.), these changes shall be done in a systematic and controlled way • The real purpose and intent of the changes shall be clearly determined • The needed resources for the changes shall be determined and available • Responsibilities during the change process and after shall be considered and assigned • If for the changes external providers are needed, their availability shall be ensured • Processes and other issues shall not violate the integrity of the EOMS during the change process To bring it to the point, changing the EOMS shall be a controlled and stable process

122

2.5.2.4

2 Generic Standards for Management Systems: An Overview

Support

The requirements of ISO 21001 concerning the clause “Support” include the following categories: • • • • •

Resources; Competence; Awareness; Communication; Documented information. Let’s have a look at their main content (Table 2.20).

2.5.2.5

Operation

The operation clause of ISO 21001 has seven subclauses. It resembles the requirements of ISO 9001, adapted, however, to the special needs of educational organizations (Fig. 2.24). We sketch the content of these clauses one by one. Operational planning and control The educational organization shall plan, implement and control its processes. Hereby the focus is on those that are necessary to deliver its educational products and services. This implies to achieve the following: • • • • •

Requirements for the educational services and products are determined. Criteria for the processes are established. Controls of processes are implemented. Needed resources are determined. Required documented information is determined and available. This includes documented information necessary to ensure that processes are followed as they should (e.g. procedures to be followed). It also includes documented information that is used to check if processes were followed and if they delivered what they should.

If changes (e.g. of processes) are planned, the educational organization shall control them. In case unplanned changes happened, the organization will investigate its potential undesired effects. It is important to mention that in case the organization outsources some of its processes, it still shall control and remain responsible for them. ISO 21001 stresses the importance of operational planning and control of processes, educational products and services. This includes the following aspects: • Clearly plan the desired learning outcomes. • Select the right teaching methods and an adequate learning environment. • Define how the progress of learning will be assessed and conduct learning assessments. • Define and practice adequate methods of improvement. • Determine and provide necessary support services.

2.5 ISO 21001—EOMS—Management Systems …

123

Table 2.20 ISO 21001: Requirements concerning “Support” of the EOMS Resources General

Generally speaking, the educational organization shall systematically determine and ensure the availability of needed resources to establish, implement, maintain and improve its EOMS The main intent is to improve • Learners’ satisfaction, engagement and learning results, as well as • Staff’s satisfaction, engagement and competence When determining and monitoring resources, the organization shall consider internal resources, as well as those from external providers

Human Resources

Human resources in the sense of this clause of ISO 21001 include • All employed staff • Volunteers and other personnel • Personnel of external providers working for the educational organization The organization shall • Determine recruitment criteria for personnel and make them transparent to relevant interested parties • Systematically determine and provide the human resources needed to effectively run the EOMS The processes used for recruitment and criteria for the selection of personnel shall be part of the documented information of the educational organization

Facilities

Facilities of the educational organization include buildings, ground, equipment, hardware and software, and utilities required by learners for the learning process The organization shall systematically determine, provide and maintain the facilities needed to support learners’ development, learning processes and staff Facilities shall be safe and adequate to their intended utilization Facilities include those for teaching and self-learning, rest, recreation, conducting research and more, depending on the scope of the organization (continued)

124

2 Generic Standards for Management Systems: An Overview

Table 2.20 (continued) Environment for the operation of educational processes

The environment provided by the educational organization shall be suitable and its physical as well as psychosocial factors shall be considered

Monitoring and measuring resources

When the educational organization measures the conformity of its products and services compared with given requirements, it shall ensure that the necessary resources for these measurements are available and adequate This includes • Employed measurement and monitoring techniques are adequate • Resources needed to do the measurements and monitoring are available • Documented information is available to demonstrate adequacy of the measurement and monitoring resources When traceability of measurements is a requirement, the educational organization shall be able to demonstrate it. This includes calibration procedures for the measurement resources. If such procedures don’t exist, the organization shall have documented information available to demonstrate the verification of measurements Measurement resources shall be safeguarded from any impact that would make invalid its calibration status In case measurement resources turn out not to fit for the intended purpose, the educational organization shall determine the validity of previously made measurements Remark These requirements may sound weird and abstract at first sight. However, they can be made clearer by giving an example Different types of rankings, performance scales, success rates, etc., are in use in various areas of the educational sector. The requirements above imply that measurement resources and methods (e.g. to determine those rankings, performances, etc.) shall be clearly defined and suitable to deliver meaningful and reproducible results. Where possible or needed, they shall be traceable to respective standards The same sort of logic applies to other monitoring and measurements (continued)

2.5 ISO 21001—EOMS—Management Systems …

125

Table 2.20 (continued) Organizational knowledge

The educational organization shall determine the required knowledge to operate its processes and to achieve its objectives That knowledge shall be kept up to date and made available to the necessary extend Example If the organization wants to remain a leading provider of undergraduate physics curricula, the necessary knowledge for that must be determined. Knowledge shouldn’t leave the organization if one of its professors resigns or retires. Necessary development of knowledge to cover future needs must be determined and ensured As needs may change, the organization shall determine if additional knowledge is needed and how it can be acquired The organization shall support and encourage knowledge exchange between the staff When needed, the organization shall provide adequate learning resources. These resources shall meet the needs of learners, staff and other beneficiaries Learning resources shall be managed (planned, catalogued, etc.) Intellectual property shall be respected

Competence • For all persons working under the EOMS and having impact on the performance of the educational organization, competence criteria shall be determined • The educational organization shall ensure that necessary competence criteria are met • Evaluation methods and criteria for staff shall be implemented and maintained • The organization shall update its competence criteria if needed • Staff competence shall be continually developed • Documented information shall be available on competence criteria in general and show evidence that competence criteria are met In addition to the general competence requirements mentioned, there are additional requirements related to special need education. The educational organization shall make available the necessary resources and ensure that all personnel having contact with special needs learners get adequate training. This may include, for example, special teaching and learning methods or assessment techniques Awareness Relevant persons of the educational organization that work under the EOMS shall be aware of • The content and importance of the organization’s policy, strategic plan, objectives and the EOMS • Their own role under the EOMS • Consequences and implications of not complying with the EOMS Top management plays the major role to create this awareness Communication (continued)

126

2 Generic Standards for Management Systems: An Overview

Table 2.20 (continued) Internal and external communication relevant to the EOMS shall be determined, including who will communicate with whom, how, why on what and when Communication needs may, for example, include • Collecting feedback and opinion from relevant interested parties • Communicating to relevant interested parties the right information in time • Collaboration and information processes within the organization Internal communication on the intent and content of the EOMS is also an important example showing the need for streamlined communication processes The educational organization shall implement arrangements for the effective communication with interested parties and especially with learners. The intent of these arrangements is to transfer important information as, e.g. about learning programs, examination procedures, formalities with respect to application and more in a reliable way. The arrangements also should define a framework for communication needs between the various parties of the organization, especially between learners and teachers The educational organization shall review its communication processes and their effectiveness on a regular basis Documented information shall be available on these communication processes Documented information Documented information may be divided into two parts • Explicitly required by ISO 21001 • Defined by the educational organization itself as being necessary to keep the EOMS running In some cases, regulatory, legal and other sources may define additional requirements for specific documented information The documented information needed will also depend strongly on the size of an organization and the complexity of its activities Keep in mind that documented information may come in various formats The following is a short checklist, highlighting important aspects when dealing with documented information • Format of the documented information: Electronic, paper, other formats? • Language requirements: In which language the document has to be? • Identification: How can the document be unambiguously identified? • Release: Who is authorized and responsible for the release of different types of documented information? • Is it available and usable when and where needed? • Do the relevant users have timely access? • How is it protected (unauthorized access, data protection, confidentiality, etc.)? • When documented information is changed: What is the process? • How is it ensured that obsolete documented information isn’t used unintentionally? • How is documented information stored? Includes legibility preservation, information security aspects and more

ISO 21001 includes an Annex A, which is normative for educational organizations offering early childhood education. Hereby the International Standard of Classification of Education (ISCED) is followed and early child education defined as that beginning at Level 0. Annex A includes 11 subclauses, the main content of which is the following: • The educational organization should respect the UN Convention on the Rights of Children.

2.5 ISO 21001—EOMS—Management Systems …

127

Fig. 2.24 Subclauses of the operation clause of ISO 21001

• The educational organization shall promote and support the development of children (intellectual, physical, emotional as well as social). • The educational organization shall offer adequate facilities, including those for playing, learning and daily care. • The educational organization shall ensure educators specialized in early childhood education and offer adequate training for them, if necessary. • Communication processes shall be implemented to streamline communication between the different involved parties (educators, parents and relevant persons). • The educational organization shall develop individual learning plans. Hereby expectations of the family and the child shall be respected, as well as the boundary conditions given by the group. These plans are expected to be updated on a regular basis and available as documented information. • The plans shall include: – Objectives and indicators how to measure them. – How will the learner achieve the objectives (resources, strategies, methods, etc.)? – Responsibilities of those involved in the individual plan (child, family members, staff of the educational organization, others). – Defined deadlines for individually defined activities. – Identification of related risks and how to manage them. – Regular reviews of individual plans. When creating individual plans, the educational organization is expected to involve the child and its family. Documented information shall be created about the different actions and phases of the plan. • The reception and delivery of the child shall follow defined processes. These include:

128

2 Generic Standards for Management Systems: An Overview

– The educational organization shall nominate a responsible person and select a place for the reception. – A communication process shall be established between the child’s family and the responsible person for the reception. – A similar process shall be established for the delivery of the child. It shall be ensured that the child will be delivered only to authorized persons. – Hygiene conditions shall be defined how to deliver the child. • The educational organization shall implement rules for hygiene care. • The educational organization shall have processes for how to act in situations of illnesses or accidents of children. This includes, for example, handling of medicine. Mandates shall be signed by the child’s parents. • The educational organization shall ensure pedagogically reasonable material as well as other equipment. Hygiene of this material and spaces shall be ensured. Documented information on this shall be available. • Concerning child abuse or negligence, the educational organization shall maintain documented information on the management of child behavior and well-being. This shall include actions on the prevention of abuse or negligence by staff and others, as well as the identification of issues related to it. Concerning operational planning and control, ISO 21001 defines some additional requirements for educational organization involved in special needs education. These include the following. The organization should: • Give adaptive instructions to learners. • Allow learners to participate in two different educational organizations or programs. • Define individual measures. • Make possible modifications of education programs or the adjustment of curricula. • Offer team environments and adequate resources to support learners with special needs individually. • Provide nutritious and healthy meals according to the needs. Requirements for educational products and services The intent of this subclause is that requirements for products and services provided by the educational organization are clearly determined and communicated. This includes the following issues. Requirements for offered services and products: • Comply with the organization’s strategy and policy. They also comply with the requirements and expectations of learners, beneficiaries and other relevant interested parties, including learners with special needs. • Comply with international developments and demands, as well as with those of the labor markets. • Comply with relevant research results. • Comply with relevant requirements for health and safety.

2.5 ISO 21001—EOMS—Management Systems …

129

The educational organization shall ensure it can deliver the services and products it offers. ISO 21001 requires the educational organization to be transparent in its communications. Especially, the organization shall communicate: • Contents, purposes, target groups and formats of its services and products to learners and other beneficiaries and relevant interested parties. • How and with what instruments evaluations will be done? • How disagreements and dissatisfactions with interested parties will be handled? • Support of learning and of evaluation: Who and how? • Transparency on costs. • Which prerequisites are necessary (theoretical and practical)? Documented information shall be available on these issues. In case of changing requirements, the educational organization shall ensure that relevant interested parties are informed. Design and development of educational products and services This subclause is lengthy; underlining the importance ISO 21001 gives the orderly design and development of educational services and products. The logic of the requirements follows the respective requirements of ISO 9001 discussed in Sect. 2.2 of this book. It is important to note that both standards require that design and development activities of the organization follow established rules and processes. The following checklist highlights the requirements. CHECKLIST: Design and development of services and products of educational organizations 1. General The educational organization shall have a process for the design and development of its educational services and products. 2. Design and development planning Design and development are complex processes and they need planning. Critical issues to be considered in the planning phase include the following: • • • • • •

Understand the requirements. Have a clear picture of the complexity, duration and nature of the design project. Be clear about the stages of the design project. Consider the verification and validation activities of the design project. Fix authorities and responsibilities for the design project. Get a clear picture about needed resources (internal, external, type of resources). • Control the interfaces between the organizational units and persons involved in the project. • Involve interested parties (learners, beneficiaries, others) where needed.

130

2 Generic Standards for Management Systems: An Overview

• Keep in mind the requirements of provision processes for products and services. • Respect the level of control expected or needed by interested parties (esp. learners). • Determine the documented information needed to document compliance or the design process with its requirements. • Consider potential needs of learners concerning their individual learning pathways. • Employ a fact and evidence-based approach during the design process. • Decide what documented information will be needed to document the design and development process. 3. Design and development inputs Ensure the inputs to the design and development process are complete. This includes the following: • Consider the input from all relevant sources and parties. • Employ relevant results from previous design projects. • Consider policies, codes of practice and others to which the organization subscribes. • In case of conflicting inputs, resolve the conflicts. • Keep documented information on design and development input. • Apply risk-based thinking: For example, what would be the consequences if the designed services and products fail. 4. Design and development controls • General design and development controls The organization is expected to implement controls in the design and development process, to ensure that the results to be achieved are clearly and unambiguously defined. Reviews shall be implemented to monitor, if design results are achieved with the design and development process. Validations and verifications need to be conducted to check if developed services and products meet the requirements. Actions shall be taken in case problems appear during the verification and validation activities. • Educational service design and development controls The course or program scopes and purposes shall be defined with the learners’ requirements for further work and study in mind (call for practice orientation). Prerequisites for courses and programs shall be specified and relevant characteristics of learners shall be defined (fix target groups and their prerequisites). Programs and courses shall take requirements for further study or work into account (how does the course or program support the learner to proceed in his/her career).

2.5 ISO 21001—EOMS—Management Systems …

131

• Curriculum design and development controls Ensure that learning outcomes are achievable, relevant, measurable and timebound. They also shall be consistent with the program or course. Learning outcomes shall be described (skills, knowledge achieved). Ensure that learning activities are appropriate to achieve the learning targets. They also shall be measurable and specific, relevant and achievable. Ensure that resources for the successful completion of learning activities are defined. Opportunities for learners to take active part in the creation of the learning process should be respected. • Summative assessment design and development controls Ensure there is a clear and transparent link between the design of assessments and the envisaged learning outcomes that may be demonstrated. Assessment activities shall be transparent, accessible, fair and show respect to learners. Grading systems shall be transparently defined and validated. 5. Design and development outputs • Ensure that design and development outputs meet the requirements of the design input. • Ensure that the design and development output is adequate to subsequent provision processes. • Design and development outputs shall include measurement and monitoring requirements if appropriate. • Retain documented information on the design and development output. 6. Design and development changes • Identify, review and control changes made during or after the design and development of services and products. Ensure that no adverse effects derive from these changes and that conformity requirements are still met. • Keep documented information on design and development changes. These shall include details of the changes, authorizations for the changes, review activities of the changes and actions to prevent negative impacts. Control of externally provided processes, products and services It frequently happens in practice that part of the processes, services and products of an educational organization are provided by external organizations or individuals. In principle, three different constellations are common: (1) External organizations or individuals provide services and products, which become part of the educational organization’s services and products. (2) External organizations or individuals provide services and products, which are delivered directly to learners or other beneficiaries. (3) A process (or part of it) of the educational organization is provided by external providers.

132

2 Generic Standards for Management Systems: An Overview

In all these cases, the educational organization shall establish adequate monitoring and evaluation criteria for its subcontractors. Providers shall demonstrate their ability to deliver in accordance with stated requirements. Monitoring and evaluations of providers will be done on a continual basis and systematically. Documented information on these activities shall be available. It is the educational organization’s responsibility to ensure that externally provided processes, products and services are under control of its EOMS. It also shall ensure that no adverse effects result from externally provided processes. The educational organization’s ability to deliver services and products conforming to specifications shall not be harmed. The educational organization shall evaluate the risks that externally provided processes, services and products have on its ability to achieve the objectives of the EOMS. The organization shall also require adequate controls and monitoring applied by external providers to their subcontractors. Results of the educational organization’s evaluations shall be communicated to the respective suppliers. This includes the following: (1) Prior to communicating requirements to its providers, the educational organization shall check them for completeness and adequacy. (Remark Don’t think, that’s obvious and trivial!) (2) The educational organization shall communicate its requirement for services, products and processes to be provided, as well as the applied methods of approval by the organization. (3) Definition of competence and qualification requirements of persons. (4) Requirements on the interaction of the provider with the educational organization. (5) Methods of performance evaluation applied by the educational organization. Verification and validation activities to be performed. Delivery of the educational products and services This clause has several subclauses and Fig. 2.25 gives an overview. We present the main requirements. The main advantage of an EOMS is to have well-defined services and products and to deliver them in a controlled and reliable way to satisfied learners and other interested groups. Robust processes are the core of it. For this reason, ISO 21001 requires that the organization implements its processes for service provision in a controlled manner. This includes the following general requirements: • Educational products and services are clearly defined, documented information on them is available and the outcomes to be achieved are described. • Adequate validated measuring and monitoring resources are available and implemented. • Results of measurements, monitoring, formative assessments, feedbacks and complaints show whether objectives have been met. • Infrastructure and environment are adequate.

2.5 ISO 21001—EOMS—Management Systems …

133

Fig. 2.25 ISO 21001: Subclauses of clause “Delivery of the educational products and services”

• Competency and qualification profiles of personnel are met. • For processes for which output cannot be measured, other validation activities are implemented. • Actions to prevent human errors are part of the EOMS. Concerning the admission of learners, the educational organization is expected to provide learners before their admission at least with the following information: • Information about the educational organization, including its commitment to social responsibility, professional standards and relevant organizational standards; • Pedagogical and didactical approaches, professional perspectives deriving from the education offered, intended learning results; • Details on the interaction with learners; • Criteria for admission; • Costs of educational services and products. The admission process itself shall include: • Admission criteria comply with organizational requirements, applicable requirements from the professional field and additional requirements deriving from the program and pedagogical approaches. • Publicly available admission criteria; • Uniform application of admission criteria for all learners; • Admission decisions are traceable and available as documented information. Concerning the delivery of educational products and services, the educational organization shall establish, implement and maintain processes. These include the following areas:

134

2 Generic Standards for Management Systems: An Overview

• Processes for teaching; • Processes for the facilitation of learning; • Supportive administrative processes for learning. (Remark Keep in mind, processes are the nitty-gritty of the EOMS!) Concerning summative assessments, the educational organization shall ensure: • Implemented methods for detecting malpractices like plagiarism and others. Learners will get informed about these methods. • Traceability of grades. Connections can be made between a learner’s work and the assigned grade. • Documented information is available concerning the assignment of grades. • Retention periods of related documented information are published. Concerning the recognition of assessed learning, the educational organization shall ensure at least the following: • • • • • •

Learners get informed about outcomes of assessments and resulting grades. Learners are given the chance to appeal outcomes. Learners have access to their works, as well as to its assessments. Learners have the opportunity to receive feedback. Learners receive evidence of assessment outcomes. Decision on grading and final assessment is part of the organization’s documented information. Retention periods for the respective documentation are available publicly.

The standard defines some additional requirements for special needs education. This includes the following: • The organization shall use input and feedback from learners and relevant interested parties to identify how the accessibility of its services can be improved and what would be timeframes to implement the improvements. • Addressing learners, instruction strategies and processes should be differentiated. • The organization should balance learners’ needs, course requirements, teachers’ needs with curricula requirements and other relevant issues. • If applicable, the organization should define individual measures (e.g. modification of curricula, support of self-directedness and mentorships). • Concerning assessments, the organization should employ alternative and diverse ways to demonstrate learners’ learning results. • The organization should implement individual and flexible measures for evaluation. Identification and traceability ISO 21001 calls for transparency. This includes requirements concerning the traceability of delivered services and products and achieved results. Especially, the educational organization shall ensure traceability concerning the learners’ progress through the organization. The work of staff concerning “what was done by whom, how and when” shall be sufficiently traceable.

2.5 ISO 21001—EOMS—Management Systems …

135

Example No learner should be able to argue: “I never heard anything about eigenvectors throughout my whole linear algebra course”, and the educational organization can’t falsify or verify the accusation. Outputs produced during service provision shall be preserved for an adequate period, if necessary. (Example Think of lecture notes and other output material.) Property belonging to interested parties The intent of this subclause is to protect interested parties’ property, when it is under the control of the educational organization. Examples include, but aren’t limited to: • Equipment and material (e.g. think of a laboratory device lent from an external party); • Software, hardware, data; • Intellectual property; • Others. The educational organization is requested to implement procedures which specify how to deal with such belongings, with special focus on their protection. This will also include regulations how to proceed if such property is damaged or lost. Preservation This short clause just reiterates that the educational organization shall preserve its relevant output from its service and product provision processes. The extent of preservation depends on several factors (including legal requirements) that shall be determined. Protection and transparency of learners’ data Keeping learner’s data is part of the “traceability concept” of an educational organization. ISO 21001 requires the organization to implement a procedure which establishes the following: 1. Which learner data does the organization collect and how (processing, storage, etc.)? 2. Who has access rights to the data? 3. What are the conditions that learner data may be shared with other parties? 4. How long are data stored? Learners shall explicitly consent with the storage of their data. Learners will be granted access to their data. The organization shall implement measures, such that data can be accessed by authorized personnel only. Control of changes in the educational products and services The educational organization shall have processes to control and review changes of its services and products. The main intent is to ensure that conformity with requirements can be achieved. Documented information shall be available which shows the results of respective reviews and evaluations. These documents also shall contain

136

2 Generic Standards for Management Systems: An Overview

information about who initiated or authorized the changes. In case of actions have to be taken after the review, these too will be shown in the documented information. Release of the educational products and services Releases of the educational organization’s services and products must be based on a defined process and ISO 21001 requires formal approvals. Depending on the case, this can also need the involvement of authorities, learners and other relevant interested parties. The following abbreviated checklist gives some potential issues relevant during the release process. Details depend on the individual case and practical needs of the educational organization (Table 2.21). Control of the educational nonconforming outputs All management systems aim to deliver outputs conforming with defined specifications. This also holds true for the EOMS. Still, however, it may happen that a produced output does not comply with defined specifications in some cases, due to a variety of reasons. Such nonconformities may occur before and during services are delivered or even after. As examples imagine: • Certain laboratory exercises are an essential part of the physics course this year, but couldn’t be offered in the planned way due to some reasons. • Oral examinations taken were partially based on material which will be part of future course units. Students complained. • After a special training course was released and started routinely, it turned out that the designed curriculum ignores some of recently published content requirements defined by a relevant authority. Table 2.21 Some aspects of the release process for educational services or products

✓ Content, purpose, format and other relevant aspects of the educational services and products ✓ Parties involved to design the services or products (including external parties like authorities, learners, relevant stakeholders) ✓ Evaluation criteria used ✓ Expectations placed on learners ✓ Prerequisites expected (e.g. skills, qualifications, professional experience) ✓ Learning methodologies employed and assessment techniques applied ✓ Processes used in case of dissatisfaction of interested parties and disagreement with the EOMS ✓ How and by whom is the learning and its evaluation supported? ✓ Costs (e.g. tuition fees, examination fees, learning materials) ✓ Who released the service or product? ✓ When will the released service or product be reviewed for necessary revision?

2.5 ISO 21001—EOMS—Management Systems …

137

The educational organization is expected to deal systematically with nonconforming outputs, by: • • • •

Corrections; Hold or suspension of provision of the service and products; Informing learners and other relevant parties; Obtaining an authorization by relevant decision makers for an acceptance under concession.

After nonconforming outputs have been detected and corrective actions initiated, the educational organization shall verify the conformity of achieved results with requirements. Adequate documented information on the control activities will be available.

2.5.2.6

Performance Evaluation

As all management system standards, ISO 21001 is based on the PDCA-cycle. What is required in the “check-stage” of it is basically the content of this clause on performance evaluation. Once having implemented the EOMS, the educational organization shall monitor and measure its performance, evaluate the results and take corrective and improvement actions, when needed. For that purpose, the organization shall determine: • • • • • • • •

What needs to be and will be measured and monitored? What methods will be employed to measure and monitor? What methods will be employed to analyze and evaluate the results? What acceptance criteria will be applied? When and where will measurements and monitoring be performed? Who will do it? When will outcomes be analyzed? How will these activities be documented (documented information)?

Typically, the methods and processes for measurement, monitoring and analysis will be specified in procedures. It should be stressed in passing that the requirements mentioned are crucial and determine to a large extend whether and in which direction the EOMS of the organization will evolve. Great care should be applied selecting the right monitoring and measurement methods, as otherwise achieved results may be not reliable, biased and in the worst case useless. The monitoring of satisfaction is yet another essential part of monitoring. These activities address learners, beneficiaries and staff. Again, the educational organization shall select the right methods to get reasonable and reliable unbiased data. Handling of complaints and appeals shall be part of measurement and monitoring. The educational organization shall implement and maintain procedures for the handling of complaints and appeals. Interested parties shall be made aware of these procedures. Typically, they shall determine the following issues:

138

• • • • • •

2 Generic Standards for Management Systems: An Overview

How are complaints received tracked and acknowledged? How are initial assessments of complaints done? How are complaints investigated? How are decisions on complaints communicated and how are complaints closed? How does the organization respond to complaints? How are decisions concerning complaints communicated?

The same holds for dealing with appeals. Data arising from measurement and monitoring shall be properly analyzed and evaluated. Output of this analysis and evaluation will typically include information on: • The conformity of services and products; • Degree of satisfaction of learners, beneficiaries and staff; • Categorization and identification of relevant groups and the impact of their data on the analysis; • EOMS: Its effectiveness and performance; • The effectiveness of planning; • Risks and opportunities: Are actions effective? • External providers: Is their performance acceptable? • Needs for improvement of the EOMS. A lot of analytical work and analysis result from this clause of ISO 21001. The organization shall ensure that it is done by competent and trained personnel. Some important aspects are summarized in Table 2.22. Internal audits Internal audits are a solid and important method when checking the performance of management systems and ISO 21001 requires them. The reader may refer to Chap. 7 where internal and external audits as well as the general requirements of ISO 19011 are described in some detail. Table 2.22 Some aspects of the analysis of performance data—a very short list ✓ Persons doing the analysis and evaluation shouldn’t have any conflict of interest which might influence their ability to conduct the work with sufficient independence and proficiency. It should be ensured that they have the necessary skills for data analysis ✓ Reports of analysis should be transparent and fact-based, describing the findings and their relations to specific services and products offered ✓ Besides the analysis of services and products, the learning environment, infrastructure, facilities and other factors of influence should be evaluated and analyzed ✓ Interested parties affected by the evaluations should be identified ✓ KPIs (key performance indicators) and evaluation criteria should be developed with relevant interested parties to ensure its relevance

2.5 ISO 21001—EOMS—Management Systems …

139

Management review Top management of the educational organization shall review the effectiveness and performance of the EOMS on a regular basis. The management review may be considered as the documented information on it. The topics and information establishing input to the management review include: • What is the status of actions which derived from previous management reviews? • Are there any (new) internal or external issues relevant to the EOMS? • What is the key information on the effectiveness and performance of the EOMS? Examples include: (1) (2) (3) (4) (5) (6) (7) (8) (9) • • • •

Results from satisfaction reviews (learners, staff, others)? Objectives reached? Performance of processes? Conformity of services and products? Found nonconformities and initiated corrective actions? Results from measurement and monitoring? Results of internal (and external, if applicable) audits? Performance results of external providers and suppliers? Outcomes of assessments?

Are resources for the EOMS adequate and sufficient? Are risks and opportunities addressed effectively? Have opportunities for improvement been detected? Is there feedback from staff concerning personnel capacity?

Based on these input data, the output of the management review will address at least the following: • Are opportunities for improvement identified? • Does the EOMS need changes? • Are assigned resources sufficient? The management review is an important part of the documented information.

2.5.2.7

Improvement

All management system standards are designed to trigger continual improvements of the organization. ISO 21001 too encourages the educational organization to identify opportunities for improvement and to take respective actions, if reasonable. The overall objective is to stay relevant and to keep the satisfaction of learners and beneficiaries on a high level. Typical issues include: • Improve services and products and adapt to new developments and requirements. • Take preventive and corrective actions, to keep undesired events at a minimum, and correct negative things that happened. • Continually improve the EOMS of the organization.

140

2 Generic Standards for Management Systems: An Overview

When the educational organization detects nonconformities, they shall be treated systematically: • Control and correct the nonconformity and address its consequences. • Make a root-cause analysis of the nonconformity, implement corrective actions and check its effectiveness. • Check if similar, but not yet detected nonconformities could exist and determine what treatment they need. • Work on the EOMS. Simplify it, without diminishing its effectiveness. Adapt it to changing needs. • Keep documented information on all these issues, including measures taken.

2.5.3 Frequently Asked Questions

For what type of educational organization ISO 21001 may be of interest? As mentioned in the text, the standard may be applied to any educational organization, no matter what’s its size, level or which are its other distinguishing factors. A kindergarten may implement an EOMS as may a college or university with extensive research facilities. Of course, the details of the organization’s EOMS will strongly depend on its complexity and other specifics. However, the more complex an organization is, the more benefit it may derive from the EOMS. Does an EOMS according to ISO 21001 really make sense? Reading through the many requirements of the standard, some of the immediate reactions readers may show include: “No thanks, too complicated! This will not improve our organization but kill it with useless formal issues! That very likely will lead us nowhere!” Teachers, trainers, professors and educators usually like learners. However, they like their degrees of freedom as well and use them in daily professional life to give their best to the benefit of learners. They don’t want to get caught in formalities. For that reason, when starting to establish an EOMS, the organization should communicate from the very beginning that the EOMS is not designed to add another burden on the shoulders of its staff. The intent is to make the organization more transparent and its processes more streamlined. In addition, the EOMS is designed to support the organization to achieve its objectives. That’s it! All inappropriate formal things should be and can be avoided. It is super important to reach a sufficient degree of conviction among the organization’s staff. Trust and belief in the EOMS are needed, before starting its implementation. Of course, it is equally important to keep the motivation high during the whole lifetime of the EOMS.

2.5 ISO 21001—EOMS—Management Systems …

141

Is there a difference between ISO 9001 and ISO 21001? Which certification scheme should an educational organization choose? There are many similarities between the two standards. Honestly, if ISO 21001 were not available, ISO 9001 could perfectly be used for the educational sector and in fact many educational organizations around the globe have chosen that option in the past and do it even now. However, after ISO 21001 has been published, it will very likely become the leading standard for the education sector. Written in a style and language that should be closer to the educational community, the standard is flexible enough to be adopted by literally any educational organization. At this moment (August 2019), however, only few accreditation bodies offer accreditations for ISO 21001. This will hopefully change quickly, as otherwise certification organization would have to offer nonaccredited certifications according to the standard, which is surely not in the interest of the educational community.

2.6 ISO 22301—BCMS—Business Continuity Management System This section includes: • A short introduction to the role of business continuity management; • An introduction to ISO 22301:2019 and its requirements.

2.6.1 Introductory Remarks Why is business continuity management important? Any organization may get impacted by external and internal negative factors. Some of them even may have the potential to disrupt the organization’s processes and business. The main intent of a business continuity management system (BCMS) is to foresee as many as possible of these potential disruptive scenarios, to establish preventive actions and to implement processes that help the organization to recover faster after a disruptive event. The objective is to reduce the negative impacts of events that cannot be prevented. The International Organization for Standardization runs a whole bunch of initiatives addressing different aspects of business continuity. In the following, we confine ourselves to the central standard ISO 22301: • ISO 22301:2019—Security and resilience—Business continuity management systems—Requirements.

142

2 Generic Standards for Management Systems: An Overview

The standard follows the structure “Context of the organization—Leadership— Planning—Support—Operation—Performance evaluation—Improvement” of modern management system standards and defines requirements for a BCMS. Given these requirements, one can conduct audits against ISO 22301 and certification organizations may use it as a certification standard. The document “ISO 22313:2012—Societal security—Business continuity management systems—Guidance” can be considered as a companion standard to ISO 22301. It offers guidance for application but no additional requirements. Both standards were first issued in 2012. The new revision of ISO 22301 appeared end of 2019 and defines no additional requirements compared to the first edition. However, it includes clarifications of requirements. Most of them concern the clause on “Operation”. ISO 22301 continues to be the cornerstone for the other ISO security and resilience standards. Currently (12/2019) the standard ISO 22313 is under revision. Its new title will be “ISO 22313—Security and resilience—Business continuity management systems—Guidance on the use of ISO 22301”. ISO 22301 is a generic standard and may be applied by whatever organization, no matter in which industry and what’s its size. The standard follows the same PDCA-logic as other management system standards: “Plan—establish—implement—operate—monitor—review—maintain and continually improve your BCMS”. If done right, a BCMS will make organizations more robust and sensitive to risks which may harm business continuity or seriously disrupt it. Risks will be identified systematically and many of them will show to be controllable at least to some extent. However, it requires awareness and readiness of the organization’s top management to deal with these issues in a systematic manner. This is what a BCMS is designed for. If, for example, supply chains are grounded on economic aspects only and BCMS issues are ignored, bad surprises may wait for you already next month. A BCMS can’t prevent an organization to get hit by major events which disrupt substantial parts of its operation, infrastructure or supply chains. It may be expected, however, that recovery time to normal operation is shorter with a BCMS in place than without it. The motivation of an organization to implement and maintain a BCMS may be triggered by a variety of threats, including but not being limited to: • • • • • • • • • • •

Natural disasters (e.g. earthquakes, hurricanes, tornados, floods); Fire; Outage of power supply; Outage of water or gas supply; Outage of IT or telecommunication; Cyberattacks or sabotage; Terror attacks or war; Financial crisis (e.g. outage of payments); Traffic breakdown; Epidemics; Strikes;

2.6 ISO 22301—BCMS—Business Continuity Management System

143

• Breakdown of critical supply chains; • Failure of critical (technical) systems or facilities. Countries and regions with high-risk levels resulting from potentially disruptive events (e.g. earthquakes in Japan) usually have implemented local or area business continuity management programs, involving the critical local or regional organizations. These programs are needed to manage efficient response to disruptive events. Needless to say, these programs may be arbitrarily complex, and we shall not go into any details here. However, the general designs of such programs and business continuity management systems follow basically the same ideas as presented in ISO 22301. BCMS comes with its own vocabulary and it makes sense to have a look at some of the most important terms before discussing the requirements of ISO 22301 (Table 2.23). Table 2.23 Explanation of some widely used abbreviations in BCMS Term

Explanation

BCMS

Business continuity management system This is that part of the overall management system of an organization which focuses on the topics relevant to business continuity. Includes policies, planning activities, resources, processes, performance evaluations and improvement processes

Incident

This is a situation or an event with the potential to cause a disruption, emergency or other negative impacts on the organization

MAO

Maximum acceptable outage In the context of a BCMS, this is the time it takes until adverse impacts would become unacceptable. In other words, the timeframe during which the organization needs to recover and provide its (critical) products or services

MBCO

Minimum business continuity objective During a disruption, this is the minimum level of product and service provision that an organization accepts to comply with its objectives

MTPD

Maximum tolerable period of disruption This is the maximum time an organization’s important services and products can be unavailable before customers and other stakeholders would experience unacceptable consequences

Risk

This is the uncertainty on defined or expected objectives

Risk appetite

This is the amount of risk that an organization is willing to take

RPO

Recovery point objective During a disruptive event, data and information may get lost and need to be recovered from backup storages. RPO defines the point in time to which systems must be reset to enable their operation on resumption

RTO

Recovery time objective This is the time interval, during which business processes, resources or activities must be recovered and resumed after a disruptive event, in order to avoid unacceptable consequences of the disruption

144

2 Generic Standards for Management Systems: An Overview

2.6.2 Discussion of the Clauses of ISO 22301 2.6.2.1

Context of the Organization

As for other standards, understanding the organization and its context is on top of the list. Prior to an organization starts thinking about business continuity, it must have a clear picture of its context. This includes, but is not limited to: Products and services, processes, resources, organizational details, partners, suppliers, affiliates, requirements and expectations of stakeholders. Based on this general context information, even a medium-sized organization will have to answer a bunch of questions, including the following: • What will be the scope of the organization’s BCMS? • What expectations do customers, other members of the organization’s supply chains and stakeholders have, concerning the organization’s BCMS? • What is the risk appetite of the organization? • What are the primary objectives of the organization’s BCMS? • What are the internal and external factors that create BCMS-relevant risks and must be addressed by the BCMS? In practice, the organization frequently will not be able to include all its products, services and processes in the BCMS. A BCMS should then be understood as a survival tool, which is expected to enable the organization to recover from a stroke of undesired events within an acceptable reaction time and to continue to produce and provide at least certain of its critical products and services. On which products and services to focus on will largely depend on customer and stakeholder requirements and expectations. Of course, the organization itself will be highly interested to ensure a continuous production and service provision for its most important and profitable products and services. The design of the BCMS will heavily depend on the risk appetite of the organization and the business continuity objectives to be achieved. The organization shall determine which risks it is ready to take and these should be in balance with customer expectations. A clear picture of its critical products, services, processes and other factors is an essential prerequisite to define the scope of the BCMS. Internal and external relevant risks shall be identified. These may include the breakdown of supply chains due to political developments in the supplier’s country, disasters due to earthquake or water floods, fire, hacker attacks on the central IT system and many more. The relevance and mix of these factors is very specific for each organization. Therefore, this type of analysis is part of the context analysis. It may be worthwhile to mention in passing that determining the context of an organization is a standard exercise for each management system standard. It should be clear, however, that in each case the contextual aspects relevant to the respective management system are in the foreground. In this respect, the BCMS-relevant context of the organization focuses on those issues which form boundary conditions of the BCMS.

2.6 ISO 22301—BCMS—Business Continuity Management System

2.6.2.2

145

Leadership

Concerning the “leadership” requirements of ISO 22301, there is no essential difference compared to other management system standards. In short, top management’s responsibilities include: • Show leadership and commitment with respect to the organization’s BCMS. • Ensure the integration of the BCMS into the other relevant processes of the organization. • Ensure necessary resources for the BCMS. • Communicate the importance of the BCMS and direct and support people to contribute to it. • Ensure the BCMS is effective and achieves the planned outcomes. • Promote continual improvement of the BCMS. • Support BCMS-relevant management functions. • Implement a business continuity policy that – Is adequate to the organization and may serve as a framework for business continuity objectives; – Shows the commitment of the organization to relevant requirements and continual improvement; – Is documented and available to relevant interested parties. Management roles relevant to the BCMS shall be unambiguously assigned and communicated.

2.6.2.3

Planning

Planning is the entry point of the PDCA-cycle. It includes: • Base the planning process on requirements derived from the context of the organization and the analysis of relevant business continuity risks. • Define the scope of the BCMS clearly. • Ensure the BCMS may achieve desired outcomes. • Define business continuity objective and plan how to achieve them. • Plan the actions and processes of the BCMS. • Consider the interaction of these processes with the others of the organization. • Define and implement business continuity objectives. Ensure they don’t contradict other objectives of the organization. • Implement measures to evaluate the effectiveness of the BCMS. Planning for the BCMS shall include the planning of resources needed to establish, implement, maintain and improve the BCMS.

146

2 Generic Standards for Management Systems: An Overview

As usual, BCMS plans shall be detailed and written in the concrete style: • • • • • •

What will be done? How will it be done? Who will do it? When will it be done? Which resources will be needed? etc.

2.6.2.4

Support

This subclause defines general requirements, needed to support the BCMS. They don’t really differ from the respective subclauses of other management systems. Key clauses are: Resources—Competence—Awareness—Communication—Documented information. We summarize them in Fig. 2.26. Although the general character of requirements follows the same template as for other management system standards, it is worthwhile to stress some issues here. Ensuring competent staff is a challenge in any case. However, ensuring competent personnel under the conditions when the BCMS is expected to demonstrate its effectiveness is an additional challenge. Adequate training programs are needed in addition to solid professional background. Similarly, it should be clear that adequate communication forms are a demanding topic under conditions when large parts of the standard telecommunication connections may be down.

Fig. 2.26 Support requirements for the BCMS

2.6 ISO 22301—BCMS—Business Continuity Management System

2.6.2.5

147

Operation

ISO 22301 defines six subclauses, concerning the operation of a BCMS. These are shown in Fig. 2.27. Focusing on the organization’s BCMS-relevant processes, it is expected that they are orderly planned, established, implemented, controlled, maintained and adapted to changing needs. Let’s have a closer look at the individual steps: Perform a business impact analysis based on risk assessment This primarily includes the following: – Business impact analysis and risk assessment on which the former is based are critical projects and the organization shall have documented processes how to do them. – The context of business impact analysis and risk assessment shall be clearly defined. – Legal and other relevant requirements that must be considered shall be determined. – Potential impacts of disruptive events shall be determined. – Risk assessment and risk analysis shall employ adequate techniques. ISO 31000 will be helpful in this respect (compare Sect. 2.8 of the book). – Identified necessary risk treatments shall be classified according to their priorities, and related costs shall be determined. – Priorities of recovery and related targets and objectives shall be identified.

Operational planning and control

Evaluation of BC documentation and capabilities

Business impact analysis and risk assessment

Exercise programs

Business continuity strategies and solutions Business continuity plans and procedures

Fig. 2.27 Five top requirements of ISO 22301 for “Operation”

148

2 Generic Standards for Management Systems: An Overview

– Activities that support the production and provision of (critical) products and services shall be determined. Consequences, impacts and effects of not performing those activities shall also be determined. – Minimal acceptable levels for those activities shall be determined, as well as the prioritization and timeframes of their resumption. – Supporting resources for those activities shall be identified. This includes subcontractors, suppliers, etc. Determine your business continuity strategies and solutions Based on the business impact analysis and corresponding risk assessments, the organization shall develop its business continuity strategy. This strategy will focus on: – The protection of prioritized activities; – Stabilization of the prioritized activities (including how to resume and recover them); – How to respond to and mitigate impacts; – Fix timeframes for resumption and the activities needed for them; – Implement and maintain your business continuity solutions and stay ready to activate them. It is obvious that a BCMS calls for resources. These include, but are not limited to financial resources, personnel, assets, facilities, buildings, equipment, transportation, information and information systems. The organization shall determine its required resources and ensure their availability. Where possible and feasible, protective actions shall be implemented to reduce likelihoods of disruptions and limit their impacts. These are proactive measures and the organization shall determine and prioritize them. They shall be part of the business continuity strategy. Implement and maintain your business continuity plans and procedures In order to manage disruptive incidents and the organization’s recovery, business continuity procedures shall be implemented and maintained. As all management system standards, ISO 22301 requires clear processes and their documentation. Hereby the business continuity plans and procedures are of especial importance, as they contain the details how the organization will act in the real case of an incident. They constitute the essential documented information, which the organization will have prepared for the day X, when it gets hit by a disruptive event. Their overall spirit is to achieve the planned BCMS objectives. Figure 2.28 sketches the headlines of the topics to deal with. The general requirement concerning business continuity procedures includes: • Does the organization have adequate documented plans and procedures for the management of disruptive events and to ensure the continuity of selected activities? • Do these procedures include internal and external communication processes? • Do the procedures include specific steps that have to be followed during and after disruptive events?

2.6 ISO 22301—BCMS—Business Continuity Management System

149

Fig. 2.28 ISO 22301—business continuity procedures

• Are these procedures flexible enough to respond to unforeseen threats and other changing external and internal conditions? • Do the procedures focus on events that could lead to disruptions of operation? • Are the procedures based on documented assumptions and do they consider interdependencies? • Do the procedures minimize consequences of disruptive events? • Do the procedures define adequate mitigation strategies? Concerning incident response structures, the requirements include: • Does the organization have one or more nominated competent teams with the authority and responsibility to assess potential and actual impacts, activate BC response and guide the organization through the necessary actions in all phases of disruptive events and their impacts? Are the roles of the team adequately fixed? • Are thresholds of impacts defined that will lead to initiate response actions? • Do the procedures include assessments of incidents and their potential impacts? • Does the incident response structure activate adequate response actions? • Are processes and procedures for response actions implemented (includes: Activation, communication, coordination and operation activities)? • Are adequate resources available to minimize the impact of disruptive events and to run these processes? • Are communication processes with interested parties implemented? Concerning warning and communication, the requirements include: • Does the organization have procedures for incident detection and the monitoring of incidents? • Are procedures available for internal communication and communication with relevant interested parties? • Are procedures available for the communication with national or regional risk advisory systems? • Is it ensured that communication means are available during disruptive incidents? • Is structured communication with emergency responders ensured? • Is vital information about incidents, corresponding response actions and related decisions adequately documented? • In case of impending or actual disruptive incidents: Are potentially impacted parties alerted? • Is the interoperability of responding personnel and organizations assured? • Are procedures for the operation of a communication facility in place?

150

2 Generic Standards for Management Systems: An Overview

• Are the communication and warning procedures exercised on a regular basis? Establishing an incident response structure and implementing warning and communication procedures are important prerequisites for an effective BCMS. The real beef comes, however, with the business continuity plans and procedures. These are documented procedures that describe the organization’s response actions to disruptive incidents and how it plans to recover within defined timeframes. Each business continuity plan shall define: • • • • • • • • •

The purpose and scope of the plan; The objectives of the plan; Criteria and procedures for the activation of the plan; Procedures for the implementation of the plan; Relevant responsibilities, authorities and roles; Related communication procedures and requirements; Interdependencies and interactions (internal and external); Required resources for the plan; Processes for documentation and flow of information.

In total, the business continuity plans of the organization shall cover at least the following issues: • The roles, authorities and responsibilities of teams and individuals that have functions during and after incidents. • Processes for response activation. • Procedures for the management of immediate consequences of incidents. This includes individuals’ welfare, response options to a disruption (operational, strategic, tactical) and preventive measures to limit its impact on prioritized activities of the organization. • Modes of communication with employees, their relatives, relevant interested parties and emergency organizations. • Recovery paths for prioritized activities and respective timeframes. • Interaction with media. Includes: Strategy of communication, ways of communication, format for statements, communicators. • Down standing process to be followed when the incident is over. The organization shall have procedures for its recovery, including the return from the temporary measures implemented after the incident. Exercise and test programs The organization shall test and exercise its BCMS processes. Only this way, it can check if they are effective and adequate with respect to the organization’s BCMS objectives. Requirements for these test and exercises include the following: • Do tests and exercises cover the scope and the objectives of the BCMS? • Are the test and exercise scenarios adequate (includes their planning and defined objectives)?

2.6 ISO 22301—BCMS—Business Continuity Management System

151

Fig. 2.29 Recovery with and without implemented BCMS (qualitative sketch only!)

• Do the organization’s test and exercise scenarios over time cover the scope of the BCMS and the needs of the organization and its relevant interested parties? • Do tests and exercises contribute to minimize risks of operation disruption? • Are performed tests and exercises evaluated and are opportunities for improvement derived from them? • Are tests and exercises conducted in planned time intervals and do they take into account and refer to relevant organizational and process changes? It may be helpful to sketch graphically some of the concepts mentioned above. Note that this is a purely qualitative discussion. In Fig. 2.29, the horizontal line NO represents the level of normal operation (100%). The dashed line OL2 represents the lowest permissible level, below which operation disrupts completely. The horizontal line OL1 is above the lowest permissible level and marks the organization’s objective for minimum operation level. The intent of the BCMS is to keep the degree of operation at least at this level or above. At time Tevent hits , the organization is hit by the disruptive event. As shown by the wavy line, the degree of operation is considered to drop down to almost zero and recovering very slowly to normal operation. The idea of the BCMS is to try to keep the degree of operation at least at the level OL1, marking the organization’s defined objectives, and to evolve from there faster back to normal operation NO, sketched by the dashed line. The time Tobjectives is an essential part of the defined objectives of the BCMS. It may mark the time, for example, until when the degree of operation should reach again 80 or 90 percent. The time Tpermissible is a maximum permissible time for this recovery, and for that reason, the set time objective Tobjective shall be below. In practice, the “degree of operation” may mean many different things, even within one organization. It’s a different thing for a chemical company, a supplier

152

2 Generic Standards for Management Systems: An Overview

for car manufacturers and an IT provider, offering cloud services. The underlying principles of the BCMS are, however, very similar.

2.6.2.6

Performance Evaluation

As all management system standards, ISO 22301 pushes the organization to evaluate the performance and effectiveness of its BCMS. This is done as follows. Monitor, measure, analyze and evaluate your BCMS • Determine what needs to be measured and monitored and select adequate methods how to do it. • Analyze and evaluate your results. Use the right methods to ensure correct results. • Determine when measurements, monitoring and their evaluations will be done and when obtained results will be analyzed. • Determine who will do it. • Retain documented information on all these activities. For these measurements, monitoring, analyses and evaluation activities, the organization shall implement and maintain procedures. Following the PDCA-cycle, all these activities are part of the CHECK phase. General objectives of this phase will include: • Demonstrate the overall compliance of your BCMS with the requirements of ISO 22301. • Monitor your performance measures for the various parts of the BCMS. Remark Note that performance measures are nothing abstract, but include very concrete practical things like incident data, near misses, false alarms, detected nonconformities, as well as data and facts from other observations. As mentioned above, the organization’s business continuity procedures play a super important role in the context of its BCMS. The regular evaluation of these procedures is, therefore, critical and a must. This sort of evaluation is not just paperwork, but usually done in connection with tests and exercises, risk assessments, risk analyses and similar activities. It is important to periodically update and improve the procedures. Another topic that plays a crucial role in this context is changing legal, regulatory and other requirements that must find their way into the procedures. Special post-incident reviews of the procedures shall be done after disruptive incidents. The intent is to update and correct procedures if necessary. Conduct internal audits Internal audits shall be conducted to check the compliance of the BCMS with the requirements of ISO 22301 and the organization’s own requirements. Chapter 7 of this book contains details about how to plan, conduct and evaluate internal and external audits.

2.6 ISO 22301—BCMS—Business Continuity Management System

153

Review your BCMS by top management on a regular basis As for other management system standards, top management of the organization has to show leadership with respect to the BCMS. Reviewing it in planned intervals is part of it. As management reviews for the various management standards basically follow the same template, the reader also may refer to Sect. 2.2, where requirements for reviews according to ISO 9001 were discussed in some detail (Table 2.11). However, ISO 22301 adds some special topics. It makes sense, therefore, to have a second look at the issue. The overall topics that shall be addressed in the management review of the BCMS are sketched in Fig. 2.30. The list of topics which shall be considered in the management review cover all relevant issues necessary to evaluate the BCMS. Examples include: • What is the status and effect of follow-up actions that result from previous reviews? • Are there any needs for changing the BCMS, the BCMS policy or BCMS objectives? • Identified opportunities for improvement? • Results from internal and external audits? • If applicable: Results of critical supplier and subcontractor audits? • What is the status of initiated corrective actions? • What are the results of performed trainings and tests related to the BCMS? • Risk assessments and analysis: Are there relevant detected risks which are not yet addressed in the BCMS?

Fig. 2.30 Elements of the BCMS management review

154

2 Generic Standards for Management Systems: An Overview

• Are there any other changes or issues relevant to the effectiveness of the BCMS? • Is the BCMS policy still adequate? • Are there products, techniques, procedures, new practices and related issues that could be used by the organization? • Are there consequences deriving from disruptive events? • Are resources for the BCMS adequate? • Any relevant changes of legal and regulatory requirements? • Are there new contractual relations and obligations that have impact on the BCMS? • What actions need to be initiated to reduce risks? Although this list of items sketches relevant items to be considered in a management review of the BCMS, it should be kept in mind that it is a really important document and should address the specific issues and needs of the organization. The quality of the management review is a very clear indicator for the seriousness top management deals with the BCMS.

2.6.2.7

Improvement

This clause of ISO 22301 calls for a systematic treatment of detected nonconformities, implementation of adequate corrective actions, as well as for the continual improvement of the BCMS. Dealing with nonconformities and initiating corrective actions follows for all management systems the same plot: 1. Identify the nonconformity 2. Reliably react to the nonconformity – Take adequate immediate actions. – Control the nonconformity. – Analyze the consequences of the nonconformity and deal with them. 3. Determine the causes (root-causes) of the nonconformity – You should have established methods how to identify and deal with root-causes (8D-Reports, Ishikawa analysis, etc.). – Determine if similar nonconformities may have occurred but remained undetected. – Analyze if similar nonconformities may occur in other contexts. 4. Define corrective actions – Decide what will be done, how and who is responsible. – If needed, train personnel and create awareness. 5. Implement the corrective actions – This will usually require making adequate changes of the BCMS and its documentation.

2.6 ISO 22301—BCMS—Business Continuity Management System

155

6. Check if implemented corrective actions are effective – Checks may include audits, tests, trainings and more. 7. If needed, make adequate changes of the BCMS – May include processes, procedures, responsibilities, training methods and more. This process of dealing with nonconformities and corrective actions follows a simple logic. In real life, however, the art is to systematically follow its individual steps and to ensure that things are really done. Beyond just reacting to nonconformities, the standard requires continual improvement of the BCMS. Chapter 6 of the book describes several tools how this can be done.

2.6.3 Frequently Asked Questions

For which organizations is business continuity management important? For all organizations. An organization cannot completely escape events that may lead to a disruption of its production and service provision. It also cannot ensure with one hundred percent to resume its business after a disaster or other disruptive scenarios. However, it can get prepared to it. Risks may be estimated, processes can be made more robust, scenarios can be modeled, personnel can be trained, disruptive scenarios can be trained and exercised. Under the line, organizations can be made more robust. The intent of a BCMS is just this: To get organizations prepared. How does ISO 22301 interact with other management system standards? As the standard follows the same template (top management commitment, process orientation, risk-based thinking, PDCA-cycle, etc.), it integrates easily with other generic management system standards like ISO 9001, ISO 14001 and others. However, ISO 22301 defines additional requirements for the risk management of an organization, BCM processes, resources, knowledge and competence of personnel and more. It is worthwhile to mention that some of the industry-specific standards like TL9000 or IATF16949 (to be discussed in Chap. 3) although focusing mainly on quality management include specific requirements for business continuity management. For that reason, there is less and less opportunity to escape the subject. Is certification of the BCMS important and which certification body to select? Establishing, implementing and maintaining the BCMS of the organization is the essential thing. Business continuity is important for the organization and it’s fine if

156

2 Generic Standards for Management Systems: An Overview

you can reach your respective business continuity objectives. The next step may be to apply for certification according to ISO 22301, but perhaps there is no need for it. However, your customers or other relevant parties may want to see that you did your homework. Selecting a certification body, make sure it is accredited for the standard and has experience in your industry. Auditing and certifying an automotive production company, a clinic and a cloud provider are pretty different things, as business continuity requirements and BCMS processes are completely different. A certification organization may have an accreditation for ISO 22301, but not enough practical experience in your industry. Select an organization with the right background. In this context, it may be helpful to have a look at “ISO/IEC TS 17021-6:2014— Requirements for bodies providing audit and certification of management systems— Part 6: Competence requirements for auditing and certification of business continuity management systems”. It gives guidance on the qualification of BCM auditors.

2.7 ISO 27001—ISMS—Information Security Management System This section includes: • A short introduction to the role of information security management; • A quick overview about the ISO 270XX-series; • An introduction to ISO 27001:2013 and its requirements.

2.7.1 Introductory Remarks It hardly needs any lengthy explanation that information security is important and why it deserves high attention within a modern management system framework. While basically each business transforms into an IT- and information-based business, opportunities and risks live side by side. Daily news on stolen information and hacked organizations give us a taste of what lies ahead of us, if adequate systematic actions will not be implemented to protect information as much as possible. Keep in mind that although in today’s society the biggest part of information is IT-based, the scope of ISO 27001 to be discussed in this section is broader and addresses any type of information and its security aspects. Information may be in digital, optical, paper, verbal or other forms. Its transmission and distribution may be done electronically, in paper form, oral form, by a courier and more.

2.7 ISO 27001—ISMS—Information Security Management System

157

The second edition of the standard • ISO/IEC 27001:2013 Information technology—Security techniques—Information security management systems—Requirements was published in 10/2013. ISO 27001 is now the globally accepted core standard for information security management systems (ISMS). The standard defines requirements for an ISMS and may be taken as a basis for certification of an organization. The standard ISO 27001 and some others referred to in this chapter are created and published by ISO/IEC JTC 1 (IEC = International Electrotechnical Commission; JTC = Joint Technical Committee). This committee was launched in 1987 and consists of about 20 sub-committees with more than 4500 registered technical experts in total. More than 3000 standards have been developed and published by ISO/IEC JTC 1. It’s one of the biggest ISO committees for standardization. ISO 27001 is embedded in a number of guides and other standards with specific focus on ISMS. Some of them define requirements, and some others are guides on general topics or guides addressing specific sectors or industries. ISO 27000:2018 contains vocabulary and definitions, used in the ISO 270XX series of standards. The standards mentioned in Table 2.24 are of special importance in the context of ISO 27001, but this isn’t an exhaustive collection. More standards focusing on special technical topics are available and more are under development and planned for the near future. The webpage of ISO/IEC JTC 1 (accessible via www.iso.org) is the best source to see what’s up next and what is going on in the field of standardization for ISMS and related areas. ISO 27001 follows the same storybook as the other modern management system standards: Context of the organization—Leadership—Planning—Support—Operation—Performance evaluation—Improvement. Compared to other standards, it is relatively short, but it contains an important normative appendix, which will be discussed below (Table 2.25).

2.7.2 Discussion of the Clauses of ISO 27001 2.7.2.1

Context of the Organization

Fixing the context of the organization is groundwork for any management system, so it is for an information security management system (ISMS). All internal and external issues, having impact on the organization’s ISMS, shall be determined and considered. Influencing factors will include: • Legal and statutory requirements. These will vary between industries (e.g. requirements for hospitals are different from those for law firms, hotels, cloud service providers or suppliers somewhere in the supply chain of a car manufacturer). Requirements will also vary between countries, where the organization has its locations and affiliates.

158

2 Generic Standards for Management Systems: An Overview

Table 2.24 Important standards in the ISO 270XX-series Vocabulary standard ISO/IEC 27000

Information technology—security techniques—information security management systems—overview and vocabulary

Content Gives an overview about ISO/IEC ISMS standards, defines terms and definitions, introduces to ISMS General guidelines standards ISO/IEC 27002

Information technology—security techniques—code of practice for information security controls

Content Offers control objectives and best practice controls. Crucial topic when implementing and maintaining an ISMS ISO/IEC 27003

Information technology—security techniques—information security management systems—guidance

Content Provides additional background and guidance to organizations when implementing an ISMS according to ISO/IEC 27001 ISO/IEC 27004

Information technology—security techniques—information security management—monitoring, measurement, analysis and evaluation

Content Provides guidance how to evaluate the performance of an ISMS. This includes: Measurement and monitoring of information security performance and of the effectiveness of the ISMS. Offers guidance how to evaluate measurement and monitoring results ISO/IEC 27005

Information technology—security techniques—information security risk management

Content This document offers guidance on information security risk management, as it is required by ISO/IEC 27001. Helpful when implementing and maintaining an ISMS according to this standard ISO/IEC 27007

Information technology—security techniques—guidelines for information security management systems auditing

Content ISO 19011 gives general guidance how to plan and provide audits of management systems and on the competence of auditors. However, auditing an ISMS has some additional flavors. This guidance document provides them ISO/IEC TS 27008

Information technology—security techniques—guidelines for the assessment of information security controls

Content The document provides guidance on the review of information security controls and the checking of technical compliance against information security implementation standards ISO/IEC 27013

Information technology—security techniques—guidance on the integrated implementation of ISO/IEC 27001 and ISO/IEC 20000-1

Content Organizations may wish to implement and maintain an integrated management system complying with both mentioned standards. This document offers them guidance how to do it ISO/IEC 27014

Information technology—security techniques—governance of information security

Content Addresses and gives hints for governance bodies of an organization how they can get oversight of the information security issue in an organization ISO/IEC TR 27016

Information technology—security techniques—information security management—organizational economics (continued)

2.7 ISO 27001—ISMS—Information Security Management System

159

Table 2.24 (continued) Content This standard supports organizations to value their information assets and related risks. The main intent is to shed light on the economic aspects of information security management and its value for the organization ISO/IEC 27021

Information technology—security techniques—competence requirements for information security management systems professionals

Content This standard defines competence requirements for personnel working as professionals to establish, implement, maintain and improve an ISMS or parts of it (e.g. process responsible). The document can be used by organizations to specify profiles for their professionals. Certification organizations may use it to determine necessary qualification profiles of their personnel involved in ISMS audits and certification decisions. Individuals may employ it to check if they comply with stated requirements. Educational organizations may use it to determine requirements for their educational products Sector-specific guidelines standards ISO/IEC 27010

Information technology—security techniques—information security management for inter-sector and inter-organizational communications

Content This document addresses mainly information sharing communities and offers guidance on how to deal with information security issues. The standard may be employed basically by any community with information security requirements. However, it will be interesting especially for organizations with high requirements (organizations of the critical infrastructure, financial institutions, etc.) ISO/IEC 27011

Information technology—security techniques—code of practice for information security controls based on ISO/IEC 27002 for telecommunications organizations

Content The standard offers additional guidance on information security controls for the telecommunication industry ISO/IEC 27017

Information technology—security techniques—code of practice for information security controls based on ISO/IEC 27002 for cloud services

Content The standard offers additional guidance on information security controls for cloud service providers ISO/IEC 27018

Information technology—security techniques—code of practice for protection of personally identifiable information (PII) in public clouds acting as PII processors

Content This standard is for organizations providing services for information processing as PII (personally identifiable information) processors and use cloud services ISO/IEC 27019

Information technology—security techniques—information security controls for the energy utility industry

Content This standard is based on ISO/IEC 27002 and provides additional guidance for process control systems in the energy utility industry. This includes electric power, heat, oil and gas production, transmission, distribution, storage and other relevant areas Requirement standards ISO/IEC 27001

Information technology—security techniques—information security management systems—requirements

Content This standard defines the requirements for an ISMS. It is designed for any organization, no matter what’s its size or in which industry (continued)

160

2 Generic Standards for Management Systems: An Overview

Table 2.24 (continued) ISO/IEC 27006

Information technology—security techniques—requirements for bodies providing audit and certification of information security management systems

Content This document addresses organizations which provide audits and certifications of ISMS. It may be considered as a complementary document of ISO 17021-1, defining additional requirements for such organizations. The document is also employed by accreditation bodies when an organization seeks accreditation for ISO 27001 ISO/IEC 27009

Information technology—security techniques—sector-specific applications of ISO/IEC 27001—requirements

Content ISO/IEC 27001 is a generic standard which can be employed by an organization from any sector. However, in some industries/sectors, additional requirements must be considered. This standard defines requirements for the integration of such specific additional needs into the ISO 27001 requirements

• Requirements and expectations of relevant interested parties. An organization may have many different interested parties. In the present context, those are of special importance that are relevant to the organization’s ISMS. • Scope of the ISMS. The scope of the ISMS is that part of the organization, processes, affiliates, etc., for which the ISMS is designed to hold. If the organization goes—for what reasons ever—for a scope smaller than the total organization, boundaries and interfaces with the rest of the organization and the external world shall be clearly fixed. Information is very “volatile” and limiting the ISMS to only a part of an organization may make little sense in practice.

2.7.2.2

Leadership

Top management of the organization shall show leadership and commitment to the ISMS. In practice, this means: • An ISMS policy is in place and the ISMS is essential part of the organization’s strategy. • Where needed, the ISMS and its processes shall be integrated into the other processes of the organization. • Needed resources (human, financial, hardware, software, etc.) shall be available. • The importance and objectives of the ISMS shall be communicated internally and externally. • Ensure the ISMS achieves intended results. • ISMS is designed with its continual improvement in mind. • Support relevant personnel, especially the ISMS-relevant management. Top management will implement an appropriate ISMS policy and make sure it is communicated and understood in the organization. The ISMS policy shall include

2.7 ISO 27001—ISMS—Information Security Management System

161

Table 2.25 Criteria from the normative Appendix A of ISO/IEC 27001 Information security policies Management direction for information security Define information security policies and let them approve by top management Publish the information security policies and communicate them to personnel and relevant external parties Review information security policies on a regular basis and adopt them to changing needs Organization of information security Internal organization Define information security responsibilities and allocate them Segregate conflicting areas of responsibilities and duties to reduce the unintentional or unauthorized modification and misuse of assets Maintain working contacts with authorities relevant to the ISMS Maintain contacts with security forums, professional associations for information security and other relevant interest groups Address information security in all project managements, no matter of the type of projects Mobile devices and teleworking Implement policy and relevant security measures to manage risks connected with the use of mobile devices Implement policy and relevant security measures to prevent information risks connected with information handling at teleworking sites (e.g. storing, processing, accessing) Human resource security Prior to employment Check and verify the background of candidates for employment. This shall be done in accordance with legal requirements and other regulations. The screening also depends on the information security risks associated with the envisaged job positions Contractual agreements with personnel (employed and external) and contracted organizations will refer to their responsibilities with respect to information security During employment Ensure that employees and contractors follow the established policies and procedures concerning information security Depending on relevance and job functions, train all employees and contractors appropriately. Make sure they get regular updates depending on changing needs and other topics of the ISMS Implement and communicate a disciplinary process to be applied against employees having violated information security principles Termination and change of employment Define duties concerning information security, which remain valid after the termination or change of employment. Similar regulations apply to contractors Asset management Responsibility for assets (continued)

162

2 Generic Standards for Management Systems: An Overview

Table 2.25 (continued) Identify those assets, which are related to information processing and information facilities and keep updated an inventory of them Own the assets in this inventory Define, document and implement rules for the acceptable use of – Information – Assets (related to information processing facilities and information) Ensure that employees, contractors or any other external users return the organization’s assets when the contractual relationship with these parties is terminated Information classification Classify information in appropriate terms. These may include legal requirements, criticality of information, unauthorized modification or disclosure of information, and others In accordance with the chosen classification scheme of information, implement procedures for the labeling of information In accordance with the chosen classification scheme of information, implement procedures for the handling of your assets associated with information processing and information Media handling In accordance with the chosen classification scheme of information, implement procedures for the handling of removable media Implement procedures for the secure disposal of no longer required media Ensure that information-containing media are protected against any unauthorized access or other misuse during transportation Access control Business requirements of access control Based on your requirements of information security and business, implement a policy on access control Ensure that users are provided only with those access rights to networks and services that they have been authorized for User access management Implement a formal registration and de-registration process to handle access rights For all user types, implement a provisioning process for granting and revoking user access Ensure that privileged access rights are controlled and restricted Implement a formal process for the control of allocation of secret authentication information Ensure that owners of assets will review access rights of users on a regular basis Ensure that access rights of employees and external party users are withdrawn or adjusted when contracts are terminated or changed User responsibilities Concerning the organization’s procedures using secret authentication information, all users shall be required to follow them System and application access control Access to application system functions and information shall be restricted according to the organization’s access control policies (continued)

2.7 ISO 27001—ISMS—Information Security Management System

163

Table 2.25 (continued) If required by the organization’s access control policies, systems access and access to applications shall be controlled by procedures for secure log-on Implement a password management system and ensure it’s interactive and ensures quality passwords Control strictly utility programs that could be capable to override controls of system and applications Ensure that the access to program source codes is restricted Cryptography Cryptographic controls Implement a policy on cryptographic controls for information protection purposes Implement a policy on their use, protection and lifetime Physical and environmental security Secure areas Define protected areas with critical information or facilities for information processing Implement entry controls and make sure that only authorized personnel may enter secure areas Design and apply physical security for offices, other relevant rooms and facilities Design and apply physical protection against disasters, accidents or attacks Implement procedures for the working in secure areas Control or isolate points of access (e.g. delivery and comparable areas) where unauthorized access of persons to protected areas could happen Equipment Protect equipment and reduce risks deriving from unauthorized access, environmental impacts or other threats Protect equipment from power failure and other potential disruptive events caused by support utilities Protect cabling (power, network cables) from negative impacts (e.g. damage, interception, interference, etc.) Implement maintenance procedures for relevant equipment to ensure its integrity and availability Ensure that equipment, software or information shall not be taken off-site without prior permission Because of special risks, security measures shall be in place concerning off-site assets Implement procedures to ensure that equipment with storage media shall be verified to be clean of critical data or licensed software before its disposal or reuse Unattended equipment is adequately protected (ensured by users) Implement a clear desk policy concerning mobile storage devices, papers, etc. Operations security Operational procedures and responsibilities Ensure that operating procedures are documented and available to relevant users (continued)

164

2 Generic Standards for Management Systems: An Overview

Table 2.25 (continued) Ensure that organizational changes, changes of processes and changes of relevant facilities that have impact on information security are done in a controlled way Implement capacity management and monitor resources to ensure continual systems performance Separate development and testing from operational environment. The reason is to reduce risks of undesired access and changes to the operational environment Protection from malware Implement procedures to detect, prevent and recover from malware. Sharpen awareness of users Backup Implement a backup policy. Test regularly backups, software and systems images Logging and monitoring Produce event logs (user activities, security events, etc.). Evaluate them on a regular basis Protect logging facilities and log information Ensure that activities of administrators and system operators are logged. Logs are protected and reviewed on a regular basis Clocks of relevant information processing systems shall be synchronized to one reference time source Control of operational software For the installation of software on operational systems, control procedures shall be implemented Technical vulnerability management Implement an information management of technical vulnerabilities of the organization’s information systems. Information on vulnerabilities shall be timely processed and countermeasures shall be taken to address risks Define and implement rules for the installation process of software by users Information systems audit considerations Ensure that audits involving operational system verifications are planned to minimize the disruption of business processes Communications security Network security management Manage and control networks to protect information in applications and systems Network service agreements shall include: General requirements, service levels and security aspects. This holds, no matter if these services are provided in-house or by external organizations Segregate on networks: Groups of services, users and information systems Information transfer Implement policies, procedures and control activities for information transfer protection. This implies all communication facilities Implement agreements on secure information transfer of business information between your organization and external organizations and parties (continued)

2.7 ISO 27001—ISMS—Information Security Management System

165

Table 2.25 (continued) Protect information involved in electronic messaging Identify the organization’s requirements for confidentiality and nondisclosure agreements. Update them when needed System acquisition, development and maintenance Security requirements of information systems Define specifications and information security requirements. Employ them for new information systems or when changes to existing ones are needed Application services: Information passing over public networks shall be protected Application services transactions: Prevent incomplete transmission, misrouting, message alteration, message duplication and other undesired events Security in development and support processes Implement rules for system and software developments and apply them Implement control procedures for system changes within their life cycle Business critical applications are adequately reviewed and tested to avoid undesired impacts on operation and information security, when operative platforms are changed Restrict changes to software packages. Limit them to necessary changes only. Control and document the changes Establish principles for secure system engineering. Document and maintain them Establish and protect secure system development environments in the organization for the whole life cycle of system development Outsourced system development shall be supervised and monitored by the organization System security functionality testing shall be carried out during the development phase Establish system acceptance testing programs. Employ them for new information systems, upgrades of systems and new versions of systems Test data Handle test data carefully (includes selection, controlling and protection) Supplier relationships Information security in supplier relationships Mitigate the risks that are associated with the access to your organization’s assets by suppliers. Define information security requirements and agree on them with suppliers Establish and agree on information security requirements with each supplier. This holds for those suppliers that may access your IT system, process your data, store data in your system or provide IT infrastructure for your organization Make sure that agreements with suppliers include requirements concerning information security risks associated with the supply chain Supplier service delivery management Audit, monitor and review your supplier’s service delivery When supplier services change, processes involved and associated risks shall be reassessed with the needs of information security in mind. Changes shall be managed, and policies and procedures shall be adopted if needed Information security incident management (continued)

166

2 Generic Standards for Management Systems: An Overview

Table 2.25 (continued) Management of information security incidents and improvements To ensure effective responses to information security incidents, management responsibilities and documented procedures shall be established Channels for effective and fast reporting of information security events to relevant management levels shall be established Request employees as well as contractors to report any observed information security weaknesses of the information system Assess information security events. Decide if they are to be classified as information security incidents Respond to information security incidents according to established documented procedures Use the results gained from the analysis of information security incidents to reduce the occurrence or likelihood of occurrence of future incidents Define and implement procedures for the collection of evidence related to information security events and incidents Information security aspects of business continuity management Information security continuity Plan the requirements of your organization for information security continuity in adverse situations (e.g. disaster, crisis situation) Implement and maintain documented processes, procedures and control activities to ensure the required degrees of continuity for information security during adverse events Remark Information security is expected to be part of the organization’s business continuity management system Verify and review regularly the information security continuity controls for effectiveness in adverse situations Redundancies Implement information processing facilities with sufficient redundancies, such that availability requirements may be met Compliance Compliance with legal and contractual requirements The organization shall identify all relevant legal, regulatory and contractual requirements related to its information security management. The organization shall identify and document its approach how it complies with these requirements. Both the identification of requirements and the approach how to meet them shall be kept up to date. The objective is to achieve compliance with the named requirements Procedures shall be implemented to achieve compliance with legal, regulatory and contractual requirements concerning intellectual property rights and proprietary software products Remark License management! The organization shall ensure that records are handled in accordance with legal, contractual and other relevant requirements. This includes protection from loss, unauthorized access or release, etc. Where applicable, privacy and protection of personally identifiable data shall be ensured, depending on legislation and regulation (continued)

2.7 ISO 27001—ISMS—Information Security Management System

167

Table 2.25 (continued) When cryptographic controls are employed, they will comply with relevant legislation and agreements Information security reviews Review independently and at planned intervals, the organization’s approach to information security management. This includes the review of policies, processes, procedures, objectives, performance, effectiveness, etc. Reviews shall also be done in case of substantial changes of the information security management Within their area of responsibility, managers shall review on a regular basis the compliance of information security procedures and the processing of information with security policies and other relevant requirements On a regular basis, technical compliance reviews of information systems will be performed, to check compliance with security policies and standards

commitments to comply with relevant legal and other requirements for information security and to continual improvement. The policy shall be available as documented information for internal use and for relevant interested parties.

2.7.2.3

Planning

The organization shall plan for its ISMS. Hereby the context of the organization shall be considered, as it has substantial impact on the ISMS. The planning shall be based on the identification, assessment and evaluation of ISMS-relevant risks. The main objectives of the planning process are the following (Fig. 2.31). • The organization shall ensure that the ISMS is adequate to achieve planned outcomes. • Prevention or reduction of undesired information security-related effects. • Continual improvement. • Address risks and opportunities related to information security. • Define information security objectives. • Establish information security processes and implement actions to achieve planned outcomes. • Ensure that these actions and the information security processes are effective.

Fig. 2.31 Typical steps of the organization’s information security risk management process

168

2 Generic Standards for Management Systems: An Overview

The organization shall implement and maintain a process for information security risk assessments. This process must be well defined, include criteria for risk acceptance and ensure that information security risk assessments provide consistent results that are valid and comparable. Issues to be addressed with information security risk assessments include the availability of information, loss of information, information integrity, confidentiality and other relevant aspects. When identifying risks, their owners shall be identified as well. Risk assessments shall include the estimation of likelihoods of risks, their impacts, consequences and levels. Identified risks shall be prioritized for subsequent risk treatments. Documented information shall be available on carried out risk assessments. Experts doing this kind of assessment shall have a real understanding of the organization’s needs and its risk threats. They also shall have a solid background in risk management techniques. Risk treatment of information security risks follows the risk assessment. The following is important in this step: • Consider the results of the risk assessment and select the right options for risk treatment. • Having selected the risk treatment options, determine the right controls. • ISO 27001 contains an extensive normative appendix that comes with a long list of controls to be considered (see Table 2.25). • Summarize defined risk treatment actions in an information security risk treatment plan. • Risk owners shall approve the information security risk treatment plan and approve their acceptance of the residual risks. Remark As can be seen, this is a pretty formal process. • All relevant information connected with risk treatment and the risk treatment plan shall be available as documented information. Information security objectives and their planning. Information security objectives form an essential part of the ISMS. Objectives shall be determined at all relevant organizational levels and functions within the scope of the ISMS. They shall be measurable, communicated and updated when needed. For each objective, the organization has to determine: • • • • •

What exactly has to be done to achieve the objective; Adequate resources; Responsibilities; Timescales planned to achieve objectives; Evaluation of achieved results.

2.7 ISO 27001—ISMS—Information Security Management System

2.7.2.4

169

Support

The support requirements for ISO 27001 are basically identical with those for other management systems standards. The essentials are as follows. 1. Resources: Resources needed for the establishment, implementation, as well as for maintaining and continual improvement of the ISMS shall be determined and made available. This is a topic for top management. Trying to operate an ISMS with unspecified or insufficient resources will fail. 2. Competence: Competence of personnel working for and under an ISMS is of utmost importance and a key topic. The organization shall fix the competence requirements for relevant functions and ensure that training is available where needed. The requirements of ISO/IEC 27021 (see Table 2.24) will be more than helpful to fix profiles of personnel. 3. Awareness: Personnel working under the control of the organization shall be aware of the importance of the ISMS. This includes internal and external personnel! 4. Communication: Communication processes concerning the ISMS shall be implemented and maintained. This includes internal and external communication. The organization shall determine what will be communicated how to whom and when by whom. (Example A critical information security event occurs: How will relevant parts of the organization and external parties (e.g. customers) be informed? What are the communication channels, timelines, etc.)? An ISMS complying with ISO 27001 comes with adequate documented information. Part of this documentation is a direct requirement of the standard, as, for example, information on the context of the organization, information security policy and outputs from the ISMS risk assessments and planning. More documented information shall be determined by the organization itself, depending on its needs: Complexity of the organization and its processes, client requirements and other issues.

2.7.2.5

Operation

This clause of ISO 27001 consists of three subclauses: 1. Operational planning and control The requirements of ISO 27001 include: • Plan, implement, control your ISMS processes. • Translate the results obtained in the “Planning” phase (see Sect. 2.7.2.3 above) into processes. • Ensure suitability of your processes to meet your organization’s information security objectives, as determined during the “Planning” phase. • Keep adequate documented information on these issues.

170

2 Generic Standards for Management Systems: An Overview

• Control planned changes of the ISMS and its processes. • Evaluate the consequences of unplanned or unintended changes of the ISMS and its processes. Take actions to manage adverse impacts that might result from them. • Determine and control your outsourced processes. 2. Information security risk assessment The requirements of ISO 27001 include: • At planned intervals: Perform information security risk assessments. • If relevant changes are planned or expected to occur: Perform special information security risk assessment. Evaluate the impacts of the changes. • Keep adequate documented information on these activities. 3. Information security risk treatment The requirements of ISO 27001 include: • Implement your information security risk treatment plan. • Keep documented information of your risk treatment results.

2.7.2.6

Performance Evaluation

The requirements defined in this clause of ISO 27001 are pretty standard and basically the same as for other management system standards. (Refer, for example, to Sect. 2.2.3.6 of this book for more details.) They include: • Evaluate the performance of your ISMS. • Implement adequate and reliable monitoring, measurement, analysis and evaluation processes to do so. • Ensure that the methods employed for these activities are described in detail (what will be done, how, when, by whom?). • Conduct internal audits of the ISMS. Remark Compare Chap. 7 of the book for details on internal audits. • Review your ISMS on a regular basis by top management. This requirement also follows the same plot as, for example, respective requirements for ISO 9001 (see Sect. 2.2.3.6). Note, however, that ISO 27001 in addition requires a review of the organization’s risk assessments and of the status of its risk treatment plan.

2.7.2.7

Improvement

ISO 27001 has two main requirements in this clause: Dealing with nonconformities and corrective actions and continual improvements.

2.7 ISO 27001—ISMS—Information Security Management System

171

Concerning nonconformities and corrective actions, the organization shall systematically and reliably respond to detected nonconformities, implement adequate corrective actions and monitor their effectiveness. In detail, these requirements don’t differ from those defined, for example, in ISO 9001 and the reader may find there more details. Continual improvement is a requirement also included in all other standards for management systems. The organization shall systematically determine the needs and opportunities for improvement of the ISMS. Such may have many sources, as, for example: • The ISMS delivered undesired results or information security objectives must be upgraded. • The context of the organization has changed. • Expectations of interested parties or legal and contractual obligations have changed. • Internal audits, measurement and monitoring results imply the need for change. In any case, the standard expects that changes of the ISMS are based on analysis and adequate planning and implemented on solid grounds. The effectiveness of improvement activities shall be followed up and checked, if they deliver the desired results. Keep in mind that the PDCA-cycle is working in the background of ISO 27001 as it does in any other management system standard.

2.7.2.8

Checklist: Reference Control Objectives and Controls

In addition to the clauses of ISO 27001 just described, the standard contains a normative annex with “Reference control objectives and controls”. Be aware that the following checklist sketching the control requirements in that annex cannot replace reading the standard itself. Its intent is to give you a short overview only. The items are listed in form of a checklist, such that they could be used for a self-assessment. It should be stressed that the content of the mentioned annex forms an essential part of the requirements. An organization seeking certification according to ISO 27001 shall comply with them (Table 2.25).

2.7.3 Frequently Asked Question

What is the role of ISO 27006? ISO 27006 (Information technology—Security techniques—Requirements for bodies providing audit and certification of information security management systems) is important for organizations offering audit and certification services. Accreditation

172

2 Generic Standards for Management Systems: An Overview

bodies employ this standard in addition to ISO 17021-1, if organizations apply for accreditation for ISO 27001. In addition, any organization offering audits in the information security management area should comply with the requirements of ISO 27006. Are there alternative audit and certification models for information security? Yes, there are. ISO 27001 is the widely accepted global generic standard for information security. However, in some industries, other approaches have been launched, and TISAX is one of them. TISAX (Trusted Information Security Assessment Exchange) is a model for those organizations in the automotive supply chains, which must comply with the VDA ISA (VDA: Verband der Automobilindustrie e. V.; ISA: Information Security Assessment). Details about this model, including its requirements, may be found under www.enx.com/tisax. This should be considered as just one example of a tailor-made scheme for special purposes. Another one is given by some national information security programs, which require organizations of the so-called critical infrastructure to pass special audits in their respective sectors. These include, for example, organizations in the energy sector, water and gas supply, parts of the healthcare infrastructure and others. Although such schemes may bring in some additional specific issues and requirements, the general scheme of ISO 27001 is a perfect and solid ground for any add-ons. How is the standard ISO/IEC 20000-1:2018 related to information security? The standard • ISO/IEC 20000-1:2018—Information technology—Service management—Part 1: Service management system requirements defines requirements for organizations which offer services in the information technology sector. Its requirements include all phases of the service process (e.g. planning of services, their design, service delivery and improvement). For that reason, the standard addresses basically two parties: • Organizations that offer information technology services and need to establish and maintain a management system for those services. • Organizations that want to buy services and need to ensure that service providers comply with the requirements of the standard. ISO 20000-1 comes with a certification scheme. Organizations that want to offer audits and certifications shall comply with • ISO/IEC 20000-6:2017—Information technology—Service management—Part 6: Requirements for bodies providing audit and certification of service management systems Organizations that look for certification of their service management system according to ISO/IEC 20000-1 should choose an accredited certification body. ISO/IEC 20000-1 follows the same template as all modern management system standards. We shall not discuss it in detail in this book.

2.8 ISO 31000—RM—Risk Management

173

2.8 ISO 31000—RM—Risk Management This section includes: • • • •

A short introduction to the role of risk management; An introduction to ISO 31000:2018; Reference to ISO/TR 31004:2013; Reference to IEC 31010:2019.

2.8.1 Introductory Remarks All standards for management systems are based on risk-based thinking; however, they don’t say much about how it should be established, implemented and maintained. They also give very little hint which risk assessment tools exist and how they could be employed in practice. The following three documents fill at least partially these gaps: • ISO 31000:2018—Risk management—Guidelines • ISO/TR 31004:2013—Risk management—Guidance for the implementation of ISO 31000 • IEC 31010—Risk management—Risk assessment techniques. In this section, we shall mainly focus on ISO 31000, but also refer to the other two mentioned documents. ISO 31000 offers an introduction to the field of risk management. It is applicable to any organization, no matter what size or industry. It should be stressed that ISO 31000 is a guideline document and not designed to be a certification standard. However, organizations implementing a management system according to ISO 9001, ISO 14001, ISO 50001 and others may and should refer to ISO 31000 as being the international guidance standard for risk management. In addition, ISO 31010 will give them an overview about risk assessment techniques. As the implementation of risk management in an organization is not a straightforward thing, ISO 31004 is worthwhile to read and follow its guidance. ISO 31001:2018 is the second edition of the standard, the first appeared in 2009. Unfortunately, the standard 31004:2013 still refers to this first edition of ISO 31000. However, this should not be considered as a major issue, as the things you have to do when implementing a risk management today are pretty much the same as they were a couple of years ago.

174

2 Generic Standards for Management Systems: An Overview

2.8.2 Discussion of the Clauses of ISO 31000 ISO 31000 is divided into three sections, shown in Fig. 2.32. We will explain their content one by one.

2.8.2.1

Principles

ISO 31000 is based on eight principles which should guide you to an effective RM and should be considered as guiding principles for its whole life cycle. They are meant as general orientation marks which should be kept in mind when establishing, implementing, maintaining and improving RM in an organization (Table 2.26).

2.8.2.2

Framework

This subsection of ISO 31000 reiterates the importance to integrate risk management into all other relevant activities and processes of the organization. Commitment of top management is crucial. In case the organization has an oversight body, it should too show full support and commitment to the RM of the organization. The standard employs a slightly modified PDCA approach, which underlines the importance of leadership and suggests the following steps: Integration—Design— Implementation—Evaluation—Improvement. The external and internal contexts of the organization essentially shape the boundary conditions of the process (Fig. 2.33). 1. Leadership and commitment • It is obvious that top management has to take the lead concerning RM. Issues to deal with include the following: – Show commitment and leadership concerning risk management. – Harmonize RM with processes, strategies, objectives, culture and other relevant aspects of the organization.

PRINCIPLES Describes the guiding principles of ISO 31000.

FRAMEWORK Describes the integraƟon of risk management with other acƟviƟes of the organizaƟon.

PROCESS Describes the typical steps of the risk management process. Fig. 2.32 Structure of ISO 31000:2018

2.8 ISO 31000—RM—Risk Management

175

Table 2.26 Principles of ISO 31000:2018 Creation and protection of value The intent of risk management is to create value and to protect it Principle

Comment

Risk management should be integrated

Risk management should be part of all relevant activities (processes, decisions, etc.) of the organization. It makes no sense to handle it as an add-on or separate topic. All personnel should be involved, especially the responsible management

Risk management should be structured and comprehensive

Risk management needs systematic and consistent approaches to achieve reliable and meaningful results

Risk management should be customized

Risk management should be tailor-made for the organization. The context of the organization is crucial, and so are its structure, processes, place in the supply chain, products and services, etc.

Risk management should be inclusive

Stakeholders should be involved in the risk management of an organization. They may have expectations, knowledge and other input

Risk management should be dynamic

Risk management should react on change. Risks are never static, but dynamic. Risks emerge, disappear and change

Risk management should be based on best available information

Risk management should be based on facts and reliable information. When limitations of information play a role, note them carefully and be aware of uncertainties deriving from them

Risk management should consider human and cultural factors

Many risks derive from human behavior, cultural aspects and the like. Consider these factors wherever they may have any impact

Risk management should address continual improvement

Risk management isn’t static but needs continual improvement and adaptation to new contexts, requirements, new information and other factors

– Define and implement a RM policy. – Ensure necessary financial, human and other required resources for RM are available. – Define and assign accountabilities and responsibilities for RM throughout the organization. – Ensure risk criteria, tolerances and risk appetite of the organization are defined and communicated to relevant functions internally and externally. – Integrate risk performance indicators with other performance indicators where meaningful and needed. – Ensure risks are systematically monitored. – Ensure RM is updated and improved appropriately.

Improvement

Evalua on

Implementa on

Design

Integra on

2 Generic Standards for Management Systems: An Overview

LEADERSHIP & COMMITMENT

176

Fig. 2.33 Framework of ISO 31000:2018

If the organization has an oversight body, this will be accountable to oversee the organization’s RM. The details of the interplay between top management and an oversight body will depend on local legal requirements and other contractual settings. The important thing is that the oversight body will bring in its requirements. These should include the following. – Consider the risks when setting objectives of the organization, understand the risks that derive from persuading the objectives and understand if these risks are appropriate. – Ensure that an adequate RM is implemented. – Ensure the appropriate flow of information concerning the organization’s risks. 2. Integration It is important to keep in mind that RM and its integration into the organization and its processes is an iterative, dynamic and ongoing process. It cannot be done once and forever but must continually be adapted to changing needs. A real understanding of the organization, its context, objectives, processes, products, services and other factors is important for a successful integration of RM. The final objective should be that RM becomes part of the organization’s DNA. However, this is challenging and must be driven by experienced risk managers who know the issues of the organization through and through. 3. Design When discussing standards for management systems, we repeatedly pointed out the importance of the organization’s context. ISO 31000 too reiterates the importance of the internal and external context of an organization for RM. It is impossible to give an exhaustive list of issues to be considered, but the following table gives some guidance. When designing a tailor-made RM for an organization, the context has important impacts (Table 2.27).

2.8 ISO 31000—RM—Risk Management

177

Table 2.27 Examples for internal and external context issues Internal context includes…

External context includes…

• Generally speaking, the internal environment in which the organization operates and seeks to achieve its objectives • Management and governance structures • Structure of the organization • Geographical locations • Compliance requirements (standards, policies, legal requirements, etc.) • Contractual requirements • Available resources (human, capital, technologies, etc.) • Objectives and strategies • Others…

• Generally speaking, the external environment in which the organization operates and seeks to achieve its objectives • Requirements and expectations of external stakeholders, including customers • Environment of the organization (locations, cultures) • Legal and regulatory requirements • Position of the organization in supply chains and other networks • Industry-specific requirements and expectations • Others…

One cannot start with the design of a RM without a serious and convincing commitment from top management, the oversight body or both. Be aware that RM is a trendy subject and every top management likely wants it. Awareness is needed, however, that you can’t get it for free. Serious risk management will need transparency, openness, adequate resources, solving of conflicts with business representatives who might see their objectives in danger, analysis of business KPIs with respect to risk-relevant issues and much more. RM should also be clearly understood as a continual activity, not as a singular event. RM commitment should be available in written form and not handled like a secret paper but communicated within the organization and beyond. RM will need clear assignments of roles and responsibilities within the organization. Those who get assigned should consider it as their core responsibility. It should be ensured that assigned individuals are not in conflict with other responsibilities. (Example If you are responsible for pushing sales you might become blind for risks that are related to it.) Reporting lines concerning RM should be established. This should include regulations how relevant information will be communicated. When it comes to the allocation of resources, it should be ensured that they are balanced with the amount of risk-relevant issues to be covered. Resources should include, but not be limited to: – – – –

Personnel with adequate skills and experience; Methods, procedures, techniques, tools that are needed for RM; Information and knowledge; Financial and others.

4. Implementation The implementation of risk management in the organization should be a planned process and include the following aspects:

178

2 Generic Standards for Management Systems: An Overview

– – – – – –

Plan how, when and where the implementation will be realized. Assign responsibilities and accountabilities. Plan and ensure needed resources. Offer RM training of personnel. Ensure relevant personnel understands the organization’s RM. Determine which stakeholders should get involved in the implementation process and how. – Integrate RM requirements into processes and organizational structures. 5. Evaluation The performance of the RM should be measurable and evaluated on a regular basis. Is should be ensured that the implemented RM remains relevant and provides the expected output. 6. Improvement ISO 31000 suggests the continual improvement of the organization’s RM framework. Needs for improvement may come from many directions, including changing needs and requirements, relevant changes within the organization or outside of it, evidence that previously practiced RM approaches didn’t deliver adequate results, the planned level of risk control is not achieved or must be changed and many other reasons. Based on evaluations of the RM and additional available information, the organization should determine and realize opportunities for improvement of the RM and its framework.

2.8.2.3

Process

The RM process in the sense of ISO 31000 is made up of a sequence of steps which are shown in Fig. 2.34. The important thing is that this process should not be considered as a standalone sequence of steps. Instead, it should become part of all relevant management and other processes of the organization. Risk-based thinking and decision making shouldn’t be considered as a separate add-on activity but become part of the organization’s DNA. We’ll have a short look at the individual parts of the RM process. 1. Communication and consultation The main purpose of communication and consultation is this: • Communication on risk-related issues with relevant internal and external stakeholders should create risk awareness and understanding why RM is such an important issue, where risks come from and what are the tools to manage them. • On the other hand, consultation with internal and external stakeholders is important, being an essential source to identify risks and collect RM-related information from a number of relevant sources.

2.8 ISO 31000—RM—Risk Management

179

Fig. 2.34 Modules of the RM process according to ISO 31000:2018

Communication and consultation with internal and external stakeholders should be understood as a continual and iterative dialog on risk-relevant issues. The aim is to bring together a variety of expertise, exchange information on factual or potential risks, expectations, needs, etc. This kind of information exchange also contributes to a better mutual understanding and it is a necessity to clarify risk ownerships. 2. Scope, context and criteria The definition of scope, context and criteria is crucial, as it gives the RM activities of an organization its content and direction. The scope of the RM should include: • At what level of the organization will the RM process be applied? This could include: – – – – – –

Process or project level; Strategic level; Limitation to defined special activities only; Specific parts of the organization; Special geographical region; Limitation to a specific time or period, etc.

• The main expected outcomes of the RM process should be specified. • Which specific risk management tools and techniques (for risk identification, risk assessment, risk evaluation) should be employed? • Are specific resources needed? • Need for specific decisions to be made?

180

2 Generic Standards for Management Systems: An Overview

The internal and external context of the organization as far as it is relevant to the RM process should be determined. It defines boundary conditions for the process. When defining risk criteria, the organization’s considerations should include the following: • What is the risk appetite of the organization? Which risks does the organization take and which not? • How is the significance of risks evaluated? • How are risk levels determined? • How are uncertainties and likelihoods of risks determined? • What measurement methods (relevant to risks) should be employed? • How shall complex risk situations be considered (e.g. risks depending on several factors, sequences of risks, risks depending on time)? 3. Risk assessment Risk assessments consist of three components (Table 2.28). Note that ISO 31010 offers in-depth guidance on risk assessment techniques. You also may find an introduction to assessment tools in Chap. 6 of this book. 4. Risk treatment Risk treatment is the logical step following a risk assessment. Once risks have been identified and analyzed, the next step is how to deal with them. General options include: • Can we change the likelihood of occurrence of the risk? • Can the source of the risk be removed? • Can the risk be avoided (e.g. by changing or stopping the activity that leads to the risk)? • Can the risk be taken? • Can the risk be shared (e.g. with other members of the supply chain, customers, etc.)? Risk treatment should be based on procedures and decisions should be transparent. It should be clear that risk treatments will be iterative in their nature. This includes, for example: • Formulate and implement risk treatment methods and strategies! • Decide if residual risks remaining after risk treatments are acceptable! • Control the effectiveness of risk treatments! Be aware that the quality and severity of risks will vary. Types of risks may include financial, compliance, technical, environmental, health and safety and much more. Selecting the right risk treatment strategies following risk assessments may be far from trivial and require high-level decisions. For that reason, it is important that the selection of risk treatment options follows some rules and is done in an orderly and rational way.

2.8 ISO 31000—RM—Risk Management

181

Table 2.28 Three components of risk assessment Risk assessment Risk assessment has three components: Risk identification, risk analysis and risk evaluation All three should be done in a systematic manner. It should also be clear that risk assessment is an iterative process. No “once and forever” solutions will exist in practice. It should be repeated in a continual manner The best available risk-relevant information should find its way into the risk assessment process Risk identification

Risk analysis

Risk evaluation

Risk identification means: Identify and clearly describe the risks that may positively or negatively impact the organization or the achievement of its objectives

Risk analysis means: Clearly understand the nature of identified risks and determine their potential (positive or negative) impacts

Risk evaluation means: Take the results achieved during risk analysis and evaluate them to support decision about their prioritization

Use established techniques to identify risks. Consider, for example • Sources of risks • Causes of risks • Events and consequences caused by risks • Criticality of risks • Potential limitations of knowledge to identify risks • Status (reliability, completeness, etc.) of information used to identify risks • Sources of risks under control of the organization or out of its control • Timeframes to classify risks; • Others…

Risk analysis is based on quantitative, qualitative or partially quantitative methods. Typical issues to be considered include • What is the likelihood of risk-induced events and what are potential consequences? • What are necessary confidence levels? • What are the magnitudes of potential risk impacts? • How to classify very rare or highly uncertain events and associated risk? • Consider biases, subjective factors (different ways to perceive risks), variations in judgments, etc. • Others…

In principle, an organization can take, try to control or avoid a specific risk Based on the input from risk analysis, the risk evaluation step should deliver decisions, how to proceed with identified and analyzed risks Decisions are based on the established risk criteria Risk treatment options should be considered and prioritized Established controls should be considered during the risk evaluation process

ISO 31000 suggests the implementation of risk treatment plans. These include the details about how selected risk treatments will be implemented. Typical content of risk treatment plans should include: • • • • • •

Rationales for the selected risk treatment methods; Responsible and accountable personnel for the selection; Details of the risk treatment actions; Time schedules for the implementation; Monitoring methods; Documentation requirements.

182

2 Generic Standards for Management Systems: An Overview

5. Monitoring and review The RM process should be monitored and reviewed. The intent behind is, of course, to ensure its quality and effectiveness: Does it achieve planned results and does it contribute to keep the organization’s risk framework under control? When reviewing the RM process, all stages shown in Fig. 2.34 should be reviewed. 6. Recording and reporting The RM process, its activities, inputs and outputs should be documented and be part of the organization’s documented information. Top management and oversight bodies should define their requirements, in which form and frequency they will review which aspects of the RM. The reporting should be considered to be an important part of the organization’s governance. Reports should include information about the RM process, its performance and outputs. They also should give relevant inputs to decision-making processes and suggest actions how to improve the organization’s RM performance.

2.8.3 Implementation Hints In the last Sect. 2.8.2 we sketched the main guidance clauses of ISO 31000. Including the general design principles of the RM process. In this section we’ll have a look at some practical aspects of RM, during the implementation phase and later on. We also will refer to some of the guidance offered by ISO 31004. Once again: What is RM dealing with? Dealing with risks, keep in mind some important definitions and concepts (Figs. 2.35 and 2.36). Although in daily life risks usually are associated with threats or negative outcomes, the world of management standards is a bit more general and considers both sides of the medal: Negative outcomes (threats) and positive outcomes (opportunities). For that reason, the management of risks includes the management of opportunities. Still, however, if you scan the risk management literature, RM is

Fig. 2.35 Definition of risk, threats and opportunities

2.8 ISO 31000—RM—Risk Management

183

EVEN NT

LIKELIHOOD

CONSEQUENCE

Fig. 2.36 So-called risk triad

mostly understood as the management of undesired hazardous events. Simple reason: That type of events should be eliminated or controlled first and with high priority. Events, their likelihood and impact Risk assessments can be done qualitatively or quantitatively. Whenever possible, quantitative assessments should be preferred. Although they may be more difficult to apply, they give more tangible results. Three concepts play a crucial role in this context (Fig. 2.36): Events, their impacts or consequence and the likelihood of occurrence of these events. The interaction between these concepts is best illustrated by an example. If an adverse event E occurs with estimated likelihood “twice a week” and has a negative impact (measured in currency) of around (5000 ± 2000)e, then the yearly impact may be simply calculated to be something like 52 × 2 × (5000 ± 2000)e = 520,000e ± 208,000e, which means, the occurrence of this specific event would create a yearly negative financial impact between 312 and 728 thousand Euro. Some comments should be made: The likelihood appearing in this kind of studies is the frequency with which the (hazardous or undesired) event occurs. In some cases, it may be known from considering historical data; in others, it must be estimated by experts, derived from reliability data of technical equipment or estimated otherwise. In most cases of practical interest, its estimation is not trivial. Situations may appear in real life that consequences of events are to be considered, which depend on a set of other events and their likelihoods of occurrence. As an example, consider the risk of production outage caused by power failure, caused by a natural disaster. Special techniques are available to deal with such cases and some of them will be sketched in Chap. 6.

184

2 Generic Standards for Management Systems: An Overview

Get top management’s commitment to RM One could think the commitment of top management and the oversight board to RM may be trivially assumed; however, as this is an important and formal issue, their commitment should be given formally and in documented form. The following should be considered in this context: • If done right, RM creates values and prevents losses. • Risks addressed by RM may be very diverse and include: – – – – – – – – –

Material and financial risks; Brand protection, legal compliance and reputation risks; Risks associated with the production and service provision processes; Health and safety risks; Quality risks; Business continuity risks; Environmental risks; Information security risks; and more. Defining the scope of the RM means selecting those risks out of this bunch that should be covered by it.

• Formulate the strategic objectives of the organization clearly and understand their risk-relevant implications. • Top management and the oversight board should define the risk appetite of the organization. • Top managers should have processes, how they keep oversight the organization’s risks. • Top managers should have a real understanding of the organization’s risk framework and their individual RM roles. • The organization’s decision makers should have clear and practical guides enabling them to make risk-based decisions. How to integrate risk management within the organization’s management systems? All generic and industry-specific management standards discussed in this book are established on risk-based thinking. How can RM be integrated into the organization’s management systems? Figure 2.37 once more sketches the steps to follow, when doing RM: • RM must be planned and tailor-made to fit the needs of your organization. Understand the context of your organization and define the scope of the RM. These are essential ingredients to the planning process. • Risks and potential adverse events must be identified, analyzed and evaluated. This part of the process is called the risk assessment. Select risk assessment tools, which are adequate to assess the risks which your organization faces. Assessment tools may be qualitative, quantitative or somehow in between (semi-quantitative).

2.8 ISO 31000—RM—Risk Management

185

• Plan and implement adequate responses and controls to manage the risks you have identified. • Keep monitoring your risks and the efficiency of risk responses and risk controls. Although this RM process is more or less the same for any organization and independent of what type of risks are addressed, the details will be very specific and depend on the needs of each organization (Fig. 2.38). Imagine you want to integrate the RM process into your QMS, EMS, ISMS or any other module of your organization’s management system. To be specific, we focus on the quality management part. Consider the following:

Plan the Riskk Managementt

Iden fyy Risk Events an nd Risks

Plan n Adquate e Ressponses to o Iden fied Riskks

Monito or and Contro ol the Riskks

Fig. 2.37 RM—from planning to monitoring it

Fig. 2.38 Risk assessment and evaluation process

An nalyze and d Evaaluate Riskks

186

2 Generic Standards for Management Systems: An Overview

• Be aware, the integration of RM with the QMS will not work if QMS processes and RM are not adequately interwoven and just run side by side. • Different risk-relevant issues of the QMS may need different RM approaches. Examples: • Decision processes of different type are scattered all over the organization and are frequently associated with risks. Decision processes may include those at strategic levels, decisions made during production and service provision processes, sales processes, administration processes, to mention just a few. Bringing into play RM, in a first step relevant decision-making points, should be identified and a risk assessment should be made (what kind of decisions, who makes them, what are the risks associated with them, etc.). Identified risks should be evaluated and their potential impact determined. In the next step then, risk controls and risk-reducing measures should be defined and implemented. These may include: Standardization and clear description of the respective decision-making processes, ensuring adequate qualifications of decision makers, implementing four-eye principles and other measures. To be even more specific Sales representatives repeatedly sent out offers for services which were accepted by customers but turned out to be highly unprofitable for your organization. A quick root-cause analysis shows that some of the sales representatives do not have a real understanding what makes a deal profitable and what not. That’s an obvious risk for your organization and it can easily be analyzed. Summing up the number of unprofitable deals over the last few months allows you to quantify the risk. Preventive actions for the future could include trainings for the sales representatives and implementation of a four-eyes principle for signing outgoing offers by at least one expert. • On the other hand, risks may be associated, for example, with the reliability of a production plant, the safety of technical components, systems, work environments and more. Specialized methods for risk assessments are available for such areas of application (see Chap. 6 for some details). Methods include: Event tree analysis, fault tree analysis, FMEA, HAZOP, reliability theory and others. Update your RM and review it The context of the organization changes with time, and so do strategic objectives, legal requirements and many other factors that influence its risk landscape. For that reason, RM requires a dynamic and iterative approach if it should lead valuable results. Regular reviews of the RM and its effectiveness are critical and should be initiated by top management. Be aware, there may be tendencies in the organization to devaluate the importance of RM compared to other (e.g. financial) objectives. If so, it should be clearly stated and communicated. The worst of all things is, if top management preaches the importance and relevance of RM, but people at the front line receive contradicting objectives and are left alone with decisions.

2.8 ISO 31000—RM—Risk Management

187

2.8.4 Frequently Asked Questions

Can one audit against ISO 31000 and which role plays the standard when auditing against management system standards? All modern management system standards require risk-based thinking and many of them even explicitly refer to ISO 31000. This is, however, meant as guidance only. As we have shown in this section, ISO 31000 guides you through how to establish, implement and maintain a RM, but doesn’t define any specific requirements. Based on the general principles defined by ISO 31000, each organization must design its own RM that fits best its needs. However, as ISO 31000 is truly recognized globally, it makes more than sense to follow its guidance. When auditing against a management system standard, one should refer to ISO 31000 when it comes to evaluate the completeness and adequacy of an organization’s RM. For example: • • • • •

Is there a clear commitment of top management and the oversight board to RM? Are adequate risk assessment methods implemented and employed? Are implemented risk controls adequate? Is the RM evaluated and improved on a regular basis? etc.

The thing is, however, that although management system standards refer to ISO 31000, they usually don’t require a full RM system according to that standard. For that reason, auditing against a management system standard somehow includes auditing against ISO 31000, but it depends on the specific organization to be audited and on the auditor’s background and skills, how deep to go. This holds especially for the generic management system standards. Some of the industry-specific are much more demanding. As an example, see the section on management systems in healthcare (Sect. 3.8). What is the role of ISO 31010? The standard “ISO 31010—Risk management—Risk assessment techniques” does not define requirements but gives a nice overview of some of the more important risk assessment techniques. It may be considered as a companion standard to ISO 31000 which doesn’t give any concrete examples on risk assessment methods. Of course, each organization has to select and implement those risk assessment methods that best fit its needs. A law firm will have different requirements and risks to manage than a supplier in the food supply chain. It’s worthwhile to stress that management system auditors should have a solid background in RM techniques at least in the industry they usually do audits. Unfortunately, however, practice shows that this background is frequently weak or even missing, which makes it difficult to compare audits and audit results. If an organization is about to select a certification body, detailed information on the qualification of its auditors should be requested prior to signing a contract.

188

2 Generic Standards for Management Systems: An Overview

2.9 ISO 44001—CBRMS—Collaborative Business Relationship Management System This section includes: • A short introduction to collaborative business relationship management and its importance; • A discussion of ISO 44001:2017 and its requirements.

2.9.1 Introductory Remarks The standard • ISO 44001:2017—Collaborative business relationship management systems— Requirements and framework was first published in March 2017. It is based on the British Standard BS 11000 from 2010 which had a PAS (Publicly Available Specification) from 2006 as its predecessor (PAS 11000). Collaborations of all types are at the very heart of today’s business relations, and their effectiveness depends on many factors. The intent of ISO 44001 is to bring the well-known PDCA-cycle on the scene and to suggest a management system approach to collaborative business relationship management. ISO employed the “high-level structure” to align the standard with the architecture of other modern management system standards. ISO 44001 defines requirements for an CBRMS. An organization can choose to get audited against the standard and certified. Collaborative business relationships show a variety of forms, including, but not being limited to, the following: • • • • • • •

End-to-end supply chains; Consortia; Alliances; Joint ventures; Collaborative networks; Clusters (e.g. for research); Partnering programs;

and many others. Note that the standard may be helpful even to single organizations with high internal complexity. Relationships between departments, affiliates and other organizational units may be managed with the help of a CBRMS, as may be those between two or more collaborating partners.

2.9 ISO 44001—CBRMS—Collaborative Business Relationship …

Clauses of ISO 44001

189

Context of the organiza on Leadership Planning Support Opera on Performance evalua on Improvement

Fig. 2.39 Clauses of ISO 44001

2.9.2 Discussion of the Clauses of ISO 44001 We’ll have a closer look at the requirements of the standard and follow the clauses one by one (Fig. 2.39).

2.9.2.1

Context of the Organization

As for all other management systems, the organization shall determine its context. This includes all relevant external and internal factors that influence the organization and are relevant to its CBRMS. The general question behind is: Which of these factors have positive or negative impacts on the organization and its ability to achieve the intended results of its CBRMS? Determining the context, the expectations and requirements of the organization’s stakeholders shall be considered. (Remark See the section on ISO 9001 to get some additional ideas about context determination.) The organization shall determine the scope of its CBRMS. The scope may be considered being the boundary or area of application of the CBRMS. The organization could, for example, limit the scope to only some selected collaborative business relationships or include all. It depends on the practical needs and requirements. The following examples illustrate potential situations: • The organization decides to limit its CBRMS according to ISO 44001 for the moment being to a selected number of collaborative business relationships, as the respective business partners require it. • Organizations A and B are just about to merge. Being aware that a significant number of M&A projects fail due to many reasons, both organizations decide to implement a CBRMS to systematically manage their merger processes. • A multinational organization has complex and not very well-coordinated HR departments in several countries. To improve collaboration between them, a CBRMS will be implemented to bring the so far more or less autonomously managed HR facilities closer together.

190

2 Generic Standards for Management Systems: An Overview

• Several organizations are involved in a complex research and development project. Organizations include a university, specialized laboratories, software and IT companies and others. The management of the project decides to implement a CBRMS to optimize collaboration between the participating organizations. Two additional requirements are formulated in this clause: • Compliance with all requirements of ISO 44001. That means, organizations which want to comply with ISO 44001 can’t be picky and choose to comply with just some of the standard’s requirements. They have to comply with all of them. • It is an objective of ISO 44001, to create value for the organizations participating in a collaborative business relationship. The standard requires that this value is not just considered to be “somehow there”. Instead, the value of collaborative business relationships has to be determined and evaluated on a regular basis.

2.9.2.2

Leadership

Top management of the organization shall: • Show commitment, leadership and accountability concerning the CBRMS. • Ensure the collaborative business relationship policy fits into the overall strategic setting of the organization. • Ensure the needed resources (human, financial, others). • Ensure the implementation, maintenance and continual improvement of the CBRMS. • Ensure the integration of the CBRMS into the management system of the organization (especially the integration of processes). • Ensure the CBRMS achieves the intended results. • Direct and support relevant persons in collaborating organizations to support the CBRMS. The management of the organization shall implement a collaborative business relationship policy and communicate it. This policy will: • • • • •

Be relevant to the purpose of the organization and hold for the scope of the CBRMS. Be concrete and define a framework for the CBRMS. Include a commitment to comply with relevant and applicable requirements. Include the commitment to continually improve the CBRMS. Be available in documented form.

Top management shall appoint a SER (Senior Executive Responsible). This position is expected to be a high-level executive within the organization. He/she shall have clearly defined responsibility, accountability and authority for the CBRMS. The SER will report to top management and ensure that the CBRMS complies with the requirements of ISO 44001. In addition, the SER is responsible for performance

2.9 ISO 44001—CBRMS—Collaborative Business Relationship …

191

evaluations of the CBRMS and for its continual improvement. The SER will also identify and define key personnel involved in the CBRMS. For these reasons, this position is crucial. The organization shall establish a robust governance structure which includes: • The empowerment and support of leaders to identify and realize benefits of collaborations; • Processes for the analysis of benefits and values of collaborative work; • Consistency of collaborative business relationships with the organization’s values; • Agility and adaptability of governance processes; • Transparency, fairness and accountability in collaborative business relationships.

2.9.2.3

Planning

Modern standards for management systems call for risk-based thinking, so does ISO 44001. Once the scope of the CBRMS has been defined and the objectives to be achieved have been specified, the organization shall plan and design the CBRMS such that: • It will achieve its objectives. • Undesired effects may be avoided, or at least risks will be reduced. • Continual improvement of the CBRMS will be ensured. Collaborative business relationship objectives shall be: • • • • •

Defined at relevant functions and organizational levels; Measurable (if it makes sense) and monitored; Adequately communicated; Documented; Not in contradiction with the collaborative business relationship policy and other relevant requirements; • Updated if necessary. Planned actions to achieve the defined collaborative business objectives will be reasonably detailed and concrete: • Who is responsible for doing what, when, how and until when will actions be completed? • What are the required resources? • How will the objectives of partner organizations be addressed? • Which evaluation methods are employed to evaluate objectives and results? As an organization may have many external or internal collaborative business relationships, it is important to have processes how to identify the critical and important ones. This process shall include the identification of opportunities and benefits of the respective collaborative business relationships. It also will give decision criteria for prioritizations.

192

2.9.2.4

2 Generic Standards for Management Systems: An Overview

Support

The organization shall determine the needed resources for planning, implementation, maintenance and improvement of the CBRMS. Top management shall ensure the availability of these resources (financial, human, others). The organization shall ensure the competence of persons working under its control within the scope of the CBRMS. Persons shall have adequate skills and get trained being able to understand and support the CBRMS. However, skills are necessary but not enough. The organization shall ensure that persons also show the awareness, willingness and behavior needed to achieve the objectives of the CBRMS. This is a broad bundle of requirements, but in practice collaborations may fail, because people just don’t want to collaborate or don’t get the right motivation. Think of a M&A project where workers of the two merging organizations may be convinced that the more effective the merger will be, the more they may lose personally because of job cancelations and other reasons. After all, why go so many M&A projects wrong? Awareness of the people working under the organization’s control shall include: • The policy of the collaborative business relationship; • Implications of missing the objectives of the CBRMS; • Their personal contributions to the CBRMS and its performance. The organization shall implement communication structures concerning the CBRMS, including rules for: • • • •

Internal and external communication; Topics for communication; Means of communication; Who communicates with whom and how?

ISO 44001 defines requirements on documented information, the extent of which depends heavily on the organization’s size, its needs, complexity of collaborative processes, skills of personnel and other issues. As with other management systems, documented information may be kept in many formats (paper, electronic, graphical, video, etc.). Adequacy is the key. The processes how to control (create, distribute, update, withdraw, store, etc.) documented information shall be available. Documented information includes the one required by ISO 44001 itself and the one considered to be necessary by the organization for keeping the CBRMS running. There may be legal or other requirements on documentation in some cases. ISO 44001 requires a corporate RMP—Relationship Management Plan. This document plays a fundamental role, as it summarizes how the organization lives collaborative business relationship management. As Fig. 2.40 tries to illustrate, each organization will have a set of policies, procedures, guidelines and others which will influence and shape collaborative business relationships. In fact, even without a CBRMS, an organization will have established processes for customer relationships, subcontractor and supplier management and the like. Based on existing procedures and

2.9 ISO 44001—CBRMS—Collaborative Business Relationship …

193

Organiza on B

Organiza on A Policies, Guidelines

Policies, Guidelines

Processes

Processes

Corporate Business RelaƟonship Management Plan

Corporate Business RelaƟonship Management Plan

Project Business RelaƟonship Management Plans

Project Business RelaƟonship Management Plans

Joint Business RelaƟonship Management Plans Fig. 2.40 Role of Joint Relationship Management Plans

policies, the corporate RMP is considered as sort of a master plan, how collaborative business relationship management is going to happen in the organization. As an organization can be involved in different collaborative business relationships which may vary significantly in type, complex organizations will have sort of a general corporate RMP, describing overall principles, processes and rules. This then may be supplemented by project-specific RMPs, which show details for individual projects. Note that these documents show things from each organization’s perspective. When organizations A and B will join into a business relationship or project, they will nail down the detailed principles, processes and other specifics in a Joint Business Relationship Management Plan. Relationship Management Plans play an important role, offering transparency to involved parties and building trust. ISO 44001 suggests some typical contents for RMPs in its Annex B. The structure follows the eight relationship stages which we will meet in the next clause on operation. Keep in mind, the following short checklist is not exhaustive, but contains some central topics only. Details depend on the specific needs of an organization. Before we have a closer look at the eight stages of a collaborative business relationship according to ISO 44001, one should note one important point from the checklist in Table 2.29: The standard wants organizations not to join “blindly” a promising relationship, but to walk through the eight stages and look at it from different angles. This includes thinking of a potential exit scenario, even before starting the relationship. Risk-based thinking is again a guiding principle of the approach.

194

2 Generic Standards for Management Systems: An Overview

Table 2.29 Checklist—Relationship Management Plan (follows ISO 44001, Annex B) Number

Stages of relationship

RMP content should include…

0

General

Is an overview of business relationship programs available? What are the business objectives? Is the governance and management structure defined? How are roles and responsibilities defined? What contract arrangements are available? What are the principles of behavior, values and visions? Note These things shall be kept updated and agreed with collaborative business partners

1

Operational awareness

Is a SER identified? Are business objectives of the collaborative business relationship defined and who are the drivers? Is a benefit analysis available? Are implementation processes for collaborative business relationships available? What constraints and risks have been identified? Are resources and needed skills available?

2

Knowledge

Are operating models and measurements identified? Are performance objectives for the business relationship identified? Have high-level risks been identified and do they include relevant issues of business continuity? Are potential partners identified? Is a communication plan for stakeholder management in place?

3

Internal assessment

Are strengths and weaknesses within the organization identified? What are topics to be yet developed? What are the selection criteria for potential partners? Are development programs available which can be used in the “Working Together” stage?

4

Partner selection

Are assessments of potential partners incorporated? Is the methodology for the assessment of potential partners available? Are evaluations of selected partners incorporated?

5

Working together

What are the key areas of concern and constraints for each organization? Are joint processes identified to manage knowledge and information flows? Is a joint program established to develop skills across partners? Are change and improvement programs established? Is a joint management of risks and opportunities implemented? Are potential indicators for disengagement identified? (continued)

2.9 ISO 44001—CBRMS—Collaborative Business Relationship …

195

Table 2.29 (continued) Number

Stages of relationship

RMP content should include…

6

Value creation

Are value creation and innovation processes incorporated? Is a continual improvement program incorporated? Is a process for monitoring value established? Is a process for assessing outcomes and creating initiatives established?

7

Staying together

Are joint programs for reviews, performance measurement and reporting incorporated? Is a process for issue resolution available? Are measures for monitoring and maintaining appropriate behavior incorporated?

8

Exit strategy activation

Is a joint exit strategy deployed?

Note further that all partner organizations shall follow this approach and do the respective analysis.

2.9.2.5

Operation

The eight stages just sketched are the modules of the life cycle approach to a CBRMS according to ISO 44001. As all standards for management systems, ISO 44001 focuses on processes. The organization shall identify, establish, implement, maintain and improve the processes which are requested by the standard. The implementation of measurement criteria and measurement means is important, as without them there’s no controlling of the processes feasible. Reading the requirements of these eight steps, you might note some overlap between them. The reason is that the different stages are strongly connected with each other (Fig. 2.41). Stage 1: Operational awareness As already mentioned, the SER (Senior Executive Responsible) plays a key role and shall provide leadership during all stages of the collaborative business relationship. For that reason, he/she will get appointed at the very beginning of the process. It’s the SER who will further define and fine-tune the organization needed to run the CBRMS. This includes management positions at other levels. The SER will ensure the right governance structures and be the key promotor of collaborative working. The organization shall develop a clear picture of whether the intended collaborative business relationships will support its strategies and objectives. Benefits to be expected from the cooperation will be analyzed in a formal value analysis process. One output of this analysis will be the prioritization of relationships and further actions. When the organization decides to consider a collaborative business relationship project, respective planning activities include:

196

2 Generic Standards for Management Systems: An Overview

Fig. 2.41 Eight stages of a business relationship according to ISO 44001

• • • • • •

The objectives of the planned collaboration; Expected benefits, opportunities and risks; Market analysis for the fields of collaboration; Needed resources; Leadership and personnel requirements; Decision criteria for exit strategy.

It is one of the SER’s responsibilities to determine the right personnel and needed skills to make collaborations a success. Where needed, staff will get adequately trained. The CBRMS shall be rooted in risk-based thinking at all stages. In stage 1 of the business relationship, an initial risk assessment shall be done. This will be updated in later stages, respecting the outputs gained in practice. Once the organization decides the collaborative approach is adequate and will be followed, a RMP (Relationship Management Plan) will be established. Stage 2: Knowledge Stage 2 of the ISO 44001 life cycle model mainly summarizes important knowledge and know-how requirements to start and proceed with a collaborative business relationship. It is expected that the organization creates a well-defined process for developing a business case and strategy for each opportunity of collaborative business relationship. This process shall include: • Nomination of the SER and other authorities. • Clear definition of roles and responsibilities. • Analysis of impact of collaborative business relationships:

2.9 ISO 44001—CBRMS—Collaborative Business Relationship …

197

– On the organization; – On customers and markets; – On sustainability of collaborative business relationship partners, competitors and market forces. • Expectations of customers and other stakeholders. For each collaborative business relationship, measurable objectives shall be defined. They shall be in line with other objectives, strategies, values and relevant aspects of the organization. In planned intervals, a value analysis of the collaborative relationships shall be done. When identifying potential collaborative partner organizations, assessment criteria will include their strategic and operational fit. Other criteria like cultural fit may be important in some cases. It shall also be considered, if envisaged new collaborative relationships may have impact on other existing or planned collaborations or other relationships. Starting a collaborative business relationship, the organization is expected to develop an initial exit strategy. Again, the idea behind this is risk-based thinking. The organization should have a plan in its pocket for the unfortunate case; a collaboration shall be terminated due to one or the other reasons. A short checklist of topics for the exit strategy shall include among others: • • • • • • •

What is the scope and what are the boundaries of the relationship? What would be triggering factors for an exit? How would an exit impact customers and other stakeholders? How would business continuity be impacted? What would be impacts on financial arrangements? How to deal with intellectual property and assets? What would be impacts on personnel and other resources?

It is obvious that these and other issues shall also be part of mutual agreements between the parties. It is important, therefore, that they are stated clearly and openly. Knowledge management is important in the context of collaborative business relationships and the organization shall have clear processes for it. Which knowledge will be shared between partners of a collaborative business relationship and which will not? And how will this be done? Key personnel of each organization participating in a collaborative business relationship shall be identified and needed competence will be determined. When an organization with an established network of supply chains and cooperation partners starts looking for additional potential collaborative business relationships, the interactions of these new opportunities with existing relationships shall be analyzed. This may include potential conflicts between different supply chain members, issues of business continuity, reputational risks, interdependencies of relations and much more. Relationship management will require risk-based thinking, tools and approaches. The organization shall enhance its risk management toolbox properly, to cover the risk management needs of the CBRMS. At the end, joint risk profiles with collaborative

198

2 Generic Standards for Management Systems: An Overview

partners shall be defined and corresponding risks controlled. The organization shall assess and evaluate the risks and opportunities following from these interactions and impacts. Identified risks of the collaborating organizations will be documented in a risk register and addressed by joint risk management processes. As may be seen from these requirements, risk management is a crucial part of a CBRMS. ISO 44001 requires the organization to evaluate each individual collaboration opportunity in a business case. This will focus among others on topics like: • • • • •

Objectives of the intended collaboration and its potential benefits and risks; Resource requirements; Team leader for the collaborative business relationship; Estimates on life cycle or duration of the relationship; Exit strategy scenarios.

Relationship Management Plans will be updated when needed and reviewed with adequate frequency. Stage 3: Internal assessment The main intent of this subclause is to check the organization’s readiness before entering a collaborative business relationship. The organization is requested to perform an internal assessment which is based on a strengths and weaknesses analysis and includes at least the following topics: • • • • •

Structure of the organization; Experience of the organization with collaborative relationships; Skills and experience of personnel; Validation of the organization’s internal relevant processes; Soft competencies like cultural and others.

Appendix D of ISO 44001 includes a relatively detailed “Relationship maturity matrix”, which organizations may optionally employ to rank themselves. However, the organization may as well define its own scheme. An internal assessment will include at least that part of the organization which would be involved in a potential collaborative business relationship. Note that different parts may get involved in different relationships. The assessment of the own organization shall be complemented with the definition of selection criteria for potential collaborative partner organizations. This will be followed by an evaluation of the potential partner organization itself. Considering similar criteria as during the self-assessment, this kind of evaluation and assessment is done by the collaborative business relationship team. Results of the assessments will become part of an updated RMP. Remark Those, who were involved preparing a merger and acquisition, will note many parallels between those processes and preparing a collaborative business relationship.

2.9 ISO 44001—CBRMS—Collaborative Business Relationship …

199

Stage 4: Partner selection After stage 3 has been completed and the organization decides to continue the process, potential collaborative partner organizations will be selected. The assessment results gained in stage 3 will form the basis for these selections. The basic intent is that organizations shall not be selected by some random approach but based on a readiness check and sound analysis. Selected potential collaborative partner organizations shall be encouraged, to subscribe to the basic business collaboration principles, as applied by the own organization. To make it short, selected partner organizations should adopt the approaches described in ISO 44001. A joint assessment of the envisaged collaborative partnership, including its risks and opportunities, shall be next on the list. This will include an assessment of joint objectives and an assessment of a joint exit strategy. Stage 5: Working together This stage summarizes the requirements of ISO 44001 for the period when a collaboration starts working and beyond. It should be clear, however, that the details will depend heavily on size, nature, regional distribution and other aspects of the collaborative relationship. It is crucial that collaborating organizations will establish a joint governance structure and management arrangement, including: • • • • • • • • • • • •

Nomination of their SERs; Establishment of joint management functions; Establishment of operational leaderships; Management systems details; Agreement on performance expectations; Agreement on a joint communication strategy (internal and external); Establishment of joint knowledge management process; Establishment of joint risk management processes, including a joint risk register; Review of operational processes and systems; Measurement procedures for delivery and performance; Procedures for the improvement of collaborative relationship; Establishment of a joint process for issue resolution.

Collaborating organizations also shall establish a joint exit strategy. Again, this is needed as finishing the collaboration is a real risk for collaborating organizations and shall, therefore, remain on its radar. Stakeholders may get impacted by an exit and these impacts will be addressed in the exit strategy. The same holds true for financial and commercial implications. Updating the RMP is important at all stages of the ISO 44001 model. At the “working together” stage, it is essential that the joint RMP will refer to the agreed governance and operational structures and to contracted agreements. It is the joint management team that shall prioritize necessary actions to implement collaborative processes and structures. The following topics are considered as a minimum content of the joint RMP:

200

• • • • • • •

2 Generic Standards for Management Systems: An Overview

Agreed objectives; Governance processes and structures; Defined roles and responsibilities; Changes of business processes and measures of performance; Process for issue resolution; Joint exit strategy; Review cycles of the CBRMS.

Stage 6: Value creation At stage 6 of the collaboration, organizations harvest the benefits of their collaborative business relationship. What remains to be done in this mode? ISO 44001 wants organizations to establish a value creation process. The intent of this process is to stimulate continual improvement of the collaboration. Organizations should rethink and redefine what’s the “value” of their collaboration and how it can be increased. Innovation is a key concept in this context, and organizations should employ it to increase the mutual benefit derived from the collaboration. Primarily, it’s the joint management team which should drive this process. If value creation initiatives and projects are defined, they shall become part of an updated RPM. Stage 7: Staying together The requirements for this stage focus on the robustness, sustainability and further development of the collaborative partnership. Once again it stresses the SER’s role, to oversee the whole engagement. The joint management team is expected to ensure among others: • • • •

Functioning of the needed management systems; Functioning and updating of the joint risk management; Appropriate operating environment; Keeping agreed behavioral principles alive.

It is expected that the joint management team and the SERs will monitor behavior and trust indicators. These shall be relevant and include that envisaged outcomes of the collaboration will be reached. Examples include: • • • • • •

Performance of delivery and outputs; Improvement of risk profiles; Trust and behavior; Collaboration profiles and skills; Value creation; Management of issues. The output of this monitoring and measurements will be part of the updated RMP.

2.9 ISO 44001—CBRMS—Collaborative Business Relationship …

201

Stage 8: Exit strategy activation The link to the exit strategy is part of each stage of the ISO 44001 model. It is requested that organizations keep a potential exit scenario always in mind and make it an essential (potential) part of their strategy, planning and operational processes. Once the decision is made, that the collaborative business relationship will be terminated, organizations shall have a plan available for controlled disengagement. Details and timeline of a disengagement process depend heavily on the nature of the collaborative relationship. However, some topics will be especially critical: • • • •

Legal, commercial and financial issues shall be resolved. Business continuity will be an issue in most cases. Impact on customers and other stakeholders shall be considered. Issues connected with resources (including personnel) shall be addressed and resolved.

2.9.2.6

Performance Evaluation

The requirements of this section of the standard follow the same template as for other management system standards and may be divided into three groups: 1. Monitoring, measurement, analysis and evaluation The CBRMS is designed to be fact-based. Therefore, the organization shall have procedures for its monitoring, measurement, analysis and evaluation. These procedures shall be detailed enough and say what needs to be measured and monitored how and when. It will also be determined how the results will be evaluated and analyzed. These requirements are standard. As more than one organization is involved in a CBRMS, at least some of the measurement, monitoring and evaluation activities shall be joint activities. There is a special requirement in this context for CBRMS: In case of a controlled disengagement (exit of the collaborative business relationship), an analysis of lessons learned shall be performed. This shall be reported to the SER and it shall be considered in future engagements. 2. Internal audits Internal audits are a standard tool to check the performance of management systems. In Chap. 7 of the book, we shall bring more details about planning, conducting and evaluating internal audits and how to deal with follow-up activities. Concerning auditing a CBRMS, one should keep in mind that here several organizations are connected in a collaborative business relationship. It makes sense, therefore, that at least some of the internal audits will be organized as joint audits, being done by auditors from the participating partner organizations. Of course, audits have to be done across the participating organizations, following the processes of the respective business collaboration.

202

2 Generic Standards for Management Systems: An Overview

3. Management review Top management of the organization(s) shall review the performance of the CBRMS on a regular basis. This process too follows the standard requirements of management reviews and the reader is referred to Sect. 2.2.3.6 for further details.

2.9.2.7

Improvement

The message of this clause is again the same as for all other management system standards: 1. The organization will react reliably and systematically to nonconformities and implement corrective actions. 2. The organization shall continually improve its CBRMS when needed. The effectiveness of implemented corrective actions shall be controlled and reviewed. The causes and impacts of nonconformities shall be analyzed (root-cause analysis). As the collaborative business relationship is a joint endeavor of organizations, improvement activities must be as well. Of course, this may make them more complex.

2.9.3 Frequently Asked Questions

Does the world need ISO 44001? A skeptical mind might ask, whether the world really needs a standard for collaborative business relationship management. After all, standards like ISO 9001 and several industry-specific quality management system standards already include requirements for managing interfaces with suppliers, customers and cooperation partners. So why another standard? ISO 44001 may be considered as a standalone standard. There may be organizations which don’t want to implement a quality management system, or any other management system discussed before. Still, however, these organizations may have a need to manage their collaborative business relationships. On the other hand, it may well be that organizations, already running a quality management system according to ISO 9001 or another industry-specific scheme, start a joint venture or get part of a collaborative network with very special needs. For such type of constellations, ISO 44001 may be interesting and offer guidance and requirements for all participating organizations. In practice, the driving forces behind the implementation of a CBRMS will vary from industry to industry and from one organizational constellation to another. As ISO 44001 defines requirements for collaborative business relationships, it is designed to serve as a certification standard. The future will show how many

2.9 ISO 44001—CBRMS—Collaborative Business Relationship …

203

organizations will go for it. It may well be, however, that certification will become a standard requirement in contracts between the partners of collaborative business relationships and that, of course, would push it. In any case, the requirements of ISO 44001 are flexible and fit to any type of collaborative business relationship. The more complex a relationship will be, the more positive impact the requirements of the standard may have to make it transparent, robust and successful. Which organization should you select if you want to get your CBRMS certified? Generally speaking, you should select a certification body which is available in your country and has experience with that type of management system. The thing is that accredited certification should be your preference. ISO 44001 is new, however, and only a limited number of national accreditation bodies offer currently accreditation programs for this standard. This may lead to the development that certification bodies will offer unaccredited certification according to ISO 44001. Although that’s always an option, you should ensure that the certification organization of your choice has a real understanding of the standard, practical experience and trained auditors. Be aware that unaccredited certificates may have limited or no recognition. You should clarify these issues in advance.

2.10 ISO 45001—OH&SMS Occupational Health and Safety Management System This section includes: • A short introduction to OH&SMS; • A discussion of the requirements of ISO 45001:2018.

2.10.1 Introductory Remarks The first edition of the standard • ISO 45001:2018—Occupational health and safety management systems— Requirements with guidance for use was published in March 2018. It will play a major role within the suite of ISO standards for management systems. ISO 45001 may be considered being the next iteration of OHSAS 18001, which was developed by the Occupational Health and Safety Assessment Series (OHSAS) Project Group and first released in 1999. This standard was updated in 2007 and

204

2 Generic Standards for Management Systems: An Overview

released as a British Standard. OHSAS 18001 was a British initiative, supported by a number of international standard-giving bodies, certification organizations and other interested parties. It was designed to fill the gap for a missing ISO standard for occupational health and safety, comparable to ISO 9001 and ISO 14001. Although OHSAS 18001 was never transformed to an ISO standard, it was an absolute success story and accepted on a global scale. For the first time in history, this standard addressed all industries and offered a scheme of requirements similar to the then already existing standards for quality management and environmental management. ISO 45001 follows the high-level structure of ISO management system standards and incorporates the experiences gained with OHSAS 18001. Organizations having a certificate according to OHSAS 18001 are given at most three years to transfer to ISO 45001. The transition must be completed until March 2021. ISO 45001 is designed to serve as a certification standard for third-party certification. It may, however, be employed to the benefit of an organization without any intent to apply for certification. The standard can also be used as the basis of a self-declaration by the organization. ISO 45001 consists of a main part defining the requirements for the OH&SMS and an informative annex that may be helpful to better understand the clauses in the requirement part. However, this annex doesn’t define any additional requirements. The main intent of ISO 45001 is to offer a framework for managing OH&S risks. This is achieved by: • Insisting in top management’s leadership and commitment; • Clear rules for top management’s accountabilities and responsibilities with respect to the OH&SMS; • Calling for an OH&S culture within the organization, which is supported by top management and communicated internally and externally; • The participation and consultation of workers and their representatives; • Ensuring the availability of necessary resources to establish and maintain the OH&SMS; • Risk-based thinking and the implementation and maintenance of policies and processes for OH&S risk identification and avoidance, as well as the identification and realization of opportunities; • Formulation of OH&S objectives and targets and their monitoring; • Integrating the OH&SMS into the organization’s processes; • Ensuring that OH&S policies, processes and objectives are compatible with the organization’s strategic and business objectives; • Requiring the organization to be compliant with applicable legal and other requirements. The OH&SMS is designed to make the organization comply with the requirements of ISO 45001 in a systematic and reliable manner. ISO 45001 defines requirements and a framework, but still leaves degrees of freedom to the organization how to establish its OH&SMS and what will be its objectives and targets. Details will depend, for example, on the size and complexity of the organization as well as on the industry the organization is part of. For example,

2.10 ISO 45001—OH&SMS Occupational Health and Safety …

205

Table 2.30 ISO 45001—important terms and their explanation Term

Explanation

Contractor

This is an external organization that provides services to the organization

Hazard

Something that may cause an injury or ill health

Incident

Events that could or do result in an injury or ill health

Injury or ill health

Negative impact on the physical, mental or cognitive state of a person

Legal and other requirements

The set of legal and other requirements the organization has to comply with

OH&S opportunity

Something that can be employed to improve the OH&S performance

OH&S policy

States the basic intentions and principles of the organization as far as related to OH&S. It is a formal statement of the top management of an organization

OH&SMS

This is that part of the management system of an organization, needed to fulfill the OH&S-related objectives, targets and policies

Risk

Any effect due to uncertainty

Worker

Person that is doing work or other work-like activities under the organization’s control. Note that this implies employees, as well as other personnel. Criterium: The work is done under the control of the organization

OH&S risks in the building or mining industry are at a different level than those in a hotel. Details also will depend on the organization’s legal and regulatory context, requirements of clients and so on. ISO 45001 is based on the PDCA-cycle, as are all other ISO management system standards. Being process oriented and following the same overall architecture of ISO management system standards, it shouldn’t be too difficult to align different management processes like those for quality, OH&S and environment. ISO 45001 even requires explicitly that the organization integrates its OH&S policies and processes with the other relevant parts of its business and management processes. Before we have a deeper look at the requirements of ISO 45001, it makes sense to mention some special vocabulary used in the standard (Table 2.30).

2.10.2 Discussion of the Clauses of ISO 45001 2.10.2.1

Context of the Organization

The main requirements are: • The organization shall understand its context. This implies the determination of issues that affect the organization’s ability to create the intended results of its OH&SMS. Issues may be of internal and external origin.

206

2 Generic Standards for Management Systems: An Overview

• The organization has to understand the needs, expectations and requirements of its interested parties. This includes, above all, the workers of the organization. Remark The explicit inclusion of workers being the essential part of interested parties is important and gives the standard a specific spin. You’ll see in later clauses that the involvement of the workers is a requirement which is deeply rooted in the spirit of the standard. The organization shall determine the scope of its OH&SMS. The scope will be available as documented information. Determining the scope, the organization shall consider the following: • The aspects deriving from its context. • The parts of the organization to which the OH&SMS applies. • The organization’s OH&SMS shall include products, services and performed or planned work-related activities which are under the control of the organization. • The scope is available in documented form. When the organization wants to comply with ISO 45001, it shall establish, implement and maintain an OH&SMS according to the standard and comply with all of its requirements. The OH&SMS shall be continually improved as needed.

2.10.2.2

Leadership

ISO 45001 sees top management in the driver seat of the OH&SMS. Top management shall: • Show commitment and leadership for the OH&SMS. • Have the overall responsibility and accountability for preventive actions concerning work-related injuries and ill health. • Be responsible and accountable for the provision of safe and healthy workplaces. • Ensure the establishment of the organization’s OH&S policy and objectives. • Ensure the integration of the OH&SMS into the business processes of the organization. Remark Note that this requirement implies, the business processes of the organization shall be “enhanced” with the respective requirements deriving from ISO 45001! • Ensure that needed resources are available (financial, human, material and others). • Ensure the communication of the OH&SMS requirements within and where needed outside of the organization. • Ensure the OH&SMS is effective and achieves its planned objectives. • Motivate people and support managers. • Ensure the continual improvement of the OH&SMS. • Ensure that when workers report on incidents, hazards or risks, they are protected from reprisals. • Ensure processes for the participation and consultation of workers. • Ensure that health and safety committees are established.

2.10 ISO 45001—OH&SMS Occupational Health and Safety …

207

The OH&S policy of the organization shall include commitments to: • • • • •

Provision of healthy and safe working conditions and working places; Compliance with legal and other relevant requirements; Elimination of hazards and reduction of OH&S risks; Continual improvement of the OH&SMS; The participation and consultation of workers and (if existent) representatives of workers.

The OH&S policy shall be documented and available internally and externally to relevant interested parties. Be aware that the OH&S policy is an important document and defines the framework for the organization’s OH&S objectives. Concerning the assignment of authorities and responsibilities: • Management roles relevant to the OH&SMS shall be clearly assigned and communicated. • Documented information concerning the assignments shall be available. • At all levels of the organization, workers shall be responsible for the OH&SMS aspects, which lie within their fields of control. • Authorities and responsibilities shall be assigned by top management. They shall ensure compliance of the OH&SMS with ISO 45001 and report on its performance to top management. The participation and consultation of workers at all relevant levels on issues concerning the OH&SMS is a real specialty of ISO 45001 and can’t be found in a comparable form in any other ISO management system standard. It gives workers a voice. This participation is intended to take place during all phases of the OH&SMS. In detail, the respective requirements include that the organization: • Provides necessary resources, training and time needed for workers’ participation and consultation. • Offers understandable, clear information about the OH&SMS, including its timely access. • Shall eliminate or minimize potential obstacles to workers’ participation and consultation. • Ensures the consultation of nonmanagerial workers. Hereby a focus will be on the identification of hazards and OH&S risks, and options to eliminate or reduce them. In addition, nonmanagerial workers or their representatives will be consulted in basically all relevant issues concerning the OH&SMS. This includes their participation and consultation in risk assessments, definition of preventive and corrective actions, determination of training needs of workers, determination of communication needs and forms, determination of control measures, investigation of incidents and more. • Ensures that incidents will be investigated, nonconformities analyzed, and corrective actions will be taken.

208

2.10.2.3

2 Generic Standards for Management Systems: An Overview

Planning

Actions to address risks and opportunities—General requirements As all other management systems, the organization shall plan its OH&SMS. This is a formal process and its objectives are mainly the following: • The OH&SMS can achieve the planned outcomes. • The OH&SMS will help to prevent or at least reduce undesired effects and outcomes. • The OH&SMS is designed to be continually improved. The OH&SMS shall be risk-based, and the main focus will be on: • Hazard identification and management; • Identification of OH&S risks and opportunities and their management; • Considering legal and other requirements. The organization shall have processes for its planning activities. Therefore, planning is not just “out of the pocket”. The organization’s planning of the OH&SMS shall be based on and consider: • The organization’s context; • The scope of the OH&SMS; • Requirements and expectations of interested parties, especially workers. In addition, ISO 45001 requires the assessment of risks and opportunities that could result from intended changes of the organization, processes or the OH&SMS and could impact the effectiveness of the OH&SMS. This assessment has to be done before these changes become effective. In simple words, if you’re going to change your organization, its processes or the OH&SMS look first what the OH&S-impacts of these changes will be! Identification of hazards and the assessment of risks and opportunities The organization shall have processes for the identification of relevant hazards. It should be stressed that according to ISO 45001 the identification of hazards shall be a proactive and ongoing process. It includes the following issues, but is not limited to them: • How is work organized? How is leadership organized? What are relevant cultural issues of the organization? How is the workload of workers? Are there discrimination or harassment issues? • What are the hazards arising from routine and nonroutine work? Physical conditions of workplaces? Aspects of infrastructure? Used materials? • Work processes? Work areas? Equipment and machinery? • Work procedures, work processes and organization of work?

2.10 ISO 45001—OH&SMS Occupational Health and Safety …

209

• Design of services and products? Hazard issues in the areas of research and development, production and service provision, construction, assembly, maintenance? Relevant human factors? Remark Don’t consider this as an exhaustive list! It just shows typical areas that need to be considered. • Relevant internal and external past incidents and their causes; Remark The intention is that the organization not only learns from its own incidents but also from relevant others that happened external to the own organization. • Potential emergency situations and associated hazards? • Identify hazards associated with people. – People having access to workplaces: Workers, personnel of contractors, visitors and others; – People in the vicinity of the organization’s workplaces; – Workers of the organization at locations not being under its control. The organization shall determine what other issues should be part of its hazard analysis. These issues will depend on the fields of activities of the organization and may include, for example: • • • • •

Machinery and equipment; Design of workplaces and working areas; Organization of work, working procedures; Needs for adaptation of things to workers’ capabilities; Negative impacts on the neighborhood of workplaces (impact on people, environment, etc.); • Negative Impacts on the organization’s workplaces caused from outside and not being under control of the organization (think, for example, of neighboring workplaces causing hazards). The organization is expected to implement adequate processes, such that hazard analyses may be done on a continual basis. Figure 2.42 further illustrates the sequence of actions: Identify hazards and assess associated OH&S and other risks and opportunities. The assessment of OH&S risks and other risks The organization shall have processes and criteria for the assessment of OH&S and other risks from identified hazards. The details will heavily depend on the scope of the organization, the industry the organization is in, and its products and services. It is expected that the assessment of risks is done proactively and based on the results of the hazard analyses mentioned above. In addition, relevant legal and regulatory requirements, as well as requirements of interested parties, shall be considered when assessing risks. ISO 45001 addresses yet another issue, which may form a risk to the OH&SMS. As day-to-day operations and activities of the organization may show unpredictable

210

2 Generic Standards for Management Systems: An Overview

Assess OH&S risks and other risks Assess OH&S opportuni es and other opportuni es

Iden fy hazards

Iden fica on of hazards and assessment of risks and opportuni es

Fig. 2.42 Identification of hazards and risk assessment according to ISO 45001

changes and situations (think of unforeseen heavy workload, unpredicted work environment, changes in personnel, necessary changes of processes, changed work equipment, etc.), such events may result in risks and OH&S objectives may be endangered. For that reason, the organization shall include these issues in its risk assessment methodology. The assessment of OH&S and other opportunities Dealing with risks is one thing, and trying to find opportunities is the other side of the coin. The organization shall have processes to systematically scan for opportunities to improve its OH&S performance. This includes opportunities: • • • •

For the improved organization of work and the improvement of work environment; For risk reduction and elimination of hazards; For the improvement of processes and other organizational issues; For the improvement of the OH&SMS.

Legal and other requirements The organization shall have processes to determine legal and other requirements that are relevant. The organization shall have access to this information. Having the access to the information doesn’t mean yet that the organization has the necessary resources to evaluate them. However, the organization shall ensure these resources and determine how those legal and other requirements have to be considered. Establishing and maintaining its OH&SMS, applicable legal and other requirements shall be respected.

2.10 ISO 45001—OH&SMS Occupational Health and Safety …

Address risks and opportuniƟes

Address legal her and oth requirements

Be prepared nd responan sive to emergency ssituaƟons

Integraate acƟons into the OH&SMS or oth her processses

211

Evaluate the effecƟveness of acƟons

Fig. 2.43 ISO 45001—planning actions

Planning action After OH&S-related and other relevant hazards have been identified and the associated risks have been assessed, the organization is requested to plan its actions (Fig. 2.43). These actions shall be adequate and proportionate to the detected hazards and associated risks. Actions must find their way into the organization’s OH&SMS and relevant processes. The effectiveness of defined actions shall be evaluated and if needed they shall be revised and improved. OH&S objectives and how to plan to achieve them ISO 45001 requires the organization to establish its OH&S objectives at relevant levels and functions. This is part of the planning process for the OH&SMS. What are the “relevant and adequate levels and functions” depends on the details of the organization. Generally speaking, objectives shall: • • • • • • • •

Not contradict the OH&S policy. Be measurable and meaningful. Comply with legal and other relevant requirements. Be based on the organization’s risk assessment and assessment of opportunities. Refer to the consultations with workers or their representatives. Be monitored according to established procedures and methods. Be communicated internally and, when needed, externally. Be updated if needed. As an example, consider the indispensable objective of work accidents reduction.

Planning to achieve OH&S objectives The planning how to achieve the OH&SMS objectives shall be very concrete and give answers to the following questions: • What are the actions and steps that will be done? What will be done, by whom, how and when? • Are the necessary resources determined and available? • How are responsibilities allocated? • What is the timeline of the action plan?

212

2 Generic Standards for Management Systems: An Overview

• How will progress be measured and how will results be evaluated? • How will the actions be integrated into other processes of the organization? As usual, documented information is to be maintained on all these issues.

2.10.2.4

Support

Concerning the support requirements of ISO 45001, there are five main clauses: 1. Resources The organization shall determine the needed resources for its OH&SMS in all phases (establishment, implementation, maintenance, improvement). Top management shall ensure their availability. Resources include human, financial, material and others. 2. Competence 2.1. The necessary competence of workers shall be determined. This addresses those that have influence on and work under the OH&SMS. 2.2. Of course, determination of needed competence of workers isn’t enough. The organization shall ensure that workers really are competent for their work. This may be based on their experience, training or education. Competence shall include the ability of hazard identification. 2.3. The organization shall ensure to maintain the competence of workers. 2.4. Documented information shall be available on the competence of workers. 3. Awareness 3.1. The organization shall create awareness of its workers, concerning the OH&S objectives and OH&S policy. 3.2. Workers shall be made aware of their individual contributions to the OH&SMS performance. 3.3. Workers shall be made aware of potential consequence of noncompliance with OH&SMS requirements. 3.4. Workers shall be instructed on hazards and OH&S risks relevant to them, as well as on incidents. 3.5. Arrangements shall be in place, offering workers the ability to remove themselves from work that they consider presenting a serious danger to their health or life. Workers will be protected from negative consequences in this case. 4. Communication The organization shall have established communication processes and procedures for internal and external communication on issues related to its OH&SMS. These include:

2.10 ISO 45001—OH&SMS Occupational Health and Safety …

213

4.1. On what, when, with whom and how to communicate. The “with whom” includes relevant functions and levels within the organization. It also includes communication with contractors, visitors and other relevant parties. 4.2. It is important that the organization takes diversity issues into account that may be relevant to communication. These issues include language, aspects of culture, literacy, gender and more. 4.3. The organization shall ensure that legal and other requirements are considered in its communication processes. Remark In some cases, certain information shall be communicated due to legal requirements. 4.4. Internal communication concerning OH&SMS issues. It shall be ensured that changes to the OH&SMS are communicated to all relevant parties. 4.5. Workers shall be enabled to contribute to the improvement of the OH&SMS. This shall be supported by the communication procedures of the organization. 4.6. The organization shall ensure that information related to its OH&SMS is communicated externally, if necessary or requested by legal or other requirements. 5. Documented information 5.1. The organization shall comply with the documentation requirements determined by ISO 45001 and by relevant legal and other requirements. 5.2. In addition, the organization shall determine which documented information it needs to ensure the effectiveness of its OH&SMS. Example: Work instructions, training videos. 5.3. The extent of documented information will vary between organizations, largely depending on their size, complexity and other issues. 5.4. The organization shall implement reliable and robust processes for creation, updating, distribution, withdrawal, storing and other relevant issues concerning its documented information. 5.5. The control of changes of documented information is an important issue. Workers and other interested parties shall be informed timely about and have access to updated relevant information. 5.6. Formats of documented information include paper, electronic or others. Video material for instructions and electronic learning are very popular in the context of OH&SMS. Remark OH&S is a typical area where instruction is widely known to be more effective if done by video formats than by printed paper or oral explanations.

214

2.10.2.5

2 Generic Standards for Management Systems: An Overview

Operation

There are two main clauses concerning “Operation” in ISO 45001: 1. Operational planning and control General requirements The main requirement of this clause is to plan, implement, control and maintain those processes that are needed to comply with the requirements of the OH&SMS and to materialize the actions planned during the “Planning”-phase. This includes: • The organization shall establish criteria for processes and implement control of processes. • The organization shall keep documented information concerning the processes where necessary. • The organization shall adapt work to workers. • The organization shall coordinate the relevant parts of its OH&SMS with other organizations at multi-employer workplaces. Remark This is, for example, a common situation in the building and construction industry, when workers from different organizations work simultaneously at the same workplace. Eliminate hazards and reduce OH&S risks The organization shall have processes to eliminate hazards and reduce OH&S risks. The following cascaded approach shall be employed: • Can hazards be eliminated? • Can hazards be reduced when materials, equipment, processes, etc., are substituted? • What would be the positive effects of work reorganization and engineering controls? • Can training and other administrative controls have positive impacts? • Can personal protective equipment reduce risks? Management of change The organization shall have processes for the implementation of planned changes (temporary or permanent). The intent is to keep the OH&S situation under control during those changes. This may include: • Changes of working conditions or change of workplaces (locations or surroundings); • Changes of work equipment; • Organizational changes; • Changes of the workforce (e.g. changes in the composition of teams);

2.10 ISO 45001—OH&SMS Occupational Health and Safety …

215

• Changes of requirements (legal and others); • New technologies and insights and knowledge about hazards and OH&S risks. Procurement The organization shall control its procurement of services and products. The intent is to ensure compliance with its OH&SMS. In other words, OH&S aspects shall be seriously considered in procurement. The organization shall have coordinated procurement processes with its contractors, to ensure the following: • Identification and assessment of hazards and OH&S risks that derive from activities of contractors and have impact on the organization or vice versa; • Identification and assessment of hazards and OH&S risks from contractors impacting other parties. • Contractors and their workers will comply with the organization’s OH&S requirements, as fixed in the OH&SMS of the organization. • Contractors will be selected on the basis of their ability and willingness to comply with the OH&S requirements of the organization. When the organization outsources processes or functions, it shall ensure that they are controlled. The organization shall ensure that its outsourcing is consistent with its OH&SMS, with legal and other relevant requirements. (Remark This is a super essential requirement!) 2. Emergency preparedness and response The organization shall have processes being part of its OH&SMS for the preparation for and the response to emergency situations. This shall include: • Procedures for planned responses to emergency situations. • Procedures for the provision of first aid. • Verification of the organization´s readiness for emergency response: Periodic testing and exercise. Testing shall be followed by evaluations of performance and, if needed, revisions of planned response activities. These evaluations are of exceptional importance after factual emergency situations. • Communication of related relevant information to workers (what are their responsibilities, duties, how they behave in case of an emergency). • Communication of related relevant information to other interested parties (contractors, local community, emergency response services, etc.). • Trainings to exercise planned responses. • Emergency plans and procedures shall be available as documented information.

216

2 Generic Standards for Management Systems: An Overview

2.10.2.6

Performance Evaluation

Monitoring, measurement, analysis and performance evaluation The requirements of this clause of ISO 45001 address the organization’s processes for performance evaluation, measurement, analysis and monitoring. The organization shall deal with the following: • Determine the topics that need to be measured and monitored. Includes: – – – –

Extend of compliance with relevant requirements, including legal ones. How does the organization determine relevant hazards, risks and opportunities? What is the degree of achieving the OH&S objectives? How effective are the operational controls and other relevant controls?

• Which methods are employed for measurements, monitoring, analyses and evaluations? Remark Measurement and monitoring equipment shall be calibrated or verified if possible. • Against which criteria does the organization evaluate OH&S performance? • When and how are measurements and monitoring done? • When and how are they analyzed and evaluated? ISO 45001 requires the organization to have processes for the evaluation of its compliance with legal and other relevant requirements. This shall include: • Which methods are employed to determine compliance and how frequently? • Evaluate the compliance of the organization and take actions if needed. • Maintain information and knowledge about the organization’s status of compliance. • Create and retain documented information on the compliance status and the results of its evaluation. Internal audits The organization shall conduct internal audits. This is a requirement of all management system standards and the reader will find more on this issue in Chap. 7 of the book. It is worthwhile to mention, however, that adequate internal audit programs must include construction sites and other relevant places where work is done. As, for example, even a medium-sized organization in the building industry may easily have hundreds of sites, auditors should consider this to collect relevant and representative information with their internal audit program. Management review ISO 45001 requires top management to review the performance of the OH&SMS on a regular basis. This too is a standard requirement of all management system standards. The review shall include the following inputs:

2.10 ISO 45001—OH&SMS Occupational Health and Safety …

217

• What is the status of defined actions in the last management review? • Are there any changes in internal or external issues that have impact on the OH&SMS? (Issues could include changing legal or other requirements, changing expectations of relevant interested parties, changing risks and opportunities, etc.). • Has OH&S policy been followed, and OH&S objectives been met? • How are the performance data of the OH&SMS? (This includes results from internal and external audits, measurement and monitoring results, reported incidents, detected nonconformities, results from worker’s consultations, determined risks and opportunities.) • Are resources for the OH&SMS adequate or do they need to be adapted? • Is there relevant input from interested parties? • Are there detected opportunities for improvement of the OH&SMS? The review shall include decisions of top management on the following: • • • • • •

Is the OH&SMS suitable to achieve its intended results? Continual improvements of the OH&SMS? Needed changes of the OH&SMS? Needed resources? Integration of the OH&S processes with other management processes? Implications relevant to the strategic development of the organization?

2.10.2.7

Improvement

Incidents and nonconformities and how to respond to them The main intent of this clause is the systematic determination of opportunities for improvements, the response to incidents and the implementation of corrective actions to detected nonconformities. Requirements include: • The organization shall have processes to detect, investigate and initiate timely response actions to nonconformities and incidents. • Responding to incidents and nonconformities, the organization shall take actions to correct and control them and to deal with resulting consequences. • The organization shall investigate incidents, perform root-cause analyses of incidents and nonconformities and involve workers and relevant other interested parties in this analysis. • The organization shall determine if comparable incidents have occurred or similar nonconformities exist or potentially could occur. • The organization shall determine the necessary actions and implement them. Hereby the abovementioned principles of change management will be respected (see Clause “Operation”). • Prior to the implementation of corrective actions, the associated risks and hazards shall be evaluated.

218

2 Generic Standards for Management Systems: An Overview

• Implemented corrective actions shall be monitored and their effectiveness shall be determined. • Necessary changes of the OH&SMS shall be made. • Documented information on these issues and activities shall be available. Continual improvement The organization shall continually improve its OH&SMS by: • Improving the organization’s OH&S performance; • Improving the OH&S culture in the organization; • Strengthening the participation of workers and their representatives in continual improvement activities. The organization shall keep documented information on its continual improvement activities.

2.10.3 Frequently Asked Questions

How should an organization get started when considering the implementation of ISO 45001? Even without ever considering ISO 45001, your organization very likely already has processes and assigned responsibilities for OH&S in place. Therefore, you very likely don’t have to start from scratch. However, when starting an ISO 45001 implementation project, you could do the following: • Clearly understand the content and intent of ISO 45001. External trainings may be helpful. Ensure, however, training contents are not too general, but focus on the specific requirements of your industry and the size and complexity of your organization (e.g. multinational organization, small or medium enterprise). Also, ensure the training is adequate and refers to your hazard levels. • Ensure the commitment of top management. If top management isn’t really behind the project, don’t even start it. Even if top management states it is behind the project, ensure they understand what it implies. • Create awareness that a serious implementation of ISO 45001 will require the ongoing commitment and support of top management and other management levels. • Ensure required resources (financial, material, human, etc.) will be available. Try to make a rough estimate, to have a figure what it means. • Clearly understand the context of your organization, as it shapes the implementation project and gives it a direction. • Define the scope of the implementation project. It may make sense to limit the implementation of ISO 45001 first to a defined part of your organization (e.g. geographically, type of activity, projects with selected contractors, etc.).

2.10 ISO 45001—OH&SMS Occupational Health and Safety …

219

• Even if you limit your scope for the time being to only a part of the organization or its activities, define a clear policy where you would like to see your OH&SMS to be in a year, in two and so on. This means: Your policy and objectives should be clear when you start, as otherwise it may be difficult to define a route where and how to go. • Perform a “delta analysis”: This serves to find out in which respects your organization already complies with the requirements of ISO 45001 and where the gaps are. Established methods for hazard analysis and risk assessments will be needed. • Using the delta analysis select your prioritized actions. In practice, there may be areas where you have to act more urgently than in others. Decision criteria may include your OH&S performance compared with other players in your industry. They also depend on your OH&S objectives. • Use project management to establish and implement your OH&S solutions. Ensure you include measures and adequate monitoring which can be used to evaluate the performance of the OH&SMS and its processes. • Be aware that OH&S activities can only be successful in the long run, if workers understand and follow. Determine the obstacles and monitor the behavior of workers and managers to start necessary actions whenever needed. • In general, follow the PDCA philosophy to continually improve your OH&SMS. • To do all these things, it will be necessary to have a dedicated team which has the skills to make it happen. The size of the team depends on the size of your project. Ensure you bring the existing know-how of your organization into the team. Ensure that representatives of workers will be part of it. Is certification of the OH&SMS according to ISO 45001 needed? As with other management system standards, certification according to ISO 45001 is an option, but not a must. Consider the following: • The standard ISO 45001 supports your organization to align its OH&SMS with a state-of-the-art-approach to OH&S. If the implementation is done right, this alone should create value. Certification may be your next step of choice. • Selecting a certification body, be sure it is accredited for ISO 45001 and has experience in your industry. If you have special needs, ensure the certification organization may satisfy them. For example, if you are a multinational organization, you may want to ensure that the certification organization can deliver its services in the geographical areas you need them. Be aware: Being accredited is one thing, and having adequate auditors for your industry and specific requirements is another. Are there alternative systems for occupational health and safety? Although ISO 45001 will definitely become the worldwide accepted standard for OH&S, there are other models on the market which may be relevant to your organization. For illustrational purposes, we just mention the SCC-model, which was developed back in 1994 by VCA (Veiligheids Checklijst Aannemers) in the Netherlands and addresses primarily contractors (see www.vca.nl for details). The SCC-model

220

2 Generic Standards for Management Systems: An Overview

comes with a certification scheme which consists of four classes: SCC* , SCC** , SCCP and SCP, addressing different sort of organizations. Although all these models have in common to eliminate or reduce OH&S hazards and related risks, they differ in their details. Organizations should determine the criteria, based on which they will adopt one or the other models. Requirements of your business partners, industry, regional, national or other requirements should be considered.

2.11 ISO 50001—EnMS—Energy Management System This section includes: • A short introduction to energy management systems; • A discussion of the requirements of ISO 50001:2018.

2.11.1 Introductory Remarks The current version of the standard • ISO 50001:2018—Energy management systems—Requirements with guidance for use was published in August 2018. Its first edition was issued in 2011 and quickly became the leading global standard for the subject. The main intent of ISO 50001 is to offer organizations (irrespective of their size and industry) a framework for the improvement of their energy performance. This includes the organization’s energy consumption, energy use and energy efficiency. The standard follows the PDCA approach and is structured according to the highlevel structure like the other modern management system standards. In addition, ISO 50001 can be employed as a certification standard. ISO 50001 is accompanied by some standards from the same series. Especially worthwhile to be mentioned here are: • ISO 50002:2014—Energy audits—Requirements with guidance for use The standard addresses requirements for carrying out energy audits with the focus on energy performance. It describes steps and processes of an energy audit. This standard does not address auditing energy management systems. • ISO 50003:2014—Energy management systems—Requirements for bodies providing audit and certification of energy management systems

2.11 ISO 50001—EnMS—Energy Management System

•

•

• •

221

The standard is intended to be used together with ISO 17021-1 by organizations offering audits and certifications for energy management systems. It also serves as a complementary standard employed in the accreditation process of certification bodies. ISO 50004:2014—Energy management systems—Guidance for the implementation, maintenance and improvement of an energy management system The standard provides guidance for establishing, implementing, maintaining and improving of an EnMS. It also contains practical examples for illustrational purposes. ISO 50006:2014—Energy management systems—Measuring energy performance using energy baselines (EnB) and energy performance indicators (EnPI)—General principles and guidance The standard offers guidance for EnBs and EnPIs. ISO 50015:2014—Energy management systems—Measurement and verification of energy performance of organizations—General principles and guidance The standard offers guidance for the measurement of energy performance. ISO 50047:2016—Energy savings—Determination of energy savings in organizations The standard offers help how to determine energy savings, how to establish energy baselines, how to do your energy accounting and more.

In our context, however, ISO 50001 is the important document, as it fits into the ensemble of management system standards. The others may be referred to as guidance papers. Before we dive somewhat deeper into the requirements of ISO 50001, it makes sense to have a look at some specific terminology of this standard (Table 2.31). ISO 50001 contains requirements and an informative appendix, which may help to better understand the requirements in the main part of the standard. We shall give a short presentation of the requirements. As the standard follows the same template as other management system standard treated above, we shall not go into the details of general issues like context determination, etc., as they may be approached the way discussed before.

2.11.2 Discussion of the Clauses of ISO 50001 2.11.2.1

Context of the Organization

The requirements of this clause are very similar to what we have seen when we discussed other management system standards: • The organization shall determine and understand its context. Determining the context means identifying all relevant internal and external issues that may influence the organization’s EnMS and its ability to achieve planned outcomes.

222

2 Generic Standards for Management Systems: An Overview

Table 2.31 Some terminology used in ISO 50001 and in the context of EnMS Term

Explanation

Energy baseline (EnB)

This is a quantitative reference baseline which provides a basis for the organization’s comparison of its energy performance

Energy consumption

This is the quantity of applied energy. For example, to a device, equipment, process

Energy efficiency

This is the relationship between the output (of products, services, energy, performance) and the respective input

Energy performance

The results of an organization, related to energy efficiency, energy use and energy consumption. Energy performance results shall be measurable

Energy performance indicator (EnPI)

Indicators defined by the organization concerning its energy performance

Energy target

These are the energy performance requirements as set by the organization. Shall be measurable and quantifiable

Energy use

The kind of application of energy (e.g. transportation, cooling, pumping, heating, lightning, process requirements)

Significant energy use (SEU)

This is an energy use that accounts for significant energy consumption. It also may offer significant potential for improvements of energy performance

Static factor

These are factors that have significant impact on the organization’s energy performance and don’t change routinely

• The organization shall determine and understand the needs, expectations and requirements of its interested parties. This includes, of course, that the organization has methods how to determine them and know who they are. It is of special importance that the organization has access to and understanding of relevant legal and other requirements. • The organization shall determine the scope of its EnMS. The scope basically defines the boundaries and area of application of the organization’s EnMS. As an example, consider a hotel group: The management could decide to limit for the moment being the scope of the EnMS to only one of the hotels and extend it later to the others, after experience has been gained and lessons have been learned. For a huge production facility, it could mean to focus on the most energy-consuming processes first and consider the others in a second step. The scope of the EnMS shall be available as documented information. • An organization that wants to comply with ISO 50001 has to establish, implement, maintain and improve an EnMS according to the requirements of the standard. It is important to explicitly stress this requirement, as it includes, among other things, that an organization can’t choose to comply with just some of the standard’s

2.11 ISO 50001—EnMS—Energy Management System

223

requirements when establishing and implementing its EnMS. Compliance with ISO 50001 (within the scope of the organization) means compliance with all of its requirements.

2.11.2.2

Leadership

As for all management systems, top management must show leadership for the EnMS. Without the explicit support of top management, any activity to establish an EnMS doesn’t really make sense. For that reason, top management shall show commitment to the EnMS, especially also for its continual improvement. In detail, top management of the organization shall: • • • • • • • • •

Ensure the scope of the EnMS is defined. Define, implement and maintain the energy policy of the organization. Ensure the establishment of energy objectives and targets. Establish an energy management team. Provide the necessary resources for the EnMS (financial, human, others). Communicate the intent and importance of the EnMS. Ensure that the defined energy performance indicators are adequate (EnPIs). Make energy management part of the planning and strategic processes. Ensure that the organization’s energy performance is measured and reviewed on a regular basis. • Promote continual improvement. Note that this should not be considered as an exhaustive list of top management’s responsibilities, but it shows the most important things. The energy policy shall be relevant and appropriate to the organization (nature of industry, consumption of energy, etc.) and include: • A commitment to energy performance improvement; • Commitment that resources and information needed to achieve energy objectives and targets are available; • Commitment to comply with legal and other requirements that are relevant to the organization’s energy consumption and energy efficiency; • It forms the framework for energy targets and objectives; • It defines boundary conditions for purchasing (e.g. energy-efficient products and services) and the procurement of energy-efficient services and products is supported; • Commitment to continual improvement of the EnMS; • In design activities, improvements of energy performance will be addressed. The energy policy shall be available in documented form and updated when needed. ISO 50001 wants to see a clear assignment of responsibilities and authorities for roles that are relevant in the context of the organization’s EnMS. Top management

224

2 Generic Standards for Management Systems: An Overview

is expected to ensure these assignments. The energy management team is of utmost importance in this respect. Its responsibilities and authorities include: • • • • •

Establishing, implementing, maintaining and continually improving the EnMS; Compliance of the organization’s EnMS with ISO 50001; Implementation of actions for continual improvement; Reporting on EnMS performance to top management; Ensuring the EnMS is effective.

2.11.2.3

Planning

The requirements for the EnMS planning are subdivided into six main clauses, shown in Fig. 2.44. 1. Actions to address risks and opportunities • Requirements deriving from the context and from interested parties shall form inputs to the planning. • Planning shall result in the organization’s continual improvement of energy performance. • Planning shall lead to EnMS processes and regulations that enable the organization to achieve its energy performance objectives. • Risk-based thinking shall be employed to prevent or reduce undesired effects. • Plan actions to manage risks and opportunities and implement them into the EnMS. • Check the effectiveness of planned and implemented actions.

Ac ons to address risks and opportuni es

Objec ves, energy targets and planning to achieve them

Energy review

Energy performance indicators

Energy baseline

Planning for collec on of energy data

Fig. 2.44 Requirements of the planning module of ISO 50001

2.11 ISO 50001—EnMS—Energy Management System

225

2. Objectives, energy targets and planning to achieve them • Define energy objectives at relevant levels and functions. • Define energy targets. • Objectives and targets shall: – Not contradict the organization’s energy policy. – Be measurable (if possible) and shall be monitored. – Be consistent with relevant requirements. – Consider SEUs and opportunities to improve the organization’s energy performance. – Be adequately communicated and updated if needed. It is important that planning of objectives and targets shall be concrete. Action plans shall describe what will be done to achieve objectives and targets, what resources will be needed, who will have the responsibility to do it and what are the timelines. 3. Energy review The organization shall perform an energy review that includes: • What was the previous and what’s the current energy use and consumption? • What are the current energy sources? • SEUs: Which facilities, equipment, processes have main impact on energy use and consumption? • What influence do people have on energy consumption (e.g. lack of awareness)? Identify the persons that affect or influence SEUs! • Are there other factors that influence energy use and consumption? • What are the estimates for future energy use and consumption? • What are the opportunities and priorities for the improvement of energy performance? Energy reviews shall get updated on a regular basis (Fig. 2.45).

The variables that influence the SEU Iden fy your SEUs and for each of it determine:

The SEU's current energy performance The persons that influence the SEU

Fig. 2.45 Energy review and the role of SEUs

226

2 Generic Standards for Management Systems: An Overview

4. Energy performance indicators The organization shall determine adequate EnPIs that can be employed to monitor and measure its energy performance. At the same time, these indicators are used to follow and show the organization’s improvements of its energy performance. The organization shall have documented methods how to determine adequate EnPIs. If the organization determines factors that significantly influence its energy performance, these shall be considered when defining adequate EnPIs. EnPIs shall be reviewed on a regular basis and also be compared to their respective EnBs. 5. Energy baseline Employing the results gained from the energy review, the organization shall set one or more energy baselines (EnB). If the organization’s energy data show that certain factors/variables have significant impact on its energy performance, normalizations of its relevant EnPIs and EnBs shall be carried out. The organization shall review its EnBs in case of: – The respective EnPIs don’t reflect anymore its energy performance. – Static factors have changed essentially. – Other relevant reasons. Documented information shall be available on the organization’s energy baselines. 6. Planning for collection of energy data The organization shall identify, monitor, measure and analyze the key factors that affect its energy performance. To do so, the organization shall implement a data collection plan that is adequate and fits its needs. Details will depend, for example, on size, complexity and industry of the organization. The data collection plan shall be detailed enough and specify which data need to be collected and monitored. Documented information on these activities shall be available. Collected data shall include: – – – – –

Energy consumption-related data of SEUs and the organization; Variables for SEUs; SEU-related criteria of operation; If any: Static factors; Other relevant data as specified in action plans.

The organization shall review its data collection plan and revise it if needed. Measurement equipment employed to do the necessary measurement shall be repeatable and accurate.

2.11 ISO 50001—EnMS—Energy Management System

2.11.2.4

227

Support

The requirements concerning the support of the EnMS again fall into five categories and are similar to those of other management system standards. To make this section self-contained, we shortly summarize what they say: 1. Resources The organization shall have processes for the systematic determination of necessary resources for establishing, implementing, maintaining and continually improving its EnMS. Top management shall ensure the availability of these resources. 2. Competence Competencies of personnel working under the control of the organization and having relevant impact on the EnMS shall be determined. Note that this includes internal as well as external personnel. Competencies and skills of that personnel shall be ensured. This may be based on work experience, training or education. If needed, personnel shall be trained, or other adequate actions shall be taken. The efficiency of these actions and trainings shall be verified. Documented information on necessary competencies and actions taken to verify and improve them shall be available. 3. Awareness Personnel doing work under the control of the organization shall be aware of the importance of the EnMS. This includes their contribution to reaching the energy targets and objectives of the EnMS. They will also understand the effect of their behavior to the energy performance of the organization as well as the effect of noncompliance with the requirements of the EnMS. 4. Communication Adequate and effective communication is an important issue in the context of all management systems. ISO 50001 requires that the organization determines the necessary internal and external communications that are relevant with respect to its EnMS. This includes: – What will the organization communicate? – When, with whom and how to communicate? – Who will communicate? Specifically, ISO 50001 requires the organization to establish a communication process that can be followed by personnel doing work under the EnMS to give comments or suggest opportunities for improvement of the EnMS and the organization’s energy performance.

228

2 Generic Standards for Management Systems: An Overview

5. Documented information The documented information of the organization shall include the one required by ISO 50001 and that determined by the organization itself as being necessary for making its EnMS effective. The organization shall have processes for all relevant aspects of document control (including creation, release, distribution, retention, etc.). To be short: For the control of documents in all phases. Documents shall be suitable and available for use when and where needed. Aspects of data security and confidentiality shall be handled. Documented information may be in various formats, including paper, electronic and others.

2.11.2.5

Operation

The requirements defined in the operation clause of ISO 50001 are relatively short, however, far reaching. They include the following: 1. Operational planning and control • Having identified the organization’s SEUs, plan, implement and control the necessary processes to meet energy objectives and energy targets. • Establish criteria for these processes and the operation and maintenance of relevant equipment, facilities, energy-using processes, systems and other issues to ensure reaching energy targets and objectives. • Communicate these criteria to personnel doing work with impact on the energy performance of the organization. • Implement adequate controls for the processes. • Keep documented information to ensure that processes are followed as planned. • Control planned and review unintended changes of processes. Mitigate unintended effects. • Control outsourced SEUs and processes that are related to the SEUs and processes of your organization. 2. Design The organization shall consider energy performance issues in its design processes. This includes, for example: • Designing new facilities and equipment, energy-using processes, systems; • Modifying existing ones; • Renovating existing ones. The intent is to improve energy performance over operating lifetime. As a rule, energy performance aspects shall be part of design specifications. Documented information shall be available on the organization’s design activities and its relations to energy performance aspects.

2.11 ISO 50001—EnMS—Energy Management System

229

3. Procurement Energy performance aspects shall also be part of the organization’s procurement processes. This includes the establishment and implementation of relevant criteria for the evaluation of energy performance of equipment, products, services and other relevant entities. The organization shall inform suppliers that energy performance is part of the evaluation and selection criteria for suppliers. If applicable, the organization shall define specifications for the energy performance of products, services, equipment, etc., and communicate them. It shall also define specifications for the purchase of energy.

2.11.2.6

Performance Evaluation

The standard’s requirements are as follows: 1. Monitoring, measurement, analysis and evaluation of energy performance and the EnMS The organization shall have processes for following up the performance of its EnMS and its overall energy performance. This includes the following: • Determine what needs to be measured and monitored. As a minimum: – The overall effectiveness of the organization’s action plans and the achievement of energy objectives and targets. – The organizations EnPIs. – The operation of SEUs. – Comparison of actual versus planned or expected energy consumption. • Determine the methods for measurement, monitoring, analysis and evaluation. Ensure they deliver reliable results. • Determine when measurements and monitoring will be done. • When will results be analyzed and evaluated? The organization shall evaluate the effectiveness of its EnMS and its energy performance. As an essential indicator for improvement of the energy performance, the organization shall compare EnPI values with the corresponding EnBs. If essential deviations from the planned energy performance occur, the organization shall respond to them. Adequate documented information shall be available for measurement, monitoring, analysis, evaluation and related relevant activities. On a regular basis, the organization will check compliance with legal, regulatory and other relevant requirements that have impact on its energy use and consumption. Records about these activities will be kept.

230

2 Generic Standards for Management Systems: An Overview

2. Internal audits ISO 50001 requires internal audits as an essential part of checking the efficiency of the EnMS. What is said in Chap. 7 of this book on internal audits will be helpful. However, the abovementioned ISO 50002 should also be considered, as it specifies additional specific requirements and guidance for energy audits. 3. Management review Management reviews of the EnMS are a must and one of the ways, how top management shows its leadership. They have to be done on a regular planned basis and include among others the following topics: • • • • • • • • • •

Is the energy policy up to date or should it be changed? Changes in external and internal issues that have impact on the EnMS? Are there open issues from actions defined in the last review? How does the energy performance develop? How do energy performance indicators develop? What are the results of the compliance analysis, concerning legal and other relevant requirements? Have energy objectives and targets been met? What are the results of internal and external audits? Are resources for the EnMS adequate do they need to be changed? What is the status of actions defined in former reviews? Management reviews shall include decisions, including the following aspects:

• • • • • •

Are there opportunities for improving the organization’s energy performance? Changes of EnBs and EnPIs? Adaptation of objectives and energy targets? Opportunities for better integration of EnMS processes with business processes? Allocation of resources? Are competence and awareness of personnel adequate?

2.11.2.7

Improvement

The requirements concerning “Improvement” consist of two aspects: • Nonconformity and corrective actions When the organization detects nonconformities related to its EnMS, it shall react to them in a systematic and reliable manner. This includes: – Corrective actions shall be taken, and the consequences of detected nonconformities shall be managed. – Nonconformities shall be reviewed, and their causes shall be identified. – It shall be determined if comparable nonconformities have occurred or might occur elsewhere.

2.11 ISO 50001—EnMS—Energy Management System

231

– Implemented corrective actions shall be adequate and effectively respond to detected nonconformities. – The effectiveness of implemented corrective actions shall be monitored and reviewed. – Necessary changes to the organization’s EnMS shall be made. – Corrective actions shall be proportionate to the effects of detected nonconformities. – Adequate documented information shall be retained about detected nonconformities, implemented corrective actions and their effectiveness. • Continual improvement ISO 50001 calls for the continual improvement of the organization’s EnMS. This includes its effectiveness, adequacy and suitability. Especially, the organization shall continually improve its energy performance. Although these requirements sound straightforward, they are not. They require a real focus on the organization’s EnMS and willingness to substantially improve energy performance. In real life, organizations may find at least as many reasons against the necessary investments than proactively go for it. In addition, of course, balance has to be found between wished improvements and financial capabilities.

2.11.3 Frequently Asked Questions and Implementation Hints

What are the key steps, when establishing, implementing and maintaining an EnMS? Detailed steps will depend on the context and individual situation of an organization, its concrete needs and potentials (size, industry, financial capabilities and more). However, the steps in Table 2.32 are typical and summarize the main ansatz of ISO 50001. Is benchmarking of any value in the context of EnMS? Benchmarking is a great tool to understand, what other organizations have achieved and what messages derive from that for your projects. For large organization, with several facilities and organizational units, it may be of high value to do internal benchmarking as well, in order to learn from the experience of others and to identify best practice solutions. Should you apply for certification of your EnMS? ISO 50001 defines requirements for an EnMS and is designed to serve also as a certification standard. When an organization engages in establishing an EnMS according to ISO 50001, its primary intent should be to harvest the positive impacts it may have,

232

2 Generic Standards for Management Systems: An Overview

Table 2.32 Content of ISO 50001 in a nutshell Step

Action

Comments

1

Secure the commitment from your top management

Top management has to define the energy policy and the scope of the EnMS. It shall also ensure the resources needed. Most importantly, this support needs to be there for the whole lifetime of the EnMS

2

Collect and track your energy data

Past and current energy consumption data shall be collected and evaluated. Future energy consumption needs shall be estimated

3

Identify your key energy users

Key energy users (SEUs) shall be identified. These include facilities, equipment, systems, processes, personnel and potential others

4

Establish your energy baseline

Outline the current energy performance and establish reference points for your energy consumption. Predict your future energy performance. Establish benchmarking processes

5

Identify your energy saving opportunities, plan and implement them

Investigate facilities, equipment, systems, processes. Create awareness of personnel. Check for other saving opportunities Identify quick wins (e.g. awareness building of personnel can frequently change a lot within a very short time) Prioritize your opportunities and decide on short-term, medium-term and long-term actions Define energy performance indicators, objectives and targets Create implementation plans and realize them

6

Monitor your achievements and energy performance

Implement monitoring and controlling processes

7

Initiate corrective actions and realize opportunities for improvement

Initiate corrective actions when needed Identify opportunities for improvements

both to the organization and to the environment. If that’s done, the organization may think about a certification of its EnMS. In many cases, clients and other members of supply chains may expect or even require it. Expectations of shareholders may push an organization to show it runs an effective EnMS. After all, it’s also a question of the image of an organization. Selecting a certification body, verify it’s accredited for ISO 50001 and for your industry. You should also check who are its auditors and if they have enough experience in your industry and for your type of organization.

2.12 ISO 55001—AMS—Asset Management System

233

2.12 ISO 55001—AMS—Asset Management System This section includes: • • • •

A short introduction to asset management; A discussion of the requirements of ISO 55001:2014; Reference to ISO 55002:2018; Reference to ISO 55000:2014.

2.12.1 Introductory Remarks The ISO standards primarily relevant to asset management systems (AMS) come in a suite of three documents: • ISO 55001:2014—Asset Management—Management Systems—Requirements; • ISO 55000:2014—Asset Management—Overview, principles and terminology; • ISO 55002:2018—Asset Management—Management Systems—Guidelines for the application of ISO 55001. ISO 55001 defines requirements for an AMS and may be used as a certification standard. ISO 55000 describes terminology used in the asset management standard series. Although asset management is a global field, so far terminologies and approaches diverge. It is one of the intents of this series of standards, to contribute to a standardization of terms and processes. ISO 55002 is intended to serve as a guideline for the application of ISO 55001. It does not define any additional requirements compared to those of ISO 55001. The most popular area of application of ISO 55001 is physical asset management. As mentioned in the standard, however, it may be applied to other assets of an organization as well. All three standards may be used by any organization, no matter in what industry and what’s its size. Why is asset management important? • What is an asset? A thing, entity or item that has potential or actual value to the organization. • What is asset management? An organization’s coordinated activities to realize values from its assets. In this context, an organization may be a car manufacturer, a coal mine, a kindergarten, a regional governmental organization (e.g. managing roads, bridges and other

234

2 Generic Standards for Management Systems: An Overview

infrastructure) and so on. As different as organizations may be, each of them has missions, objectives and targets. Think of the AMS as being that part of the organization’s management system that is needed to create value with the organization’s assets. ISO 55001 employs the same template, used for the other ISO management system standards. That should make it easier to integrate the AMS of an organization with other topics, like quality management, environmental management or energy management. The intended achievements of the standard may be summarized as follows: 1. Improve financial performance How: – Reduce costs; – Improve ROI; – Preserve the value of assets. 2. Make more informed asset investment decisions How: – Improve your decision-making process; – Evaluate risks and opportunities and take them systematically into account. 3. Manage your asset risks How: – – – – – –

Optimize maintenance strategies and processes; Increase health and safety; Manage financial risks; Minimize financial losses; Manage social and environmental impacts; Increase the reputation of the organization.

4. Improve your products, services and outputs How: – Quality and performance of assets; – Comply with expectations of stakeholders. 5. Demonstrate social responsibility of your organization How: – – – –

Conservation of resources; Reduction of emissions; Show social responsibility; Show ethical business practices.

2.12 ISO 55001—AMS—Asset Management System

235

6. Demonstrate compliance of your organization How: – Conform with requirements: Legal, statutory, regulatory; – Establish policies of your organization. 7. Enhance the reputation of your organization How: – Improve satisfaction of stakeholders and interested parties. 8. Improve organizational sustainability How: – Balance the management of short-term and long-term needs; – Improve performance and costs. 9. Improve efficiency and effectiveness of your organization How: – Systematically plan and implement asset management processes; – Review, monitor and improve asset management processes. It is important to stress that ISO 55001 defines requirements for an AMS, but it does not say what the AMS of an organization should look like. This should be considered as an advantage, as the organization has all degrees of freedom to design its AMS according to its specific needs. If the organization looks for advices, how to optimize an existing asset management system, ISO 55001 will not have much to teach. However, this holds for all management system standards: They tell you, what you’re expected to have, but they don’t tell you much, how to get it! In the following, we shall limit ourselves to sketch the main requirements of the standard. Although it mainly follows the standard template, it comes with some additional flavors.

2.12.2 Discussion of the Clauses of ISO 55001 2.12.2.1

Context of the Organization

• Determine internal and external issues that are relevant to the organization and that influence the intended achievements and outcomes of the AMS. • The strategic asset management plan (SAMP) of the organization shall be consistent with the objectives of the organization. • Identify stakeholders that are relevant to the AMS.

236

2 Generic Standards for Management Systems: An Overview

• Identify requirements and expectations of stakeholders that are relevant to the AMS. • Identify criteria for decision making that are relevant to the AMS. • Identify recording and reporting requirements (financial and nonfinancial) concerning the AMS with respect to stakeholders and internal and external parties. • Define the scope of the AMS and define the asset portfolio covered by the scope. • Align the scope with that of the strategic asset plan (SAMP). • Ensure that the scope and the asset portfolio are available as documented information. An organization that wants to comply with ISO 55001 shall comply with all its requirements. This includes the establishment and implementation of the relevant asset management processes. The organization also shall develop a tailor-made SAMP.

2.12.2.2

Leadership

Top management • Ensures the establishment of an asset management policy, asset management objectives and the SAMP. • Ensures the integration of AMS requirements into business processes. • Ensures the necessary resources (financial, nonfinancial). • Communicates the requirements of the AMS and their importance. • Ensures the AMS’ effectiveness. • Ensures the collaboration across functions and organizational units. • Promotes the continual improvement of the AMS. • Supports all management levels to show leadership related to AMS. • Ensures that the risk approach to asset management is harmonized with that used in the organization. Asset management policy: • Shall be established by top management. • The asset management policy shall be appropriate for the organization and set a framework for asset management objectives. Especially, it shall not contradict other policies of the organization. The policy shall include commitments to continual improvement and to satisfy relevant requirements. It shall be available as documented information and communicated. It shall be reviewed and updated on a regular basis.

2.12 ISO 55001—AMS—Asset Management System

237

Organizational roles, responsibilities and authorities Authorities and responsibilities for creating the SAMP and establishing asset management objectives shall be assigned by top management. The same holds for other management roles relevant to the AMS.

2.12.2.3

Planning

Generally speaking, the AMS shall be planned and designed such that the asset management objectives of the organization can be achieved. This also includes compliance with relevant requirements (e.g. legal, interested parties, stakeholders). Requirements of ISO 55001 include: Addressing risks and opportunities for the AMS • Planning for the AMS shall be risk-based and consider issues that might prevent the achievement of planned outcomes and objectives. • Planning shall tend to avoid or reduce undesired effects and address continual improvement. • Implemented actions are concrete and address risks and opportunities having impact on the effectiveness of the AMS. Consider that risks and opportunities may change with time. • Integrate risk-based thinking and actions into AMS processes. Asset management objectives and planning to achieve them Asset management objectives shall be: • Defined at relevant organizational levels and for relevant functions; • Compliant with stakeholder requirements, legal requirements, regulatory requirements, technical and financial requirements, other relevant requirements; • Measurable if possible; • Part of the SAMP; • Consistent with other objectives of the organization and with its asset management policy; • Communicated internally and to stakeholders; • Monitored, reviewed and updated on a regular basis. Planning activities for the AMS shall be linked to relevant other planning of the organization, like energy and environmental management, financial and human resources. Asset management plans shall be established and aligned with the SAMP and the AMS policy. Planning activities related to asset management shall be concrete and include: • Planning of processes and methods employed for asset management. • Planning of decision-making processes: What methods are applied and what are agreed on decision criteria? How are decisions prioritized?

238

2 Generic Standards for Management Systems: An Overview

• Planning for the AMS shall be linked to life cycle management planning of assets. • Planning shall be concrete and include, but not be limited to: – – – – – – – – – –

Who will do what when and how? Financial implications? Risk and opportunity assessments? Timelines? Responsibilities? Needed Resources? Financial resources? Nonfinancial resources? Review intervals for asset management plans? Employed methods for risk assessments, risk analysis and risk evaluation?

Risks associated with the asset management of the organization shall be part of its overall risk management approach.

2.12.2.4

Support

Resources Top management is responsible that needed resources for the AMS will be available during its whole life cycle. This also includes the resources defined in asset management plans and those needed to achieve asset management objectives. Competence The necessary competence of persons working under the organization’s control and having impact on the AMS shall be determined and available as documented information. Competence may be based on professional experience, training or education. When needed, training will be offered to achieve required competence levels. The effectiveness of such actions will be controlled. Awareness Personnel doing work under the organization and its AMS shall be aware of their individual roles to achieve the asset management objectives. They also shall be aware of the consequences deriving from not following the AMS processes and from ignoring the requirements of the AMS. Communication The organization shall determine its communication needs for internal and external communication relevant to the AMS. Procedures on who communicates what, when and how will be available.

2.12 ISO 55001—AMS—Asset Management System

239

Information requirements Depending on type and number of the organization’s assets or the organization’s structure, the AMS may be pretty information intensive. The organization has to determine, therefore, what its information requirements are and how they will be satisfied. Issues that influence information requirements include, but aren’t limited to: • • • • • • • • • •

Strategy and planning requirements; Process management (AMS processes and others); Technical information concerning assets; Operation, maintenance and service of assets; Performance and controlling of assets; Management of resources; Financial information requirements; Planning of contingency and business continuity; Risk management information; Management of contracts (e.g. service, vendor information, third-party control agreements).

Remark One of the challenges to face is the alignment of financial and nonfinancial information within the organization. This includes the alignment of terminology. Documented information The standard requires three types of documented information: • Documented information required by the standard itself; • Documented information required due to legal and regulatory requirements; • Documented information the organization considers to be necessary to run the AMS. Creation, updating, distribution, withdrawal and other control of document activities shall follow robust processes. The format (paper, electronic, etc.) of the documented information may be chosen by the organization, as far there are no other specific requirements.

2.12.2.5

Operation

Operational planning and control The subject of this clause is to define requirements for the organization’s asset management processes that are needed to realize the asset management plans created in the “Planning”-module above. Hereby the results of the planning phase shall be considered, as well as other relevant inputs. This implies: • The processes shall be planned, implemented and controlled. • Criteria for the processes shall be established.

240

2 Generic Standards for Management Systems: An Overview

• Controls for the processes shall be implemented. • Documented information shall be kept, to ensure that processes are carried out as intended. • Risks and opportunities shall be monitored and treated. • Process description shall be explicit enough and describe what shall be done, when, by whom and how. Procedures for processes shall be available if needed. Management of change The organization shall assess the risks coming with planned permanent or temporary changes that could have impact on its ability to achieve its asset management objectives. These risks shall be managed. Planned changes shall be monitored and reviewed. Actions shall be taken to avoid or limit unintended effects of those changes. Outsourcing When the organization outsources processes and activities that may impact the performance of its AMS and its objectives, it will evaluate the corresponding risks. Outsourced activities and processes shall be monitored and controlled by the outsourcing organization. Outsourced activities and processes shall be integrated into the organization’s AMS. Procedures will be available, determining how this integration is done and how outsourced activities and processes are controlled. Responsibilities and authorities for the management of outsourced processes and activities shall be fixed. Processes for sharing information and knowledge between the organization and its contractors shall be implemented.

2.12.2.6

Performance Evaluation

Monitoring, measurement, analysis and evaluation The organization shall determine: • What needs to be monitored and measured? • Which methods for monitoring and measurement need to be employed, to ensure valid results? • When will monitoring and measurements be done and how will results be analyzed? The organization shall evaluate: • The performance of assets; • The performance of asset management (nonfinancial and financial aspects); • The effectiveness of the AMS.

2.12 ISO 55001—AMS—Asset Management System

241

Internal audits The organization shall conduct internal audits. Remark See Chap. 7 of this book for details on internal audits. Management review Top management shall review the AMS on a regular basis. The review will contain at least the following: • What is the status of actions defined in the last review? • Are there any changes of the AMS needed, due to changes of internal or external issues? • How is the performance of the AMS? • Changes of risk profiles? • Performance and condition of assets? • Adequacy of resources? • Opportunities for improving the AMS? Note that there should be a nontrivial output from the management review. It should not just be a collection of data but trigger further actions and development of the AMS.

2.12.2.7

Improvement

Nonconformities and corrective actions The organization shall respond to nonconformities or incidents concerning its AMS, asset management or individual assets. These responses shall include but not be limited to: • Take direct action and limit immediate negative impacts. • Determine the causes of undesired events and effects. • Depending on the issue, perform a root-cause analysis and check if comparable nonconformities could turn up elsewhere or in other contexts. • Implement adequate corrective actions. • Monitor if corrective actions are effective. Preventive action As the AMS gears toward avoiding undesired events, the organization shall implement adequate processes to prevent them. Continual improvement The organization shall systematically identify opportunities for improvement, evaluate them and have decision processes implemented, how to proceed with those opportunities.

242

2 Generic Standards for Management Systems: An Overview

2.12.3 Frequently Asked Questions

In a nutshell: What is the content of ISO 55001? (1) (2) (3) (4) (5) (6)

(7) (8) (9) (10) (11)

(12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23)

Understand your organization and its context. Determine all relevant issues that affect the AMS of your organization. Employ a systematic approach to determine your stakeholders. Understand their needs and expectations. Determine the scope of your AMS. The scope shows what’s covered by the AMS and where its boundaries of application are. Subscribe to establish, implement, maintain and improve your AMS. Compliance with ISO 55001 means compliance with all of its requirements. Top management of your organization shall demonstrate leadership and commitment to the AMS. Your asset management policy shall be established by top management. It shall be more than a piece of paper but show the commitment of your organization to its AMS. Top management shall assign responsibilities and authorities for the AMS, the SAMP and other relevant issues. Planning for the AMS includes primarily actions to address risks and opportunities relevant to the AMS. Define and plan asset management objectives and actions to achieve them. Your asset management objectives shall be part of the SAMP and aligned with the other relevant objectives of your organization. Link your AMS with other relevant processes of the organization. Especially, ensure adequate information flow and collaboration between financial and nonfinancial functions. Create your asset management plans. Determine and ensure necessary resources for the ASM. Ensure the competence of relevant staff. Create awareness for the ASM. Determine your ASM-Relevant communication needs. Ensure adequate documented information on all issues required by ISO 55001 and on those determined by your organization. Implement the processes that are necessary to materialize your asset management plans. Determine your methods and processes for monitoring, measurement, analysis and evaluation of AMS-relevant issues. Conduct internal audits. Top management reviews the AMS. When incidents or nonconformities are detected, determine its causes and respond to them adequately. Continually improve your AMS.

2.12 ISO 55001—AMS—Asset Management System

243

For which type of organization is ISO 55001 primarily designed? ISO 55001 addresses asset management. Assets may be physical, financial, human, software, tangible or intangible. As the standard is still relatively new, the future will show in which area it will find most of its supporters. However, physical assets will likely be in the forefront. The standard may be applied by any organization having to do with assets. The more complex an organization is and the more assets it has to manage, the more helpful an ASM would be. It should be stressed that ISO 55001 addresses not only organizations which own, for example, physical assets, but also organizations that offer asset management services. It could well be that such organizations might be asked in the future by their customers to demonstrate compliance with the standard. ISO 55001 may be used as a certification standard. However, it can also be employed by interested organizations as a guidance document without any focus on certification. SAMP—What is it? According to ISO 55001 and ISO 55000, the Strategic Asset Management Plan (SAMP) is an essential documented information that specifies: • How are the organization’s objectives transformed into asset management objectives? • How are asset management plans developed? • What is the role of the AMS to achieve asset management objectives? It is essential that the SAMP is developed in an iterative way and not isolated from other planning activities and organizational objectives. As its name says, it’s a strategic document and it summarizes the essential parts of the organization’s asset management strategy.

2.13 ISO 22316—Organizational Resilience This section includes: • A short introduction to ISO 22316:2017. The first edition of the standard • ISO 22316:2017—Security and resilience—Organizational resilience—Principles and attributes was published in March 2017. The standard offers principles and guidance, but no requirements. Although an organization could be audited against ISO 22316, it cannot be used as a certification standard and it is not a management system standard.

244

2 Generic Standards for Management Systems: An Overview

Common visions and purposes help to align behaviour

Good management and governance

The organiza on's resilience is based on a true and updated understanding of its context

Wide range of knowledge, skills and leadership and experience

Ability to respond to change, adapt and absorb

Linked disciplines of management and involvement of scien fic and technical exper se

Effec ve risk management

Fig. 2.46 Principles that impact an organization’s resilience according to ISO 22316

However, organizations at any point of its management system’s life cycle may and should find it valuable, to take aspects of organizational resilience into account. For that reason, a quick sketch of ISO 22316 is included here (Fig. 2.46). ISO 22316 suggests a set of attributes that an organization will demonstrate, once it has adopted the mentioned principles. We choose a checklist format to sketch the most important of those attributes. It may be employed to audit the organization against them. 1. Does the organization have shared visions and a clear purpose? 1.1. Does the organization communicate its core values, visions and purposes to relevant interested parties, and are they suitable to provide a basis for decision-making and strategic decisions? 1.2. Are individual objectives and goals in line with values, visions and the purpose of the organization? 1.3. Does the organization review its strategies on a regular basis? Are these strategies evaluated with respect to objectives, core values and visions? 1.4. With respect to internal and external changes: Does the organization check if objectives, core values, visions and the purpose of the organization must be revised? 1.5. Does the organization select and promote new ideas when working on its strategic objectives?

2.13 ISO 22316—Organizational Resilience

245

2. Does the organization understand and influence its context? 2.1. Does the organization continually analyze its context and changing boundary conditions (e.g. competitors, legal, regulatory and political environments)? 2.2. Does the organization work on and optimize its relationships with relevant interested parties? Does it work and improve relevant co-operations? 2.3. Does the organization collaborate with organizations and interested parties that share comparable visions and purposes? 2.4. Does the organization think beyond its current technological, organizational and other factors of its context? 3. Is the organization’s leadership effective and empowered? 3.1. Does the organization have and develop trusted leaders? 3.2. Does the organization have and support leaders with a wide range of leadership experience in a variety of situations (e.g. including critical periods with uncertainties and organizational and business disruptions)? 3.3. Does the organization have a leadership with the ability to adapt to changing contexts and circumstances? 3.4. Are these leaders respected and do they act with integrity? 3.5. Are the organization’s leaders committed to resilience? 3.6. Are responsibilities for the development of the organization’s resilience assigned? 3.7. Is there a system in place for sharing good practices and lessons learned relevant to the enhancement of the organization’s resilience? 3.8. Are all levels of the organization empowered to improve and protect the organization’s resilience? 4. Does the organization’s culture support organizational resilience? 4.1. Did the organization determine those behavioral rules, values and beliefs that make its culture? 4.2. Can the identified core values and behavioral rules be employed to measure individual behavior and performance? 4.3. Do people at all relevant levels promote the organization’s core values and behavioral rules? 4.4. Does the organization support innovation and creativity that strengthen its resilience? 4.5. Are personnel empowered to identify risks and opportunities relevant to resilience? 4.6. Are personnel empowered to act and initiate improvements relevant to the organization’s resilience? 4.7. Does the organization monitor its culture and potential impacts on resilience?

246

2 Generic Standards for Management Systems: An Overview

5. Does the organization share knowledge and information? 5.1. Does the organization promote a spirit in which learning and knowledge are valued? 5.2. Does the organization ensure: 5.2.1. Available and understandable relevant knowledge? 5.2.2. Knowledge is shared and used when making decisions? 5.2.3. Knowledge is treated as a critical resource and factor of the organization? 5.2.4. Knowledge is created, applied and retained through established processes and systems? 5.2.5. Knowledge is shared between relevant groups and individuals? 6. Are necessary resources available? 6.1. Does the organization identify and make available the resources needed to improve its resilience (e.g. financial, human)? 6.2. Does the organization make available the resources needed to keep its core services at the determined and acceptable level? 6.3. Is there a selection and development program for employees in place that have the skills and knowledge and show the required behavior needed to improve the organization’s resilience? 6.4. Does the organization have the resources and ability to detect and respond to changing conditions? Remark Response should include changing processes, capabilities, structures, etc. 6.5. Does the organization continually review its available resources for the response to changes (e.g. in the organization, context and others)? 7. Does the organization develop and coordinate management disciplines? 7.1. Does the organization coordinate and align the different management disciplines that have impact on its resilience (e.g. product and service management, human resource management, financial management, risk management, business continuity management, asset management, environmental management, quality management, information security management)? 7.2. Are the identified management disciplines regularly evaluated if and how they contribute to the organization’s resilience? 7.3. If underperformance of management disciplines concerning resilience is detected: How is this addressed? 7.4. Do management disciplines have enough empowerment and flexibility to respond to change? 7.5. Is communication and coordination between management disciplines adequate to create a coherent approach with respect to resilience?

2.13 ISO 22316—Organizational Resilience

247

8. Is continual improvement supported? 8.1. Does the organization have a culture of continual improvement with respect to organizational resilience? 8.2. Does the organization measure its performance with respect to resilience? 8.3. Does the organization ensure the responsiveness of implemented performance measures to changes that have influence on the organization’s objectives? 9. Does the organization have the ability to anticipate change and to manage it? 9.1. Can the organization demonstrate its ability to deliver products and services according to its commitments under changing conditions (e.g. unexpected requirements, incidents, suddenly changing circumstances, etc.)? 9.2. Can the organization respond to unexpected and sudden incidents and absorb related impacts? 9.3. Is the organization sensitive to and aware of factors and situation that may create change and challenge its resilience? 9.4. Are the organization’s management disciplines able to respond to (sudden) change? ISO 22316 requires a systemic approach to organization’s resilience. Organizations should have processes and measurement tools in place that allow them to determine which way the organization’s resilience develops. Organizations should evaluate the effectiveness of its resilience activities and approaches. Important issues include the following: • The organization’s resilience objectives should be determined by top management. • Make the organization’s resilience measurable! Processes should be implemented that enable continual monitoring of resilience. • Measurements should target the individual attributes of the organization’s resilience, as sketched above. Determine the status of each attribute contributing to the organization’s resilience. • The effectiveness of the implemented measurement processes should be evaluated. Clarify again and again, what needs to be monitored and measured. Ensure that measurements and monitoring methods deliver reasonable, reliable and valuable results. • Integrate measurements concerning the organization’s resilience with other measurement and monitoring approaches. • Kind of a “control chart” would make sense: Determine which resilience measurement values are acceptable and which are not and need actions to be defined. • Determine how resilience measurement results will be evaluated and analyzed. It is also important to determine, who will do this and to whom will the results be reported.

248

2 Generic Standards for Management Systems: An Overview

• Either in the initial gap analysis of the organization’s resilience or later during routine measurements and monitoring, issues may be identified that need action. The organization’s top management should determine which gaps are acceptable or need (urgently) to be addressed. Customer voice and response from other relevant interested parties should be considered to decide on the relevance of identified gaps. • The organization’s resilience should be reviewed by top management on a regular basis. All relevant factors having influence on resilience should be addressed. These include, but aren’t limited to: – – – – –

Measurement and monitoring results; Feedbacks from customers and other relevant interested parties; Relevant changes in the organization; Relevant changes of management and personnel; Requirements and circumstances deriving from new markets and geographical regions; – Changes in the risk framework which need to be addressed? – Resources needed; – Actions derived from the last review and their results. • The review by top management should result in a report. Its format should be standardized to enable comparison with other reports. It should be noted that ISO 22316 addresses any organization, no matter in what industry and what size. Respecting the criteria of the standard makes sense for any organization that needs or wants to increase its likelihood to survive.

2.14 Finishing This Chapter and Looking Forward to Chap. 3 This chapter was dedicated primarily to the generic ISO management system standards, starting with ISO 9001 for quality management and ending with ISO 55001 for asset management. The standards we have seen are shown in the left column of Fig. 2.47. They have in common that each of them covers a specific aspect of an organization’s management system. These standards may be applied to any organization, irrespective of its size or industry. That’s why they are called generic management system standards. In addition, all these standards are designed as certification standards. The standards listed in the first row at the right side of Fig. 2.47 also were discussed in this chapter. They are sort of connected with the management system standards: • ISO 17025 tells us how a laboratory should work; • ISO 31000 offers guidance how to do risk management; • ISO 22316 offers guidance how to approach organizational resilience.

2.14 Finishing This Chapter and Looking Forward …

249

Fig. 2.47 Standards we have met and those we shall see next

In a sense, ISO 21001 doesn’t fit into the series of generic management system standards, as it addresses educational organizations only. However, we still treated it here, as it is a first example of an “industry-specific” standard on ISO level. In Chap. 3, we shall focus on industry-specific standards which in one sense or the other go beyond the generic standards.

Chapter 3

Industry-Specific Standards for Management Systems

In this chapter, you will get an overview of the most important industry-specific standards and understand where they come from. These include: • • • • • • • • • • •

Automotive industry: IATF 16949; Railway industry: ISO/TS 22163:2017; Aerospace industry: EN 9100, EN 9110, EN 9120; ICT industry: TL 9000:2016; Food industry and agriculture: HACCP, ISO 22000, FSSC 22000, IFS, BRC, GMP+; Forestry, wood and chain of custody: ISO 38200:2018, FSC and PEFC; Healthcare: EN 15224, JCI; Event management: ISO 20121:2012; Security management for the supply chain: ISO 28000:2007; Facility management: ISO 41001:2018; Road traffic safety management: ISO 39001:2012.

3.1 Introduction and Overview All management system standards discussed in the last chapter, are generic in nature and may be applied by organizations of whatever industry. However, especially the standard ISO 9001 for quality management was found to be too generic for the purposes of some industries and they developed their own specific standards. As we will see, however, most of these standards are established on ISO 9001:2015 as a common ground. In this chapter, we aim to give an outline of the most important developments in this direction. The reader should take this presentation more as an overview, than an in-depth discussion. The details of industry-specific standards would deserve single © Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7_3

251

252

3 Industry-Specific Standards for Management Systems

Industry Specific QM Standards Based on ISO 9001:2015

Automotive Industry

Railway Industry

Aerospace Industry

ICT Industry

Fig. 3.1 Selected industry-specific quality management standards

volumes for each of them and cannot be presented in an overview like the present book attempts to offer. The guidance given, however, should be enough to show interested readers the direction to follow if detailed information is needed. In the first block of presentation, we shall focus on the industries shown in Fig. 3.1.

3.2 Automotive Industry The automotive industry defines high requirements for its products and processes. Safety and reliability are of utmost importance. For that reason, quality management and quality assurance have a long history in this industry. In fact, many of the quality tools employed allover today have originally been developed in the automotive industry. To get a better understanding of the current status of QMS in that area, it is worthwhile to have a short look at its historical development. In 1988, the three American car producers Chrysler, Ford and General Motors installed the “SQRTF—Supplier Quality Requirements Task Force”. One of its main intents was to harmonize requirements defined by the three organizations for the members of their supply chains. This initiative was mainly driven by economic needs. Until then, suppliers delivering their products to more than one of the car producers often had to comply with a variety of quality requirements and specifications defined by each of them. This clearly led to inefficiencies. One of the important results of the SQRTF initiative was the establishment of QS9000, which defined a landmark in the development of industry-specific quality management standards. QS9000 was first released in 1994. Very quickly, more producers joined the quality initiative. In 1999, QS9000 was replaced by the first edition of ISO/TS 16949, which is the core standard for quality management systems in the automotive industry since then and continues to inspire comparable developments in other industries. As the first edition of ISO 9001 was published in 1987 and updated in 1994, the question may be asked, why the automotive industry didn’t adopt that standard in 1994. The answer is, it wasn’t considered as specific enough to serve the needs of the industry.

3.2 Automotive Industry

253

Table 3.1 Evolution of the IATF 16949 standard Genealogy of IATF 16949 documents Around 1994

1999

QS9000 VDA6 AVSQ EAQF

1st edition

2nd edition

3rd edition

1st edition

ISO/TS 16949

ISO/TS 16949

ISO/TS 16949

IATF 16949

Based on ISO 9001:1994

Based on ISO 9001:2000

Based on ISO 9001:2008

Based on ISO 9001:2015

USA Germany Italy France

2002

2009

2016

ISO/TS 16949 was repeatedly updated since its first edition (Table 3.1). The current version is the following: • IATF 16949—Quality management system requirements for automotive production and relevant service parts organizations—1st edition issued on October 1, 2016. Until September 2018 all organizations certified according to ISO/TS 16949 had to complete their transfer to IATF 16949. Table 3.2 sketches the current structure of IATF—International Automotive Task Force. IATF is an “ad hoc” group of automotive manufacturers and trade associations. Details may be found on www.iatfglobaloversight.org. The IATF Global Oversight Offices manage, among other things, the accreditation and surveillance of certification organizations for the IATF 16949-scheme. A global database is available which contains up to date information about certified organizations according to the standard. Only auditors with a valid license from IATF are permitted to conduct certification and surveillance audits against IATF 16949. This license is based on auditor trainings and examinations. Accreditations of certification organizations are based on ISO 17021-1, but include additional specific requirements. Key performance indicators for the certification and surveillance processes are defined and controlled on a regular basis. Only a limited number of certification organizations worldwide are accredited according to the scheme. As of late 2017, about 66,000 organizations were certified according to the IATF-scheme. The certification scheme for IATF 16949 is among the most advanced on the market. Auditor requirements are high, and performance indicators are defined for the essential steps of the auditing and certification process. Sanctions will be defined by IATF or the oversight offices if a certification organization doesn’t comply with requirements or shows bad performance. Concerning the relation of IATF 16949 with other management system standards, some remarks are in order: • IATF 16949 is not a standalone standard but based on ISO 9001 enhanced with industry-specific requirements. The standard is strictly organized along the high-level structure of new ISO management systems standards, supplementing the individual ISO 9001:2015 clauses with specific additional requirements or clarifications valid for the automotive industry.

IATF members

AIAG Automotive Industry Action Group

National Supplier Organizations

SMMT Society of Motor Manufacturers and Traders

IAOB International Automotive Oversight Bureau

SMMT Society of Motor Manufacturers and Traders

IATF Global Oversight Offices

BMW Group FCA US LLC Daimler AG FCA Italy Spa Ford Motor Company

OEMs

Table 3.2 IATF members and IATF Global Oversight Offices

VDA-QMC VDA Qualitäts Management Center im Verband der Automobil-industrie

VDA Verband der Automobil-industrie

ANFIA Associazione Nazionale Filiera Industria Automobilista

ANFIA Associazione Nazionale Filiera Industria Automobilista

IATF France

FIEV Fédération des Industries des Equipments pour Véhicules

General Motors Company PSA Group Renault Volkswagen AG

254 3 Industry-Specific Standards for Management Systems

3.2 Automotive Industry

255

• In addition to ISO 9001 and IATF 16949, customer-specific requirements shall be respected by the organization which wants to comply with the standard. Some harmonized OEM requirements are already part of IATF 16949. • The objectives of IATF 16949 include: – – – –

The quality management system supports continual improvement. Prevention of defects; Reduction of variation in the supply chains; Reduction of waste in the supply chains.

• Due to the same high-level structure, IATF 16949 may easier be connected with other management system standards like ISO 14001, ISO 22301, ISO 27001 and ISO 50001. • Process approach, PDCA-cycle and risk-based thinking are essential pillars of the standard. • IATF 16949 may be applied by organizations offering products or services (including software) relevant to automotive-related products. Organizations that don’t offer products and services exclusively to the automotive industry will determine the scope of the organization, to which the IATF 16949 Quality Management System applies. Example Imagine a supplier which offers products for the automotive and aviation industry. This organization will have to determine the scopes of the automotiveand aviation-relevant parts of its organization and processes. The following two documents are crucial for certification organizations and their auditors: • Automotive certification scheme for IATF 16949—Rules for achieving and maintaining IATF recognition—5th edition—November 1, 2016; • IATF Auditor Guide for IATF 16949—3rd edition—January 1, 2017. We will not give a full presentation of the requirements of IATF 16949. Having a sound understanding of ISO 9001, it is straightforward to include the additional requirements coming from IATF 16949 into one’s QMS. However, the following very short list gives examples for requirements that go beyond those of ISO 9001: 1. Context of the organization 1.1. Scope of the quality management system: 1.1.1. Include support functions (e.g. design centers, headquarters, distribution centers) in the scope of the quality management system. This is because interfaces to critical activities shall be included in the organization’s QMS. For example, responsibilities for design cannot just be delegated to somewhere. 1.1.2. Exclusion of product design activities shall be justified. 1.1.3. Manufacturing process design shall be included.

256

3 Industry-Specific Standards for Management Systems

1.2. Conformance of products, services and processes with statutory, regulatory and customer requirements shall be ensured. This includes outsourced processes. 1.3. Detailed requirements concerning the management of product-safetyrelated manufacturing processes and products; 2. Leadership 2.1. Implement corporate responsibility policies that at least include: 2.1.1. Anti-bribery policy; 2.1.2. Employee code of conduct; 2.1.3. Ethics escalation policy (e.g. whistle-blowing policy). 2.2. Ensure that top management reviews product realization and support processes. Objective: Improve efficiency. 2.3. Process owners responsible for process management and output shall be identified by top management. Ensure competence of process owners. Process owners play a super important role in IATF 16949. 2.4. To ensure that customer requirements are met, top management assigns personnel with adequate authorities and responsibilities. Assignments are documented. 2.5. Top management shall ensure that personnel with responsibility for product requirements and for corrective actions receive proper empowerment. 3. Planning 3.1. Risk analysis: Includes at least information from product recalls, product audits, complaints, field returns and related topics. Tools to apply include FMEA and adequate risk assessment techniques (see ISO 31000). 3.2. Preventive actions 3.2.1. Ensure preventive actions are proportional to potential impacts of negative effects. 3.2.2. Identify potential nonconformities, their potential impacts and adequate preventive actions. 3.2.3. Review the effectiveness of preventive actions. 3.3. Contingency plans 3.3.1. Identify internal and external risks that may impact infrastructure and manufacturing processes and that may endanger production output and the fulfillment of customer requirements. 3.3.2. Prepare contingency plans according to risks and their impacts to customers. 3.3.3. Prepare contingency plans to continue product and service provision in case of interruption of supplied products, interruption of processes and services, natural disasters, fire, disruption of infrastructure, interruption of utility or shortage of labor. (Compare business continuity section in Chap. 2 of this book).

3.2 Automotive Industry

257

3.3.4. Test contingency plans and check their effectiveness. 3.4. Quality objectives and planning to achieve them 3.4.1. Top management: Ensure quality objectives are defined that meet customer requirements. 4. Support 4.1. Planning of resources, plants, facilities and equipment 4.1.1. Employ multi-disciplinary approach, risk identification and mitigation when planning, developing or improving plants, facilities and equipment. 4.1.2. Optimize the flow of material, handling of material and related topics. 4.1.3. Manufacturing feasibility assessments; 4.1.4. Capacity planning; 4.2. Statistical studies to analyze variations of measurement and inspection results. These measurement system analyses shall prioritize critical characteristics. 4.3. Calibration records Detailed specific requirements concerning critical aspects of calibration. 4.4. Internal laboratory 4.4.1. Define the scope and competency of the laboratory. Accreditation of the laboratory isn’t required. However, requirements as defined in ISO 17025 should be respected. 4.5. External laboratory 4.5.1. The laboratory shall be accredited for the required scope according to ISO 17025, or there is other evidence, that the laboratory is acceptable for the purposes of the organization. This may be achieved by supplier audits, taking the requirements of ISO 17025 or equivalent into account. 4.6. Competence 4.6.1. Implement processes to systematically identify the training needs of all personnel influencing the conformity of products and services. 4.6.2. Implement on-the-job trainings. This shall include also contract personnel and personnel from agencies. 4.6.3. Internal auditor competency System, process and product auditors shall have expertise in the automotive sector and understand customer requirements as well as the requirements of ISO 9001 and IATF 16949. Shall have the background needed for the scope of the respective audits. Shall conduct a minimum number of audits per year and keep updated with changes in technology, processes and other relevant aspects. 4.6.4. Second-party auditor competency Similar as internal auditors and comply with customer-specific requirements for auditors.

258

3 Industry-Specific Standards for Management Systems

4.7. Awareness Documented information is needed showing the awareness of all employees of their impact on product quality, improvement activities and meeting customer requirements. 4.8. Documented information Additional requirements concerning quality management documentation, retention of records and handling of engineering specifications; 5. Operation Concerning section “Operation,” there is a long list of additional requirements of IATF 16949 compared to ISO 9001:2015. We just mention the headline topics here. IATF defines additional requirements mainly for the following aspects: 5.1. 5.2. 5.3. 5.4. 5.5. 5.6. 5.7.

Operational planning and control; Product and service requirements; Product and service design and development; Control of products, services and processes that are externally provided; Production and service provision; Release of products and services; Control of nonconforming output;

6. Performance evaluation 6.1. Monitor and measure manufacturing processes 6.1.1. Process studies of new processes (manufacturing, assembling, etc.); 6.1.2. Process capability and process performance results; 6.1.3. Process flow diagram verification; 6.1.4. Process FMEA; 6.1.5. Measurement analysis; 6.1.6. Statistical concepts and statistical process control. 6.2. Customer satisfaction analysis based on all relevant input data 6.3. Internal audits 6.3.1. Includes system, process and product audits; 6.3.2. Software development capability assessments (if applicable). 6.4. Management reviews (at least annually) 6.4.1. Compared to ISO 9001 additional inputs to the management review are defined. 7. Improvement 7.1. Additional requirements for dealing with nonconformities and corrective actions 7.1.1. Implement and maintain processes for problem solving. 7.1.2. Implement a process for error-proofing. 7.1.3. Warranty-management system; 7.1.4. Analysis of customer complaints and field failure tests;

3.2 Automotive Industry

259

7.2. Additional requirements for continual improvement 7.2.1. Process for continual improvement, describing the methods employed Includes aspects of risk analysis (e.g. FMEA), improvement action plans and methodologies employed. In a nutshell, IATF 16949 stresses the following: • Defines a quality management system for all members of the global supply chains in the automotive industry. • Sets additional requirements compared to ISO 9001, but keeps its general structure. • Enables organizations to link their quality management system with other management system requirements (ISO 14001, ISO 45001, ISO 50001, etc.). • Includes the following core tools as specific requirements for the automotive industry: FMEA—Failure Mode and Effects Analysis (e.g. for design, products and processes); SPC—Statistical Process Control; APQP—Advanced Product Quality Planning; PPAP—Production Part Approval Process; MSA—Measurement System Analysis. • Contingency planning; • Enhanced risk-based thinking; • Stresses leadership and corporate responsibility policies; • Stresses communication principles and processes within the organization and along supply chains; • Stresses the focus on customer requirements and compliance.

3.3 Aerospace Industry The IAQG is an international aerospace industry initiative. Its primary objectives include: • • • •

Promote a quality culture for members of the aerospace industry supply chains. Promote the continuous improvement of products and processes. Promote good practices and harmonized requirements and processes. Deliver a third-party quality management certification scheme.

The organization has a regional structure, which is shown in Fig. 3.2. More information may be found under www.iaqg.org. Here too, the interested reader will find updated information about the IAQG quality management activities. The IAQG promoted certification scheme is based on the following three requirement standards:

260

3 Industry-Specific Standards for Management Systems

IAQG International Aerospace Quality Group

AAQG

APAQG

EAQG

Americas Aerospace Quality Group

Asia-Pacific Aerospace Quality Group

European Aerospace Quality Group

Fig. 3.2 IAQG and its regional sub-organizations

• EN 9100:2018—Quality Management Systems—Requirements for aviation, space and defense organizations; • EN 9110:2018—Quality Management Systems—Requirements for aviation maintenance organizations; • EN 9120:2018—Quality Management Systems—Requirements for aviation, space and defense distributors. Note that these are the European versions (EN) of the standards. If you are based in the USA, the relevant standards are AS9100, AS9110 and AS9120. However, they don’t differ in content. Developing and maintaining these standards, ASD-STAN (www.asd-stan.org) plays a leading role as a developer of standards on behalf of the European aerospace and defense industry. ASD-STAN is part of the CEN European Standardization System. IAQG follows the strategy that ultimately all relevant members of the supply chains will participate in its quality management initiatives and especially in the certification scheme according to the EN 9100 series. The 9100-series follows completely the ISO 9001:2015 structure and adds specific requirements, relevant to the targeted industry sector. Certification organizations which want to offer certification services according to the three mentioned standards need to be accredited for them. Third-party auditors need to show industry experience and pass a special auditor training. The certification model comes with a global database, called OASIS (Online Aerospace Supplier Information System). All certified organizations according to the abovementioned standards may be found in this database.

3.4 Railway Industry The worldwide recognized management system standard for the railway industry is IRIS, which stands for International Railway Industry Standard. Details may be found under www.iris-rail.org.

3.4 Railway Industry

261

The underlying document of this railway specific business management system is the standard • ISO/TS 22163:2017—Railway applications—Quality Management System— Business management system requirements for rail organizations: ISO 9001:2015 and particular requirements for application in the rail sector

The IRIS CertificationTM Model

which was published in May 2017. This document follows the structure and content of ISO 9001:2015 and supplements it with specific requirements for the railway industry. Note, the IRIS community calls it a business management system, which indicates that the standard doesn’t include requirements for the organization’s QMS only, but additional issues like business continuity and more. Certification organizations which want to offer audit services for the model need to be accepted by the owner of the scheme UNIFE, The Association of the European Rail Industry. See www.unife.org for details. In addition, the certification organization needs to be accredited by a recognized accreditation body. Representing the European rail industry, UNIFE’s members are the essential players of that industry. Despite other activities, UNIFE runs the IRIS certification scheme (Fig. 3.3). The “IRIS Certification rules” (current version 2017) describe the technicalities of the audit and certification process, as to be followed by certification organizations and their auditors. The IRIS model too comes with a global database on certified organizations. Although being a certification model originally driven by European organizations, the by far biggest number of organizations certified according to the standard is in China.

The Standard: ISO/TS 22163:2017

The IRIS Certification Rules (Version 2017)

Supporting Tools: - Tool for the conduction of IRIS audits - Database on certified organizations - The IRIS Portal

Fig. 3.3 IRIS certificationTM model—ingredients

262

3 Industry-Specific Standards for Management Systems

3.5 ICT—Information and Communication Technology Industry ICT industry is an important partner of practically all industries today and requirements and expectations concerning the quality and reliability of its products and services are high. QuEST Forum (Quality Excellence for Suppliers of Telecommunication Forum) developed the TL 9000 Quality Management System in 1998, to establish a tailor-made model for supply chain members of the ICT industry. In November 2017, QuEST forum merged with TIA, the Telecommunication Industry Association. The scope of activities is now much broader; however, one of the main pillars remains the TL 9000 model. For details see www.questforum.org. The TL 9000 certification scheme is based on two documents, whose current versions are the following: • TL 9000 Requirements Handbook—Release 6.2:2020; • TL 9000 Measurements Handbook—Release 5.6:2019. This model for the ICT industry is based on the general requirements of ISO 9001:2015 and adds industry-specific requirements. The general “high-level structure” of management system standards is fully employed. This allows interested organizations to establish and maintain integrated management systems including TL 9000, ISO 14001, ISO 27001 and others. The main objectives of TL 9000 include: • Offer a tailor-made quality management model for the ICT industry and its suppliers of hardware, software and services. • Reduce the number of management system standards in the ICT industry by harmonization and agree on common specific requirements for the members of the supply chains (hardware, software and service suppliers). • Define effective performance-based measurement methods to improve performance and quality controlling. • Improve and harmonize customer–supplier relationships. • Define a certification scheme, tailor-made for the ICT industry. The central document defining the requirements of TL 9000 is the Requirement Handbook. This contains the full text of ISO 9001 and the additional requirements which make TL 9000. However, a really distinguishing issue of the TL 9000 scheme is its stress of measurement methods. Although ISO 9001 supports management by fact and measurement approach, TL 9000 is much more specific. Details are set in the Measurement Handbook which includes general TL 9000 measurements as well as specific ones for hardware, software and service deliverers (Table 3.3). It would be beyond the general scope of this book, to go into the technical subtleties of TL 9000. However, with the general background offered in Chap. 2 of the book, and the necessary technical background from ICT industry, the reader will quickly master the specific TL 9000 requirements for his or her organization. To give a taste of the additional requirements, we summarize some of them in Table 3.4.

3.5 ICT—Information and Communication Technology Industry

263

Table 3.3 TL 9000 quality management model according to the TL 9000 Requirements Handbook TL 9000

Measurement Handbook

Hardware

Software

Services

Common TL 9000 measurements Requirements Handbook

Hardware

Software

Services

Common TL 9000 measurements ISO 9001 Table 3.4 Selected additional requirements of TL 9000 compared to ISO 9001 Clause of ISO 9001

Examples for additional requirements of TL 9000

Context of the organization

• Determine the TL 9000 profile and scope. This will be maintained in the QuEST Forum’s RMS (Registration Management System) • Declare not applicable requirements of the standard in the registration profile

Leadership

• Establish and maintain communication with selected customers to share expectations and drive joint quality improvement programs

Planning

• Quality objectives shall include targets deriving from the TL 9000 Measurement Handbook • Inputs from customers have utmost priority. Joint quality improvement programs are suggested • Input from external providers shall find its way to quality planning • Quality planning shall include short- and long-term planning

Support

• Business continuity planning shall be established and maintained. Includes: Documented plans for disaster recovery, continuity of operations, security restoration, infrastructure, information technology, crisis management. Evaluate and update on a regular basis • Determine and provide infrastructure security • Identify and monitor measurement equipment which must not be used • Develop internal training courses for personnel. Quality personnel shall get trained on quality issues like customer satisfaction, continual improvement and problem solving. Personnel with respective functions shall receive electrostatic discharge training. Advanced quality training (including statistical methods) shall be offered. Hazardous condition trainings shall be offered • Personnel will be informed about the quality performance of the organization (continued)

264

3 Industry-Specific Standards for Management Systems

Table 3.4 (continued) Clause of ISO 9001

Examples for additional requirements of TL 9000

Operation

• Employ a life cycle approach to products and services. Include sustainability aspects • Product and service security throughout the life cycle • End of product life planning • Problem severity classification of customer-reported issues • Product replacement processes • Critical problem reports and service disruption • Methods and processes for contract reviews • Design and development Special requirements include: • Project planning based on life cycle approach for products and services. Detailed requirements! • Risk management plans • Tracing of requirements • Planning of tests and planning of the integration of products and services • Planning of configuration management • Quality measurements during the design and development process • Planning of migration of hard- and software, if needed • Stress testing of products and services • Tests under abnormal conditions • Product releases include systems tests and release management • Special requirements for design and development outputs (products and services) • Special requirements for the management of design changes • Control of externally provided processes, products and services Special requirements include: • Procurement processes • Performance management of external providers • Production and service provision Special requirements include: • Periodic testing, content of testing and frequency of testing • Instructions for installations • Operational changes • Software used in service delivery • Changes of mechanical tools • Traceability (for recalls, design changes and product identification) • Protection from electrostatic discharge (ESD) damage • Packaging and labeling • Deterioration • Software virus protection • Testing of repair and return products • Emergency service provisioning • Software patching information • Release of products and services Special requirements include • Inspections and tests • Documentation of tests and inspections (continued)

3.5 ICT—Information and Communication Technology Industry

265

Table 3.4 (continued) Clause of ISO 9001

Examples for additional requirements of TL 9000

Performance evaluation

• Process measurements. Special targets: Effectiveness and conformity with requirements • Customer satisfaction data shall be collected directly from customers • Nonconforming products and services: Trend analysis shall be performed • Quality management performance data shall include product and service performance evaluation data • Evaluate sustainability efforts with respect to products and services • The internal audit program shall include all requirements (including those from the Measurement Handbook)

Improvement

• Encourage employee’s participation in improvements • Reported incidents: Available documented information on problem resolution

The following observation can be made even from this sketchy account of additional requirements of TL 9000 compared with ISO 9001: • Some of them make general ISO 9001 requirements more precise and concrete for the needs of the ICT industry. • Some others go beyond ISO 9001 requirements and include business continuity, environmental, sustainability or information security aspects. The standard TL 9000 comes with an accredited certification scheme. Only a very limited number of accreditation bodies may offer accreditations for TL 9000. Currently (August 2019) these are: • • • • •

USA: ANSI-ASQ National Accreditation Board (ANAB); Austria: Austrian Federal Ministry of Economy, Family and Youth (BMWFJ); China: China National Accreditation Service for Conformity Assessment (CNAS); Japan: Japan Accreditation Board (JAB); South Korea: Korea Accreditation Board.

Certification organizations seeking accreditation for TL 9000 shall get accredited by one of these authorized accreditation bodies. Any organization who wants to apply for certification shall do so with an accredited certification body. Nonaccredited certificates are useless and not accepted on the market (Table 3.5). The reader shouldn’t get confused by the term “registration” in connection with the certification of a management system. It is internationally agreed terminology, to call a third-party assessment of a management system and the declaration of its conformity with a management system standard certification. However, a certified management system usually will be registered in a public system or the information system of the certification body. In a sense, this registration may be considered as the final step of the whole auditing and certification process—hence the term. Also, in some countries and industries certification bodies are called registrars for the reason given.

266

3 Industry-Specific Standards for Management Systems

Table 3.5 Seven distinct registrations of TL 9000 Type of registration (certification) TL 9000-H TL 9000-S TL 9000-V TL 9000-HS TL 9000-HV

TL 9000 supports seven distinct registrations: • Hardware suppliers (H), • Software suppliers (S), • Service suppliers (V), and combinations Example: TL 9000 SV stands for Software supplier and serVice provider

TL 9000-SV TL 9000-HSV

QuEST runs an own RMS (Registration Management System) which has to be used by organizations applying for certification (registration), as well as by its certification organization. Public information is provided by the system, including the scope of certification. It is important to note that the scope of certification (registration) shall be defined with care and includes: • • • •

Legal identification data of the certified company; Subsidiaries and product lines certified; Registration options (hardware, software, services); Product categories (there is a catalog of such defined by QuEST).

The important message is that for the TL 9000 model, the scope is defined in great detail. As many requirements defined in the Measurement Handbook are specific for product categories, the scope links directly to these requirements. The QuEST quality model is a good example for an industry standard for quality management, developed by the ICT industry with the specific requirements of that industry in the focus. Advantages include: (a) Based on ISO 9001, the model defines additional specific requirements for organizations in the ICT industry. (b) Requirements defined in the Measurement Handbook specify measurement methods to be employed. Standardization of measurement methods enables the comparison of performance between organizations. (c) Only a limited number of accreditation bodies worldwide are permitted to offer accreditations for TL 9000. This reduces variances in the performance of these accreditation bodies in the process of accreditation and surveillance of certification organizations. (d) Definition of auditor qualification and approval of training providers for auditors is done by QuEST. This again ensures that variances of auditor performance are lower than otherwise. (e) QuEST runs its own RMS—Registration Management System—which offers global oversight of registered organizations and their scopes. (f) In addition, QuEST offers best practice examples, trainings and conferences, benchmarking services and others.

3.6 Quality Management Schemes for Food Industry and Agriculture

267

3.6 Quality Management Schemes for Food Industry and Agriculture 3.6.1 General Introduction Food industry and agriculture show a significant degree of globalization, and there are several quality management system standards competing with each other. As one may expect, more than one interested party took the initiative to create standards and corresponding certification schemes for quality management and food safety in these industries. Quality management system standards are always and necessarily strongly linked to the products and services produced under them. In the food industry and agriculture, the focus of quality management and food safety management systems on product and service quality is especially strong. Some of the standards even require certification organizations to hold accreditation for product certification according to ISO 17065, when they want to issue accredited certificates. It is not easy to get a complete overview of the myriad of standards in the area of food and agriculture, as they come from too many sources. Most of them are only of local or regional importance and focus primarily on specific issues. Examples include schemes for • • • • •

Certification of the origin of products; Fairly produced and traded products; Organic agriculture and production; Organic farming; and many more.

It should be said that in the area of food and agriculture, some of the certification schemes are hybrids of product and management system schemes. In what follows, we deal only with some of the most prominent global quality management system schemes. When you enter the world of these standards, you will quickly encounter the terms: • Codex Alimentarius; • HACCP—Hazard Analysis and Critical Control Points; • GFSI—Global Food Safety Initiative. We shall briefly explain them.

268

3.6.1.1

3 Industry-Specific Standards for Management Systems

Codex Alimentarius Standards

This is a collection of standards and guidelines, issued by the Codex Alimentarius Commission (CAC). CAC is part of the joint program of WHO (World Health Organization) and FAO (Food and Agriculture Organization of the United Nations). The Codex Alimentarius system was established in 1963. Objectives of the CAC include: • Consumer protection; • Fair practices in international food trade; • Coordination of work on food standards done by governmental and nongovernmental organizations on an international scale. Currently, about 190 countries from all regions are members of the CAC. CAC is the highest decision-making commission. Actual work on standards is done by more than a dozen of committees (Table 3.6). It is important to note that the members of the WTO (World Trade Organization), which apply the Codex Alimentarius standards, meet their obligations under the WTO “Agreement on Sanitary and Phytosanitary Measures” [see www.wto.org for details]. This is one of the reasons, why Codex Alimentarius Standards and Guidelines find their way into national legal and other requirements concerning food. All Codex Alimentarius standards may be downloaded from www.fao.org, but we will not go into their details, as this is out of the scope of this book. However, it is indispensable to mention them here, as these standards are important, and the reader will find reference to them again and again. One of the methods promoted in several of the Codex standards is the HACCP approach, which will be sketched next. To give just a rough picture of the Codex Committees’ activities, Table 3.6 shows an overview of their scopes.

3.6.1.2

HACCP—Hazard Analysis and Critical Control Points

The history of the HACCP approach traces back to the late 1950s/early 1960s. Focused on the plans for the manned space program, scientists from NASA, US Army Labs, and The Pillsbury Company worked on methods to produce food with a very high level of safety. One of the outcomes of this work was a simplified version of what is called HACCP today. Starting in the early seventies, the method was published and became more and more popular. This development was also triggered by retailers as supply chains became increasingly complex and more and more global. From the 1980ies on, the HACCP approach became an essential part of local and global standards in the industry. ISO 22000, on which we’ll have a look in the next section, is mainly based on HACCP and enhances it with the usual requirements for a full management system standard, targeting the whole organization. The modern form of HACCP is largely standardized and consists of seven steps or principles. These are preceded by a couple of typical preparatory steps (see Fig. 3.4). So-called prerequisite programs should be successfully installed prior to the implementation of HACCP programs, and however, in practice frequently both go

3.6 Quality Management Schemes for Food Industry and Agriculture

269

Table 3.6 Selected Codex Alimentarius Committees according to www.fao.org Codex Committees CAC

Codex Alimentarius Commission

CCEXEC

Executive Committee of the Codex Alimentarius Commission

General Subject Committees CCCF

Codex Committee on Contaminants in Foods

CCFA

Codex Committee on Food Additives

CCFH

Codex Committee on Food Hygiene

CCFICS

Codex Committee on Food Import and Export Inspection and Certification Systems

CCFL

Codex Committee on Food Labeling

CCGP

Codex Committee on General Principles

CCMAS

Codex Committee on Methods of Analysis and Sampling

CCNFSDU

Codex Committee on Nutrition and Foods for Special Dietary Uses

CCPR

Codex Committee on Pesticide Residues

CCRVDF

Codex Committee on Residues of Veterinary Drugs in Foods

Commodity Committees CCCPL

Codex Committee on Cereals, Pulses and Legumes

CCFFV

Codex Committee on Fresh Fruits and Vegetables

CCFO

Codex Committee on Fats and Oils

CCPFV

Codex Committee on Processed Fruits and Vegetables

CCS

Codex Committee on Sugars

CCSCH

Codex Committee on Spices and Culinary Herbs

Ad Hoc Intergovernmental Task Forces TFAMR

Ad Hoc Codex Intergovernmental Task Force on Antimicrobial Resistance

FAO/WHO Coordinating Committees CCAFRICA

FAO/WHO Coordinating Committee for Africa

CCASIA

FAO/WHO Coordinating Committee for Asia

CCEURO

FAO/WHO Coordinating Committee for Europe

CCLAC

FAO/WHO Coordinating Committee for Latin America and the Caribbean

CCNASWP

FAO/WHO Coordinating Committee for North America and South West Pacific

CCNE

FAO/WHO Coordinating Committee for Near East

hand in hand. Typically, these prerequisite programs include the handling of aspects shown in Fig. 3.5. Needless to say that relevant regulatory requirements must be fulfilled at all stages. The HACCP systemized approach is globally recognized. It may be employed by all food processing organization of whatever type. As already mentioned, it is also the core of other food standards, like ISO 22000.

270

3 Industry-Specific Standards for Management Systems

Fig. 3.4 Seven principles of HACCP

3.6.1.3

GFSI—Global Food Safety Initiative

GFSI was launched in 2000 by a group of major retailers, food manufacturers and other interested parties. Detailed information may be found at www.mygfsi.com. GFSI has a broad spectrum of activities; however, in the context of our subject, it is important as a leading supporter and driver of quality management certification programs in the food sector. GFSI is neither a certification program nor does it perform certifications or accreditations. However, it runs a benchmarking program and recognizes selected certification programs (Table 3.7). To bring it to the point, as influential interested parties are behind GFSI, the set of certification schemes accepted by this organization plays a super important role in the food sector.

3.6 Quality Management Schemes for Food Industry and Agriculture

271

Adequate Design, Location and Management of Facilities

Adequate Design, Installation and Management of Production Equipment

Cleaning, Sanitation, Personal Hygiene Procedures

Control of Chemicals and Pest Control

Adequate Knowledge of Staff and Training

Procedures for the Selection and Control of Suppliers

Specifications for Products, its Ingredients and Processing

Specifications for Packeging Materials

Storage of Products

Control of Raw Materials

Shippping Procedures

Management of Undesired Events, Recalls, Traceability

Fig. 3.5 Examples for aspects of prerequisite programs

Table 3.7 GFSI Contact Certification Programs (www. mygfsi.com)

GFSI Contact Certification Program Owners • • • • • • • • • • •

FSSC 22000 IFS International Featured Standards BRC Global Standard Primus GFS Global Aquaculture Alliance Global G.A.P. SQF Institute GRMS Global Red Meat Standard CANADA GAP ASIA GAP Japan GAP Foundation jfsm Japan Food Safety Management Association

GFSI Contact Government Certification Programs • China HACCP • USDA AMS—Canadian Grain Commission

The foundation of GFSI was triggered by the following issues: 1. Several severe food scandals in the 1990ies, contributed to the uncoordinated development of a huge number of in-house, second-party and third-party audit schemes in the food supply chains. 2. However, these schemes developed independently from each other and didn’t prove to be sufficiently efficient. In addition, competing schemes led to confusion and additional loads on suppliers.

272

3 Industry-Specific Standards for Management Systems

3. A real need emerged, to harmonize requirements and audit schemes. At the same time, the intention was to increase safety and reliability in the global food supply chains. With this in mind, GFSI was created as a nonprofit organization with the mission to benchmark and harmonize requirements of audit schemes and to achieve more effectiveness and efficiency. The current focus of GFSI, as far as relevant to our context, may be highlighted as follows: • GFSI’s scope is the complete food supply chain: “Farm to fork” approach. • GFSI does not issue or own food safety schemes. However, it recognizes audit and certification schemes from various scheme owners. These are called CPOs— Certification Program Owners. • As retailers and producers are behind GFSI, its recognized certification schemes are acknowledged globally, throughout the supply chains. This is a huge advantage for the members of those supply chains. • GFSI influences indirectly the training and licensing of auditors. This is an advantage too, as the quality of audits depends on auditor expertise and their approach to conduct audits. Practice shows, it makes sense if a strong interested party influences auditor selection and training and doesn’t let it be solely in the hands of audit and certification organizations. • GFSI isn’t itself involved in certification or accreditation activities. • Certification schemes recognized by GFSI must comply with the GFSI Benchmarking Requirements. These requirements exist for different parts of the food supply chain. Depending on the scope of the respective certification scheme, it has to comply at least with the Benchmarking Requirements relevant to the scope of the scheme. • GFSI Benchmarking is a formal process. When a CPO presents its standard to GFSI for benchmarking, first the GFSI Benchmarking Committee checks compliance of the standard with relevant GFSI Benchmarking Requirements. Once this step was passed successfully, the standard will be reviewed in closer detail and the CPO will be involved. It is GFSI’s policy, to keep the number of certification schemes with comparable scope to a low number, and the accepted schemes at a high level. This definitely contributes enormously to the transparency of schemes. The GFSI Benchmarking Requirements aren’t a certification scheme by themselves. An organization seeking certification according to a GFSI recognized standard should proceed as follows: 1. Determine the envisaged scope of certification. 2. Check which GFSI recognized certification schemes cover this scope. 3. Select the scheme. Making the choice, consider preferences of members of your supply chains.

3.6 Quality Management Schemes for Food Industry and Agriculture

273

4. Contact a certification organization which is accredited and recognized for the specific scheme. 5. The next steps follow those of any other certification scheme (pre-audit, certification audit, surveillance audits). We continue to sketch some of the most popular certification schemes.

3.6.2 ISO 22000—FSMS—Food Safety Management System The international standard • ISO 22000:2018—Food safety management systems—Requirements for any organization in the food chain defines general requirements for a food safety management system (FSMS). As the name of the document states, the standard addresses any organization in the food chain and holds, therefore, from “farm to fork”. ISO 22000 may be considered as the core quality management standard in food industry. ISO 22000 comes with companion standards, the most important ones are the following, which define requirements and guidance for the respective fields mentioned in their scopes: • ISO/TS 22002-1 Prerequisite programs on food safety—Part 1: Food manufacturing; • ISO/TS 22002-2 Prerequisite programs on food safety—Part 2: Catering; • ISO/TS 22002-3 Prerequisite programs on food safety—Part 3: Farming; • ISO/TS 22002-4 Prerequisite programs on food safety—Part 4: Food packaging manufacturing; • ISO/DTS 22002-5 Prerequisite programs on food safety—Part 5: Transport and storage (remark: Under development, August 2019); • ISO/TS 22002-6 Prerequisite programs on food safety—Part 6: Feed and animal food production. ISO 22000 may be used as a certification standard. The following document is important for audit and certification organizations offering audit and certification services for FSMS. It is also employed by accreditation bodies in the accreditation process: • ISO/TS 22003—Food safety management systems—Requirements for bodies providing audit and certification of food safety management systems; Two more standards are of importance: • ISO 22004—Food safety management systems—Guidance on the application of ISO 22000; • ISO 22005—Traceability in the feed and food chain—General principles and basic requirements for system design and implementation.

274

3 Industry-Specific Standards for Management Systems

ISO 22004 gives additional guidance on how to apply ISO 22000 in practice and how to interpret its individual clauses. As traceability is of utmost importance in the food sector, ISO 22005 defines principles for that topic. ISO 22000 is made out of the following ingredients: • • • • • • • •

HACCP—Hazard Analysis and Critical Control Points; Adequate prerequisite programs; Processes and promotion of process management; Adequate communication procedures; Strong leadership approach and evidence-based decision making; Effective resource management, including personnel; Focus on customers and management of relationships with interested parties; Quality improvement and PDCA-cycle approach.

In a nutshell, ISO 22000 is HACCP enhanced with the standard requirements for management system standards, as we met them in Chap. 2. HACCP being the most essential pillar of ISO 22000, risk-based thinking is at the very heart of the standard. Once again, be aware of the broad scope of application of the standard. It includes farmers, harvesters, feed and animal food producers, transportation, cleaning companies, storage services, producers and more. It is worthwhile to mention that even organizations involved indirectly in food chains (providers of equipment, producers of packaging materials, cleaning companies, etc.) may refer to the standard. ISO 22000 may be applied by organizations irrespective of their size and organizational complexity. Clauses 4–7 of ISO 22000 are more or less the same, as those of other management system standards and may be summarized as in Table 3.8. Clause 8 of ISO 22000 deals with operation requirements. To get an overview of the content, see Fig. 3.6. Operational planning and control As all management system standards, ISO 22000 is based on processes. The organization shall: • Plan, implement, control, maintain and update its processes with the intent to deliver safe products and services. • Processes shall be controlled and monitored based on defined criteria. • Documented information shall be kept, to ensure, that processes are operated as they should and as planned. When processes are changed intentionally, the organizations shall make sure that changes happen in a controlled manner and no unintended effects will result. In case unintended changes of processes happened, their impact shall be analyzed. PRPs—Prerequisite Programs Generally speaking, PRPs are necessary activities and conditions within the organization and along the food chain to ensure food safety. PRPs shall be:

3.6 Quality Management Schemes for Food Industry and Agriculture

275

Table 3.8 Clauses 4–7 of ISO 22000 Context of the organization Determine the context of the organization. This includes especially those topics that influence the objectives of the FSMS. It is clear that the context of an organization depends heavily on its products, processes, customer requirements, strategies, legal and regulatory requirements, locations and others Understand and respect the requirements and expectations of interested parties that are relevant to the FSMS. Update this information on a regular basis. Interested parties may include customers, members of the supply chain, regulatory and other bodies, owners of the organization, etc. Determine the scope of the FSMS. The scope specifies products, services, parts of the organization, affiliates, etc. that are covered by the FSMS The organization shall establish, implement, maintain and update its FSMS according to the requirements of ISO 22000. The intent of this general requirement is that the organization works continually on its FSMS, improves it and keeps complying with this standard Leadership Top management shall show commitment and demonstrate leadership concerning the FSMS. As top management has the overall responsibility for the organization anyway, this requirement should be considered as being straightforward A food safety policy shall be defined and together with the objectives of the FSMS it shall be in line with the strategic direction of the organization. The food safety policy shall be appropriate for the organization and its context. It shall include the commitment, to satisfy relevant food safety requirements. These include customer as well as regulatory requirements. The food safety policy shall include the commitment to continual improvement of the FSMS and shall be communicated internally and externally. The organization shall ensure, that the policy is understood by its personnel Top management shall ensure the availability of needed resources for the FSMS (financial, personnel, infrastructure, equipment, others) Top management shall communicate the importance of the FSMS. The FSMS shall be maintained, reviewed and evaluated if it achieves the intended results. These include compliance with regulatory requirements Top management shall promote continual improvement of the FSMS Management responsibilities and other roles concerning the FSMS shall be defined clearly and communicated within the organization. Specifically, a Food Safety Team and its leader shall be appointed The leader of the Food Safety Team is responsible for the establishment, implementation and updating of the FSMS and the management of the Food Safety Team. This includes the training of the team. He/she also communicates to top management on the effectiveness of the FSMS (continued)

276

3 Industry-Specific Standards for Management Systems

Table 3.8 (continued) Planning Planning for the FSMS primarily intends to address risks and opportunities, undesired effects and opportunities. The overall target is to achieve the planned objectives of the FSMS, to prevent or minimize undesired events and to continuously improve the FSMS Actions to address risks and opportunities shall be proportionate to potential impacts on food safety and the conformity of products and services Objectives of the FSMS shall be defined at all relevant functions and levels, as usual for a management system. Objectives shall be measurable and cover relevant requirements (regulatory, customer and others, as, for example, requirements deriving from the food safety policy of the organization) Objectives shall be communicated within the organization, monitored and verified. When needed, they shall get updated Planning shall be in depth and determine among others: What will be done how and by whom, with what resources, when and how will results be measured? When necessary changes of the FSMS are identified, these will be done in a planned manner, not violating the integrity of the FSMS Support Resources needed for running the FSMS shall be determined realistically. They include: • Personnel; • Infrastructure and work environment; • Externally developed elements of the FSMS; • Control of externally provided processes, products and services The competence of personnel having impact on the FSMS is of utmost importance. Persons responsible to run an effective FSMS shall be selected with care and formally nominated. If the organization outsources activities concerning the FSMS, the qualification of external personnel shall be ensured. Records shall be available concerning the qualification, authority and responsibilities of external personnel The infrastructure of the organization includes buildings, land, transportation facilities, equipment, software, hardware and others. Resources shall be available to adequately determine and maintain the infrastructure needed to comply with the requirements of the FSMS. The same holds for the work environments When the organization uses externally developed elements of the FSMS, the organization shall ensure that these elements: • Comply with the general requirements of ISO 22000; • Comply with the specific needs and requirements of the organization; • Are adopted by the organization’s Food Safety Team; • Get updated according to the needs; • Are adequately documented (part of the documented information) The organization shall control externally provided products, services and processes. This includes: • Evaluation, re-evaluation and monitoring of external providers on the basis of established performance criteria; • Ensure that externally provided products, services and processes comply with the requirements of the FSMS of the organization; • Effective communication of requirements to external providers; • Control that external providers comply with requirements set by ISO 22000 and defined by the FSMS of the organization; • Keep adequate documented information on these issues (continued)

3.6 Quality Management Schemes for Food Industry and Agriculture

277

Table 3.8 (continued) Competence criteria for personnel working under the FSMS and influencing aspects of food safety shall be clearly fixed. This includes personnel of external providers The organization’s food safety team is crucial and shall have a multi-disciplinary composition, which includes all aspects relevant to implement, run and keeping updated the FSMS. In practice this means, the team shall have real experience with the products, processes, infrastructure, equipment and other aspects of the organization All relevant personnel (internal and external) which is under the control of the organization shall be made aware of the importance of: • The food safety policy of the organization; • Objectives of the FSMS related to their tasks; • Consequences of not complying with the requirements of the FSMS The organization shall implement processes for internal and external communications. These processes shall include: Who communicates, on what to communicate, when to communicate, with whom and how Concerning external parties, an effective communication with members along the organization’s food chains is crucial. These include for example suppliers and contracted organizations, customers and consumers, statutory and regulatory authorities and others For example, important topics for communication include food safety hazards which may impact other parts of the food chain The organization also shall establish processes for internal communication. Effective and unambiguous communication processes shall exist between the personnel having impact on food safety. Especially, the Food Safety Team shall get timely informed on any issues like (but not limited to): • Changes of products and services; • Changes of ingredients or raw material; • Changes of processes, infrastructure or equipment; • Changes of suppliers; • Changed customer requirements, regulatory requirements; • Alerts, complaints and other risks with potential impact on food safety Documented information is a crucial part of any management system, so it is for ISO 22000. It shall include: • Documented information required by the standard ISO 22000 • Documented information needed for the FSMS, as determined by the organization itself • Documented information required by customers, other members of the food chain or statutory and regulatory requirements Besides these general boundary conditions, the organization may determine, how much and in which form documented information is needed to run its business and the FSMS. In practice, it also will depend on the size and details of its business, number of locations, etc. Updating and control of documented information is critical. As well is the format. Documented information may be in paper or electronic form, media, graphics and more The language in which documented information is written, may be important, if members of the supply chain or personnel are multilingual It is essential that documented information is available where needed in updated and current versions at the right time and the right place

278

3 Industry-Specific Standards for Management Systems Operational planning and control

Operation Requirements

Fig. 3.6 ISO 22000: Clause 8 Operation and its sub-clauses

PRPs - Prerequisite Programs Traceability system Emergency preparedness and response Hazard control Updating the information specifying PRPs and the hazard control plan Control of monitoring and measuring Verification related to PRPs and the hazard control plan Control of product and process nonconformities

– Adequate with respect to the organization’s context, size, products, type of business and operation, environmental conditions and other relevant factors; – Implemented across all relevant parts of the organization. PRPs shall be approved by the Food Safety Team. The organization is expected, to employ relevant parts of the standards ISO/TS 22002-X mentioned above when establishing its PRPs. In addition, statutory and regulatory requirements shall be respected. Codes of practice will form additional input to the system of PRPs. Examples of topics to be considered in PRPs are sketched in Fig. 3.7. Traceability system Traceability of products, services, ingredients, received products, etc. is an important topic in almost all industries. In the context of ISO 22000, it requires special attention. Examples include:

Hygiene, Cleaning, Disinfection

Pest control

Supply of water, air, others

Buildings, facilities, work environment, equipment

Approval and control of suppliers

Controlling of material

Storage and transportation

Cross contamination

Others

Fig. 3.7 Examples for PRPs

... ...

3.6 Quality Management Schemes for Food Industry and Agriculture

279

• Identification of incoming material from suppliers; • Identification of the initial distribution route of end products. However, this is the in- and out-part only. In addition, it is needed: • What’s the relation of incoming materials, intermediate products or ingredients to the end products? • How are reworked materials and products traced? • What’s the distribution route of the end products? If existing, compliance of the traceability system with statutory and regulatory requirements shall be given. The same is with requirements from customers. Documented information concerning traceability shall be available. Emergency preparedness and response The organization shall prepare and plan preventive actions concerning emergency situations and incidents. Focus is on those situations and incidents, which may have potential impact on food safety. The organization’s specific role in the food chain shall be taken into account. Documented information and processes shall be in place, how to handle emergency situations and incidents. Note, that emergency situations and incidents may have internal and external causes. In practice, they reach from workplace incidents, natural or environmental disasters to terror attacks and more. Responding to incidents and emergency situations, the organization shall: • Activate its communication procedures mentioned above for internal and external communication (e.g. with other members of the supply chain like customers, suppliers, etc.). • Comply with regulatory and statutory requirements. • Take appropriate action to reduce the impacts of the emergency situation and incidents. Defined procedures shall be tested regularly for suitability to achieve their objectives. Procedures and related documented information shall be updated on a regular basis. Lessons learned during real incidents and emergency situations shall find their way into redefined procedures and documented information. Hazard control Figure 3.8 sketches the typical steps of hazard control according to ISO 22000. To sketch these steps in more detail, we point out the main actions needed: Preliminary steps to enable hazard analysis • Before carrying out the hazard analysis, list relevant statutory and regulatory as well as customer requirements. Consider equipment, processes and products of the organization. Identify hazards relevant to the FSMS. This work is done by the Food Safety Team.

280

3 Industry-Specific Standards for Management Systems

Preliminary Steps to Hazard Analysis

Hazard Analysis

Control Measure Validation

Create Hazard Control Plan

Fig. 3.8 Phases of hazard control according to ISO 22000

• Identify statutory and regulatory requirements relevant to the FSMS, concerning raw materials and ingredients, as well as materials with product contact. The organization shall have up to date documented information including: – – – – – –

Physical, chemical and biological characteristics; Ingredients and their composition; Sources and places of origin; Production methods, packaging and delivery methods; Conditions of storages and handling of the material before production; Defined acceptance criteria for the material.

• Identify relevant food safety requirements (regulatory, statutory) for all end products. • Ensure the availability of documented information on end products. These are an important input to hazard analysis. Documentation shall include, for example, food safety-relevant characteristics (biological, physical, chemical). This includes information on relevant storage conditions, composition, packaging information, ways of distribution, etc. • Consider and create documented information on the intended use of end products. This includes also considerations of unintended use, potential misuse and comparable aspects. Consider these issues as input to hazard analysis. • Create flow diagrams for the processes that are part of the FSMS as well as the products that are covered by the FSMS. This work is done by the Food Safety Team. The flow diagrams form input to hazard analysis. Ensure that flow diagrams are complete and detailed enough. They shall show the sequence of process steps. Outsourced processes shall be included. Flow diagrams shall make visible where material (ingredients, raw materials, packaging material, etc.) enters the processes. They shall also show where end products or intermediate products leave the flow. Verify flow diagrams onsite, to ensure their completeness and correctness. • In addition to processes, describe the process environment. This will be done under the lead of the Food Safety Team and include facilities, equipment, material flows, etc. Hazard analysis • The hazard analysis shall be conducted by the Food Safety Team, based on the information collected during the phase “Preliminary steps to hazard analysis”. In

3.6 Quality Management Schemes for Food Industry and Agriculture

281

addition, food safety hazards shall be identified, including, but not being limited to: – Information from all relevant parts of the food chains; – Information gained by own experience; – Relevant information sources like scientific results, epidemiological data, known undesired events and others; – Customer requirements and regulatory and statutory requirements. • Identify the steps in which the food safety hazards materialize. Hereby all steps in the flow diagrams shall be considered, including the neighboring steps in the respective food chain (suppliers, retailers, customers, etc.). Consider also process environments, staff and other relevant factors. • Where possible, determine food safety hazard levels for end products. Doing so, ensure that customer, regulatory and statutory requirements are met. Also take into account intended usage of end products. In addition, there may be other relevant information that must be considered. • Ensure documented information on food safety hazard levels, including information how they have been determined. • Conduct an assessment for each identified food safety hazard and consider the likelihood with which it may occur. Also consider its potential consequences, like negative health effects. • Select control measures that may reduce or prevent identified food safety hazards. • Categorize your control measures. Doing so, follow systematics and consider for example: – What is the likelihood that the selected control measure does what it should? – What are the consequences if the measure fails? – Where is the measure located and how does it interact with other measures? • Selection, categorization and assessment of control measures shall be available as documented information. Control measure validation • Prior to the implementation of selected control measures, the food safety team shall validate the adequacy of the selected measures and their capability to control the respective food safety hazards. If that validation fails, alternative measures shall be found. • The validation methodologies employed shall be available as documented information. Creation of hazard control plan Recall the following concepts: – A critical control point (CCP) is a point in the process at which control measures are implemented.

282

3 Industry-Specific Standards for Management Systems

– An operational prerequisite program (OPRP) is a measure to control (reduce or prevent) a (significant) food safety hazard. • Create, implement and keep updated a food hazard control plan that includes: – Which food hazards are controlled by the respective OPRP and CCP? – What are the actions defined for each OPRP and what are the limits for each CCP? – Who is responsible to initiate which actions, if OPRPs and CCPs fail? – How are OPRPs and CCPs monitored and is adequate documented information available? • Specify action criteria for OPRPs and critical limits for CCPs. These action criteria and limits shall be measurable. • Implement monitoring systems for OPRPs and CCPs. The intent is to observe and detect in time whether they work as planned. • Monitoring methods shall be capable to detect timely respective failures. • Monitoring methods shall be described in adequate detail. • When failures of OPRPs or at CCPs are detected, corrective actions shall be initiated. • Implement the hazard control plan. Keep documented information on it. Updating the information specifying PRPs and the hazard control plan • Keep your hazard control plan and prerequisite programs updated. Input information shall include: – – – –

Updated flow diagrams and process descriptions; Updated prerequisite programs; Changes in packaging, raw material or ingredients; Changes in end products.

Control of monitoring and measuring • Ensure and show evidence that employed measuring and monitoring methods, as well as measurement equipment are adequate to the intended applications. • Ensure their calibration and verification before use. • Ensure adequate management and handling of measurement equipment. • Keep records about calibrations and verifications done. • If measurement equipment is found malfunctioning or otherwise problematic, investigate the consequences to previously made measurements with this equipment. • Ensure traceability of measurement results to national and international standards. • Ensure that software used in measurement processes is validated by your organization, the supplier of the software or another competent party. • Any changes concerning measurement equipment or software employed in measurement processes shall be validated before their usage.

3.6 Quality Management Schemes for Food Industry and Agriculture

283

Verification related to PRPs and the hazard control plan • Implement and maintain verification activities. This shall include: – – – – –

The implemented prerequisite programs are effective. The implemented hazard control plan is effective. Hazard levels are acceptable. Inputs to hazard analysis are continually updated. Defined actions are implemented and verified to be effective.

• Ensure that verifications are not executed by staff that is responsible for monitoring activities. • Results of verifications shall be documented and kept as documented information. • Note that some verification activities may include product testing. If such tests show nonconformities or food hazards, handle the respective lots as being unsafe. • The Food Safety Team shall analyze the results of verification activities. This is an essential part of the FSMS evaluation. Control of product and process nonconformities • Ensure that data collected at critical control points and monitoring results of operational prerequisite programs are analyzed by competent and authorized persons. They shall also have the authority to draw a conclusion from the analyses and initiate corrective actions and corrections if needed. • Identify affected products if at critical control points the respective limits aren’t met. • Ensure, methods are in place for the identification, handling and correction of affected products. • Review the corrections made. • Handle products affected by missed critical limits at critical control points as being unsafe. • If operational control prerequisite programs actions were not met, determine the consequences for food safety, determine the causes and identify affected products and initiate adequate handling of the respective products. • Create adequate documented information on these nonconformities, their causes and consequence following from them. • Adequate corrective actions shall be initiated in the cases when OPRP and CCP related critical events have been identified. This includes: – Review nonconformities, including customer complaints and findings, reports of regulatory bodies and other relevant sources. – Identify and analyze trends in monitoring data. – Determine root-causes of detected nonconformities. – Define adequate actions to prevent recurrence of nonconformities. – Document corrective actions. – Determine the effectiveness of corrective actions.

284

3 Industry-Specific Standards for Management Systems

• Prevent identified unsafe products to enter the food chains if the organization cannot demonstrate that identified hazards are back to acceptable levels. • Retain identified products that are potentially unsafe until closer examination. • Inform relevant interested parties if products have been released that are subsequently identified as being unsafe. • Ensure adequate documented information about these activities. • Evaluate each product lot that is affected by detected nonconformities. Do not release lots that cannot be demonstrated to fall within the critical limits at critical control points. Products that don’t comply with action criteria for operational prerequisite programs shall only be released if conformity with requirements can nonetheless be demonstrated. • Implement processes for dealing with products that cannot be released because of nonconformities. This includes: – Reprocessing; – Release for other use (which must not violate relevant food safety criteria); – Destruction and waste disposal. • The organization shall ensure its ability to withdraw or recall products in a timely manner that has been identified as not conforming with requirements. The organization shall have processes on how to manage withdrawals and recalls and how to deal with respective products. This shall include: – – – – –

Notification of relevant parties; Practical handling of the withdrawal or recall; Storing of withdrawn or recalled products; Verification of the withdrawal and recall processes; Availability of adequate documented information.

Performance evaluation The requirements of this clause are the same as those for other management system standards (see ISO 9001 for more details) and include: • Availability of monitoring, measurement, analysis and evaluation methods; • Conduction of internal audits (compare Chap. 7 of this book); • Review of the FSMS by top management on a regular basis (see e.g. Sect. 2.2.3.6 for further details). Improvement This element too defines the standard requirements of management system standards (e.g. ISO 9001), including: • Systematically deal with detected nonconformities and determine their rootcauses. • Design and implement corrective actions.

3.6 Quality Management Schemes for Food Industry and Agriculture

Internal and External Communication and Requirements

Results from Analyses and Verifications

285

To-Dos from Management Review

Other Sources

FSMS Update

Fig. 3.9 Factors triggering the evolution of the FSMS

• Evaluate the effectiveness of implemented corrective actions. • Check if detected nonconformities also may have impact elsewhere or if similar nonconformities may exist but have not been detected yet. • The organization shall subscribe to continual improvement. Additionally, ISO 22000 formulates a requirement which is not part of ISO 9001. It requires top management of the organization to trigger the continual update of the FSMS. For this purpose, the Food Safety Team shall evaluate the FSMS on a regular basis and initiate necessary changes (Fig. 3.9).

3.6.3 More Standards for Food Industry and Agriculture 3.6.3.1

General Remarks

In this short section, we give a sketchy overview of some additional and especially important standards and certification schemes for quality and food safety management systems. Because of the high diversity and complexity of the standards, we can’t go into any details here. For that reason, the presentation is more a guide to important scheme owners, their standards and associated certification schemes than a deeper discussion of content. However, if you have mastered the material so far presented in this chapter, you may easily dive into the details of each of the schemes mentioned below. The histories of these schemes differ in detail. However, there is one element common to all of them: In each case a group of relevant interested parties found it important, to create a tailor-made standard for their individual needs. In some cases, different groups of stakeholders had the same ideas and intents in parallel. For that

286

3 Industry-Specific Standards for Management Systems

reason, you will see that different standards for similar fields of application have been developed in parallel and stay to be continued as such.

3.6.3.2

FSSC 22000

FSSC 22000 is a global certification scheme for the food and feed sector. It is fully based on ISO 22000, ISO 22002 and sector-specific prerequisite programs. The scheme is recognized by GFSI, as explained above and owned by the Foundation FSSC 22000, behind which there is a group of relevant stakeholders from food industry, retail and others. The FSSC 22000 scheme includes the following scopes of application (www. fssc22000.com): 1. 2. 3. 4. 5. 6. 7. 8.

Farming of animals; Production of food products; Production of (bio)chemicals; Production of food packaging and packaging material; Production of food and feed for animals; Transport and storage services; Catering; Retail, wholesale.

Organizations interested in certification according to FSSC 22000 have to apply for it with a certification organization which holds accreditation for that scheme (Fig. 3.10).

Understand FSSC22000 requirements

Complete a selfassessment according to FSSC22000

Select your certification body

Pass Stage 1 Audit

Pass Stage 2 Audit

Complete corrective actions identified during Stage 2 Audit

Certification body decides on certification and issues certificate

Ongoing surveillance audits

Fig. 3.10 Audit and certification process for FSSC 22000

3.6 Quality Management Schemes for Food Industry and Agriculture

287

FSSC 22000 certification follows a 3-year certification cycle. After three years, a recertification is necessary. In addition, certified organizations have to agree that during these three years, there will be one unannounced audit. There is a portal which can be accessed from the FSSC 22000 homepage that shows all certified organizations according to the scheme.

3.6.3.3

IFS—International Featured Standards

Established in 2003 by the German HDE Retail Association and the French FCD Retail Association, the IFS Management GmbH’s headquarter is in Berlin (Germany) but operates branch offices in Europe, China and North and South America. The standards issued by IFS cover different parts of the food supply chain and have received a high degree of international recognition. The scheme is recognized by GFSI. The main intent to establish the IFS standards was and still is to harmonize requirements and standards within the food supply chains. Since its launch, IFS contributed a lot to achieve this goal (Table 3.9). IFS standards are not pure system management standards but include essential product and service quality issues. Certification organization, which wants to offer certification services for IFS standards, must complete the following steps: Table 3.9 IFS—International Featured Standards www.ifs-certification.com IFS—International Featured Standards Standard

General scope of application

IFS Food

Companies that process food or pack loose food products

IFS Global Markets Food

Food safety assessment program for retailers and industry branded food products

IFS Wholesale/Cash and Carry

Especially developed to optimize audit procedures of wholesalers and cash and carry markets

IFS Logistics

Covers all logistics activities. Applicable to food and nonfood products

IFS Global Markets Logistics

Objectives of the standard: Facilitate local market access, create mutual acceptance along the supply chain and mentor and develop small and less developed logistics providers

IFS Broker

Applicable to companies involved in trading activities

IFS HPC

Applicable to the entire production chain of household and personal care products, to ensure product safety

IFS Global Markets HPC

Nonfood safety assessment program geared toward small and less developed businesses

IFS PACSecure

Applicable to manufacturers and converters of primary and secondary packaging materials

288

3 Industry-Specific Standards for Management Systems

• Sign a framework contract with IFS. • Receive accreditation according to ISO 17065 and IFS accreditation procedure (product certification!) from an accreditation body which has a signed agreement with EA/European Accreditation or IAF/International Accreditation Forum. • Fulfill the IFS requirements for personnel, including: – Auditors trained according to IFS rules and approved by IFS. – At least one internal IFS trainer according to IFS rules; – Reviewers complying with IFS rules. Requirements concerning professional and audit experience of IFS auditors, IFS trainers and IFS reviewers are high. For example, IFS auditors receive appointments only for those product scopes, where they can demonstrate practical experience. The IFS scheme comes with: • An IFS Database which contains companies certified according to IFS standards. Access to the database is granted to certified organizations, certification bodies, retailers and other users. Each of these groups has different and specified access profiles. • An audit software tool “auditXpress”; • An IFS App “IFS Audit Manager”, available for different platforms. It is designed to support internal audits according to IFS requirements and offers additional services. In April 2019, about 130 certification bodies globally hold accreditations with varying scopes for IFS standards. IFS schemes are applied now in roughly 90 countries worldwide. All IFS standards may be downloaded from the IFS webpage: www.ifscertification.com.

3.6.3.4

BRC—Global Standards

The history of BRC Global Standards can be traced back to the year 1996 when the British Retail Consortium (BRC) started to develop the BRC Food Technical Standard, which was published then in 1998. Triggered by industry needs, additional standards were developed, covering different parts and needs of the supply chains. The driving forces behind were largely the same as those for the GFSI and IFS initiatives, which started around the same time. The BRC Food Technical Standard was first employed to audit organizations producing own brand products of retailers. However, the scheme was extended to other scopes, and it contributed to the harmonization of a variety of requirements and audit approaches, defined by individual organizations (Fig. 3.11). Current BRC Global Standards cover the following scopes: Copies of BRC Global Standards may be received via: www.brcglobalstandards. com.

3.6 Quality Management Schemes for Food Industry and Agriculture

289

BRC Global Standards

Food Safety

Packaging and Packaging materials

Storage and Distribution

Agents and Brokers

Consumer Products

Retail

Fig. 3.11 BRC Global Standards

End of 2018, about 28,000 suppliers in about 130 countries are certified according to BRC Global Standards. Roughly 90 accredited and BRC recognized certification bodies may offer the service. There are currently about 1700 auditors qualified for BRC Global Standards. For certification bodies and auditors engaging in BRC audit schemes, conditions are very similar as those for becoming an IFS certification body or auditor: • The certification body has to apply for accreditation for ISO 17065 with an accreditation body that offers accreditations for the BRC schemes. • The certification body has to sign a contract with BRC. • Auditors (full employees or freelancers) have to bring in profound professional background and pass the BRC auditor training. BRC too runs a database for certified clients. This is accessible for certification bodies, members of the supply chain, auditors and certified organizations. Access rights vary.

3.6.3.5

GMP+ Feed Certification Scheme

The standard is owned by GMP+ International. The abbreviation GMP stands for Good Manufacturing Practices, the + is designed to indicate the integration of the HACCP principles in the standard. The launch of the GMP+ Feed Certification scheme in 1992 by the Dutch feed industry was a response to a series of contamination incidents in this industry. Since then, the standard is well established. As with the other schemes sketched in this section, organizations interested in a certification according to the GMP+ standard have to apply for it with an accredited certification organization. Table 3.10 shows the structure of the relevant documents in which the details of the GMP+ requirements and those of the certification scheme are defined. They all can be downloaded from the homepage indicated. GMP+ has its own platform, which among other things lists the certified organizations.

290

3 Industry-Specific Standards for Management Systems

Table 3.10 Documents describing the GMP+ scheme (www.gmpplus.org) GMP+ Feed Certification scheme A Documents

General requirements for the participation in the GMP+ Feed Certification scheme

B Documents

Normative documents. Appendices. Country notes

C Documents

Certification requirements

D Documents

Guidelines

3.6.4 Concluding Remarks: Which Scheme to Choose? Considering the huge number of certification schemes in the food sector, which one should an organization choose? In this section, we mentioned only some of the leading schemes in food and feed industry. As was mentioned several times, there are many more competing schemes on the market, which frequently address certain groups of interested parties only. In addition, many are of local character. In this environment, each organization must make its choice and adopt the scheme that fits best to its needs and which is accepted by its customers and other relevant interested parties. It should be stressed, however, that although the various schemes differ in details and requirements, there are also many similarities and overlaps between them.

3.7 Forestry and Chain of Custody 3.7.1 General Introduction In this section, we give a very short introduction to certification schemes for forestry and the so-called chain of custody for wood. The intent is primarily to motivate the interested reader for deeper study than to give a detailed presentation of the issue, which is beyond the scope of this book. The need for control systems for wood and wood derivatives should be obvious, considering the importance of forests for our ecosystems and the unbelievably careless global overexploitation of forests during the last decades. Getting adequate control of supply chains for wood should contribute to oppose malpractices and negative impacts.

3.7 Forestry and Chain of Custody

291

3.7.2 PEFC and FSC The PEFC Schemes PEFC is an abbreviation for “Program for the Endorsement of Forest Certification”. It is an international nongovernmental and nonprofit organization that promotes thirdparty certification and sustainable forest management. PEFC is not a certification organization itself, but the owner of the certification schemes. Third-party certification organizations may apply for accreditation to offer certification services according to the PEFC schemes. The following documents describe the two PEFC certification schemes and may be downloaded from www.pefc.org: • PEFC ST 1003:2018—Sustainable Forest Management—Requirements; • PEFC ST 2002:2013—Chain of Custody (CoC) of Forest Based Products— Requirements. Roughly speaking, the Sustainable Forest Management Standard offers a benchmarking ansatz for regional, national and sub-national forest certification systems. The standard follows the formal structure of modern management systems and includes the following requirement modules: • Context of the national standard and the organizations applying a PEFC endorsed standard; • Leadership; • Planning; • Support; • Operation; • Performance evaluation; • Improvement. It is PEFC’s policy and strategy to support existing regional, national and subnational certification schemes and include local needs and boundary conditions. The named standard and some additional documents define clear criteria against which those certification systems can be audited. Among other things, this approach is considered to support also small and individual owners of forests. On the other hand, the standard for the Chain of Custody of Forest Based Products focuses on the traceability of forest-based products to their sustainable production. Interested parties in this PEFC certification include organizations that process wood (e.g. in the building industry, paper industry, furniture industry, etc.). The CoC standard shows some reference to ISO 9001 and ISO 14001. Organizations which have been certified according to these standards will easier comply with its requirements. In addition, the CoC standard also includes some social and health and safety requirements. Organizations that successfully passed the certification process may mark their products with the PEFC label. At www.pefc.org, interested parties may search for certified organizations.

292

3 Industry-Specific Standards for Management Systems

The FSC Schemes FSC stands for Forest Stewardship Council. It was created in 1993 after the 1992 Earth Summit in Rio. FSC is a global organization that creates standards and owns the certification systems: • Forest Management Certification; • Chain of Custody Certification; • FSC Controlled Wood. FSC is not a certification system by itself. However, it supports third-party certification and is involved in the accreditation of the respective certification organizations. The requirements for the “Forest Management Certification” and “Chain of Custody Certification” differ in some parts fundamentally from those of PEFC, and however, there is also overlap. The “FSC Controlled Wood” scheme addresses wood that comes from acceptable sources and can be mixed with FSC-certified wood. It carries the FSC Mix label. Requirement documents for the FSC certifications can be downloaded from the FSC homepage www.ic.fsc.org, and we will not go into details here. For FSC too, the legitimacy of certificate holders may be checked on the FSC homepage. For consumers, it is super difficult to determine the differences of the two certification schemes, as it would require looking deeply into the respective requirement documents. For forest owners, the decision may be easier, as requirements differ and compliance with one or the other system may be easier to achieve, depending on circumstances and strategy. Concerning organizations that find themselves somewhere in the supply chains, the question which system to choose may get answered by their customers. For example, some retailers prefer this and others that system.

3.7.3 ISO 38200: Chain of Custody of Wood and Wood-Based Products In the context of the present section, it is worthwhile to mention the new standard • ISO 38200:2018—Chain of custody of wood and wood-based products; the first edition of which was published in October 2018. This standard is designed to define a requirement framework for chain of custody (CoC) systems for wood, wood-based products, lignified products and cork. It reaches from the source of material to the finished products. To get an idea of what this standard is about, consider the following shortened checklist. It is included here to show how a chain of custody system should be designed. General requirements – Implement the management procedures as required by the standard.

3.7 Forestry and Chain of Custody

293

– Implement a system of records according to the requirements of the standard. – Ensure conformity with relevant legal requirements. – Implement a Due Diligence System to ensure legally harvested material only is an acceptable input. – Material containing genetically modified organisms shall be identified (except recycled material). – Comply with the requirements of the standard. Organizational requirements – – – – – – – – – – – – – – –

Define boundaries of the CoC system. Implement a chain of custody system and meet the requirements of the standard. Define the roles connected with the CoC system. Define and ensure competence requirements for personnel. Top management shows commitment to the CoC system. Top management assigns responsibilities and ensures availability of necessary resources. Ensure that management and staff comply with the requirements of the CoC system. Implement a system for document control. Know relevant legal and other requirements and keep records of them. Conduct internal audits. Handle nonconformities and prevent their reoccurrence. If noncompliant material has been supplied to customers, inform them immediately. Review the CoC system on a regular basis by top management. Implement a system for handling complaints related to the CoC system. Keep the responsibility for outsourced activities related to the CoC system.

Input material – Record received material and classify it according to: Certified, specified, verified and recycled. – Assess all input material according to the Due Diligence System. – Implement procedures for the acceptance and identification of input material. Due Diligence System – The Due Diligence System shall be capable to verify information concerning all input material. – Employ adequate risk management techniques and minimize risks concerning input material. – Collect relevant information concerning input material. – If certified material is part of the input, verify the relevance of the underlying certification scheme. – Implement risk assessment methods for the identification of illegally harvested or procured material. – Implement risk mitigation procedures.

294

3 Industry-Specific Standards for Management Systems

Chain of custody control methods – The following types of control methods shall be implemented: Physical separation, single and rolling average percentage, credit. Output information – Define output categories. – Ensure output material declaration. – If trademarks are used, demonstrate you have permission to use them. The core of the CoC scheme is the Due Diligence System, which is there to distinguish between “good” and “bad” material. It shall be risk-based and include adequate risk assessment and evaluation methods. Note, that ISO 38200 is not designed to be a certification standard for CoC systems. However, it can be employed by organizations in the context of PEFC or FSC CoC certification. In addition, certification bodies and scheme owner can use it to design their CoC related requirements. Beyond this, the standard can be used for inspirational purposes in the context of CoC systems in other contexts and not only for wood.

3.8 Healthcare 3.8.1 General Introduction In this section, we give an overview of some selected aspects of quality management systems in healthcare. This is a huge subject and an in-depth presentation would take more than one volume. In addition, many quality management requirements concerning healthcare organizations are defined on a national level. Wherever such local requirements exist, they must be followed with priority. For that reason, we’ll only scratch the surface of the topic here. However, to illustrate some of its facets, we’ll have a look at the following: • • • •

ISO standards for healthcare; The European Standard EN 15224; The accreditation scheme of JCI—Joint Commission International; Case study: Quality management initiatives in German healthcare.

3.8.2 International ISO Standards for Healthcare ISO is very active in many fields that directly have impact on healthcare organizations of all types. As an indicator, see some ISO Technical Committees in Table 3.11.

3.8 Healthcare

295

Table 3.11 Some ISO Technical Committees with impact on healthcare standards ISO/TC

Title

121

Anesthetic and respiratory equipment

194

Biological and clinical evaluation of medical devices

198

Sterilization of health care products

210

Quality management and corresponding general aspects for medical devices

212

Clinical laboratory testing and in vitro diagnostic test systems

215

Health informatics

276

Biotechnology

304

Healthcare organization management

As an example of the output of these TCs, take the published standards of ISO/TC 212. They include: • ISO 15189—Medical laboratories—Requirements for quality and competence; • ISO 15190—Medical laboratories—Requirements for safety; • ISO 15195—Laboratory medicine—Requirements for the competence of calibration laboratories using reference measurement procedures; • ISO 20658—Medical laboratories—Requirements for collection, transport, receipt, and handling of samples; • ISO 22367/TS—Medical laboratories—Reduction of error through risk management and continual improvement; • ISO 22870—Point-of-care testing (POCT)—Requirements for quality and competence. Another example is ISO/TC 210 which published among others the standard • ISO 13485—Medical devices—Quality management systems—Requirements for regulatory purposes. It is of utmost importance for medical device producers and certification organizations in that area.

3.8.3 The European Standard EN 15224 In this section, we give a short account of the European standard EN 15224:2016. Some basic facts about this standard include: • The current version of the standard – EN 15224:2016—Quality management systems—EN ISO 9001:2015 for healthcare is its second edition. The first was published in 2012. Due to the update of ISO 9001 in 2015, an adaptation of EN 15224 was needed.

296

3 Industry-Specific Standards for Management Systems

• EN 15224:2016 is a sector-specific version of ISO 9001:2015. It contains the full text of ISO 9001 and all requirements of this standard. However, EN 15224 is enhanced with additional healthcare-specific requirements, comments and clarifications. It also contains five informative guidance appendices. • The standard defines requirements for the quality management system of a healthcare organization, but not requirements for its healthcare services. • To make the general requirements of ISO 9001 more adapted to healthcare, EN 15224 identifies eleven basic quality aspects that apply to the majority of healthcare organizations (Fig. 3.12). In case one of these quality aspects doesn’t apply to the organization, it may be excluded. However, the reason for such exclusion needs to be justified and documented. On the other hand, additional aspects may be relevant to some organizations, and they need to be considered then. The organization needs to address the eleven quality aspects in its quality management system and specify quality characteristics for them. • ISO 9001 requires risk-based thinking. EN 15224 requires more: Clinical risk management. EN 15224 adopts the ISO 31000 definition of risk as “effect of uncertainty on objectives”. Clinical risks are considered as those risks that could have negative impacts on outcomes of the abovementioned eleven quality aspects. • EN 15224 is built on ISO 9001’s PDCA-cycle and management principles. These include: – – – – – – –

Focus on your customers. Ensure leadership. Engage your staff. Base your decisions on evidence and facts. Continually improve your quality management system and your results. Define and control your processes. Manage your relevant relationships.

Appropriate and Correct Care

Availability of Services

Ensuring the Continuity of Care

Effectiveness of Services

Efficiency of Services

Equity in the Provision of Services

Evidence and Knowledge Based Care

Patient Oriented Care

Involvement of the Patient

Safety of the Patient

Fig. 3.12 Eleven basic quality aspects of EN 15224

Timeliness and Accessibility of Services

3.8 Healthcare

297

• EN 15224 is process oriented, as is ISO 9001. Concerning customer-related processes, the standard distinguishes the following: – The clinical processes; – Processes related to research (if applicable); – Processes related to education. EN 15224 focuses on the clinical processes of an organization. It does not define additional requirements for research- and education-related processes. • Patients are considered to be the key customers of the organization according to EN 15224. However, there may be additional groups, depending on the details of the healthcare organization. Examples include: – Health insurance companies; – Customers that buy services from the organization: e.g. laboratory or sterilization services, diagnostic services, etc.; – Citizens in the organization’s area; – Others. Organizations that want to establish and implement a QMS according to EN 15224 basically may follow the same steps as with ISO 9001. Important topics will typically include: 1.

Top management of the organization decides to implement a QMS according to EN 15224. This decision implies among others the following: • Top management communicates and shows real and ongoing commitment to the project. • Top management makes clear that this is going to be a project touching almost each process of the organization. • Determine the context of the organization. • Determine the scope of the QMS. • Nominate one or more teams and their leaders that will manage the details of the QMS project(s). The members of the team should have solid professional backgrounds and have received adequate training. The composition of the teams should be multi-professional.

2.

Adequate coordination of the teams and their work should be ensured. Make an inventory of: • Clinical processes; • Healthcare processes; • Status of the clinical risk management.

3.

Conduct a gap analysis of your current QMS against the requirements of EN 15224.

298

3 Industry-Specific Standards for Management Systems

4.

Based on the gap analysis, identify priorities of the next steps. Example As a result of the gap analysis, it may turn out that some processes must be considered with higher priority (e.g. associated high risks, urgent needs for improvement). 5. Establish the details of your clinical risk management. Remark This is an area, where the involvement of external support/consulting may be especially helpful. 6. Ensure that parallel to the steps above all personnel gets continually trained. Awareness for the importance of the QMS must be established. Ensure the intent and content of the QMS is understood. 7. When establishing or changing processes or procedures, involve personnel. It would be inadequate if staff would get confronted with processes and procedures that were established by only a view people, not respecting potential valuable input from personnel. Acceptance of the QMS increases with people involvement in all phases. 8. Involve top management to agree on and release final versions of processes. 9. Ensure that personnel are trained and understand processes. 10. Conduct audits and other surveillance methods to ensure that new processes and regulations are followed. Note, this simple ten-step program may get more complex, depending on the complexity of the organization. It will also depend on the level of readiness of the organization. What is the difference between ISO 9001 and EN 15224, which standard an organization should choose and for which certification a healthcare organization should go? • EN 15224 is definitely the standard which should be a health care organization’s first choice. It is slightly more demanding than ISO 9001 but more adapted to its needs. EN 15224 includes ISO 9001. • Although EN 15224 is a European standard, nothing prevents you to apply it in a country outside Europe. However, it will be difficult if not impossible, to find an accredited certification body for the standard outside Europe. On the other hand, certification bodies accredited for ISO 9001 and the healthcare scope are all around. For that reason, ISO 9001 may be your choice for certification. Even then, however, the more explicit requirements of EN 15224 may help you to better understand and implement ISO 9001.

3.8 Healthcare

299

3.8.4 JCI—Joint Commission International JCI is a US-based organization with a network of regional offices, providing wellknown accreditation schemes for hospitals and other medical organizations. Note, the term “accreditation” as used by the model deviates from normal use as explained in Chap. 8 of the book. However, this is just an issue of terminology. JCI uses international advisory and consultant teams, as well as international surveyors for its accreditation process. Accredited organizations are listed on JCI’s homepage. This list also shows the number of accredited organizations per country. The main resources containing JCI’s accreditation and survey standards for hospitals are the following: • JCI (2017a); • JCI (2017b) (Fig. 3.13).

Fig. 3.13 JCI accreditation standards for hospitals and academic medical center hospitals (JCI 2017a)

300

3 Industry-Specific Standards for Management Systems

In addition to the accreditation program for hospitals and academic medical center hospitals, JCI offers accreditation programs for: • • • • •

Ambulatory care; Home care; Long-term care; Primary care; CCPC—Clinical Care Program Certification Including: Acute myocardial infarction, asthma, brain injury, cancer, diabetes, heart failure, HIV/AIDS management, joint replacement, kidney disease, osteoarthritis, pain management, palliative care, stroke, specialty centers; • Laboratories; • Medical transport organizations. Requirement catalogs for all models may be downloaded from JCI’s homepage (www.jointcommissioninternational.org). What kind of organizations may participate in the JCI accreditation program? Essential decision criteria are sketched in Fig. 3.14. As suggested by JCI, hospitals should define the following ten milestones on their way toward JCI accreditation. For some of the steps, trained JCI consultants may be hired to support the clinical team onsite. However, the involvement of consultants isn’t a requirement but just an option. (Remark For details see www. jointcommissioninternational.org.)

Your organization is located outside the US and its territories

You are a licensed and operating hospital in your country

You provide full range of accute care services (diagnostics, curative, rehabilitation)

You are a specialty hospitals providing specific services (psychiatric, eye, pediatric...)

Operation 24/7/365. Needed ancillary and support services 24/7.

Provided hospital services are addressed by JCI standards

Willingness for continual improvement

In full operation. Patient numbers suffice to evaluate according to JCI standards

Complies with JCI standards

Fig. 3.14 Which hospitals may go for JCI accreditation: Sketch of criteria

3.8 Healthcare

1.

301

Understand JCI’s accreditation standards and the survey process 1.1. If your organization considers, to go for JCI accreditation, the first thing to do is to get familiar with the underlying JCI standards and policies. 1.2. A clear understanding of the accreditation manual and the details of the survey process must precede everything else. 1.3. The support and involvement of the organization’s top management are crucial and must be ensured from the very beginning. 1.4. Ensure your staff gets involved and understands the intent of the project.

2.

Create an action plan, based on your gap analysis 2.1. Having understood the requirements of JCI standards, it makes sense to do an assessment of your current state, processes and performance against these standards. This may be considered as being a gap analysis. 2.2. Assessments must be done by trained people with a clear understanding of JCI standards and their application to the organization. It is important to ensure a sufficient number of such trained staff. Personnel must be involved in these assessments from the very beginning, in order to create a sound understanding of the standards. 2.3. Analyze the results of your gap analysis and establish action plans how to eliminate the gaps. Again, staff must be involved actively in these activities and guided by experienced persons. 2.4. A plan should be created which describes the intended path from the current state to JCI accreditation. Ensure, the plan is realistic and necessary resources are available.

3.

Update your policies and procedures 3.1. During this phase of the project, you should check your policies and procedures and update them. The objective is to make them compliant with JCI requirements.

4.

Focus on implementation of improvements 4.1. During this phase of the project, you should focus on high-risk issues, the prevention of adverse events and other risk-relevant aspects. 4.2. The International Patient Safety Goals (IPSGs) should be in your focus. 4.3. Prioritize your risk-relevant issues and address them adequately.

5.

Involve staff and ensure its support 5.1. Having improved procedures and processes in the preceding steps, in this phase staff should receive trainings based on them. Note, this should include all staff of the hospital. 5.2. It is important that leaders are involved in this process. Procedures and policies should be discussed and trained in an open atmosphere. 5.3. One objective of this phase of the project is to improve the interprofessional information flow and to improve the culture of safety.

302

6.

3 Industry-Specific Standards for Management Systems

Evaluate readiness 6.1. In this phase, you want to find out if the organization adheres to JCI standards. This is done by conducting surveys (you also could name them special audits). These include interviews with staff, observation of patientrelated processes, review of procedures and policies, medical records, performance data, etc. 6.2. Patient tracers are an essential part of these surveys. They are also part of the JCI accreditation process. A patient tracer is basically an evaluation of a patient’s path through the organization. Remark In other contexts, this type of evaluation is frequently called a horizontal audit. It consists of following a patient through the organization along with the value-creating processes.

7.

Train your staff and keep it motivated 7.1. Changing processes and policies may be liked and considered as positive by part of the staff. The other part may not like it and consider it as being just another burden. It is important, therefore, that staff is trained and motivated on a regular basis.

8.

Identify gaps and continue to improve processes 8.1. In this phase, you continue to spotlight deficiencies and lack of compliance with JCI standards. 8.2. Staff from various disciplines should get involved in these monitoring and adjustment processes. 8.3. Continue to motivate staff and explain the needs of the changes. 8.4. The message should not be: “Sorry, we have to do this because we’re going for JCI accreditation”. Instead, the value and advantage of the implemented changes must be in the foreground. Staff must get convinced, not forced!

9.

Do a mock survey 9.1. This is something like the final maneuver before the accreditation surveys. 9.2. The intent is to “evaluate everything” and check compliance with JCI standards. 9.3. Necessary improvements may still be unveiled. And corrective actions must be implemented. 9.4. If needed, identify the topics which need to be addressed in staff trainings.

10. Make final optimizations and get ready for JCI survey In this final state, you’re ready to go for the JCI survey. You finalize some documentation which has to be supplied to JCI and finalize some issues with the JCI surveyor team prior to the survey.

3.8 Healthcare

303

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Step 7

Step 8

Step 9

Step 10

2-3 m

2-3 m

2m

2-3 m

2-3 m

2-3 m

2-3 m

2-3 m

2-3 m

6-7 m

Fig. 3.15 Suggested time in months for the individual steps toward JCI accreditation (www. jointcommissioninternational.org)

Based on its experience, JCI suggests the following completion times for the mentioned 10-project steps. In total, that implies 24–31 months from start to completion of a JCI accreditation. However, JCI states that average times are 18–24 months. Details will depend on the complexity of the organization, its readiness and other issues (Fig. 3.15).

3.8.5 Case Study: Quality Management Initiatives in German Healthcare The following sketchy overview of audit and certification schemes for quality management in German healthcare is not presented because these schemes have high global relevance. Instead, the main intent is to give an example, how differently the issue of QMS in healthcare may be approached. It must be stressed that the organization of healthcare issues in Germany isn’t easy to understand, as central federal structures interact with state structures in a nontrivial way. In a nutshell: According to Sect. 135a SGB V (German Social Law), all general and university hospitals, specialized medical centers and private practices of doctors have to establish, implement and maintain a quality management system. However, the law doesn’t specify which quality management model should be adopted. Especially, it doesn’t require any sort of certification. However, there is one exception: Rehabilitation clinics have to pass one of the accepted quality management certification schemes. We will see in a moment which models these are. The so-called Gemeinsamer Bundesausschuss (www.g-ba.de) has the authority, to define a framework of regulations and requirements, with which a quality management system in the named area must comply. This is done in the document: “Richtlinie des Gemeinsamen Bundesausschusses über grundsätzliche Anforderungen an ein einrichtungsinternes Qualitätsmanagement für Vertragsärztinnen und Vertragsärzte, Vertragspsychotherapeutinnen und Vertragspsychotherapeuten, medizinische Versorgungszentren, Vertragszahnärztinnen und Vertragszahnärzte sowie zugelassene Krankenhäuser” which holds from November 16, 2016. Under the line, this framework leads to a highly diversified landscape of quality management system models, which comply with the general requirements but are pretty different in detail. A huge number of organizations, representing different

304

3 Industry-Specific Standards for Management Systems

General Hospitals

Medical Sectors

University Clinics

Rehabilitation Clinics

ISO 9001, EN 15224, KTQ

DEGEMED, IQMP REHA, QS-REHA, DEQUS

Specialized Medical Centers

Specialized Standards for Specific Types of Medical Centers

Private Practices of Doctors

QEP, KTQ, ISO 9001

Fig. 3.16 Examples for quality management systems in German healthcare

groups of interested parties, developed quality management models and certification schemes. In this context, medical societies and insurance companies play a leading role (Fig. 3.16). It would be beyond the scope of this book, to dive into this here any deeper. However, a number of especially popular models are listed in Table 3.12 together with the homepages, where the interested reader can find all details for the respective schemes. Most of the scheme owners of these and other schemes subcontract third-party certification organizations to execute their certification programs. However, some of them run own certification activities for their schemes. Table 3.12 Examples of German healthcare standards

Scheme

Details may be found at …

KTQ

www.ktq.de

DEGEMED

www.degemed.de

DEQUS

www.dequs.de

QS-REHA

www.qs-reha.de

IQMP REHA

www.iqmg-berlin.de

QEP

www.kbv.de

DGAV schemes

www.dgav.de

Certification scheme for stroke units

www.dsg-info.de

Certification scheme for oncological centers

www.krebsgesellschaft.de

3.9 ISO 20121—ESMS—Event Sustainability Management System

305

3.9 ISO 20121—ESMS—Event Sustainability Management System 3.9.1 Introduction to the Standard The standard • ISO 20121:2012—Event sustainability management systems—Requirements with guidance for use was first published in 2012. It is designed to be applied by organizations in the event industry. As this standard is about sustainability, there is some relationship with ISO 14001 for environmental management systems and similar standards. However, ISO 20121 follows a different philosophy and has a different scope. In the sense of the standard, an event is a planned gathering in time and space with the intent to create an experience or to communicate a message. That’s very general and could apply equally to a rock concert as well as to the Olympic games, a football match or any other type of event. The potential scope of application is, therefore, huge. Events may have positive or negative impacts on the environment, on the economy, on people and others. ISO 20121 requires organization complying with it to reduce negative impacts. ISO 20121 is a Type A standard in the sense of ISO and may be used as a certification standard. However, an organization could equally well adopt its principles and requirements and just conduct first-party audits (internal audits) or second-party audits to verify the conformity of its ESMS with the standard. The architecture of ISO 20121 is of the new style of management system standards and has, therefore, the same structure as for example ISO 9001 or ISO 14001. In addition to stating requirements, the standard contains an extensive Annex A, which offers guidance for implementation. However, as this Annex A is informative only, it does not define any new or additional requirements. An Annex B is included, which offers guidance for dealing with the organization’s supply chain. This annex too is of informative nature only and doesn’t define additional requirements. Lastly, Annex C is included which offers guidance for the “evaluation of issues”. We’ll come back to this and sketch what it means. It is assumed that the reader has mastered one or the other presentations of standards in Chap. 2 of this book. It should be clear by now, how standards for management systems work. For that reason, in what follows we’ll be shorter than usual and just give the essentials of each clause. An ESMS according to ISO 20121 may be implemented as a standalone management system. However, it also may be easily coupled with quality management, environmental management, business continuity and others. As structures of the requirements are similar and processes and objectives shall be integrated anyway, it is straightforward to create one integrated management system.

306

3 Industry-Specific Standards for Management Systems

3.9.2 Discussion of the Clauses of ISO 20121 3.9.2.1

Context of the Organization

An organization in the sense of ISO 20121 may have a variety of forms, including sole-trader, firm, authority, partnership, corporation and others. Whatever specific entity it is, the organization shall determine its context. Determining the context means to consider the external and internal issues, that are important and influence the ESMS and its intended outcomes. The organization shall define the scope of its ESMS, which is that part of the organization and its operation, which is included in the ESMS. The scope may include the whole organization. However, it also may be limited to some of its parts or activities. For example, it could be restricted to specific events or even a single event only. The organization shall determine interested parties relevant to its ESMS and their requirements. These requirements may be needs, expectations, obligatory or implied. Interested parties shall include, e.g. the organizer of events, the owner of events, employees and contractors, members of the supply chain, attendees of the events, regulatory bodies, communities and others. The organization shall develop its principles and values of sustainable development. This shall be done in the form of a statement of values and purpose. Obviously, this statement will define a framework for the organization’s ESMS and its objectives. It is a specific requirement of the standard. Remark There is an important point to mention. Although the organization may limit the scope of the ESMS to a single event, it will not be the event which may claim to be compliant with ISO 20121, nor can the event get certified as such. If the organization goes for a certification of its ESMS, it will be the ESMS which gets certified. The scope of certification could include, however, the named event.

3.9.2.2

Leadership

Top management of the organization shall show commitment to the ESMS and support it. As for other management systems, this includes: • Ensure that policies and the whole direction of the ESMS aren’t in contradiction with the overall strategic direction of the organization. • Integrate the requirements of the ESMS into the processes of the organization. • Ensure that needed resources for the ESMS are available (human, financial, others). • Create awareness concerning the importance of the ESMS for the organization and show leadership by supporting all management levels. • Ensure the effectiveness of the ESMS and achievement of its objectives. • Ensure continual improvement of the ESMS. Top management shall establish a sustainable development policy that is appropriate to the organization and forms a framework for sustainable development objectives.

3.9 ISO 20121—ESMS—Event Sustainability Management System

307

This policy shall include a commitment to comply with applicable requirements and to continual improvement of the ESMS. The sustainable development policy shall be available as documented information. Top management shall define responsibilities and authorities for the ESMS. This should be obvious, as top management has the overall responsibility for the organization anyway.

3.9.2.3

Planning

ISO 20121 is built on risk-based thinking but taking into account opportunities as well. Planning for the ESMS, the organization shall determine and evaluate risks and opportunities and ensure that the ESMS can achieve intended outcomes. Identifying risks and opportunities follows basically the same steps as has been shown before, discussing other management system standards. The risk assessment tools suggested in Chap. 6 of the book may be used here as well. However, frequently less advanced approaches may suffice. The standard requires to categorize relevant issues and evaluate them accordingly. As a rule, issues will include the following three categories: • Environmental, including conservation of resources, reduction of emission, choice of materials, utilization of resources, preservation of biodiversity and nature and releases to land, water and air; • Social, including standards of labor, health and safety; religious sensitivities, expectations of local communities and others; • Economic, including shareholder values, local economy topics, the presence in the market, direct and indirect economic impact and others. Each of these categories of issues shall be scanned for potential risks connected with them. The ESMS shall comply with relevant legal requirements and those defined by authorities. To determine these requirements may be challenging, especially when the organization is heading to geographical areas in which it has no prior experience. However, fixing these requirements is also part of context determination. It may happen that in some countries, requirements concerning environment, labor and others are comparably low. ISO 20121 suggests that in such cases the organization should adapt international best practice standards if this is not in conflict with respective local legal requirements. There’s no management system without objectives and targets. ISO 20121 requires the organization to establish event sustainability objectives. These shall be consistent with the organization’s sustainable development policy, measurable, monitored, communicated to relevant personnel and to partners and updated when needed. It’s clear that these objectives also shall be based on the expectations of interested parties, respect technological opportunities, financial and business options and other criteria. Planning how to achieve sustainability objectives shall result in concrete actions, which include:

308

3 Industry-Specific Standards for Management Systems

• What will be the actions to achieve the objectives, and how will they be done by whom and how. • Determine precisely, what resources will be needed. • Clearly define responsibilities. • Define timelines for completion. • Define how results will be evaluated.

3.9.2.4

Support

Requirements concerning the support of the ESMS don’t differ much from those for other management systems. This means: 1. Resources include personnel and its competence and training needs, technology, infrastructure and finance. Resources shall be determined and provided for all phases of the ESMS’ lifetime. 2. Competence of personnel shall be determined and ensured. Where needed, training will be offered. Documented information will be available to show evidence concerning the competence of personnel. 3. Awareness of personnel shall be ensured. Personnel shall know and understand the sustainable development policy and the importance of their contributions to realize it. They also shall understand the consequences of not conforming with the processes of the ESMS. 4. Communication is a key issue for the successful performance of the ESMS. The organization shall determine processes for communication: Who will communicate what, to whom, when, and how? 5. Documented information shall be created and adequately managed (distributed, withdrawn, stored, etc.).

3.9.2.5

Operation

The organization shall plan, implement and maintain the processes needed for adequate operation. Control mechanisms shall monitor their effectiveness. It’s a huge difference whether you organize an open-air concert, run a holiday park or organize adventure holidays somewhere in Asia. Contexts, requirements, expectations of interested parties and other issues differ widely. This diversity will also be reflected by the operative processes. The tools presented in Chap. 6 of the book are applicable also to these areas. Keep in mind, however, the simple logic of things sketched in Fig. 3.17, and how the operative processes are embedded in the overall ESMS. It will frequently happen in practice that activities, products or services need to be changed due to changing circumstances and requirements. ISO 20121 requires for such cases that objectives, targets and plans shall be reviewed and adapted to new

3.9 ISO 20121—ESMS—Event Sustainability Management System

309

Define the context of your organization, scope and sustainable event policies Top managmeent fully suports the ESMS and makes needed resources available Get concrete and plan the details of your ESMS

implement and operate the ESMS

Evaluate performance of the ESMS

improve the ESMS where needed

Fig. 3.17 Establish, implement and maintain your ESMS

circumstances. In practice, this may require some short-term actions. The main intent of this is that the ESMS shall show sufficient robustness and not collapse if unexpected issues appear. Processes should stay stable even under “shaky” conditions. Event management depends heavily on well-organized supply chain management. It is for this reason that the standard requires robust supply chain processes. These include an adequate selection of suppliers and their verification. Ensure that selected suppliers comply with the requirements and expectations put on them. This holds especially for those requirements, which derive from the objectives of the organization’s ESMS.

3.9.2.6

Performance Evaluation

Performance evaluation is a key topic for management systems and the organization shall establish criteria, against which it will measure the performance of the ESMS. For that reason, it shall be fixed in detail: • • • •

What the organization needs to measure and monitor. Methods for measurement and monitoring; How and when measurements and monitoring will be done. How results will be analyzed and evaluated.

Again, it will depend strongly on the type and details of events, and the organization is managing. In addition, the organization will use its “lessons learned” for further improvement of the ESMS and make adequate changes.

310

3 Industry-Specific Standards for Management Systems

Internal audits are a standard tool to investigate and verify the performance of a management system. We refer the reader to Chap. 7 of this book for more details on internal audits, especially how to plan and conduct them. Management reviews are an important instrument how top management demonstrates its involvement in the ESMS. The targets include: • Review formally, if the ESMS delivers, what it should. Does the organization achieve the intended results? • Did boundary condition of the organization change and does the ESMS need to address them (e.g. changing internal and external issues)? • Concerning changes of the ESMS made previously: Are they effective and adequate? • To which extend were objectives of the ESMS met? • What is the status of preventive and corrective actions? • Are resources adequate? • What are the objectives for the next period? All relevant data and information on the performance of the ESMS will be input to the management reviews. Output of the review should include clear decisions of top management, how to go on with the ESMS. This could include determination of resources needed, definition of new objectives, decisions to extend or limit the scope of the ESMS and others, depending on the specific needs of the organization.

3.9.2.7

Improvement

Dealing with nonconformities and corrective actions is of utmost importance to keep an ESMS alive. Once a nonconformity is detected, it must be analyzed and decided, what to do with it. Adequate root-cause analyses and implementation of corrective actions shall be the standard doing. Corrective actions shall be proportionate to the factual or potential impact of a nonconformity. The effectiveness of corrective actions shall be followed up. Nonconformities and opportunities for improvement may come from different sources, including internal audits, customer complaints or advices from clients and interested parties. Feedbacks from members of the supply chains shall be taken into account as well.

3.9.3 Example to Illustrate Some Concepts of the ESMS We sketch a fictitious case study to illustrate some concepts of an ESMS. The case – Residents of a medium-sized Bavarian town are proud of their beer festival which takes place once a year and has a long tradition of more than hundred years.

3.9 ISO 20121—ESMS—Event Sustainability Management System

311

– Once this was a local event with visitors from an area of 25 km around. – Primarily due to aggressive marketing done by some parties, the festival changed dramatically over the last years. More and more residents feel that the original character of the festivity got lost. The whole thing degenerated into a mainstream event with alcohol consumption being the main thing. – Travel companies all over the country discovered the event and bring people to the festival. – Local hotels adapted to the trend and so did the local show business, contributing even more to change the character of the festival. – The negative ecological impact is increasing, including noise, garbage and more. The question if it’s ecologically sane to travel hundreds of kilometers for having some beers should at least be asked. – Originally the festival was based on local Bavarian culture. However, this has been completely swept away. The festival degenerated to just another place where to celebrate and drink. – Safety experts are getting concerned as the evacuation concepts for the festivity area seem not to be adequate to the masses, but changes are difficult due to the geometry of the location. Their suggestions include partial cutting down of trees at the festival area to create more open space and to avoid accidents caused by falling branches in case of storm. – An increasing number of residents lost interest in the festival. People living close to the festivity feel super disturbed by the noise and other issues. What can an ESMS contribute? – The organizer of the festival is a consortium headed by the town’s major, breweries and other representatives from business. – The consortium thinks about to establish and implement an ESMS for the festival. The intent is to use it to get things balanced and to redefine the role and details of the festival. A consultant has been hired to suggest a concept of how this could be done. What would be crucial parts of the concept? – Where does the consortium want to go? The most important and first step would likely be to determine the consortium’s sustainable development principles and its statement of purpose and values. In other words: Where does it want to go. Is it ready for the decision to downsize the festival and to bring its character back to the previous state? Should it look for a compromise? – But wait: Another issue is, to determine the requirements and expectations of all relevant interested parties. These should surely include the community living next to the festivity and other representatives of the town’s residents. What do they think? We would like to leave it as an exercise for the reader to think about how this project could lead to a satisfying result. Note, there is not the solution for it. As can be seen from the steps indicated, the most important thing to do first is to determine

312

3 Industry-Specific Standards for Management Systems

the different parts of the context. Although it is clear from the beginning that there will be many voices and attitudes concerning the festival, the question is how to balance them. Only once this is done and the necessary political decisions have been made, the context can be finalized. Compared to this the following steps like planning the ESMS or ensuring the resources and determining the operational processes are relatively straightforward and require technical skills to complete them. However, first their direction must be given determining the context.

3.9.4 Beyond Event Sustainability ISO 20121 is a good example of how standardization initiatives of ISO support trends and factual needs toward sustainability management in the event industry and beyond. However, more is on the agenda. As an example, consider the recent document • ISO 21401:2018 Tourism and related services—Sustainability management system for accommodation establishments—Requirements which was published in December 2018. The standard defines social, environmental and economic requirements for the sustainability management system in the named industry. It follows the standard architecture of management standards, but focuses on a mixture of issues, including the following: – – – – – – – – – – – – – –

Environmental requirements; Landscaping and architectural aspects; Waste management, emissions, effluents, etc.; Hazardous substance management; Conservation and protection of the environment; Energy efficiency; Work conditions of employees; Health and safety; Education; Respecting cultural aspects; Social aspects of sustainability; Economic aspects; Supply chain management and requirements; Guest satisfaction and quality management.

We shall not go into the details of this standard here but recommend its study to the interested reader. One of its intentions is also to offer a common and harmonized approach for certification schemes in those sectors.

3.10 ISO 28000—SCSMS—Supply Chain Security Management System

313

3.10 ISO 28000—SCSMS—Supply Chain Security Management System The first edition of the standard • ISO 28000:2007—Specification for security management systems for the supply chain was published in September 2007. It defines requirements for a supply chain security management system (SCSMS). It has been already pointed out in Chap. 1 that supply chains and their needs are one of the main triggering factors for the evolution of management systems (quality, environment and others). ISO 28000 addresses yet another aspect of supply chains, namely security management requirements. ISO 28000 is designed to offer a framework for continual improvement of the security issues of supply chains. Being a high-level management system standard, it may be applied by any organization, irrespective what’s its size or industry. The standard is based on the PDCA-cycle model. Its requirements include assessments of the organization’s supply chain security risks and their management. ISO 28000 defines requirements and organizations may use it: • When establishing, implementing, maintaining and continually improving a security management system for their supply chains; • When they want to show compliance with the standard; • When they want to get certified according to ISO 28000; • When defining requirements for the members of their supply chains. Security is the keyword in the standard’s title, and it means the organization’s resistance to any unauthorized intentional act with the intent to damage or cause harm to the supply chain or by the supply chain. The standard is not yet organized according to the high-level structure of modern management system standards but has the same typical core elements. In addition, ISO 28000 focuses on processes and risks. We shall have a short look at the standard’s clauses: 1. General requirements of ISO 28000 Organizations that want to comply with ISO 28000 shall establish, implement and maintain an SCSMS. The systems shall be adequately documented, and the organization subscribes for its continual improvement. The scope of the SCSMS shall be clearly defined by the organization (what’s in, what’s out?). If an organization outsources processes, it shall be ensured that these processes are controlled. Responsibilities for this controlling and the applied controlling methods shall be clearly defined. 2. Security management policy of the organization Top management of the organization shall formulate a supply chain security management policy. That policy shall:

314

3 Industry-Specific Standards for Management Systems

– – – – – –

Be relevant to the organization and its supply chain threats. State the organization’s supply chain security management objectives. Not contradict other organization’s policies and objectives. Include the commitment to continually improve the SCSMS. Be documented, communicated and available for relevant parties. Be updated, if needed.

3. Assessment of security risks and planning 3.1. The organization shall have established processes and procedures for the assessment of supply chain risks and threats. These shall be adequate to the purposes and risk situations of the organization. Necessary control measures shall be implemented. Risk assessments shall be ongoing and also keep changes in supply chains on the radar. Issues to be addressed during the risk assessment shall include risks and threats resulting from: – Physical failures and damages; – Criminal or terrorist activities; – Operations; – Environment, as, for example, extreme weather events; – Issues that are difficult or impossible to control by the organization (e.g. services and products delivered from outside); – Risks and threats that could impact stakeholders; – Security equipment; – Management of information and data; – Business continuity aspects. The organization shall consider the likelihoods of the related events and their potential impacts. In addition, the analysis of these assessments shall be used to define actions and take them into account when: – Establishing and updating supply chain security programs; – Formulating targets and objectives for the SCSMS; – Determining human resources and others; – Determining knowledge, skills and training needs of personnel; – Defining operational controls. It is assumed, that the organization uses adequate methods for the identification and assessments of risks and threats. (Remark The standards ISO 31000 and ISO 31010 may be helpful to select the right methods.) It is important that the organization keeps its documentation on these issues updated. When determining the mentioned risk profiles and defining response actions, the organization shall take into account legal and relevant regulatory requirements. For this purpose, the organization shall have processes to keep its information and analysis of these requirements up to date. 3.2. Objectives—Targets—Programs (a) ISO 28000 requires the organization to establish, implement and keep updated objectives for its SCSMS. Objectives shall be quantified and

3.10 ISO 28000—SCSMS—Supply Chain Security Management …

Establish, implement and maintain supply chain security management objecƟves

Establish, implement and maintain supply chain security management targets

315

Establish, implement and maintain supply chain security management programs

Fig. 3.18 ISO 28000 requires objectives, targets, and management programs

measurable if possible, not contradict other objectives of the organization, and kept updated and communicated to relevant parties. Objectives shall be based on: – Relevant legal and other regulatory requirements; – Risks and threats related to supply chain security; – Other requirements (including operational, financial); – Technical options; – Expectations of relevant stakeholders. (b) ISO 28000 requires the organization to establish, implement and keep updated targets for its SCSMS. Targets shall be: – Relevant to the organization’s context and needs; – Realistic, achievable within a defined timeframe, measurable; – Communicated to relevant internal and external parties; – Monitored, reviewed and updated when needed. (c) ISO 28000 requires the organization to establish, implement and keep updated security management programs, being part of the SCSMS. The main intent of these programs is to achieve the organization’s objectives and targets of the SCSMS. Security management programs shall include authorities and responsibilities for the individual objectives and targets. They also shall include a clear description of how objectives and targets will be reached in what time scale (Fig. 3.18). 4. Implementation and operation of the security management system 4.1. Responsibilities of top management ISO 28000 expects top management to commit to and actively support the SCSMS. This includes the following: • A member of top management shall take overall responsibility for the SCSMS. • Ensure that management functions are appointed that have the necessary authority to implement objectives and targets. • Ensure that requirements and expectations of stakeholders are identified, and actions are taken to meet them. • Ensure that necessary resources for the SCSMS are available. • Ensure that supply chain security objectives, programs and targets don’t have unintended negative interaction with other issues (processes, objectives, targets, etc.) of the organization.

316

3 Industry-Specific Standards for Management Systems

4.2.

4.3.

4.4.

4.5.

• Ensure the effectiveness of the SCSMS. • Include supply chain risks and threats in the overall risk register of the organization. Knowledge and awareness The organization shall ensure that managers have responsibilities for the SCSMS and staff doing work within its scope: • Have the necessary knowledge. • Are fully aware of the importance of the SCSMS. • Understand their roles and potential consequences of not following the processes and role assignments of the SCSMS. Communication issues The organization shall have processes for the communication of supply chain security-relevant issues with staff, relevant business partners, contractors, stakeholders, etc. Documentation requirements and document control ISO 28000 requires adequate documentation of the SCSMS. However, the organization has degrees of freedom, how the details of this documentation will look like. It shall include but not be limited to the following: • All the documentation and records as required by ISO 28000; • Security management policy; • Documented supply chain security objectives and targets; • Scope of the SCSMS; • Documents describing the elements of the SCSMS and their interactions among themselves and other parts of the organization’s management system; • Documents that the organization determines to be necessary to run the SCSMS. This shall include records of risk and threat assessments, etc. The organization shall have processes to control these documents and records during all phases and to protect them from unauthorized access. Documents and records shall be classified in sensitivity categories. In addition, the usual requirements for document control apply and include: • Processes how to create, distribute, review, revise, approve, remove, store documents. • Processes how to ensure adequate backup of electronic documents. Control of operation The organization is expected to identify its operations actions that are crucial to: • Comply with the security management policy; • Comply with relevant legal and other requirements; • Control threats that may lead to relevant risks; • Achieve its supply chain security objectives and targets; • Achieve the defined level of security of its supply chain.

3.10 ISO 28000—SCSMS—Supply Chain Security Management …

317

ISO 28000 requires the organization to establish, implement, maintain and update procedures to manage the supply chain security aspects of its operation. The organization has to decide for which issues procedures are needed to prevent undesired effects and events. The organization shall evaluate threats deriving from activities upstream of its supply chain and implement adequate measures and activities to keep respective risks under control. The organization shall determine and maintain requirements for services and goods that have an impact on the security of the supply chain. These shall be shared with its contractors and suppliers. It is important, that the organization takes into account supply chain security aspects related to infrastructure, equipment and facilities. This includes aspects when infrastructure, facilities and equipment are being changed. 4.6. Business continuity requirements ISO 28000 requires the organization to establish, implement and maintain plans and procedures for potential emergency situations and security incidents which may impact its supply chain security. These plans also shall show how the organization intends to respond to such events. It is expected that plans and procedures are concrete enough and include, for example, equipment and facilities to be involved in such situations. The standard requires the organization to test its security and emergency plans periodically. Although ISO 28000 doesn’t refer to the business continuity standard ISO 22301, much from it can be used. 5. Checking the security management system’s performance and corrective actions 5.1. Supply chain security performance: Monitoring and measurement activities ISO 28000 requires the organization to do the following: • Monitor the performance of the SCSMS, based on meaningful measurement tools. • Monitor and measure the organization’s supply chain security performance. • Base these monitoring and measurements on the assessment of threats and associated risks. • Monitor if and how the organization’s supply chain security objectives and targets are met. • Monitor performance data on incidents, nonconforming issues, deviations from requirements, etc. • Ensure that data quality and data volume are sufficient to base corrective actions on them.

318

3 Industry-Specific Standards for Management Systems

5.2. Evaluation of the SCSMS The organization shall evaluate its SCSMS on a regular basis. This includes procedures, supply chain security plans, reports of incidents, results from emergency events and trainings as well as other relevant documents and data. Evaluations will also include compliance with legal and other requirements. In addition, the organization shall compare its own performance and compliance with best practice examples from its industry. Records on all these evaluation activities shall be available. The evaluation results will form input to corrective actions and improvements of the SCSMS. 5.3. Preventive and corrective actions ISO 28000 requires the organization to: • Select adequate preventive and corrective actions; • Analyze and derive lessons learned from incidents, emergencies, near misses, nonconformities and other undesired events and effects; • Analyze root-causes of these events; • Implement corrective actions; • All preventive and corrective actions shall be adequate and proportionate to the respective threats and risks addressed; • Corrective and preventive actions shall be reviewed and evaluated during risk assessments; • Monitor the effectiveness of preventive and corrective actions; The organization shall assign clear authorities and responsibilities for all these actions. 5.4. Record control The organization shall implement and maintain a system for the control of records related to its SCSMS. Procedures shall be available on how to create, store, identify and trace records. This shall include electronic and all other relevant records. 5.5. Auditing the SCSMS The organization is required to implement and maintain an audit program for its security management. Chapter 7 of the book brings more on audits. 6. Management review of the security management system and its continual improvement As all management system standards, ISO 28000 requires top management of the organization to review its SCSMS on a regular basis. This is one aspect of how top management demonstrates commitment and leadership. Topics of the review shall include, but be not limited to: • • • • • •

Status of actions defined in previous management reviews; Data on supply chain security performance of the organization; Monitoring and measurement results of the SCSMS; Supply chain security performance of the organization; Results from internal and external audits; Supply chain security objectives and targets and the extent of meeting them;

3.10 ISO 28000—SCSMS—Supply Chain Security Management System

319

• Implemented preventive actions: Status and effectiveness; • Required actions needed from changing the context of the organizations, changed scope, legal requirements, etc. The management review must be available in written form.

3.11 ISO 41001—FMS—Facility Management System 3.11.1 Introductory Remarks The first edition of the standard • ISO 41001:2018—Facility Management—Management systems—Requirements with guidance for use was published in April 2018. The document should be seen in the context of the following recent standards: • ISO 41011:2017—Facility Management—Vocabulary; • ISO 41012:2017—Facility Management—Guidance on strategic sourcing and the development of agreements; • ISO/TR 41013:2017—Facility Management—Scope, key concepts and benefits. ISO 41001 defines requirements and may be used as a certification standard. It also contains an extensive appendix which offers guidance on how to use it. Facility management has many facets, and it is a globalized business. The main intent to create a separate management system standard for this industry was the sheer requirement to have a common global standard that may be used by the global community. The model of ISO 41000 follows the design of the other management systems standards discussed previously (Fig. 3.19). The “Demand Organization” formulates requirements and expectations, and the “Facility Management Organization” has to comply with them. Based on this, the usual management system tools are employed: Top management commitment and leadership clear FM strategy and policy, FM plans, process-oriented and risk-based thinking, measurement and performance evaluations and PDCA-cycle as a motor of the FMS and continual improvement. It is important to note that the demand organization and the facility management organization may be part of the same overarching organization. The two terms are used by the standard to explicitly show the relationship between the organization (unit) that defines the demand for a facility management service and the organization (unit) that provides the service.

320

3 Industry-Specific Standards for Management Systems

Fig. 3.19 Relation between the demand and facility management organization

The advantages of the standard ISO 41001 include: • Defines a common standard for the facility management industry and its management needs. • Contributes to an improved interaction between the demand organization and the facility management organization. • Applicable to any organization, no matter what’s its size or details of its facility management activities; • Offers a framework for higher consistency of services. • Systematic approach to increase effectiveness and efficiency; • Requires the organization to identify and manage its processes and interactions between them. • Requires the implementation of KPIs. • May be used to demonstrate conformity with ISO 41001 via third-party certification or self-declaration.

3.11.2 Discussion of the Clauses of ISO 41001 ISO 41001 should be considered to be complementary to ISO 9001, ISO 14001 and other management system standards, focusing on the specific needs of facility management. ISO 41001 does not replace those standards. As the structure of ISO 41001 is similar to that of the other management system standards discussed, we shall highlight its essentials. This is done in the form of a To-Do-List.

3.11 ISO 41001—FMS—Facility Management System

3.11.2.1

321

Context of the Organization

1. Understand your organization’s context This includes: • Determine external and internal issues that need to be considered, as they have an impact on your strategy, objectives, processes, etc. • Determine these issues with great care and systematically, and document them. • Requirements and expectations of the demand organization(s) are of utmost importance and you must align your plans, resources and processes with them. 2. Understand the needs and expectations of your relevant interested parties • Determine your relevant interested parties. • Determine their requirements and expectations, and implement a process of how to update them. • Ensure the outputs of your organization satisfy those requirements and expectations. • Determine the inputs needed to achieve those outputs. • Document this information. 3. Determine the scope of your FMS The scope is the range of application of the FMS. • • • •

It may include geographical and organizational boundaries; Specific assets; Specific processes, products and services; Others. Keep in mind, the scope of the FMS must be harmonized with its context.

4. Establish, implement and keep updated your FMS • Implement FMS that complies with ISO 41001. • Central issues include: – FMS policy; – Appropriate processes that enable you to comply with requirements and expectations of the demand organization and of other relevant interested parties. Generally: Ensure specified outputs. – Establish, implement, maintain and improve/update the FMS. – Ensure the necessary resources for the FMS. – Performance measures; – Interaction with other processes of your organization.

322

3 Industry-Specific Standards for Management Systems

3.11.2.2

Leadership

1. Top management: Show leadership and commitment • Establish your facility management policy. • Establish your facility management objectives. • Integrate the FMS and its requirements with other processes (e.g. business processes). • Ensure the availability of resources needed for the FMS. • Communicate the importance of the FMS internally and externally. Especially, communicate with the demand organization’s top management. • Offer support to relevant management roles and personnel. • Ensure collaboration between departments. • Ensure that the FMS achieves its planned results and call for continual improvement. • Ensure that risk management approaches for the FMS are in line with the other risk management approaches of your organization. 2. Top management: Establish the organization’s facility management policy This policy shall: • Be relevant to the organization and its FMS scope. • Define a framework for the FMS and its objectives. • Include the commitments to comply with relevant requirements and to continual improvement. • Ensure risk-based thinking and approaches concerning the FMS. • Be endorsed by top management of the demand organization or its sponsor and comply with the requirements of the demand organization. The FMS policy is part of the documented information required by ISO 41001 and must be communicated within the organization and available to relevant interested parties. Top management shall review the FMS and adapt it to changing needs and requirements. It should be stressed that the FMS policy is an essential document and must be tailor-made to fit the individual organization’s needs. 3. Define responsibilities, authorities and roles As top management has the overall organizational responsibility. It must assign the necessary authorities and responsibilities. This includes clear answers to the following questions: • Who is responsible that the organization’s FMS complies with the requirements of ISO 41001? • Who is responsible for establishing, implementing, maintaining and improving the FMS? • Who establishes FMS policies and objectives? Are they harmonized with the strategic development and direction of the organization?

3.11 ISO 41001—FMS—Facility Management System

323

• • • • •

Who reports the performance results of the FMS to top management? Who is responsible for establishing facility management plans? Who ensures that facility management processes are established? Who is responsible for the robustness and adequacy of the FMS? Who is responsible for the management and evaluation of the organization’s suppliers and subcontractors? • Who is responsible for the evaluation of FMS resources (effectiveness, sufficiency, etc.)? • Who is responsible for evaluating the FMS? • Who reports on the performance of the FMS and other related issues to whom?

3.11.2.3

Planning

1. Address and manage risks and opportunities As all other management system standards, ISO 41001 requires that the FMS is systematically planned. Planning is not a singular process but will continually be needed during the whole lifetime of the FMS. In addition, this planning is typically a very individual process for each organization, as the FMS needs to be tailor-made to its individual context. When establishing the FMS, important issues include: • • • • • •

Define the outcomes you want to achieve. Ensure the FMS may achieve the desired outcomes. The FMS shall prevent or at least reduce undesired effects/events. The FMS shall ensure preparedness to emergencies and business continuity. The FMS shall have a focus on continual improvement. Ensure the FMS is established on risk-based thinking. Remark Keep in mind that risks may change with time.

ISO 41001 does not require the organization to implement a formal risk management system, as for example according to ISO 31000. However, the basic rules defined in the latter standard and the concrete guidance offered by ISO 31010 still should be helpful to manage the risks that need to be considered. The facility management organization typically will face a diversity of risks, including: – – – – – – – – –

Economic, commercial and financial risks; Political and social risks; Human resource risks; Environmental risks; Health and safety risks; Risks deriving from contracts; Organizational risks; Brand risks; All kind of technical risks;

324

3 Industry-Specific Standards for Management Systems

and more. The organization has to consider those risks that have direct or indirect impact on its FMS. To manage its risks, the organization should: • Create a register of risks that impact its FMS. This register is part of the required documented information and must be updated on a regular basis. • Once the risk register is established, evaluate the risks. Set priorities, what must be done first. You may employ a simple ansatz like: Risk (relevance) = Impact of the risk (measured in currency) × likelihood of its occurrence • Understand clearly the “mechanisms”, how causes and its root-causes trigger undesired effects or events. • Establish preventive actions to minimize impacts or even prevent its occurrence. • For those cases, when risks already materialized and impacts occurred, use prepared (emergency) plans on how to respond and minimize the consequences. Two additional cross-references may be useful: – As FMS-relevant risks may have severe negative impacts on business continuity, it is worthwhile to refer to ISO 22301. It is not a requirement of ISO 41001 to comply with that standard, and however, it is highly relevant and should be considered. This holds especially true if the facility management organization has it in its contracts to provide a defined level of operation after a disruptive event. – Another worthwhile cross-reference is to ISO 55001, which deals with asset management. Depending on the details of its facility management services, the organization likely will have interactions with the demand organization’s physical asset management processes. It is more than helpful, therefore, to understand the requirements of that standard. In addition, it may be referenced in contracts between demand organizations and facility management organizations. 2. Define facility management objectives and the actions on how to achieve them ISO 41001 expects that facility management objectives are defined at all (relevant) levels and functions. Important aspects of facility management objectives include: • • • • •

They must refer to relevant requirements. They must be harmonized with other objectives of the organization. They must be measurable and monitored. They must be updated if needed. The planning of objectives must be concrete, including: – Who is responsible for the individual objectives? – What is precisely the content of the objective and what will be done? – What resources are needed?

3.11 ISO 41001—FMS—Facility Management System

325

– What is the timeline of the objective and when is it completed? – What methods of analysis will be employed? – How is the demand organization involved? As abstract these requirements may sound, they materialize into very concrete actions. To a large extent, facility management objectives are driven by requirements and expectations defined by demand organizations. In this context, facility management objectives should be considered as a means to make these requirements and expectations as concrete as possible and measurable. Examples include: • What are the absolutely critical issues and outcomes for the involved interested parties? • Where scheduling activities are involved: What are the critical points and how can they be measured and followed up? • How are the changing objectives communicated and agreed between the facility management organizations and the involved parties? • How are resource requirements realized? • How are subcontractors efficiently controlled? For that reason: Facility management objectives are very concrete things and should be dealt with as such.

3.11.2.4

Support

1. Determine and provide resources The overall requirement of ISO 41001 is that the organization ensures the availability of the necessary resources for the FMS. This includes the resources for the whole lifetime of the FMS. Resources include human, financial, technical and others. When dealing with resources, the organization should especially focus on those that are critical. For example, consider some aspects related to personnel: • • • •

How to hire personnel and how to ensure its qualification? How to train personnel efficiently? How to supervise personnel (own and that from subcontractors)? How to ensure the regional availability of personnel?

In this context, also consider the interaction of processes and respective resources, as required by the standard. For example, if contractual agreements with a demand organization or its requirements change: How is this information reliably communicated to all involved parties and how are resulting in changing resources ensured? 2. Determine and ensure the necessary competence Competence of staff is obviously a crucial issue and ISO 41001 defines basically the same requirements as other management system standards do. To deal with the “competence” clause of the standard do the following:

326

3 Industry-Specific Standards for Management Systems

(1) Determine the necessary competencies of persons working under the control of your organization. (2) Make sure that these persons are competent either by education, professional experience or training. (3) In case you determine gaps in the necessary competence of individuals close them by training, professional experience or other means. (4) Keep documented information on competence of personnel. (5) Have a systematic approach in place to satisfy the future needs of human resources (short and long term). 3. Ensure awareness Persons working under the control of your organization and having an impact on the FMS shall be aware of its importance. They shall know the facility management policy and the organization’s objectives and planned outcomes. They also shall understand their role within the FMS, the importance to comply with its processes and objectives and the consequences of noncompliance. Remark Keeping the awareness of personnel high is sort of an art. Sometimes even critical roles for the FMS don’t have enough knowledge to explain its importance. This may be due to missing training and internal communication. However, very often too, a substantial part of personnel just isn’t motivated and doesn’t care. Missing awareness will definitely have negative impacts on the FMS in total and its perspectives as a management system. This holds true for all management systems treated in this book. Awareness building is, therefore, a super important thing. 4. Establish communication processes ISO 41001 requires processes for FMS-relevant communication. These include: • • • •

What needs to be communicated internally and externally? Who will communicate? With whom to communicate on what, when and why? How will be communicated?

5. Create, maintain and keep updated documented information The standard requires two types of documented information: • The documented information required by the standard itself. • The documented information found to be necessary by the organization itself, to keep the FMS running. The extent of documented information may vary from organization to organization, depending on its complexity, processes and other issues and requirements. It also depends on the competence of staff. Documented information may be given in various formats, including paper and electronic form.

3.11 ISO 41001—FMS—Facility Management System

327

It is of utmost importance, that documented information is reliably controlled. This includes its creation, distribution, retention, disposition, management of changes, storage and other aspects like traceability. The organization shall implement and maintain processes which ensure all this. 6. Determine necessary organizational knowledge The knowledge that is necessary to operate the organization’s facility management processes needs special attention. ISO 41001 requires the organization to determine that knowledge and to ensure that it is available and maintained. Remark This is just one aspect of the standard which targets business continuity and organizational resilience.

3.11.2.5

Operation

1. Plan and control your operation The overall intent of ISO 41001 is that your organization plans, implements, maintains and controls the processes of the FSM that are necessary to achieve defined objectives. The basic steps include: • Establish, implement and maintain your processes; • Implement tools to control your processes and measure its inputs, outputs and performance; • Have documented information about the processes. Remark For all three issues, compare the tools discussed in Chap. 6 of the book. The organization shall determine the operational processes and issues that need to be managed. Details will always depend on the context of the organization, its size and the complexity of its projects and services. However, ISO 41001 suggests the following types should be among them: • • • •

Management of projects; Management of relationships; Management of capacity and resources; Service-level agreements and comparable statements.

Remark When dealing with operational processes, there are a few things to keep in mind, otherwise you could do it wrong: • Identify your processes with care. • Determine required inputs, required outputs and the steps of the process that transform the input into the output. • Describe processes as clear as possible. Ensure process descriptions contain all necessary information. • Risk-relevant issues need special attention. Wherever possible, design processes such to prevent or minimize risks. • Make processes measurable (lead times, KPIs, measurable attributes).

328

3 Industry-Specific Standards for Management Systems

• Define responsibilities along with the processes. It should be as unambiguous as possible, who is responsible for what. • Invite experts when designing processes. Too frequently processes are drafted at a green table. • Communicate your process descriptions and ensure people understand and follow them. • Control and audit your processes. • Change your processes when needed and check routinely for improvement. The DMAIC approach (Chap. 6) or a modified version offers a good framework on how to proceed in practical projects systematically. 2. Manage your relationships with interested parties ISO 41001 requires two things: • Your organization shall manage its relationships with interested parties, especially end users; • Your organization shall coordinate its activities such as to minimize any negative impacts on the demand organization’s primary activities. Remark The more complex facility management projects are, the more important is it to manage relationships with all relevant interested parties in a systematic manner. This should be done in order to ensure the quality of facility services, work together on continual improvement and comply with requirements. The standard ISO 44001 on collaborative business management offers some interesting approaches in complex collaboration projects that could be interesting to take consider (see Sect. 2.9). 3. Ensure the integration of your FMS This clause of the standard is super short: Your organization shall demonstrate that its facility management functions are integrated. This is considered as a prerequisite that your organization may deliver its facility services in an effective and efficient way.

3.11.2.6

Performance Evaluation

Performance evaluation is a crucial part of all management system standards. The standard expects the evaluation of performance for the whole scope of the FMS, as determined earlier. For that reason, your organization can’t be “picky”, selecting just some of the processes or other issues of the FMS to be controlled. 1. Ensure efficient measurement, monitoring, evaluation and analysis processes Based on the scope of its FMS, the organization shall: • Determine what needs to be measured and monitored.

3.11 ISO 41001—FMS—Facility Management System

329

• Select monitoring and measurement methods and methods for the analysis of performance data. • Determine, how and when the measuring and monitoring will be done and by whom. • Select adequate data to define the baseline of its performance. • Determine its facility management performance. Hereby it shall consider nonfinancial and financial effectiveness criteria. • Determine, how and to whom performance results will be reported. 2. Conduct internal audits Internal audits are a standard requirement of all management system standards. ISO 41001 doesn’t add anything special to this requirement. Remark See Chap. 7 of the book for more details concerning internal audits. However, the following standard may be considered: • ISO/IEC TS 17021-11:2018 Conformity Assessment—Requirements for bodies providing audit and certification of management systems—Part 11: Competence requirements for auditing and certification of Facility Management (FM) management systems Although the standard targets primarily certification organizations and their auditors, it can be helpful beyond this inner circle. 3. Review your FMS It is the top management’s task to review the FMS on a regular basis, usually at least once a year. The main intent of this exercise is to have an overall look at the FMS’s performance. For that reason, all relevant factors that impact the FMS and its performance results shall be considered in that review. This is quite similar to the requirements of other management system standards. The following checklist refers to items that shall be found as a minimum in the review: INPUT TO THE MANAGEMENT REVIEW • What is the status of actions taken following the last management review? • Which changes of external and internal issues do have an impact on the management review? • What are the performance data of the FMS? Here should be entered: – All relevant measurement, surveillance and monitoring data; – Detected nonconformities and corrective actions; – Results from internal and external audits; – Detected opportunities for improvement; – Information about risk-relevant issues, including an overview of the risk register. OUTPUT FROM THE MANAGEMENT REVIEW • Needs for scope adaptation, if any; • Actions to improve the FMS and its performance, deriving from the input to the management review;

330

3 Industry-Specific Standards for Management Systems

• Actions to comply with new external and internal requirements, as for example: – New contracts and obligations; – New risk situations; – Updated needs for resources; – Human resources issues; • Actions derived from changes in the overall strategy and business development. The management review is part of the documented information as required by ISO 41001.

3.11.2.7

Improvement

The FMS according to ISO 41001 is based on the PDCA-cycle. This drives the following simple logic, that may be found in all management system standards: 1. Deal with nonconformities and corrective actions Nonconformities may be detected in daily business, during internal audits, following customer complaints or in any other manner. The important thing is to analyze them, determine root-causes and to respond with adequate corrective actions. The typical steps to follow are basically as follows: (1) When nonconformity is detected, react to it. This sounds trivial, but the point is to really react decisively. Determine who is responsible for managing the reaction. A multi-professional team may be needed in many cases, including representatives from interested parties. (2) Try to control the consequences of nonconformity. In some cases, the nonconformity may need immediate special actions to keep impacts and consequences under control or to avoid similar nonconformities to appear elsewhere. (3) Analyze the nonconformity and determine its causes and root-causes. When analyzing nonconformities, employ field proved techniques. Chapter 6 gives an overview of some of the most important ones. The critical point is, to really identify the root-causes. The output of a root-cause analysis could be an 8D-Report (see Chap. 6 for details). (4) Check the risk if similar “cause–effect relationships” may exist but are not yet detected. The result of the root-cause analysis could be that similar cause-and-effect relationships could appear under other circumstances. Example Inefficient communication between the facility management organization and the demand organization. Actions shall be taken to cover also these cases (risk management). (5) Implement corrective actions. Implement the developed corrective actions.

3.11 ISO 41001—FMS—Facility Management System

331

(6) Communicate the implementation of corrective actions. It is important to communicate the implemented corrective actions to all relevant persons and organization units. (This is one of the reasons, why ISO 41001 requires processes on communication.) (7) Check the effectiveness of implemented corrective actions. Corrective actions may do what they should, but they also may fail. It is crucial to check their effectiveness. How to do this depends on the type of action. (8) Make the necessary adaptations of FMS and document the new process. Once the new process or other parts of the FMS proved to be efficient, make the new solution part of the FMS and let it replace the old one. 2. Go for continual improvement Taking the PDCA-cycle serious, you should not wait until nonconformities drop down on your table. The inherent power of a management system its continual search for better solutions and for overall improvement. Balancing opportunities for improvement and economic efficiency is what the organization has to do in each case. 3. Implement preventive actions The whole direction of a management system (and the FMS is just one more example) is to prevent nonconforming outputs of products or services. When planning the FMS, the design and implementation of preventive actions is an essential part of the system. During the whole lifetime of the FMS the identification and implementation of effective preventive actions should be on the organization’s agenda.

3.12 ISO 39001—RTSMS—Road Traffic Safety Management System The standard • ISO 39001:2012 Road traffic safety (RTS) management systems—Requirements with guidance for use was first issued in October 2012. It addresses organizations that have (significant) interaction with road traffic. The main intent is to support those organizations to reduce, and potentially eliminate road accidents and related negative events. ISO 39001 can serve as a certification standard. Accredited certification is available. ISO 39001 follows the same template as all other modern management system standards. Especially, the following should be mentioned: 1. The standard has the usual requirement modules: 1.1. Context of the organization; 1.2. Leadership;

332

3 Industry-Specific Standards for Management Systems

1.3. 1.4. 1.5. 1.6. 1.7.

Planning; Support; Operation; Performance evaluation; Improvement.

2. The standard is based on risk-based thinking and the PDCA-cycle. 3. It includes any form of road traffic (e.g. cars, trucks, buses, trams). It includes cargo and passenger transport. 4. It doesn’t specify any requirements concerning the quality of these transports but focuses on road traffic safety management aspects that an organization can influence. 5. The standard assumes compliance with applicable laws and other relevant requirements. Its systemic approach is settled on top of these basic requirements. However, the RTSMS is designed to support the organization to comply with them. An adequately implemented and efficiently maintained RTSMS should include the following benefits: • • • • •

Contribute to the reduction of traffic accidents and their consequences. Protect the organization’s human resources from the consequences of accidents. Reduce the impact of accidents on the society. Protect the physical assets of the organization and society. Reduce the costs resulting from traffic accidents: Both, for the organization and for society. • Improve the image of the organization. • Improve the working climate and increase satisfaction of employees. • Promote the RTSMS objectives of the organization and encourage suppliers and customers to start similar initiatives. Being a management system, the RTSMS shall be adequately linked to other relevant management systems of the organization and not contradict their objectives. The following are the main requirements of the standard: • The organization determines its context relevant to the RTSMS. Doing so, also determine the organization’s involvements in road traffic: – – – – –

Which types? Where? What are the existing local legal and other requirements? What are customer requirements and expectations? What are the requirements and expectations of relevant interested parties?

• Top management of the organization shall show full commitment to the RTSMS. This includes the availability of relevant resources; formulation of the RTS policy; promotion of the RTSMS and its objectives and policies within the organization and beyond; and review of the RTSMS on a regular basis.

3.12 ISO 39001—RTSMS—Road Traffic Safety Management System

333

• The RTSMS shall be planned and adapted to changing needs. RTS objectives shall be formulated and be measurable if possible. The RTSMS shall be risk-based and designed to reduce risks and consider opportunities and chances. • Planning the RTSMS, the RTS objectives and targets will give the organization’s RTSMS its direction. So-called RTS performance factors shall be considered. They include: – Risk exposure factors: What is the organization’s volume of service provided? What is the organization’s road traffic volume? Types of vehicles and transports? – Intermediate safety outcome factors: Safety factors relevant to planning and design of the organization’s transport activities on roads. (E.g. design and quality of roads, fitness of drivers, driving speeds, route planning, qualification of drivers.) – Final safety outcome factors: For example, number of accidents and traffic deaths influenced by the organization. • RTS objectives shall be relevant, not in contradiction with legal and other requirements, measurable and adequate. The organization shall control how they are achieved. • Planning and defining RTS objectives and targets, the organization shall specify – – – – –

Required resources? What exactly will be done? Who will do it? Who is responsible? What is the timeline for the actions? How will results be evaluated and by whom?

• Top management shall ensure that adequate resources are available. This includes human, material, financial and others. • Training of employees and creation of awareness is super important to make the RTSMS successful. • The organization shall ensure that the documented information required by ISO 39001 shall be available. In addition, the organization shall determine which documented information it needs to run its RTSMS effectively. • ISO 39001 is process-based. For that reason, the organization shall determine and implement the processes needed for its RTSMS. In this context, the standard requires adequate processes for emergency preparedness and response. • The performance of the RTSMS shall be regularly evaluated. The main pillars of these evaluations are: – The investigation of road traffic crashes and other incidents; – Internal audits; – Reviews of the organization’s RTSMS.

334

3 Industry-Specific Standards for Management Systems

• As all other management systems, an RTSMS requires: – Adequate handling of nonconformities and defined corrective actions; – Continual improvement of the RTSMS.

References JCI. (2017a). Joint Commission International. Accreditation standards for hospitals (including standards for academic medical center hospitals) (6th ed.). JCI. (2017b). Joint Commission International. Survey process guide for hospitals (including standards for academic medical center hospitals) (6th ed.).

Chapter 4

Standards for Compliance, Anti-bribery and Corporate Social Responsibility (CSR)

In this chapter, you will get an overview about the leading standards for compliance, anti-bribery and social responsibility: • • • •

Compliance management: ISO 19600:2014; Social responsibility: ISO 26000:2010; Anti-bribery management system: ISO 37001:2016; Some additional models for corporate social compliance management systems and their certifications.

4.1 Introductory Remarks In this chapter, we give a short overview about some guidance and certification standards for compliance management, anti-bribery management and corporate social responsibility. Looking at these topics from an auditing company’s point of view, these audit schemes are among the fastest growing ones. Obviously, there is substantial demand, generated by organizations in different industries, to get audited against one of these audit schemes. Whereas ISO 19600 and ISO 26000 are pure guidance standards, ISO 37001 and some of the CSR standards discussed further down are certification schemes. The main driving force behind the “popularity” of these schemes is requirements defined by powerful members of the respective supply chains. For example: When a retailer sells textile and clothes made in countries with a priori low social standards, this retailer may find it beneficial, to demonstrate that its goods were produced in an environment that complies with the requirements of the respective social standards.

© Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7_4

335

336

4 Standards for Compliance, Anti-bribery …

4.2 ISO 19600—CMS—Compliance Management System 4.2.1 Introduction The first edition of the standard • ISO 19600:2014—Compliance management systems—Guidelines was first published in December 2014. The standard ISO 19600 offers guidance for organizations to establish, implement, maintain and improve a compliance management system (CMS). Note, the standard offers guidance and not requirements. It is, therefore, not designed to serve as a certification standard. It may be applied by organizations of any size, irrespective to what industry they belong. The standard follows the high-level structure of modern management systems standards. That should make it easier to link its guidance principles with standards like ISO 9001, ISO 14001 and others. The “thinking” contained in ISO 19600 is basically the same as in these standards. For example, it employs the PDCA-cycle as a driving principle. Figure 4.1 offers a bird’s eye view at some of the essentials of ISO 19600. Note, ISO 19600 uses a “risk-based thinking” approach. As for the other management system standards discussed before, no formal risk management systems (e.g. according to ISO 31000) needs to be established. However, the organization should have tools in place that allow to identify, evaluate and manage risks related

Commitment of your top management. Leadership!

What you should clarify from the very beginning.

ISO 19600

What are your internal and external compliance issues? What are the expectatons and requirements of your stakeholders and other interested parties concerning compliance? What are your "Good Governance" principles? What is your organization's compliance policy? What are your organization's compliance obligations?

Establish, implement, maintain and improve your CMS.

Address compliance risks and plan how to achieve compliance objectives. Plan your CMS operation and control your compliance risks. Evaluate the performance of your CMS. Manage non-compliance and improve your CMS.

Fig. 4.1 Main pillars of a CMS according to ISO 19600

4.2 ISO 19600—CMS—Compliance Management System

337

to compliance-relevant issues. Tools discussed in ISO 31000 or ISO 31010 will definitely be helpful. We shall give a short overview about ISO 19600 clause by clause. Prior to this, some explanations of terms may be helpful: • Compliance means, an organization meets its compliance obligations. • Compliance commitments are those requirements, with which the organization decides to comply. • Compliance culture is the total of all values, ethical standards and other rules that are followed by the organization and its employees. It is the set of behavioral norms that impact compliance. • Compliance functions are defined and assigned roles to persons that have responsibilities for the management of compliance. • Compliance obligations are requirements or commitments concerning compliance. • Compliance requirements are requirements that concern compliance issues and that the organization has to fulfill. • Compliance risks are those risks that are related to compliance issues. In the following discussion, it is assumed that the reader already has a general understanding of management system standards, for example, studying the section on ISO 9001 and others. We shall outline the main guidance principles of ISO 19600 but not repeat the general working principles of a management system. Note that all guidance statements are “should” statements, as the standard doesn’t define requirements. We would like to mention in passing that currently (August 2019), there is an initiative to develop a standard • ISO 37301—Compliance management systems—Requirements with guidance for use. This is being developed by the same Technical Committee (ISO/TC 309) that created the standards ISO 19600 and ISO 37001.

4.2.2 Discussion of the Clauses of ISO 19600 4.2.2.1

Context of the Organization

Managing the context of the organization includes, but is not limited to the following topics: • The organization should understand its context and determine all those internal and external issues that have impact on its ability to achieve the envisaged outcomes of its CMS. These should typically include, but not be limited to: • Legal and regulatory aspects; • Expectations and requirements of relevant interested parties;

338

4 Standards for Compliance, Anti-bribery …

• Aspects deriving from specifics of its organization and industry; • Cultural and social aspects; • The organization’s business and processes. • The organization should determine all interested parties that are relevant to its CMS. The requirements and expectations of these interested parties should be determined. • The organization should determine the scope of its CMS. The scope defines the area of application of the CMS and its boundaries. Note, this may include organizational, geographical and other aspects. • The organization should operate a CMS and manage it during the whole lifetime: Establishment, implementation, maintenance and improvement. • Compliance functions should be selected and nominated. These functions should have sufficient independence and have access to the governing body (if there is one) or to top management. • Sufficient resources should be allocated to the compliance function. In addition, this function should receive the authority needed. • The organization should determine its compliance obligations in a systematic and exhaustive manner. These obligations should give the CMS its direction. Compliance obligations should be available in documented form. • The organization should have processes to update its compliance obligations and to keep them compliant with changing requirements and expectations. In practice, this will require to process information from different sources. The complexity of this task will be proportionate to the complexity of the organization. • Compliance risks are the underlying motivation for having a CMS. The organization should have processes in place to detect, evaluate and manage its compliance risks. Whereas compliance obligations give the CMS its direction, compliance risks act to make the CMS deviate from its intended outcomes. Effective management of compliance risks should enable the organization to comply with its compliance obligations. Compliance risks should be determined on a regular basis. The organization should be aware, that changes of the organization’s context and other boundary conditions, will typically have impact on its compliance risk register and needs actions to respond.

4.2.2.2

Leadership

The governing body (if any) and top management should play the central roles concerning the CMS and they should show commitment and leadership during its whole lifetime. This should include, but not be limited to the following: • The organization’s core values should be defined and lived. • Compliance objectives and policies of the organization should be defined. • It should be ensured that these objectives and policies are adequate and consistent with the organization’s compliance obligations and other objectives.

4.2 ISO 19600—CMS—Compliance Management System

339

• Necessary resources for the CMS should be available. • The CMS and other parts of the management system should be harmonized and there should be no contradictions between them. The CMS should be integrated into the business processes of the organization. • The content and the value of the CMS should be communicated, and the importance of conforming to the CMS should be stressed. Personnel should be encouraged to support the CMS. • The management at all levels should be called to support the CMS and show leadership. • Compliance obligations should not contradict operational targets and objectives. • Accountability of compliance issues should be given. • There should be a reporting system on compliance issues in place. • It should be ensured that the CMS reaches its objectives and is continuously improved. The organization’s governing board (if any) and top management should create the compliance policy. This policy should be designed to form a framework for the organization, the CMS and its objectives. At the same time, it should show the commitment of the organization and its management to compliance. Obviously, the compliance policy should be adequate and tailor-made to the needs of the organization. The compliance policy should: • Refer to the values of the organization, its objectives and strategies. • Outline the importance of compliance and the CMS. • Be linked to operational documents and processes to show how it will be brought “on the road”. • Show the scope of application of the CMS. • Refer to the interfaces with other corporate functions like risk management, corporate management, process management, etc. • Refer to the role and function of the compliance function(s) and its independence. • Address responsibilities for compliance and its management. • Outline the interaction with stakeholders and interested parties concerning compliance. • Be documented and available to relevant parties. The need for its availability in several languages should be evaluated. • The compliance policy should be communicated adequately. • Checked on a regular basis for completeness and updated if necessary (Fig. 4.2). The governing board (if there is any) and top management have the overall organizational responsibility. For that reason, the following issues should be addressed by them: • Responsibilities and authorities for compliance functions should be assigned clearly and unambiguously.

340

4 Standards for Compliance, Anti-bribery …

Compliance Obligations

Strategies of the Organization

Organization and Governance

Noncompliance Risks

Codes, Policies and Standards

Fig. 4.2 Aspects that should be taken into account when creating the compliance policy

Remark Complex organizations may prefer to assign fulltime compliance functions. In smaller organizations, this function may just result in an additional responsibility for an existing management function. The compliance function should be responsible for the organization’s CMS compliance with the guidance principles of ISO 19600. The compliance function should have direct access to the governing board and to top management, concerning compliance topics. He/she should ensure the reporting concerning the CMS to the board and top management. This reporting should be timely and professional. • Ensure that nominated compliance functions have the adequate skills needed for the function. • The compliance function should also have access to all other management levels, as well as to information sources needed. • For all management levels (and if needed beyond), compliance-related responsibilities should be fixed in job descriptions or similar documents. • Compliance-related responsibilities and authorities should be communicated within the organization. The governing board and top management should systematically determine and make available the resources needed for keeping the CMS efficient and effective (Table 4.1). Managers at all levels should be responsible for compliance topics within their respective area of responsibility. The cooperation with the compliance function(s) should be guaranteed. Performance measures for managers at all levels should include compliance-relevant indicators. Their behavior should be in line with compliance obligations and processes. Managers should actively participate to identify compliance issues within and outside of their area of influence. They should cascade the principles and rules of the CMS to employees and participate actively to comply with relevant processes and procedures, as well as participate in their improvement. Employees of the organization should comply with compliance obligations relevant to them. They should get trained and understand the importance of the CMS. Employees should get encouraged to report factual or suspected compliance issues.

4.2 ISO 19600—CMS—Compliance Management System

341

Table 4.1 Job description elements for the compliance function The job description of the compliance function should include Identification of compliance obligations using the input of relevant sources Transformation of compliance requirements and obligations into processes and procedures Organization and provision of trainings for personnel on a regular basis Enhancing job descriptions of personnel with relevant compliance responsibilities Implementation of a compliance reporting system. This includes hotline solutions on compliance issues, whistle-blowing system, etc. Creation of relevant performance measures for the CMS and their monitoring and analysis Identification of opportunities for improvement concerning the CMS Participation in the review of the CMS Supporting personnel with compliance-relevant information and other issues

4.2.2.3

Planning

As any other management system, a CMS should be planned with care and be tailormade for the specific organization, its context and its needs. The following points should form input to the planning: • • • •

The organization’s context; Requirements and expectations of interested parties; Identified compliance obligations and commitments; Identified compliance risks.

A risk-based approach should be followed when planning the CMS. Action plans should be proportionate to identified compliance risks and processes should be adequate to the organization’s needs. Processes and procedures of the CMS should not be standalone solutions but be connected to other relevant processes of the organization to form an integrated management system. The CMS should include all relevant levels and functions of the organization. Compliance objectives form a crucial part of the CMS. They should be adequate, relevant and address the practical compliance needs of the organization. Compliance objectives should be measurable. It is obvious that they also should be communicated within the organization. Processes how to monitor the (measurable) compliance objectives should be in place. The results of these monitoring should form input to the compliance reporting system.

4.2.2.4

Support

The clause on “Support” of ISO 19600 hast five subclauses, shown in Fig. 4.3. It’s the top management’s task to ensure and make available adequate resources during the whole lifetime of the CMS. Resources should include financial, human and other resources.

342

4 Standards for Compliance, Anti-bribery …

Make Resources Available

Ensure Competence and Training

Create Awareness

Create Communication Rules

Create Documented Information

Fig. 4.3 Five support elements of ISO 19600

The organization should determine the necessary competence of personnel concerning compliance and CMS. Adequate trainings should be offered on a regular basis. These trainings should be practical in nature, planned and adapted to the background and need of individual employees. Trainings should be evaluated for their effectiveness. It should be kept in mind that retraining may be required, if substantial parts of the CMS change (e.g. new procedures or objectives, changes of the organization’s context, change of employee’s position, etc.). The organization’s personnel should understand the compliance policy and the relevant parts of the CMS. This will increase staff’s awareness of the importance of compliance in general and how each employee may contribute to achieve the organization’s compliance objectives. To increase awareness, the organization should demonstrate the following: • Top management is committed to compliance and truly supports the CMS and its interaction with operational processes. • The compliance functions are accepted and valued in the organization. • Employees are trained and encouraged to support the CMS. • Noncompliance is reported. Identified noncompliance is corrected quickly. Noncompliance cases are investigated, and corrective actions are designed to prevent repetition. • Compliance requirements are not torpedoed by operational requirements. • The compliance culture of the organization is convincing, sustainable and visible. • There is visible evidence that the compliance culture is supported and spreading in the organization. • Results of the CMS are measured and meet planned targets. As all management systems, the CMS should come with clearly defined communication channels and procedures for internal and external communication of compliance-relevant issues. These should include: Who will communicate on what, with whom, when and how. When it comes to compliance-related issues, efficient communication is of utmost importance. The organization should have available documented information. This may be divided into two categories: 1. Documented information required by ISO 19600; 2. Documented information which the organization needs for the operation of the CMS.

4.2 ISO 19600—CMS—Compliance Management System

343

Examples of documented information: • • • • • • • • •

Registers for compliance risks, compliance obligations; Compliance functions and its roles; Compliance plans; Training programs and records; Records on personnel competence; Documented processes of the CMS; Compliance policy; Results of internal/external compliance audits; Review of the CMS.

The organization should choose the system of documented information that best fits its needs. Information may be processed in different formats (paper, electronic and more). Irrespective which format is chosen, a reliable system for the control of documents should be in place. Documents should be identifiable and traceable. Typical issues concerning documents should include: • • • •

Who created, released and updated the document? How are different versions of document distinguished? How are documents distributed and withdrawn? How are outdated documents managed?

It depends on the organization’s size, complexity, geographical distribution and other factors, which amount of documented information concerning the CMS will be needed. The maturity of the CMS, awareness and competence of personnel will play a role too.

4.2.2.5

Operation

As all management system standards, ISO 19600 is process oriented. This means, the organization should have the processes in place that are needed to run its CMS. Processes should be carefully planned and implemented. Controls should show if they are efficient. Documented information will usually be needed to describe the processes and to show evidence concerning their performance. As reaching the compliance objectives is the main goal of the organization’s CMS, control mechanisms should be implemented that support this objective. These mechanisms should include: • Real and visible commitment of the top management to compliance processes and goals; • Written unambiguous operation procedures and other instructions concerning compliance; • Compliance audits; • Trainings of employees followed by compliance performance checks.

344

4 Standards for Compliance, Anti-bribery …

Personnel should understand the compliance regulations and be continually encouraged to follow them. Conflicting targets should be avoided. Implemented control mechanisms should be evaluated for efficiency and adapted to changing needs. Compliance risk should be regularly reevaluated. The organization should clearly understand its responsibilities concerning outsourced operations and processes. In general, at least part of its compliance responsibilities will stay with the outsourcing organization. For this reason, these issues should be part of the CMS and associated risks should be controlled.

4.2.2.6

Performance Evaluation

The performance of the organization’s CMS should be monitored and checked for its efficiency. The issues to be considered when monitoring the CMS should include, but not be limited to the following: • • • • • • • • • • • • • • •

What should be monitored? Which monitoring methods are employed? How are monitoring results evaluated and analyzed? Are the organization’s compliance obligations updated? Are the compliance trainings effective? Are installed compliance control mechanisms effective? Are responsibilities for compliance-relevant issues clearly defined and allocated? Are these responsibilities being updated? Are compliance obligations up to date? Where have compliance obligations not been achieved and what actions have been taken in these cases? Are internal compliance controls done as planned and in which cases not? What is the overall status of the organization’s compliance culture? In which instances compliance obligations haven’t been met? Are the organization’s compliance indicators being met? What sources of information and methods of its collection does the organization employ?

Remark 1 Examples for relevant data include: Data from customers, partner organizations, employees, external surveillance organizations, regulatory bodies and data collected during daily operation and others. Remark 2 Examples for data collection include: Internal audits, internal and external surveillance methods, information gained via hotlines, integrity testing methods and others. • How is compliance-relevant information analyzed and classified into categories of criticality? Remark This analysis should be done in a systematic and professional manner to derive the right conclusions from it. The analysis should be established on risk-based thinking.

4.2 ISO 19600—CMS—Compliance Management System

345

ISO 19600 suggests to implement meaningful measurement methods that may help to indicate the organization’s achievements concerning compliance management and the performance of the CMS. These indicators should allow the organization to follow the development of the CMS and compliance-relevant issues over time, in order to make trends visible. The management of the organization and the governing body (if any) should ensure that they get information about the organization’s compliance performance and the efficiency of the CMS. This information should be relevant, complete and delivered in a timely manner. Being part of the organization’s overall reporting system, a standard format should be defined for compliance reporting. Topics that should be in a compliance report include: • Compliance issues on which the organization decides to report and those that are requested by other bodies (e.g. regulatory authorities); • Information on undesired compliance events, corrective actions and their efficiency; • Information on the development of compliance indicators and on compliance performance; • Effectiveness of the CMS; • Results from internal and external audits; • Results from the organization’s compliance monitoring activities. The organization’s compliance activities and compliance results should find their way into a record-keeping system that contains all relevant information about the CMS and data related with it. It should be clearly regulated, who has access to these records, and they should be protected against unauthorized changes like deletions, additions, etc. Internal audits are part of all management system standards and so they are of ISO 19600. The organization should design, implement and maintain an adequate system of internal audits. Chapter 7 of the book contains details on how to do this and how to conduct internal audits. There is little to add here, concerning auditing the organization’s CMS against ISO 19600. However, special care should be taken selecting and appointing internal compliance auditors. They should have a detailed understanding of all relevant aspects of compliance management and the suggestions (not requirements!) of ISO 19600. Compliance-relevant issues may change from geographical region to region and from industry to industry. It is important that the auditor or the team of auditors have the necessary background and knowledge. ISO 19600 suggests the top management of the organization should review the CMS on a regular basis. Typically, this is done once a year, but other frequencies may be chosen, if needed. The management review should address the following topics, but needs not to be limited to them:

346

• • • • •

4 Standards for Compliance, Anti-bribery …

Is the compliance policy up to date? Are the resources (human, financial, others) adequate? What is the status of defined actions, deriving from the last management review? Are the compliance objectives up to date and are they met? Are there internal or external issues that have impact on the CMS?

Examples New organizational structures, personnel, business partners, changed processes. • Performance data related to compliance and the CMS? • Feedbacks, complaints and other information from customers, stakeholders and interested parties? • Results of internal audits and other activities of self-control? • Behavior of management and personnel concerning compliance? • Training needs of the personnel? Keeping in mind the importance of compliance management for the organization, the topics of the management review should be treated with great care and seriousness.

4.2.2.7

Improvement

Compliance management according to ISO 19600 is oriented toward continual improvements and systematic implementation of corrective actions. This implies the organization should: • In case of occurring nonconformities or noncompliance, respond adequately. – – – – – – – – –

Why did they occur? What’s their impact? Is there a risk for similar undesired events elsewhere, but not yet detected? Determine the root-causes of nonconformities or noncompliance. Define adequate corrective actions. Ensure effectiveness of corrective actions. Initiate changes of the CMS, if needed. Train personnel. Corrective actions should be proportionate to the factual or potential impact of nonconformities or noncompliance.

• Implement an escalation procedure It is of utmost importance that noncompliance is adequately escalated. The organization should implement an escalation procedure that ensures that noncompliance events are timely escalated to relevant management levels and to the compliance function. Top management and the governing body (if any) must be in the escalation process.

4.2 ISO 19600—CMS—Compliance Management System

347

In cases, when other organizations (e.g. regulatory bodies) must be involved in the escalation process, it should be ensured, this happens in a reliable and timely manner. • Strive for continual improvement The organization should challenge its CMS and continually work on its improvement, as far as needed. Available information (audits, collected information, analyses) should be used to give this improvement process a direction. To summarize some essentials: • ISO 19600 offers a framework to establish, implement, maintain and continually improve the organization’s CMS. • Corporate compliance is one of the main risk areas for top management. Aligning the organization’s CMS with ISO 19600 gives assurance to have established a complete system concerning compliance management. • The structure of ISO 19600 is identical with other management system standards like ISO 9001, ISO 14001 or ISO 27001. The organization should not find it too difficult to integrate its CMS processes into them. In fact, this integration is one of the biggest values of the CMS according to ISO 19600. • Although ISO 19600 is not designed to be a certification standard, the organization may audit its CMS against it. • Being an ISO standard, ISO 19600 may be considered as a global benchmark document for a CMS. • ISO 19600 is adaptable to the organization’s complexity and size.

4.3 ISO 26000—Guidance on Social Responsibility 4.3.1 General Description of ISO 26000 The first edition of the standard • ISO 26000:2010—Guidance on social responsibility was published in November 2010. The idea of ISO 26000 is to offer guidance on social responsibility to all types of organizations, no matter what’s its size, industry or geographical location. ISO 26000 is not a management system standard and it does not define requirements. For that reason, it cannot be used as a certification standard. However, its scope as a guidance standard is broad and it also may be used as a general introduction to the area of corporate social responsibility. Social responsibility is a complex subject having many dimensions. ISO 26000 sheds light on them and offers a framework for practical applications. We shall not present the full content of ISO 26000, but point out some of its main topics.

348

4 Standards for Compliance, Anti-bribery …

Especially, we use the standard as an introduction to the issues treated later in the book: Sects. 4.4 (ISO 37001) and 4.5 (corporate social responsibility). ISO 26000’s starting point is the observation that social responsibility issues gain importance and impact. The driving forces include: • Organizations become increasingly aware that more social responsibility is expected by interested parties. Ignoring this expectation may lead to a loss of image and business. • Nongovernmental organizations (NGOs) and governments monitor the social behavior of organizations closer than ever before. • The impacts of an organization on the environment became a critical factor for its reputation and further development. • Socially responsible behavior becomes an increasingly important requirement for organizations down the supply chains. • Better social compliance indicators often imply competitive advantages. • Any responsible business should strive for minimizing its negative impacts on the physical and social environment. The following is a very short summary in form of a checklist, of some of the most essential content of ISO 26000. More details and explanations may be found in the standard itself. 1. Follow the principles of social responsibility 1.1. Be accountable Your organization should be accountable for its impacts on the environment, on the society and on the economy. 1.2. Be transparent Your organization should be transparent concerning its actions that have impact on the environment and on the society. 1.3. Show ethical behavior Your organization should show ethical behavior. 1.4. Show respect for the interests of stakeholders Your organization should understand and respond to the interests of its relevant stakeholders. 1.5. Show respect for legal requirements Your organization should consider legal requirements as being mandatory. 1.6. Show respect for international norms of behavior Your organization should stick with the law and follow international norms of behavior. 1.7. Show respect for human rights Your organization should understand the importance of human rights and comply with them.

4.3 ISO 26000—Guidance on Social Responsibility

349

2. Recognize your social responsibility and engage with your stakeholders 2.1. Understand the interactions and relationships of your organization with the society. 2.2. Understand the interactions and relationships of your organization with your stakeholders. 2.3. Understand the interactions and relationships between your stakeholders and the society. 2.4. Understand your organization’s most important factors and relevant issues concerning social responsibility. 2.5. Understand your organization’s area of influence, concerning social responsibility. 2.6. Identify your organization’s relevant stakeholders. 2.7. Ensure your organization’s engagement with relevant stakeholders. 3. Recognize the core subjects of social responsibility 3.1. Governance of your organization Understand the utmost importance of organizational governance for all aspects of social responsibility. 3.2. Your organization and human rights How does your organization exercise due diligence to manage its impacts on human rights? How does your organization valuate its risk issues concerning human rights? What’s your organization’s role concerning silent, direct and beneficial complicity? How does your organization resolve grievances concerning human rights? What is your organization’s policy concerning nondiscrimination and vulnerable groups? How does your organization respect civil and political rights? How does your organization respect economic, cultural and social rights of individuals? How does your organization respect fundamental principles and rights at work? 3.3. Your organization and labor practices How does your organization manage employment relationships? How does your organization manage working conditions and social protection? How does your organization practice social dialog? How does your organization manage health and safety at work? What’s your organization’s practice concerning human development and training? 3.4. Your organization and the environment What are your organization’s environmental management principles? How does your organization prevent pollution?

350

4 Standards for Compliance, Anti-bribery …

What’s your organization’s practice concerning sustainable use of resources? What are your organization’s practices concerning mitigation of climate change and adaption to climate change? How does your organization protect the environment? What does it contribute to biodiversity and the restoration of natural habitats? 3.5. Your organization and fair operating practices What’s your organization’s practice concerning anti-corruption? How does your organization practice responsible political involvement? What’s your organization’s policy concerning fair competition? How does your organization promote social responsibility along the value chain? What’s your organization’s practice concerning the respect of property rights? 3.6. Your organization and consumer issues How does your organization practice fair marketing? Does it offer factbased and unbiased information? Does it offer fair contractual practices? How does your organization protect consumers’ health and safety? How does your organization support sustainable consumption? What’s your organization’s practice concerning consumer service and support? How does your organization manage disputes and complaints? How does your organization protect consumer data? How does it protect privacy? How does your organization contribute to grant access to essential services (e.g. healthcare)? What does your organization contribute to consumer education and awareness building? 3.7. Your organization and the involvement and development of the community How does your organization proactively outreach to the community? How is the community involved? How does your organization promote and support education? How does your organization promote the preservation of culture? How does your organization contribute to the creation of employments and the development of skills? How does your organization contribute to the development of technology? How does it contribute to make it accessible? How does your organization contribute to the creation of income and wealth? How does your organization contribute to the improvement of the health system? What other social investment does your organization provide? (Table 4.2)

4.3 ISO 26000—Guidance on Social Responsibility

351

Table 4.2 Integration of CSR into the organization’s structure and processes How to integrate social responsibility into the organizaƟon’s structure and processes? 1. Ensure the commitment of the top management. 2. Clearly understand your organiza on’s context and which social responsibility issues are most relevant to you. 3. Define the social responsibility objec ves of your organiza on. 4. Define responsibili es, structures and processes for social responsibility. 5. Integrate these responsibili es, structures and processes for social responsibility with the others throughout the organiza on. If your organiza on already has an ISO 9001, ISO 14001 and others in place, there are clearly interac ons with social responsibility issues. Therefore, integra on is needed! 6. Communicate social responsibility issues. 7. Evaluate the effec veness of social responsibility in your organiza on and update everything that is needed. Although ISO 26000 is not a management system standard, under the line, a successful implementa on and opera on of social responsibility calls for a systemic approach. The PDCA cycle will drive things also in this case.

4.3.2 Integrating ISO 26000 into the Organization’s Management System Organizations that have implemented one or more of the generic or industry-specific management systems may be interested to integrate all or some of the ISO 26000 content. The document • IWA 26:2017—Using ISO 26000:2010 in management systems will offer helpful suggestions, how to do it. Remark International Workshop Agreement (IWA) is a special format of ISO documents which are created aside of the standard ISO process for generating ISO standards. However, they offer helpful material to the practitioner. We also would like to mention in passing, that currently (August 2019) the document • ISO/DTS 26030—Sustainable development and social responsibility—Guidance for using ISO 26000:2010 in the food chain is under development. As the name says, it addresses primarily organizations in the food supply chains.

352

4 Standards for Compliance, Anti-bribery …

4.4 ISO 37001—ABMS—Anti-bribery Management System 4.4.1 Introductory Remarks The first edition of the standard • ISO 37001:2016—Anti-bribery management systems—Requirements with guidance for use was published in October 2016. It is a Type A standard, which means, it can serve as a certification standard. ISO 37001 follows the “high-level structure” and has the same architecture as all other modern management systems standards. The standard consists of two parts, the first of which defines requirements concerning an antibribery management system. An extensive annex offers guidance on the use of the ISO 37001 and sheds light on general aspects of anti-bribery management. The standard with its requirements may be used as a standalone document. However, it may also serve as a module of an integrated management system including quality management, environmental management and others. What is bribery and why a standard for anti-bribery management systems? Bribery has many dimensions. In general, any acceptance or offering, promising and giving of undue advantages are considered as bribery. Advantages may be financial or nonfinancial and may be granted directly or indirectly. Bribery may address persons or organizations (Fig. 4.4). Being a widely spread phenomenon, bribery is explicitly considered as an offense in most jurisdictions. Spreading of bribery varies between industries and geographical regions. The idea of ISO 37001 is to offer a general framework, which may be

Bribery by/of the organization's personnel

Bribery by/of the organization

Bribery by/off the organization's business associates

Dimensions of Bribery

Fig. 4.4 Dimensions of bribery according to ISO 37001

Bribery in the publlic, private and not-for-profit sectors

Direct and indirect bribery (e.g. involvement of third party)

4.4 ISO 37001—ABMS—Anti-bribery Management System

353

employed by any organization, no matter what’s its size, industry or geographical location. It may be used in all jurisdictions and considered as a collection of good management practices to install preventive actions concerning anti-bribery at all levels of an organization. Of course, the application of ISO 37001 cannot provide assurance that bribery will not occur in the organization. However, implementing and really living the requirements of the standard will contribute a lot to reduce the likelihood of related undesired events. In addition, the standard requires an explicit commitment of the top management that bribery is “banned” from the organization’s processes and management structures.

4.4.2 Discussion of the Clauses of ISO 37001 4.4.2.1

Context of the Organization

The context of the organization is the set of determining factors and issues (internal and external) that influence the to-be-implemented anti-bribery management system. There’s a context for the quality management system of an organization and another one for the environmental management system and so on. Issues that influence and determine the context of the organization concerning the ABMS include: • • • • • •

Regulatory and statutory requirements; Requirements deriving from contracts, obligations, etc.; Size and organizational structures (incl. delegation rules etc.); Geographical locations and industry sectors of the organization; Entities controlled by the organization and entities controlling the organization; Business partners and associates.

Each and every organization has stakeholders and their expectations and needs shall be respected when analyzing the organization’s context. The organization shall determine the scope of the ABMS: For which part of the organization the ABMS will be implemented? The requirements deriving from the abovementioned context, the bribery risk assessments and other factors will influence the determination of the scope. An organization that wants to comply with ISO 37001 shall establish, implement, maintain and continually improve an ABMS and comply with all requirements of the standard. Regularly carrying out bribery risk assessments are a requirement. When determining these risks, standard risk assessment tools as they will be described later in this book may be employed. ISO 37001 is one more standard for management systems, which promotes and is built on risk-based thinking. Once the organization is on the way to determine its bribery risks, it will quickly become clear that criteria for evaluating levels and types of bribery risks need to be established. Again,

354

4 Standards for Compliance, Anti-bribery …

established approaches used in other areas of risk assessment may be employed. Procedures for and results of bribery risk assessments shall be documented and retained as documented information.

4.4.2.2

Leadership

The top management of the organization is in the driver seat of the ABMS. However, if the organization has a governing body, this shall be involved as well and show leadership with regard to the ABMS (Table 4.3). Table 4.3 ISO 37001 leadership and commitment requirements Leadership and commitment of the governing body and of top management Governing body shall …

Top management shall …

• Approve the anti-bribery policy of the organization: • Ensure the alignment of the organization’s anti-bribery policy and strategy • Review information about the performance of the ABMS • Be initiative that needed resources for the ABMS are allocated • Monitor the implementation of the ABMS by top management as well its effectiveness

• Take over the activities mentioned for the governing board in case the organization doesn’t have one • Ensure that the ABMS, the anti-bribery policy as well as anti-bribery objectives are adequately implemented, maintained and monitored • Ensure that ABMS requirements are integrated into the processes of the organization • Ensure needed resources for the ABMS • Communicate the anti-bribery policy internally and externally • Create awareness for the importance of the ABMS • Ensure that the ABMS may achieve the anti-bribery objectives of the organization • Encourage personnel and especially management personnel to support the ABMS and promote an anti-bribery spirit in the organization • Ensure continual improvement • Support management levels to show leadership in detecting and preventing bribery • Review the efficiency of the ABMS on a regular basis and report results to the governing body (if there is one) • Ensure that personnel will not suffer retaliation or other negative impacts, when refusing to participate in bribery (even if it has negative impact on the organization’s business) or reporting on suspected or factual violation of the anti-bribery policy

4.4 ISO 37001—ABMS—Anti-bribery Management System

355

The organization shall implement and keep updated an anti-bribery policy, which is established by top management. The anti-bribery policy shall: • • • • • • • •

Prohibit bribery; Call for compliance with applicable anti-bribery laws; Fit the needs of the organization; Commit to the requirements of the ABMS; Commit to continual improvement; Declare the anti-bribery compliance function to be independent; Explain consequences for not following the anti-bribery policy; Encourage the raise of concerns without fear of reprisal (in good faith, or on the basis of reasonable belief in confidence); • Be documented and available to stakeholders (in languages relevant to the organization); • Be available to business partners and associates. Top management has full responsibility for the implementation of the ABMS and the compliance of the organization with it. Roles and its responsibilities and authorities shall be assigned and communicated throughout the organization. All management personnel are responsible in their respective parts of the organization and in their roles that the ABMS is applied. An anti-bribery compliance function shall be assigned by top management and given the authority and responsibility to: • Ensure the conformity of the organization’s ABMS with the requirements of ISO 37001; • Oversee the ABMS of the organization and give guidance to personnel on it and issues concerning anti-bribery; • Report to top management and/or the governing body on the performance of the ABMS. This important anti-bribery compliance function shall be given to competent and experienced persons. The function shall be adequately equipped with resources and independence. In large organizations, the function will usually be stuffed with more than one person and with adequate coverage of the regions, the organization is active in. The anti-bribery compliance function shall have direct access to the governing body and to top management. It’s possible that all or part of the anti-bribery compliance function is assigned to an external person or third party. However, even in this case, a nominated manager of the organization shall retain the overall authority and responsibility over these external anti-bribery functions. This manager also shall supervise the external anti-bribery compliance functions. When an organization’s top management delegates decision-making authority to personnel, adequate anti-bribery control mechanisms shall be installed. The objective of such control mechanisms is to ensure that decision processes aren’t in conflict with the intents of the ABMS.

356

4.4.2.3

4 Standards for Compliance, Anti-bribery …

Planning

The organization shall ensure that all phases of the ABMS are properly planned. Topics to be addressed include: • • • •

The ABMS can deliver the results requested; Actions to prevent or reduce negative effects relating to anti-bribery are taken; The effectiveness of the ABMS is being monitored; Actions for the continual improvement of the ABMS are planned and implemented.

As with all other management systems, the organization shall establish antibribery management system objectives. These objectives shall be relevant, measurable, monitored and give the ABMS a direction. The objectives shall be consistent with the anti-bribery policy and realistic, in the sense of being achievable. Objectives shall be communicated to the relevant parties within and (if needed) outside of the organization. Anti-bribery objectives too, should get updated when needed. To ensure that anti-bribery objectives shall be met, actions will include: • • • • •

What exactly will be done and what are the resources needed? Who’s responsible for achieving the objectives? When will objectives be achieved? How will results be evaluated and how reported? Who’s responsible for imposing penalties and sanctions if needed?

4.4.2.4

Support

Requirements of the standard concerning support include: Resources, competence, awareness and training, communication and documented information. Generally speaking, it is the top management’s responsibility to allocate the resources needed to run the ABMS. Considering personnel, ISO 37001 defines some specific requirements concerning its competence, the employment process and awareness and training. In detail: • The competence of personnel working under the ABMS shall be determined; • It shall be ensured that personnel working under the ABMS is sufficiently competent and received adequate education and trainings; • If needed, personnel shall get trained and the effectiveness of the trainings shall be evaluated; • Documented information on the competence of personnel shall be available; • The organization shall implement a procedure, according to which all personnel is required to follow the anti-bribery policy and the processes of the ABMS and that the organization has the right to discipline personnel in the case of noncompliance. Remark In practice, this will usually be part of the workers contract. • Personnel have to be trained according to the ABMS and the anti-bribery policy of the organization;

4.4 ISO 37001—ABMS—Anti-bribery Management System

357

• The organization shall implement procedures according to which personnel will face disciplinary actions if not complying with the ABSM; • Personnel shall not suffer any discrimination or other negative impact when refusing to participate in activities which may bear the risk of bribery; • Personnel shall not suffer any discrimination or other negative impact when rising concerns of actual or suspected bribery or other violations of the anti-bribery policy. For two types of personnel, ISO 37001 defines additional requirements: • The anti-bribery compliance function; • All personnel that are exposed to more than a low bribery risk (as it comes out from the required bribery risk assessment of the organization). Before employment, transfer, promotion or redeployment this group of people has to undergo a due diligence process with the focus on anti-bribery. For the same group of personnel regular reviews of bonuses, targets, etc., shall be made in order to avoid colliding interests and additional risks for not acting compliant with the anti-bribery policy. This group of personnel, including top management and (if any) members of the governing body are asked in addition to sign documents, declaring their compliance with the anti-bribery policy of the organization. Awareness and Training Needs Establishing an ABMS is one thing reaching the people with it, is another. For that reason, ISO 37001 comes with dedicated requirements concerning training needs in order to create awareness. Topics concerning these trainings include: • What is the organization’s anti-bribery policy and ABMS? • Which risks may derive from not following the anti-bribery policy and ABMS? • Under what circumstances may bribery occur and what are typical mechanisms of bribery? • How to recognize and react to bribe? • How can personnel contribute to the effectiveness of the ABMS? • In which form and to whom may personnel report concerns connected with the ABMS? These trainings with the focus on anti-bribery awareness shall be offered regularly. Needless to say that training programs shall be updated when needed to comply with changing needs. ISO 37001 requires that business associates of the organization acting on behalf of it, shall subscribe to comparable due diligence and training processes. Awareness shall be created for the importance of the ABMS of the organization and its antibribery policy. Communication Procedures Many management systems standards require the implementation of communication procedures and communication channels, so does ISO 37001. The organization shall

358

4 Standards for Compliance, Anti-bribery …

implement procedures concerning on what to communicate, when and with whom, how and who will communicate in what languages. Documented Information ISO 37001 requires several kinds of documented information, deriving from several clauses throughout the standard. Examples include: Anti-bribery policy, documented trainings of personnel, documented procedures and so on. Beyond these requirements, the organization shall fix, what documented information is needed and how to document. Documented information doesn’t consist of printed paper only but may include all type of media currently available. The extend of documented information will, among other factors, depend on the organization’s size, qualification of personnel, type of industry, international presence, etc. Languages used will play a role in an international setting. No matter, however, which and how much documented information will be around, there’re a few basic principles which shall be followed: • The processes of creating, updating, distribution, retention, retrieval, etc., of documented information shall be under control. • The golden rule is: All necessary information shall be accessible at the right moment at the right place to the right people.

4.4.2.5

Operation

We summarize the ISO 37001 requirements concerning operation in Table 4.4.

4.4.2.6

Performance Evaluation

The performance of the ABMS shall be evaluated on a regular basis. In order to put these evaluations on solid ground and to be able to compare methods employed and results obtained from different performance evaluations with each other, certain rules shall be followed. These include: • • • •

Which aspects and parts of the ABMS need to be monitored? How will these be measured? Who is responsible for the monitoring and measurements? In order to obtain reasonable results: What are the monitoring and measurement methods? • When and how will monitoring and measurement results be analyzed and to whom will be reported? Internal audits are one of the standard tools to sample information about the performance of a management system. ISO 37001 too requires internal audits. The guidance offered by ISO 19011 may be employed to plan and conduct internal audits for ABMS. Chapter 7 of the book gives some additional details.

4.4 ISO 37001—ABMS—Anti-bribery Management System

359

Table 4.4 Requirements of ISO 37001 concerning operation Operational planning and control ISO 37001 requires the organization to define, implement and control the processes which are needed to comply with the requirements of the standard. As usual with processes, this includes the establishment of measurable criteria, as well as control tools for monitoring the processes. Adequate documented information shall be available to ensure, that the operation of processes is as it should Changes of processes, no matter if intended or unintended, shall be reviewed. Corrective actions shall be initiated if needed If the organization outsources processes, these shall be adequately controlled as well Due diligence In the organization’s anti-bribery risk assessments, usually areas will appear which show a more than low risk. These may include, without being limited to: • Relationships with business associates • Selected categories of personnel or functions • Special projects and activities The organization is required, to assess the bribery risks for these and other relevant categories. If needed and adequate, due diligence will be part of these assessments. This due diligence shall be updated if needed and repeated Financial controls Financial controls implemented by the organization shall include the management of bribery risks Nonfinancial controls In addition to financial controls needed to manage bribery risks, nonfinancial controls shall be in place, where needed. Examples include areas like: • Operation and procurement • Sales and commercial • Human resources, legal and others Implementation of anti-bribery controls by controlled organizations and by business associates An organization that has implemented an ABMS and controls other business organizations or associates, shall require them to either implement the organization’s ABMS or their own anti-bribery control system. Details of this requirement strongly depend on the bribery risk level of the controlled organizations or associates For those business partners and associates which are not controlled by the organization and for which a more than low bribery risk was identified, the organization shall have one of the following approaches: 1. Check, if the business associate has its own ABMS in place 2. If not, the organization shall require the implementation of anti-bribery controls to manage bribery risks 3. If TOP 1 or TOP 2 aren’t practicable, the organization shall reevaluate the anti-bribery risks and their potential impacts with respect to this partner and decide about how to manage these risks (continued)

360

4 Standards for Compliance, Anti-bribery …

Table 4.4 (continued) Operational planning and control Anti-bribery commitments The organization shall require business associates with a higher than low bribery risk, to implement adequate anti-bribery commitments with respect to their business associates. The nitty-gritty of this requirement is that the organization shall make sure, to keep adequate control of the “bribery behavior” along the supply chain with its next neighbors. In the case the organization should face problems with this sort of controls, decisions shall be made how to proceed with the noncomplying associates and their partners Gifts, hospitality, donations and similar benefits As gifts, hospitality, donations etc. may be an important source of direct or “hidden” bribery, the organization shall have procedures in place to regulate what type of benefits are acceptable and which not Managing inadequacy of anti-bribery controls If the organization detects (e.g. by due diligence), that anti-bribery risks connected with a business associate can’t be managed with the existing anti-bribery controls and the organization can’t or doesn’t wish to increase these controls, adequate steps shall be initiated. These may include to limit or terminate projects or transaction or to postpone them In real life, much will depend on the details of the relationship and projects under consideration. The intent of this requirement is, however, that the organization keeps trustworthy with respect to its ABMS and not violate its objectives Raising concerns The organization shall implement procedures, such that: • People are encouraged and able to report on actual or suspected bribery issues • Anonymous reporting is allowed • Identities of reporters are treated confidentially, and reports are used as far investigations require it only • Persons making reports are protected • Personnel may receive advices on issues related to bribery situations The organization shall ensure, that personnel is aware of the established reporting procedures Investigating and dealing with bribery The organization shall implement processes which: • Require assessments and investigations of reported or suspected bribery or other issues related to the violation of the ABMS • Require, that investigators shall receive adequate empowerment and personnel shall be required to co-operate in investigations • Require, that investigations are carried out confidentially • Ensure, that results of investigations are reported to the anti-bribery compliance functions Trivially, investigations shall neither be carried out by, nor reported to personnel which might be involved in the investigated case

Generally speaking, internal audits may contribute to check the compliance of the ABMS with general requirements of ISO 37001 and at the same time compliance with additional requirements defined by the organization, in case there are any.

4.4 ISO 37001—ABMS—Anti-bribery Management System

361

The standard • ISO/IEC TS 17021-9:2016—Conformity assessment—Requirements for bodies providing audit and certification of management systems—Part 9: Competence requirements for auditing and certification of anti-bribery management systems. It is primarily designed for second- and third-party audit and certification organization. However, the requirements defined herein may be helpful also for internal audits. It is important that the audits are risk-based. This has an essential influence on how information shall be sampled during the audit. Top management shall do reviews of the ABMS on a regular basis. The intent of these reviews is to check its effectiveness, adequacy and potential needs for changes. The following issues constitute standard input to the management review: • What is the status of defined actions from previous reviews? • Are there any changes of internal or external issues that may have influence on the ABMS? • Are there found nonconformities and defined corrective actions? • How are the measurement and monitoring results? • What are the results of internal audits? • What about investigations and reports on bribery? • Which bribery risks does the organization face and what’s their extent and nature? • How effective are taken actions addressing bribery risks? • Are there opportunities for improvement of the ABMS? Management reviews of the organization shall be part of the documented information. If the organization has a governing body, it shall too periodically review the ABMS, usually based on the review of the top management. The anti-bribery compliance function too shall assess the ABMS on a regular basis. Adequacy of the ABMS and effectiveness of its implementation are the two core topics of these assessments. Results of the assessment are to be reported to top management and to the governing body, if the organization has one.

4.4.2.7

Improvement

The organization shall react promptly to occurring nonconformities connected with the ABSM and take actions to correct and control them and deal with its consequences. • Nonconformities shall be reviewed, and an analysis of the root-causes shall be performed. The intent is, of course, to avoid reoccurrences and to determine causes of the nonconformities. • Corrective actions shall be implemented and their effectiveness shall be monitored. • If needed, changes of the ABMS shall be initiated.

362

4 Standards for Compliance, Anti-bribery …

• It shall be cross-checked, if found nonconformities might have undesired impacts on other issues. • It shall also be checked if detected nonconformities in one part of the organization may also have appeared somewhere else but remained undiscovered yet. • Detected nonconformities and initiated corrective actions shall be adequately documented. They’re part of the documented information. Despite of reacting to detected nonconformities by corrective actions, the organization shall continually work on the improvement of the ABMS.

4.5 CSR—Corporate Social Responsibility The standards discussed so far in this Chap. 4 are ISO standards. Practical needs lead to the development of a considerable number of additional standards and related audit schemes, triggered by industries, retailers and other groups of interested parties. It is almost impossible to oversee all these developments and it is not within the scope of this book to offer a detailed presentation. However, we would like to give the reader at least a little help to get some quick orientation in that field. For that purpose, Table 4.5 lists some of the most popular and influential CSR standards. Detailed up to date descriptions of the respective schemes may be found online. All these schemes have one thing in common: They use third-party audit organizations and their auditors to conduct the audits. The respective scheme owners survey their subcontracted audit organizations and the latter should have their processes and auditors under control. Real life shows, however, there are opportunities for improvements. For that reason, scheme owners tend to survey third-party audit organizations now more stringent than in the past. Noncompliant behavior of an audit organization or their auditors may lead very quickly to a temporary business hold or cancelation of the audit organization’s license for the respective audit scheme. Another development is the recently created APSCA (Association of Professional Social Compliance Auditors (see www.theapsca.org). Its mission includes: • Objective and effective assessments of competencies and skills of audit firms and their auditors. • Establishing effective governance for the member organizations to act with integrity and independence. It should be understood as one more quality assurance initiative to keep the quality of CSR audits high.

4.5 CSR—Corporate Social Responsibility

363

Table 4.5 Selected CSR standards Scheme

Characteristics of the scheme

Amfori BSCI

Amfori is the owner of the BSCI audit program, that is based on the following amfori BSCI principles and performance areas: rights of freedom of association and collective bargaining, fair remuneration, occupational health and safety, special protection of young workers, no bonded labor, ethical business behavior, no discrimination, decent working hours, no child labor, no precarious employment, protection of the environment, social management system and cascade effect, workers’ involvement and protection www.amfori.org

ASI

The aluminum stewardship Initiative is the owner of an audit scheme addressing organizations of the aluminum value chain. The program focuses on responsible production, sourcing and stewardship. It includes a performance standard, defining environmental, social and governance principles and criteria. It also includes a standard for the chain of custody of material in the value chains www.aluminium-stewardship.org

Fair Stone

Fair Stone e. V. is the owner of an audit scheme, which addresses supply chains for natural stone from China, India and Vietnam. The scheme focuses on occupational health and safety, human and labor rights, environment and management system www.fairstone.org

ICTI

The ICTI ethical toy program is an audit program addressing toy manufacturers. The primary intent is to ensure social compliance issues, as defined in the program’s requirements checklist www.ethicaltoyprogram.org

PSCI

The pharmaceutical supply chain initiative (PSCI) runs an audit program that focuses on the following target areas: management system, ethics, labor, health and safety, environmental protection www.psciinitiative.org

SA8000

Social accountability international (SAI) was founded in 1997. It is a nongovernmental global organization which advances human rights at work. Its certification process is based on the standard SA8000 www.sa-intl.org

SMETA

SMETA (sedex members ethical trade audit) is one of the classical audit concepts in the social compliance sector. SEDEX stands for supplier ethical data exchange www.sedexglobal.com

WRAP

WRAP stands for worldwide responsible accredited production. The WRAP audit and certification scheme is globally accepted and addresses primarily apparel, footwear and sewn products www.wrapcompliance.org

Chapter 5

Special Purpose Audit Schemes and Quality Awards

In this short chapter you’ll find: • A discussion of some design principles for special purpose audit schemes; • A sketchy introduction to quality awards.

5.1 Special Purpose Audits Schemes In Chap. 2 of this book, we considered generic management system standards, which had one thing in common: All of them were ISO standards. Recall, the creation and revision of an ISO standard follow specified rules and consensus processes. In Chap. 3 we discussed important industry-specific quality management standards, which are issued and managed by authorized industry organizations. Most of these standards were closely related to ISO standards (especially to ISO 9001). In addition, they passed consensus processes in their respective industries. In both cases, it is an intent of those management system standards that organizations can be audited against them. Besides the schemes with ISO or relevant global industry organization behind them, there is a zoo of audit schemes on the market for a variety of purposes and managed by different organizations (scheme owners). For example, third-party auditing organizations frequently develop audit schemes and offer them as add-on services to their customers. Some of these audit schemes come with an associated certification program, and some others are designed as pure audit schemes which end with an audit report. Due to the diversity and huge number of audit schemes out there, it’s hopeless to give a complete and exhaustive overview. What we shall do instead is to offer some guidance and “design principles” for such schemes. In a nutshell, the main ingredients are shown in Fig. 5.1. © Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7_5

365

366

5 Special Purpose Audit Schemes and Quality Awards

Scope and Requirements of Audit Scheme

Rules of Application

Auditor Qualification

Audit Scheme

Fig. 5.1 Essential ingredients to an auditing scheme

In more detail this means: • Scope and requirements of audit scheme: Define the scope of application and the requirements of the audit scheme. Note, the compliance with audit criteria cannot be established if they aren’t clearly formulated. Audit criteria must be answerable as “fulfilled”, “partially fulfilled”, “not fulfilled”, “not applicable”, etc. • Rules of application: To apply an audit scheme, some rules of application are necessary. These describe how audits are to be conducted. This includes, but isn’t limited to: – – – – – –

Which audit techniques are applied to collect information? How are audits conducted? Which parts of the organization need to be audited? How are audit durations calculated? If sampling is applied: how are samples selected? Other aspects.

• Auditor qualification: Audits are done by auditors. Therefore, the outcome of audits depends primarily on auditors’ qualification and the style how audits are conducted. It is super important that the qualification requirements for auditors are clearly described. This should also include other requirements concerning auditors, if any. Unfortunately, in practice, audit schemes are sometimes developed by parties, which don’t have adequate experience with the necessary design requirements of such schemes. The following shortlist of criteria summarizes some important topics. It should be supplemented, whenever needed for specific fields of application. 1. What is the intent and content of the audit scheme? 1.1. Clearly describe the intent of the audit scheme. 1.2. The documentation of the audit scheme should clearly describe the content and audit criteria of the audit scheme. 1.3. Is the audit scheme designed to be associated with a certification scheme, certificate label or comparable? If so, clearly describe the certification scheme.

5.1 Special Purpose Audits Schemes

367

2. Can the objectives of the audit scheme really be achieved based on audits? 2.1. In a sense, an audit is a measurement process: Certain aspects of an organization and its management system are compared with requirements of an audit catalog. It is important, therefore, that the audit catalog is clear enough, and its criteria can be answered with: Yes, no, partially, etc. 2.2. Sometimes pure system audits are insufficient to fulfill the special purpose of the audit scheme and must be supplemented by laboratory tests or other sorts of information. 3. Specify the owner of the audit scheme and the owner of the certification scheme. 3.1. Who is the owner of the audit scheme? Note, several organizations or persons may collaborate to create an audit scheme. However, ownership of the audit (and certification) scheme is a different topic. It is highly recommendable to define the owner of the scheme in the very beginning. This includes to define the rights and duties resulting from this ownership. 3.2. If the audit scheme comes with an associated certification scheme, define the owner of it as well. Ownership for the audit and certification schemes may coincide, but not necessarily. 4. Design the audit scheme The design of an audit scheme should be done with care and by people who have a real understanding of the subjects to be audited. During the design process the following topics may be worthwhile to be considered: 4.1. 4.2. 4.3. 4.4.

What is the expected output of audits? Who is authorized to define audit criteria of the audit scheme? How is information collected during audits? How are audit findings classified? Example: Fulfilled/not fulfilled vs. Fulfilled with xx %. Note, a quantitative grading of audit results needs more effort and clear procedures to be followed during audits. The design of such audit schemes is more demanding. On the other hand, they deliver more stringent results. Auditors need specific practical trainings to qualify them for the correct execution of such audit schemes. 4.5. What auditor team compositions are needed? 4.6. How is audit duration time calculated? 5. Conducting audits 5.1. Procedures should be available, describing how audits for the respective scheme should be conducted. 5.2. Are the audits done with the help of an audit tool (software package) or just in standard form using checklists? 5.3. Shall audits be done only onsite or are remote audits possible?

368

5 Special Purpose Audit Schemes and Quality Awards

6. Define necessary auditor qualifications and other related issues. 6.1. Assumed knowledge and skills (degrees, theoretical trainings, practical work experience, licenses, others)? 6.2. Auditor recruitment and selection. 6.3. Contracts with auditors: Clarify issues like responsibilities, insurance, etc. 6.4. Monitoring methods and evaluation of auditors. 6.5. Training needs of auditors. 6.6. Does the owner of the audit scheme need influence on auditor selection, appointment, monitoring and other steps? 7. The audit scheme should be transparent 7.1. Ensure that the audit scheme is transparent to relevant parties. 7.2. Ensure the audit scheme is adequately documented. 8. In case, the audit scheme is connected with a certification scheme, define the interfaces. 9. Define when and how the audit scheme shall be updated and by whom. It should be reiterated that this short checklist is by no means complete, but just highlights some important aspects. As audit schemes may be very diverse, the details will depend on specific needs. However, there are too many audit schemes on the market (frequently even combined with certification schemes) that show a quick and dirty design: Audit criteria are too vague, auditors are not sufficiently trained and “calibrated”, audit outcomes are not really comparable, the audit or certification results are not even clear and transparent. It makes sense, therefore, to spend adequate time for the design of a scheme. On the other hand, you may use the same principles to evaluate an existing audit and a potentially associated certification scheme. Unfortunately, frequently audit and certification schemes are intentionally not transparent. Certificates are designed to impress certain groups of addressees, without making the content and procedures behind the respective schemes clear. This kind of schemes should, therefore, just be ignored, as they don’t create value or relevant information.

5.2 Quality Awards Quality awards are another facet of the world of quality management. We shall give a short guide to them in this section. To illuminate the background of quality awards, have a short look at their history.

5.2 Quality Awards

369

5.2.1 The Deming Prize In 1950, the Union of Japanese Scientists and Engineers (JUSE) invited W. E. Deming to deliver lectures on statistical methods for quality control in Japan. Deming was a leading US American proponent of quality management, quality control and statistical methods, who at that time seemingly found more followers in Japan, than in his home country. The lectures delivered were a historic success and one of the outcomes of the partnership was the establishment of a national Japanese quality award, which was named Deming Prize. The first chairman of the Deming Prize Committee was the famous Ichiro Ishikawa, and the prize was first granted in 1951. It is generally considered as the mother of all now existing quality awards. The Deming Prize consists of four categories (www.juse.or.jp): • The Deming Prize for Individuals, designed for Japanese who have delivered an outstanding contributions to total quality management. • The Deming Distinguished Service Award for Dissemination and Promotion (Overseas), designed for individuals who have delivered outstanding contribution to total quality management outside of Japan. • The Deming Prize, which is granted to organizations who have implemented total quality management in an outstanding manner. • The Deming Grand Prize, which is granted to organizations that were winners of the Deming Prize and have even further developed their total quality management approaches in the years after.

5.2.2 MBNQA—Malcolm Baldridge National Quality Award In 1987, the US Congress established the MBNQA for US companies which have achieved extraordinary performance successes with their quality management system. The award is given annually in the following categories (www.asq.org): • • • • • •

Manufacturing; Service Company; Small Business; Education; Healthcare; Nonprofit.

The main intent of the price was and is to promote efficient quality management initiatives in the US economy. We shall not dive into the details of the award criteria categories, the selfassessment and evaluation process of an organization applying for the prize. However, the criteria categories are shown in Fig. 5.2.

370

5 Special Purpose Audit Schemes and Quality Awards

Leadership

Strategy

Customers

Measurement, Analysis, and Knowledge Management

Workforce

Operations

Results

Fig. 5.2 MBNQA criteria categories

We would like to add the following remarks: • It is a must for everyone deeply interested in management systems to have a detailed look at the MBNQA model. Detailed material is available for different categories. Similarities with standards like ISO 9001 will be obvious; however, there are also huge differences. • Doing an assessment according to the MBNQA criteria, you must employ its scoring system. This should be considered as a super exercise going beyond the generic and even industry-specific quality management standards.

5.2.3 The Continuum of National Quality Awards Over the years, an uncountable number of national, regional and other quality awards have been established around the globe. Very frequently, the MBNQA served as the raw model. As a typical example consider the awards of • EFQM—European Foundation for Quality Management, launched in 1991. Details may be found under www.efqm.org. Although requirements for the various national quality awards differ in some detail, organizations that want to apply for them typically have to go through the steps shown in Fig. 5.3. It should be noted that in addition to the many national quality awards, there are organizations offering awards for specific industries.

5.2 Quality Awards

Do a self assessment against the award criteria

371

Supply Award Committe with required information

On-site assessment of the organization

Granting of Award

Decision is made by Award Committees

Fig. 5.3 Typical steps during an application for a quality award

Winning an award is an issue of prestige for the winner. However, only a small number of organizations are selected every year. Even if you don’t intend to apply for your national or industry-specific quality award, it may make sense to audit your organization against its requirements. It just will lead you to discover alternative potentials and get important insights.

Chapter 6

How to Get Things Done: A Practitioner’s Toolbox

In this chapter, you will find a short introduction to the DMAIC concept that may be employed in many cases when establishing, implementing, maintaining and improving management systems in real-life environments. The main intent of this chapter is the presentation of a substantial number of tools that may be used to get things done.

6.1 Introduction and Overview The standards for management systems discussed in Chaps. 2–4 in this book all have one thing in common: They define requirements for management systems, but they don’t tell you how to align with them. The management system standards specify requirements, but not the design of your organization’s management system! Some of the standards, include informative appendices, but these too, are just collections of recommendations. Reading and understanding these standards is indispensable. However, this alone is not enough. You need tools, to get things done. Some remarks on this: • There’s no king’s road which will lead an organization easily to be compliant with one or more of the management system standards. Hard sustainable work will be needed. • Each organization is different. You may learn from others, but you have to find your individual way, which respects where you come from and where you want to be. • Establishing a management system, that is compliant with ISO 9001, ISO 27001 or any other standard, is one thing. The effectiveness and efficiency of the system

© Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7_6

373

374

•

•

•

•

6 How to Get Things Done: A Practitioner’s Toolbox

and if it really improves your organization is a different one. Whatever you do in this context, make sure, it serves your organization and improves it. There are countless consultants who want to support your organization. But how can you ensure they offer you support and solutions that are tailor-made for your organization? Take care! Many consultants offer mainstream and one-fits-all solutions, which may do in some cases, but too often they are not solutions with maximum positive impact on your organization. Therefore, look twice to select your consultant! If you are convinced, to have found the right one, go ahead! However, be aware: Your objective shouldn’t be just to achieve compliance with one of the management system standards. Your objective should be to get out the best of it. Don’t just envisage a certificate which you may get in many cases even for a mediocre implementation! To adapt and change a famous word: “Don’t ask, what you may do for the management system standard, but ask, what it may do for your organization!” All management system standards push you to determine and have available the knowledge needed to keep your organization running. You should also ensure that a sufficient number of people in your organization know the essential tools how to establish, implement, maintain and improve your management system. The tools presented in this chapter include some of the most popular ones. All were invented to deal with practical problems of certain types. Some were developed in Japan, others in the USA and elsewhere. Many were originally designed for the purposes in a specific industry, but then carried over to others. As an example, see how many hospitals are using tools now, originally developed in the automotive industry (e.g. FMEA). If you would like to find a common core of all these different tools, it’s this: – Implement fact-based thinking in your organization at all relevant levels. – Base your decision processes on real evidence, whenever possible. – Ensure that people at all levels understand the importance and application of the tools.

To really get used to the tools described in this chapter, it is important not just passively reading them, but to try them out in real life. You may like one better than the other. Also be aware that we present a selection of the most important tools only. There are variants of them and additional techniques, which you will encounter elsewhere. Although the list of presented tools is by far not exhaustive, the most important ones you should find on it. We present them in alphabetical order, as this seems to be the most effective way to identify them.

6.2 DMAIC: Define-Measure-Analyze-Improve-Control

375

6.2 DMAIC: Define-Measure-Analyze-Improve-Control 6.2.1 General Description of the DMAIC Approach DMAIC is an approach to project management and problem solving. It is central in Six Sigma environments. It is a demanding, but very structured scheme, which is widely acknowledged and used. It makes sense, therefore, to describe it here, as it is much more concrete and detailed as the PDCA cycle. Essentially, it offers sort of a navigation system through the whole improvement process, however complex it may be. Table 6.1 gives an overview about the individual steps, further below follows a more detailed description. Table 6.1 Five modules of the DMAIC model DMAIC Define

Measure

Analyze

Improve

Control

Project definition: clearly define the project and its scope. Formulate project charter. What are needs of customers and stakeholders: Collect information and validate voice of the customer analysis. Do a financial analysis Do a high-level value stream map. Map the process Select the team for the project. Define a communication plan. Draft the project schedule.

Collect all available information on current status and performance. Do an in-depth value stream analysis. Check metrics for input, output and process performance. Check process capability data. Check validity of measurement systems. Analyze time series of performance data.

Identify the root-causes of defects. Determine their impact on output, processes and performance. Employ statistical methods to analyze cause-and-effect relationships.

Create suggestions for solutions. Design and select final solutions. Create implementation plans. If needed, run pilot projects and validate the results. Implement final solutions. Measure results of implemented solutions. Analyze the improvements and benefits achieved.

Create process descriptions and SOPs for new processes, if needed. Train personnel. Communicate lessons learned. Control and monitoring of the new processes handed over to process owners. Follow the PDCA cycle.

376

6 How to Get Things Done: A Practitioner’s Toolbox

What is Six Sigma? Six Sigma is a structured approach based on the so-called DMAIC process (DMAIC: Define-Measure-Analyze-Improve-Control), to systematically run improvement programs for production and service processes and their outputs. It comes with a basket full of tools, which are employed in the DMAIC processes. Six Sigma traces back to earlier approaches which employed statistical quality and process control, to manage the performance of processes. The focus on measurement and the employment of statistical methods is one of the distinguishing factors of the Six Sigma approach. Starting in the eighties of the last century, it may be found in many industries now. In statistical terms, a Six Sigma process is one in which 99.99966% of all produced items are without a defect and conform to specifications. In other words, there are only 3.4 defective items per million. For some industries, like electronics, this level is crucial. However, many other industries, which are fine with a lower quality level of their output, still adapt the DMAIC approach, as it is well structured and offers a systematic route for continual improvement. Special trainings are offered for those who want to become licensed experts for Six Sigma. There are several levels of certification: white, yellow, green and black belts and even a master black belt. Organizations, subscribing fully to Six Sigma philosophy, typically nominate black belts as the team leaders for DMAIC projects. However, even if you’re not a licensed black belt, nothing should prevent you to study the tools and employ them with benefit in your daily work and projects.

6.2.2 Detailed Steps of the DMAIC Approach You may look at the DMAIC process as being an algorithm, which should be strictly followed step by step, as described. It is part of the concept that each step has a formal “gate” to the next step following it. It is important that activities belonging to one of the five steps are not mixed up with those belonging to others. A structured approach is key. Activities of one step should be finished, before doing the next. In each of the steps, typically certain tools are employed. Most of them will be discussed later in this chapter. Some of the tools may be useful in more than one of the DMAIC process, usually, however, with a bit different ansatz (Table 6.2).

6.2 DMAIC: Define-Measure-Analyze-Improve-Control

377

Table 6.2 A more detailed description of the DMAIC steps Define Input The input to this step is the formal initialization of the project by an authorized person or group. In Six Sigma terminology, this person is usually called the champion of the project. He/she should also be authorized to decide on resources needed for the project It is important that the initiator of the project (call it champion) delivers a first draft of the intent of the project, expectations on it, timeline and other input, if needed. This input information is called the project charter Action In this step of the DMAIC process, the project team will be nominated. In a Six Sigma environment, this will usually be led by a licensed black belt. Whatever, you need an experienced project leader to manage the whole project and guide the team. It is important that team composition is adequate and includes relevant know-how (may sound trivial, but it’s not!) The preliminary project charter delivered by the project initiator shall be reviewed and discussed with the team. If needed, necessary changes and modifications of the project charter shall be made and discussed with the project initiator DMAIC projects are safely based on facts and data. For that reason, all information needed to verify or falsify the problem statements of the charter shall be either available or collected in this phase. The project will not go on to the next phase, if the data situation is weird or unclear Financial implications (positive and negative) of the project shall be clarified and based on reliable analysis and estimation Project relevance to customers and its impacts on customers and other stakeholders shall be estimated and based on data. It may make sense to even involve representatives of the interested groups in the project in some cases An updated project plan shall be created, including its goals, milestones and timelines As communication is essential in DMAIC projects, typically a communication plan is established, which includes the principles, how will who communicate what, when and how. This point is critical, and it should address all relevant parties touched directly or indirectly by the project (relevant parts of the own organization, clients, stakeholders) At least a high-level project map shall be created Output The output of this step is the final project charter. Content includes: • Clear description of the problem/project • Clear description of the boundaries of the processes to be considered (what is part, what not) • High-level process map • Description of the goals of the project, its impacts and benefits • Evaluation of potential risks associated with the project • Project milestones and timeline • Project team composition • Communication plan • Validated input data (financial, data relevant to the project, customer’s voice, etc.) Typically employed tools Affinity diagrams

Organize and cluster information, especially results from brainstorming

Communication plan

Organize communication channels and communication responsibilities (continued)

378

6 How to Get Things Done: A Practitioner’s Toolbox

Table 6.2 (continued) Define Control charts

Help to analyze processes, their stability and variations

CTQ tree

Critical to quality (CTQ) analysis shows that which quality parameters of products, services and processes are critical for customers

Data sampling

Reliable and validated data sampling methods are needed throughout the DMAIC process

Pareto chart

Delivers a ranking of problems, from utmost importance to minor impact

Process capability

Process capability indices are objective measures for process performance

SIPOC diagram

SIPOC (suppliers-inputs-process-outputs-customers) analysis delivers essential process information, including: Boundaries of the process, requirements on the input and output of the process

Stakeholder analysis

Important to bring in relevant requirements and expectations of stakeholders on the DMAIC project

Value stream mapping

Useful to analyze flows in a process (material, information, etc.) and to identify improvement potentials. Separates value adding activities from nonvalue adding ones

Voice of the customer

Delivers objective customer information. Especially, what customers value, consider being critical and what is dispensable

Measure Input The complete output produced in the preceding step DEFINE Action The main intent of the MEASURE step is to collect and gather as much meaningful data as available about the current state of the process. This includes the following: • Focus on all relevant data for the process • Collect time series of data for the process to check process behavior, variances, etc. • Make a detailed mapping of the process (e.g. flowcharts) • Make a detailed value stream map • Check implemented measurement systems (validity, reproducibility of results, etc.) • Calculate process sigma Output The output of this step includes the following: • Complete and reliable data on the process (input/output requirements vs. actual) • Process maps (flowcharts, etc.) • Process performance and capability data • Process sigma • Value stream map • Validation of the measurement systems in place • If needed, update project charter and project plans Typically employed tools Control charts

Helps to analyze processes, their stability and variations (continued)

6.2 DMAIC: Define-Measure-Analyze-Improve-Control

379

Table 6.2 (continued) Measure Flowcharts

Maps the process and its individual steps

Histograms

A tool to visualize data, especially frequencies of appearance of categories of data

MSA

Measurement system analysis. Employed to understand measurement tools (Accuracy, precision, reproducibility, etc.). Ensure that data variation is due to process variations and not to variations of the measurement tool

Pareto chart

Helps to estimate the relative importance of factors, influencing a process

Process capability

Statistical indicators that help to understand process capabilities

Process sigma

Used to estimate process capabilities

Statistical sampling

Selecting the right statistical sampling methods is crucial to derive meaningful and significant conclusions from them

Taguchi loss function

Allows you to determine the loss due to variations of the process around specifications

Analyze Input The process information and data gathered in step MEASURE and the input from DEFINE Action The main intent of the preceding step MEASURE was to gather as much relevant data about the process as possible. In the current step, these data shall be analyzed and well understood, based on some theory, root-cause analysis or comparable approach It is important in this phase of the project that team members focus on the data and their analysis. Biases should be avoided, which may derive from insufficient data analysis, so should prejudices based on own previous experience or any other form of argument that isn’t fact-based Members of the team shall have sufficient practical experience in data analysis and the application of root-cause analysis tools Actions include: • Perform complete data analysis • Perform a process analysis based on the data • Perform a root-cause analysis • If needed, prioritize root-causes • Document the analysis adequately, such that conclusions may be traced back to decisions, data and facts • If during the ANALYZE step some immediate minor opportunities for improvement get visible, they may be implemented right away, but in a controlled manner Output The output of this steps includes the following: • Analysis of the process (input, process flow, output) • Statistical analysis of process performance, where needed • Root-cause analysis • Prioritizing cause-and-effect relationships • Documentation of the actions done, and decisions made in ANALYSIS • If needed, update of the project charter and project plan • Planning documents for the IMPROVE step Typically employed tools (continued)

380

6 How to Get Things Done: A Practitioner’s Toolbox

Table 6.2 (continued) Analyze 5 Whys

Employed to do deep dives in root-cause analysis studies

Brainstorming

Employed to collect ideas delivered by team members

C&E diagram

Cause-and-effect diagrams are an alternative tool to dive deep and find out cause-and-effect relationships

Confidence intervals

Confidence intervals are lower and upper bounds for statistical statements

Fishbone diagrams

Also called Ishikawa diagrams are a pictorial method to determine root-causes. Used in cause and sub-cause analysis

FMEA

Failure mode and effect analysis is used to determine ways in which, for example, a process can fail and what the effect of the failure will be

Hypothesis testing

Hypothesis testing is a statistical approach to test hypotheses

Regression techniques

Regression techniques are statistical methods, which may be employed to establish relationships between two or more variables

Tree diagrams

Tree diagrams may be used to analyze complex problems or goals. The recipe is to break them systematically in smaller parts and graphically visualize this process

Improve Input The results of the ANALYZE step Action The sole intent of the IMPROVE step is to develop a robust and efficient solution to the problem Actions include • Identify and develop solutions. Depending on the details of the case, this may result in just one solution, or in a bundle of alternatives • If more than one potential solution has been suggested, the optimal one should be selected on rational grounds • Designing and selecting a solution, input from benchmarking analysis should be considered, if available. Look around, how others solved the problem! • In some cases, special software may be employed, to simulate the suggested solutions under a wide range of parameters • In any case, testing the solution in a test environment or a pilot solution is a must • Doing a value stream map for the new solution may be a good advice and deliver additional insight • When the preceding design, draft and test phases of the IMPROVE step are finished, the implementation plan will be developed Depending on the size and scope of the project, the individual steps mentioned may vary considerably in complexity from project to project and from one organization to another Output The output of this step includes the following: • Design and development plans • Selection of solution • Results of pilot testing • Implementation plans • Documentation of the actions Typically employed tools (continued)

6.2 DMAIC: Define-Measure-Analyze-Improve-Control

381

Table 6.2 (continued) Improve 5S

5S means sort-set in order-shine-standardize-sustain. This is a tool to optimize workplaces

Benchmarking

Strive for best solutions and compare with what other organizations achieved

Brainstorming

Employed to collect ideas delivered by team members

Control charts

Helps to analyze processes, their stability and variations

FMEA

Failure mode and effect analysis is used to determine ways in which, for example, a process can fail and what the effects of the failure will be

Hypothesis testing

Hypothesis testing is a statistical approach to test hypotheses for samples

Involvement matrix

Supportive tool, to decide whom to involve in the different steps of a project

Kaizen

A method to speed up improvement processes by the direct involvement of employees

Pareto charts

Helps to estimate the relative importance of factors, influencing a process

PDCA cycle

PDCA: Plan-Do-Check-Act is a fundamental tool used in environments with needs for continual improvement

Process sigma

Used to estimate process capabilities

Simulation techniques

Software-based techniques, which allow you to simulate, test and improve designed processes (including interaction with others) before their ultimate implementation

Control Input Plans, data and documents from the IMPROVE step Action The main intent of this step is to sustain the changes of the process made in the IMPROVE step Actions include: • Documentation of the new process • Training of personnel on the new process • Establish monitoring system for the implemented new process • Make sure the new process delivers what it should • Compare before-implementation-data with after-implementation-data • Nomination of new process owners • Implement PDCA philosophy • Plan validation activities and special audits for a period after implementation (continued)

382

6 How to Get Things Done: A Practitioner’s Toolbox

Table 6.2 (continued) Control Output The output of this step includes the following: • Stable implementation of the new process • Documentation of the new process, including traceability of changes, compared to the former • Documentation of lessons learned in the project, for further use Typically employed tools Communication plan

Organize communication channels and communication responsibilities

Control charts

Helps to analyze processes, their stability and variations

PDCA cycle

PDCA: Plan-Do-Check-Act is a fundamental tool used in environments with needs for continual improvement

Process control plans

Determines how the new process shall be controlled

Project replication

Documentation of lessons learned. Should be done such that it is of use for forthcoming comparable projects

SOPs

SOP: Standard operation procedures. These are documented information to instruct personnel how to run the processes correctly

6.3 Integrated Management Systems In the last section, we sketched the DMAIC approach to process optimization projects. Understand this is just one of many possible ways to do things. However, DMAIC is field-tested and includes the following advantages: • It gives projects a clear structure and standardizes approaches. Still there is enough room for creativity, but the whole ansatz remains result driven. • It nicely describes the inputs and outputs of each step. • It suggests which tools could be helpful to solve the tasks of individual project phases. In the context of management system implementation and optimization, one usually faces yet another issue: • The organization does not start from scratch but has already some sort of management system. • However, the organization identifies opportunities for improvements almost everywhere and in addition wants to comply with the requirements of a set of management system standards. As an example, consider the first row in Table 6.3. In this case, the organization wants to comply with ISO 9001, ISO 14001, ISO 27001, ISO 45001 and some CSR standard. An important practical question is then how an integrated management system can be established, implemented, maintained and optimized? Per definition, an integrated management system would comply with all the legal and regulatory requirements,

6.3 Integrated Management Systems

383

Table 6.3 Standards—processes—requirements—tools Standard

Processes

Requirements

Tools

ISO 9001

PQ1 , PQ2 , …

ISO 14001

PE1 , PE2 , …

ISO 27001

PIS1 , PIS2 , …

ISO 45001

PHS1 , PHS2 , …

CSR

PCSR1 , PCSR2 , …

…

…

Requirements of the standards Legal and regulatory requirements Customer requirements Own optimization requirements …

IT-based processes Statistical process control 8D-Reports FMEA (design, processes, products) RACI matrix organization …

with the requirements of the management system standards selected, with customer requirements and with the organization’s own process optimization requirements. To bring it to the point, there is no general and universally valid answer to the question how to achieve this. It heavily depends on the details of the organization, the availability of resources and many other factors. It should be clear, however, that an identification and mapping of all relevant processes will not only help but be a prerequisite for all further steps. Note there will be processes that are primarily quality relevant. Others are relevant to information security topics, environmental issues and so on. In some cases, processes will have both quality and environmental aspects. Of course, other combinations of processes will prove to be relevant. In Table 6.3, the second row indicates the respective core processes that are identified to be of utmost priority for the individual parts of the management system. What makes the DMAIC approach so useful is its stress of certain tools for specific tasks. It is important and contributes a lot to an integrated management system, if for comparable tasks defined tools are employed. As an example, it contributes enormously to the discipline of project groups and the seriousness how nonconformities are handled, if tools like 8D-Reports are used for all management system components. This is indicated by the fourth row in Table 6.3. To sum it up, there hardly is a king’s road to run an integrated management system. But employing a standardized toolbox is an important prerequisite to achieve it.

6.4 Tools and Concepts in Alphabetical Order 6.4.1 Introduction The intent of this chapter is to introduce the reader to some important tools and concepts that are necessary and useful when doing practical work in the context of the management systems discussed in previous parts of this book. As has been mentioned before, all management system standards define requirements, but they

384

6 How to Get Things Done: A Practitioner’s Toolbox

don’t offer much help how to get things done in your organization. Although some of these standards contain informative and guidance sections, they don’t offer you a toolbox. The tools and concepts presented in this section are collected from different environments: Risk management, Six Sigma, quality management, mathematical statistics and more. An alphabetical order has been selected to list the tools. This seems to be the best choice for quick reference. Each of the tools is presented in closed form. Very rarely cross-references are necessary. If needed, they are given. The reader may choose his or her individual path through the material. Just reading this section and getting a taste of the tools will not suffice. You should try to use them in daily life, try to solve real problems, and gain practice how to use them. Some of the tools you’ll like more than others. Some even may not show any value for the type of issues you currently deal with. But that’s ok. Just pick up those, which make sense to you right now! Some of the tools are core tools in some industries (e.g. HACCP in food industry and FMEA in the automotive industry). If you want to dive in deeper into the subject, you should have a look at all of them. Some of the tools presented involve inevitably some amount of mathematics. In most of the cases, not only formulas are presented, but they are derived. From my understanding, this is necessary for a deeper understanding of the respective methods. The reader may skip these derivations on first reading or forever, if he/she is only interested in quick applications.

6.4.2 5S Method The 5S method forms part of a bunch of methods that often are summarized under the headline “visual management” methods. The simple, but powerful idea behind the 5S method is the observation that clean and clearly structured workplaces and work environments are a crucial prerequisite for dealing with quality issues or other aspects of management systems. In other words: To clean up your stuff is one of the very first and obvious opportunities for improvement you may start with. The name of the 5S method derives from the initial letters of its five steps (Table 6.4). The nitty-gritty of the tool… In almost any organization, you’ll find working places that are a mess or at least show opportunities for improvement. Some people even defend and love what they call their “creative environment”. However, there is more than one reason for cleaning up: • Improve effectiveness and efficiency (quality, environment and more). • Avoid potential health and safety risks. • Keep hygiene standards high.

6.4 Tools and Concepts in Alphabetical Order

385

Table 6.4 Five steps of the 5S method Japanese term

English translation

What it means …

Seiri

Sort

Eliminate items not really needed from the workplace

Seiton

Set in order

Organize the workplace effectively

Seiso

Shine

Keep the workplace as clean as possible

Seiketsu

Standardize

Implement standards for the organization of workplaces

Shitsuke

Sustain

Ensure discipline and live the implemented standards for the workplaces However, work on their continual improvement

• Efficient and clean workplaces reflect clear thinking and show the organization takes care. • Clients don’t really trust messy organizations. In this context, it doesn’t have only physical workplaces in mind. For example, if someone opens his laptop and you see 120 files on his desktop, you might ask the question: Ok, how does this guy organize stuff? Employing the 5S method in practice, you should proceed systematically: • Organize the application of the 5S method as a project with a dedicated project leader. • Train personnel about the intent of the project and explain the principles of the 5S method. • Define the objective of the 5S project and try to make them measurable. As it is about workplace improvement, details of 5S projects will depend much on the details of your organization like: Industry, size of your organization, current state of workplaces and others. However, there are some general rules that should be followed. The following checklist contains typical To-Dos during the individual steps of a 5S project. Step 1—Sort The goal of this step is to eliminate everything from the workplace that isn’t really needed. To achieve this, it makes sense to categorize the items. Categories could include, but aren’t limited to: • How often are individual items used (permanently, once the day, occasionally every week or month)? • Are there items around that are defective, outdated or not really needed? • Is there paper stuff around that isn’t needed or outdated? • Are there critical items with negative impact on health and safety, quality or other aspects? Items that are obviously not needed at the workplace should be removed right away. In some cases, it may not be immediately clear what to do with specific items

386

6 How to Get Things Done: A Practitioner’s Toolbox

and it may be helpful to tag them and observe for a while, if and how they are used. After that period decide. Step 2—Set in Order Once having removed unnecessary and other items from the workplace during Step 1, the next objective is to improve the organization of the workplace. Whenever possible, this should lead to simplifications of the workplace and the workflows to which it is connected. Depending on the details of the workplace, this step may be complex. Issues to be dealt with include the following: • After removal of unnecessary items: How does the workplace currently look like? • What are the borders of the workplace? • How could the workplace be optimized and what should it look like after optimization? Finding the optimal layout of workplaces may require the involvement of experts. The organization of a workbench and operation theater design is very different things and should be done by people with relevant background. Step 3—Shine After the “Sort” and “Set in Order” steps, workplaces have changed and should look much better than before. The objective of the “Shine” step is to ensure that workplaces stay to be clean and safe. This should include: • • • •

Define criteria for cleanliness and safety. Ensure the implementation of adequate cleaning and safety procedures. Ensure that issues like handling waste are included in the procedures. Implement regular control procedures to check compliance with the set cleanliness and safety standards. • Where needed, implement adequate hygiene standards. • Make sure, housekeeping standards are in place with sufficiently detailed cleaning objectives (how to clean, how often, who’s responsible). Step 4—Standardize In this step of the 5S project, you set the standards for workplaces and work environments. These standards will deal, for example, with the following issues: • How shall workplaces look like (includes storage areas etc.)? Example Standards should be detailed enough to show which items are part of the workplace and which not. Photos may help to illustrate. • Cleaning procedures. • Regular and unannounced controls of workplaces and work environments. • Training of employees to make them understand the 5S philosophy and its implementation in the organization.

6.4 Tools and Concepts in Alphabetical Order

387

Step 5—Sustain Perhaps the most important objective of a 5S project is to achieve a mindset that really supports the project, and which is sustainable. Once Steps 1–4 are finished and achievements have been made, you must ensure that people don’t return to old habits. Things may be nicely looking today but transform into a mess after four weeks. For that reason, depending on the needs, culture and other aspects of your organization, you should: • Not consider the 5S approach to be a singular event but repeat it in adequate intervals. • Make 5S thinking part of the toolbox of your organization. Remark Applying the method once and then let it go, will lead you nowhere. • Ensure that people get the spirit of the approach and follow it (discipline). • Define clear standards for workplaces and work environments. • Control compliance with the standards. • You may benchmark different parts of the organization with respect to 5S achievements to encourage responsible personnel.

6.4.3 5 Whys The intent and strength of this tool is to push you to keep thinking about the rootcause of an event and not getting satisfied easily with preliminary results. If you face any issue, undesired event or problem, you should ask: “What is the cause for that? Why did it happen?” Too often people get satisfied with a preliminary or unprecise answer. The 5 Whys method pushes you to keep on asking and thinking, until you identify the ultimate and real root-cause. The recipe is: Don’t get satisfied easily. Ask Why-Why-Why until you finally end up with the true root-cause. The nitty-gritty of the tool… The method is best explained by a simple example (see Fig. 6.1). It should be stressed that the number 5 suggested by the name 5 Whys is by no means an obligatory figure. There may be cases where you’ll find the root-cause after three steps, but in others it takes ten. The number 5 is there for illustrational purposes. The message is: Be insistent and follow the path until you identify the final cause. In the trivial example below, a service guy wants to identify the reason for the low battery life of a tablet, the customer complaints about. He finds out the root-cause for the mediocre 5 h battery life of a tablet isn’t a technical defect but caused by user’s ignorance.

388

6 How to Get Things Done: A Practitioner’s Toolbox

Fig. 6.1 Simple illustration of the 5 Whys method, applied by the service guy

SSelect an event e for which w you want to ffind the caause Client complains: Batttery of tab blet PC lassts only 5 hours h Why does d this h happen? WiFFi and blueetooth is o on perman nently, eveen if not needed n Why is thaat? Default settings o of tablet PC is on peermanentlyy Why did that happen? h User didn't study manual W didn'tt user read Why d the manual? Userr is ignorant and doesn't like tto read

6.4.4 5W2H—5 Whys and 2 Hows When responding to any issue (problem, improvement need, corrective action, etc.), this method may be of value. Simple as it is, it may help to get discipline and structure into a project and define a frame for it. It forces you to consider all relevant aspects of the respective issue. The nitty-gritty of the tool… The main intent of the 5W2H tool is to answer for any project at least the five W-questions and the 2 H-questions, as shown in Table 6.5. The application of the tool is straightforward: 1. Select the problem or issue to deal with. 2. Ask one by one the seven questions (five times why and twice how) and see, if you have good answers to all of them. The tool supports the general ansatz of all management system standards discussed in this book, namely “management by fact”. Pushing individuals or teams to be ready Table 6.5 To-Dos behind the 5W2H model Question

Explicit question

Comment

What?

What will be done?

Plans, actions, details of the project

Why?

Why will it be done?

What are the reasons for the project?

Where?

Where will it be done?

Location, organization unit

When?

When will it be done?

Time schedule

Who?

Who will do it?

Responsibilities

How?

How will it be done?

Description of processes and methods

How much?

How much will it cost?

Costs and other resources, measured in money

6.4 Tools and Concepts in Alphabetical Order

389

to answer certain key questions concerning a project helps substantially to walk on the safe side. Example Implementation of a new software tool for production process control Important questions include: 1. What will be done exactly? What’s the scope of the project? 2. Why is it needed? Why will the current software be replaced? What’s the rationale for the decision? 3. Where will it be done? In all production units? Test phase in one unit and then rollout? 4. When will it be done? Is there a clear time schedule for the software rollout? 5. Who will be responsible for the rollout? Who is on the team? 6. How will the rollout be done? Validation procedures? What-If-plans? Training of personnel? Written procedures prepared? Risk management? 7. How much will it cost? Does the financial plan contain all facts and risks?

6.4.5 8D-Reports An 8D-Report is a structured way to respond to detected nonconformities with a systematic root-cause analysis and successive actions. These include the implementation of temporary and final corrective actions, their monitoring and check of effectiveness. In many organizations, 8D-Reports are implemented and considered as a must for each found substantial nonconformity. Many organizations require convincing 8D-Reports from their suppliers, if they don’t conform to requirements. 8D-Reports should be in the toolbox of everyone having responsibility for quality, environmental aspects or others within an organization. The report bears its name from the eight steps (dimensions) one has to consider to complete it. The nitty-gritty of the tool… 1. Assemble a team that will deal with the nonconformity. 1.1. Team members shall be experts who oversee the full scope of the nonconformity. 1.2. Nominate the head of the team, who will bear overall responsibility for the actions to be done. 2. Define precisely the nonconformity (problem). 2.1. Sometimes a nonconformity may look relatively harmless but evolve to an issue with major impact if analyzed in detail. For that reason, it may be necessary to update the scope of the team and its tasks.

390

6 How to Get Things Done: A Practitioner’s Toolbox

3. Define containment actions, if needed. 3.1. In some cases, it may be advisable or necessary, to implement containment actions, before the full corrective action plan will be done. 3.2. This may happen, for example, when even a quick analysis shows that a production equipment is contaminated and must be shut down until further decision. 3.3. If the problem may be traced back to misbehavior of individuals, it shall be decided how the organization shall respond. 4. Do a complete root-cause analysis. 4.1. This may be done with established means like Ishikawa analysis, or any other tool, that fits to the specific problem and circumstances. 5. Define a corrective action plan. 5.1. Based on the root-cause analysis, the corrective action plan contains all actions, responsibilities and suggested timelines. 5.2. The corrective action plan, suggested by the team, shall be confirmed by an authorized person, which is not necessarily a member of the team that suggests the plan. 6. Implement permanent corrective actions. 6.1. Be aware that the implementation of the corrective action plan may be a small thing, or may be huge, depending on the details of the plan. It may, for example, call for substantial changes in the organization, investments to be made—there’s no limit. 6.2. The responsibilities for the individual actions in the corrective action plan shall be defined clearly and the people in charge shall get sufficient empowerment. 7. Take actions to prevent recurrence of nonconformities. 7.1. A once cured disease may return, if preventive actions aren’t taken seriously. It is important, to install actions, that the nonconformities will not occur again. 7.2. In many cases, this will call for the implementation of additional measurement and monitoring. This should contribute to get an early alarm if things don’t develop as they should. 8. Congratulate the team. 8.1. Having completed the job, a team should receive a positive feedback. Figure 6.2 sketches the eight steps that make up an 8D-Report and shows a flowchart of the individual action items. In practice, it is needed to document steps 1–8 adequately. In most cases, a simple form sheet will not do, as the results of the

6.4 Tools and Concepts in Alphabetical Order

Flow Chart

391

Form Sheet 1. Team

Select the Team

2. Problem Description Describe the Problem

3. Containment Actions

Estimated Effect

implement Verified Interim Actions

4. Root Causes Identify Root Causes

Root Causes Verified?

no

yes

5. Choosen Permanent Corrective Actions Define Corrective Actions

6. Implemented Permanent Corrective Actions Implement Corrective Actions

7. Actions to Prevent Recurrence Prevent Recurrence

8. Congratulate the Team Recognize Team Members

Comments and Remarks

Fig. 6.2 Content of an 8D-Report

analysis, actions defined, additional monitoring, etc., may be a substantial amount of material. Typically, IT solutions are in place. However, details will depend on the size of the organization and its requirements.

392

6 How to Get Things Done: A Practitioner’s Toolbox

6.4.6 Acceptance Sampling Acceptance sampling is a bunch of statistics-based inspection techniques. It is usually applied at the beginning of production processes, checking the quality of incoming (raw) material, products, lots or batches. It is also applied during (e.g. quality control inspections) and after the production process (e.g. pre-shipment inspections), to check if quality standards and requirements are met. It must be stressed that acceptance sampling shouldn’t be considered as a quality improvement technique, as it does just this: Checking the conformity of lots, material or items with requirements. Any feedback loop triggering improvement processes is not part of the acceptance sampling process. However, acceptance sampling techniques were developed at the very beginning of quality management initiatives starting in the 1930s, and at that time they were one of their sharpest weapons. Today, acceptance sampling techniques are still in use and needed in many fields. The best way to look at them may be as a quantitative statistics-based inspection process. In many industry environments today, customers and suppliers agree on the use of SPC methods to control the quality of material and products. Acceptance sampling is considered then as a complementary and often indispensable tool. Why sampling and not checking the whole lot? A 100% inspection of lots or material is usually neither possible nor adequate, considering the time needed and related costs. On the other hand, doing no inspection is not an option, as the risk not meeting quality requirements must be kept to a low level. Acceptance sampling is a compromise between the two extremes of doing nothing and checking everything. Based on agreed sampling plans and statistical methods, it offers probability-based statements about the inspected lots and items. The nitty-gritty of the tool… We shall give a short overview about the basic concepts of acceptance sampling and the mathematics behind them. 1. Approaches to acceptance sampling Two approaches to acceptance sampling should be distinguished: • Sampling by attributes This approach is based on checking for defects or defective items in the sample. The decision about accepting or rejecting the lot depends on the quality and number of defects found. • Sampling by variables In this approach, the decision about accepting or rejecting the lot is based on characteristics that are measurable (Fig. 6.3). In the following, we focus on sampling by attributes. 2. Sampling plan The sampling plan is the core element of acceptance sampling and usually agreed between the customer and supplier. Based on the number N of items in

6.4 Tools and Concepts in Alphabetical Order

393

Fig. 6.3 Types of sampling plans

the lot, it specifies how many items n shall be selected at random and inspected. Depending on the number c of found defects in the sample, the sampling plan specifies if the inspected lot will be accepted or rejected. The sampling plan may be part of a procedure which describes in detail what methods shall be applied during acceptance sampling. For example, how should samples be selected? Sampling plans are decision rules! There are several types of sampling plans: • Single-sampling plan This type of plan is based on a single sample drawn from the lot. The lot is accepted if the drawn random sample doesn’t contain more than a specified number of defects. Otherwise it is rejected. • Double-sampling plan This type is based on a cascaded sampling procedure. For the first step of the double-sampling plan criteria for accept-reject-inconclusive are defined. If the results of the first step allow a clear decision whether the lot should be accepted or not, a second step isn’t needed. If the results of the first step are inconclusive, a second sample will be taken. The results from the first and second samples should lead to an accept-reject-decision. • Multiple-sampling plan More complex sampling plans may be required in special contexts. These are tailor-made acceptance sampling procedures with more than two sequences of sampling and a final decision making. • Sequential sampling plans This type is based on an item-by-item sampling. In each step of the sequence, the decision is made whether to reject or accept the lot or whether to continue the sampling process.

394

6 How to Get Things Done: A Practitioner’s Toolbox

To summarize, for or all types of sampling plans holds: They contain clear descriptions how the sampling has to be done and what are the acceptance and rejection criteria. In addition, sampling plans are based on statistical arguments. 3. Application of acceptance sampling and related risks Acceptance sampling may be adequate in the following typical situations, but not be limited to them: • Testing 100% of the items isn’t feasible, too expensive or time-consuming. • Inspection implies the destruction of the item; therefore, not all items can be inspected. • Huge lots have to be inspected (electronics parts, raw materials, agricultural products, wood, etc.). • Used as an additional quality assurance tool to complement quality management activities. • Used as a special in-process control activity (e.g. textile industry and food industry). Risks connected with acceptance sampling include: • There is a risk to accept nonconforming lots and reject conforming ones. • The sampling plan is not adequate and does not discriminate sufficiently between acceptable lots and not acceptable ones. • Personnel involved in the acceptance sampling procedure provides unreliable samplings. • The sampling process is biased. 4. Ensure that random sampling is really random The following aspects are critical: • Items, products, units or probes selected for inspection shall be selected at random, avoiding bias. Example 1 Imagine five containers of animal feed are to be tested. If in this case only probes from the surface of the container are selected, this will almost inevitably lead to biased results. Example 2 You receive a batch of electronic components (e.g. resistors). The batch consists of five boxes, each containing 2000 resistors. In total, this makes N = 10,000 items. You would definitely create a biased sampling result if you sample all items only from the same box. • To assure as much randomness as possible, in some cases it is possible to assign numbers to the items. In a second step, a random number generator is employed to select which item will be inspected. If this is not an option, you should refer to other methods to ensure randomness of your samples.

6.4 Tools and Concepts in Alphabetical Order

395

N=150

( - α)

c=1

c=2

c=3

β

Fig. 6.4 Elements of an operation characteristic

5. Terminology: AQL, LTPD, Producer’s Risk, Consumer’s Risk The following terminology is used in the context of acceptance sampling, especially in the design of sampling plans and operating characteristics. See Fig. 6.4 for a graphical illustration. • AQL—Acceptable Quality Level The AQL is an agreed value between the supplier and the customer (consumer). It is the poorest level of quality that the customer will accept (worst tolerable). To achieve the AQL, the average output of the supplier’s processes must be better than the AQL, as processes show variations and the AQL is the minimum quality level the customer would like to see. AQL is typically measured in proportion defective. The AQL is not a specification but marks a red line which the output of the supplier must not cross. Operation characteristics of sampling plans should be designed such that a lot that violates the AQL will be accepted with a very low probability only. Example If the supplier and customer agree on an AQL of 0.2%, this means maximum two defective items in one thousand are accepted. • LTPD—Lot Tolerance Proportion Defective Sometimes called RQL (Rejectable Quality Level) or LQL (Limiting Quality Level). It is also measured in proportion defective. The LTPD is the lowest level of quality the consumer can accept in a singular lot. The range between AQL and RQL is typically small and depends on the requirements of the consumer and the criticality of the subject under consideration. • Producer’s Risk (α) As acceptance sampling is based on statistical reasoning, there is a nonvanishing probability, that even a good lot complying with a given AQL (having defects equal or less than the AQL), will be rejected based on the inspection

396

6 How to Get Things Done: A Practitioner’s Toolbox

process. As this is a risk for the producer (supplier), it is called producer’s risk. The probability for this is often called (α). • Consumer’s risk (β) There is also a nonvanishing probability that a bad lot with defects greater than LTPD will be accepted. As this is primarily a risk for the customer, it is called customer’s risk. The probability for this is often called (β). 6. The OC—Operating Characteristic and the mathematics behind it The operating characteristic of an acceptance sampling procedure plots the “Probability of acceptance of the lot” against the “Proportion defective”. In plain English: The operating characteristic shows how a given sampling plan discriminates between “good” and “bad” lots. To show how it is derived, we proceed as follows. Given a lot with N items, suppose D of them are defective. It is customary to introduce a factor θ , that is defined via the equation θ = ND , giving the proportion defective. Assume we draw a sample of n items from the lot (without replacement) and want to calculate the probability that out of these n items exactly x are defective. This is solved by the hypergeometric distribution, as was shown in Chap. 9:  f (x) =

D x



N−D n−x   N n



 =

θN x



N − θN n−x   N n



If we ask for the probability that there are less or equal c items defective in our sample, the respective probability is given by  F(c; θ ) =

c  x=0

θN x



N − θN n−x   N n



As we also know from Chap. 9, if θ = ND is small, the hypergeometric distribution may be approximated by the binomial distribution as follows:      x  D n−x D n x n 1− = f (x) = θ (1 − θ)n−x x x N N This simplifies calculations. However, as number crunching is not an obstacle anymore, one can do all calculations with the hypergeometric distribution equally well.

6.4 Tools and Concepts in Alphabetical Order

397

The following graph of an operating characteristics illustrates these quantities (Fig. 6.4). It is based on N = 150 and n = 5. From left to right, it shows the operation characteristics for c = 1, c = 2, c = 3. In this plot, given AQL and LTPD, the values of α, β are shown for the operation characteristics belonging to c = 1. To get a feeling how much it matters to calculate the operation characteristics with the help of the hypergeometric or binomial distribution, Fig. 6.5 shows a typical situation. The following data have been used as input: – Lot size N = 500; – Sample size n = 50; – c = 3. As may be seen, for such a setting there is almost no difference visible between the two calculations. Figure 6.6 plots the difference for further illustration. Despite of the immediate application to the acceptance sampling problem,

Fig. 6.5 Operation characteristic for the same setting, calculated with the hypergeometric and the binomial distribution

Fig. 6.6 Plot shows the difference between the two graphs in Fig. 6.5

398

6 How to Get Things Done: A Practitioner’s Toolbox

this comparison is also helpful in other contexts, where the two distributions play a role. In the current example, the difference is negligible. 7. How to design a sampling plan It is straightforward to create a sampling plan with the concepts just explained. In a typical situation, the following data are given: – Producer’s risk α; – Consumer’s risk β; – AQL = θ1 and LTPD = θ2 . These data define two points on the operating characteristic we are looking for. Using the binomial distribution for our calculation, we have the following two equations for determining the two variables n and c: c   c     n x n x n−x = 1 − α; θ1 (1 − θ1 ) θ (1 − θ2 )n−x = β x x 2 x=0

x=0

Alternatively, we could also use the more precise hypergeometric distribution and get the following two equations for n and c: ⎛

⎞⎛

⎞

θ N ⎠⎝ N − θ1 N ⎠ ⎝ 1 c  x n−x ⎛ ⎞ = 1 − α; N x=0 ⎝ ⎠ n

⎛

⎞⎛

⎞

θ N ⎠⎝ N − θ2 N ⎠ ⎝ 2 c  x n−x ⎛ ⎞ =β N x=0 ⎝ ⎠ n

In both cases, these equations are highly nonlinear in n and c and can be solved only numerically. We mention this here to show the theory behind. In practical cases, you’ll not need to solve these equations. Instead, these are the strategies how to proceed: (a) In most cases when you have to use acceptance sampling, your organization (or industry) will have ready to use sampling plans, which just have to be applied. These are more or less extensive tables showing the relevant values for a wide range of lot sizes, AQLs, etc. (b) There are nomograms available that allow you to put in your data and read off the solutions for n and c. (c) Statistics programs are available that do all that math in a comfortable way. You just feed in the data and the software delivers (n, c). Although this will likely be the modern method of choice, it still makes sense to really understand, what the software is doing and how the data are calculated.

6.4 Tools and Concepts in Alphabetical Order

399

Fig. 6.7 Example—getting bad stuff sold (see text)

Example: The Fraudulent Supplier This is just a simple example to illustrate the following. A lot was returned after inspection to the supplier and identified as not complying with specifications. The supplier knows that due to the acceptance sampling plan of his customer, nonconforming lots are accepted with probability 0.05 and returned with probability 0.95. However, the supplier also knows the properties of the geometric distribution (see Chap. 9) and comes up with the idea, to send the nonconforming lot as often back to his customer, until it gets accepted. Although this might not happen in some industries, it does in others. The lesson is: Once you identify a nonconforming lot, make sure you don’t get it back again and again! Even so the probability of acceptance is as low as 0.05, if your supplier tries often enough, things will slip through (Fig. 6.7).

6.4.7 Affinity Diagrams Affinity diagrams are a simple, but helpful tool to collect and sort facts and ideas or any other information of interest. Typical areas of application include: • • • •

Organize any set of issues or ideas to make it more structured and transparent. Organize output from brainstorming sessions. Categorize complaints from customers or employees. Organize ideas for improvement projects.

The main intent of the Affinity Diagram tool is to organize ideas, such that they can be clustered in a structured and agreed on way by the team and processed further using other methods.

400

6 How to Get Things Done: A Practitioner’s Toolbox

The nitty-gritty of the tool… The standard approach to complete an affinity diagram follows the following typical steps: 1. Select the issue you want to investigate. 2. Identify a number of people who have expertise concerning the subject and may contribute to a solution. 3. Ensure participants understand the problem and make them think about the issue in question. 4. Collect ideas (brainstorming or any other creativity method) and write them down on sticky notes or pin cards. 5. When the collection of ideas comes to an end, the team should start to group the developed ideas into preliminary groups. 6. After two or three rounds of grouping and regrouping ideas, typically a handful of themes emerge, such that each developed idea will appear in one of those themes. 7. Use this final clustering of ideas to give each theme a name, which best describes its content and meaning. In the simple example in Fig. 6.8, the three clusters of themes are: Personnel, organization and service.

Fig. 6.8 Affinity diagram: improvement project for a call center

6.4 Tools and Concepts in Alphabetical Order

401

6.4.8 ALARP—As Low as Reasonably Practicable ALARP is an acronym for “As Low, As Reasonably Practicable”. It is not a tool, but a model for how to look at risks. When discussing aspects of risk management, we repeatedly encountered concepts like risk level, risk appetite of an organization and others. The practical question is: What is the acceptable risk level and what is the adequate risk appetite of the organization? The ALARP model groups risks into one of three regimes. This may help to set risk-related goals. The nitty-gritty of the tool… The categories of the ALARP model are the following: Intolerable regime: This is the risk regime, where immediate and urgent action is required, as risks are at intolerable levels. ALARP regime: This regime is located between the tolerable and intolerable regime. Risks in this regime could be reduced. However, these risks are as low, as reasonably practicable. Broadly acceptable regime: In this regime, risks are low or negligible and broadly acceptable. Further riskreducing activities are not really necessary, although some improvements can be made. Risks at this level may be controlled by standard procedures (Fig. 6.9). The risk situation in the ALARP regime is characterized by the slogan “as low as reasonably practicable”. This means, you may discount risk treatments, if they would generate costs and efforts that are disproportionate compared to benefits. However, the extent to which you can do this depends, for example, on: • • • • • • • • •

National and international standards, laws and regulations; Jurisdiction in your area; Established health and safety standards and guidelines; Relevant industry standards and practice; Codes of practice; Comparison with undesired events in comparable industries; Expectations of your insurance company; Policies and objectives of your organization; Expectations and requirements of customers and other members of your supply chains.

and other relevant issues. In some countries, it derives from case law and legislative requirements, what is considered as reasonably practicable. The ALARP model does not deliver an immediate answer to the question, which risk appetite is adequate to your organization. However, it offers a widely accepted scheme to systematically address the issue and to classify risks.

402

6 How to Get Things Done: A Practitioner’s Toolbox

Fig. 6.9 Location of the ALARP regime

It should be mentioned in passing that the same role that ALARP plays in risk management, SFAIRP (So Far As Is Reasonably Practicable) plays in the context of safety management. The explanation given for ALARP may be repeated for SFAIRP. The SFAIRP model says that safety must be ensured “so far as is reasonably practicable”.

6.4.9 ANOVA—Analysis of Variance Frequently, we encounter the following type of problem. Given a population (in the statistical sense), we divide it into subgroups and treat each of them in a different manner. We would like to know if the different treatments show significant effects. Specifically, we consider one so-called factor—e.g. a fertilizer—and treat different fields with different amounts of it. In the context of ANOVA, these different amounts are called levels of the factor. As another example, consider a number of patients with decease XYZ and divide them into subgroups. Patients of different subgroups receive different doses of a new medicine. Do varying doses show significantly different results? Table 6.6 sketches a scenario. In this case, we have 20 × 10 = 200 fields, divided into six groups. Groups 1–5 are indicated by F1 , F2 … F5, and one group is left blank. The blank group of fields isn’t treated with the fertilizer at all; the other five groups are treated with specific amount of it, indicated by the indices.

F5

F5

F2

F1

F5

F3

F2

F3

F5

F3

F2

F2

F3

F5

F3

F3

F3

F1

F3

F4

F4

F5

F5

F3

F2

F4

F3

F5

F3

F4

F1

F1

F4

F5

F4

F2

F4

F2

F5

F1

F2

F4

F5

F3

F4

F5

F1

F5

F2

F5

F2

F4

F1

F2

F4

F4

F3

F4

F2

F1

F4

F1

F3

F1

F1

F3

F3

F1

F3

F5

F5

F5

F3

F5

Table 6.6 A model field divided into 200 sub-fields, treated with different amounts of a fertilizer

F5

F1

F5

F2

F5

F3

F4

F3

F1

F5

F1

F1

F1

F1

F3

F2

F4

F1

F4

F2

F4

F4

F5

F2

F2

F2

F1

F4

F5

F1

F2

F4

F3

F4

F3

F5

F3

6.4 Tools and Concepts in Alphabetical Order 403

404

6 How to Get Things Done: A Practitioner’s Toolbox

Obviously, instead of using different amounts of a fertilizer, we could water the fields differently and ask the same question: Does it have an effect on respective yields? As yet another example, consider an educational organization which employs four teachers for chemistry, differing in their method of teaching. In this case, the subject (chemistry) would be considered as the factor and the methods of teaching would be the levels. We would like to understand whether the four teaching methods show significantly different results. For that purpose, the average gradings of students from the four groups are compared. Do they differ? The nitty-gritty of the tool… Approaching problems of this sort, we need to derive a specific statistical test method. To illustrate the definitions of some important quantities used in this context, consider Table 6.7. The first column shows the identification number of groups into which the overall population has been divided. Note different groups correspond to different levels of exposure to the factor that we want to study. Column two shows the number of elements in each of these groups, and column three the measured respective values. Column four shows the so-called group sums which are needed to calculate the group mean values in column five. Line eight of Table 6.7 gives the total number of elements of all groups and μ, the overall mean value. The quantity SST is called “sum of squares of treatments” and quantity SSE “sum of squares of errors”. They form critical inputs to ANOVA. Intuitively, SST may be Table 6.7 Definition of quantities used in ANOVA calculations Treatment groups

Number of values

Measured values

Group sums

Group mean values

1

n1

x11 , x12 . . . x1n 1

x1∗ = x11 + · · · + x1n 1

μ1 ≡ x¯1 =

x 1∗ n1

2

n2

x21 , x22 · · · x2n 2

x2∗ = x21 + · · · + x2n 2

μ2 ≡ x¯2 =

x 2∗ n2

3

n3

x31 , x32 . . . x3n 3

x3∗ = x31 + · · · + x3n 3

μ3 ≡ x¯3 =

x 3∗ n3

…

…

…

…

…

k

nk

xk1 , xk2 . . . xkn k

xk∗ = xk1 + · · · + xkn k

μk ≡ x¯k =

x∗∗ = x1∗ + · · · + xk∗

μ ≡ x¯ =

n = n1 + n2 + · · · + nk Sum of squares of treatments Sum of squares of errors

x k∗ nk

x ∗∗ n

sst = n 1 (x¯1 − x) ¯ 2 + n 2 (x¯2 − x) ¯ 2 + · · · + n k (x¯k − x) ¯ 2 

2 sse = (x11 − x¯1 )2 + · · · + x1n 1 − x¯1 + · · ·

2 + (xk1 − x¯k )2 + · · · + xkn k − x¯k

6.4 Tools and Concepts in Alphabetical Order

405

considered to measure the (weighted) differences between the group means and the total mean. SSE measures variances within the groups. The ANOVA test is based on the hypothesis: H0 : μ1 = μ2 = · · · = μk This means that different treatments of the respective groups would not lead to any difference of the mean values. The alternative hypothesis is that at least one or more groups show differences. It should be mentioned that the test doesn’t identify which groups show the differences, if any. This would need additional investigation with other methods, and it is done after the ANOVA result is in our hands. The hypothesis H0 is rejected, if F=

sst k−1 sse n−k

> Fk−1,n−k;1−α

where Fk−1,n−k;1−α is the quantile of Fisher’s F-distribution (see Chap. 9). Example 1 In four fish ponds, different amounts of the same feed are used. The weights in a sample of randomly sampled fishes are as follows. Pond

Weight (kg)

1

0.93

0.85

0.63

2

1.26

0.98

1.12

3

1.28

1.44

1.61

4

1.12

1.22

1.03

0.89 1.15

1.40

We want to test H0 at significance level 95%. Doing the number crunching, we get the F-value: F = 10.72. Note that this can be calculated using the formulas above; however, that’s tedious. There are pocket calculators on the market which offer subroutines for ANOVA and almost all other tests sketched in this book. Statistics software will do it as well, of course. In Table 9.13 of Chap. 9, you may look up F3.11;0.95 = 3.59. As F = 10.72 > 3.59, we reject the hypothesis that the group means are equal (at level 95%). In this case, it isn’t too surprising to find this result, as the input data show that group values differ pretty much. However, this example was meant only to illustrate the approach. Example 2 Twenty candidates are selected at random and sent to absolve a drill program which is offered by four instructors (Program 1–4). The objective is that the candidates learn to assemble a certain part as fast as possible. We want to measure if average outcomes (assembling times in minutes) from the four groups differ (at level 95%).

406

6 How to Get Things Done: A Practitioner’s Toolbox

Training Program 1

10

9

11

12

13

Training Program 2

7

8

11

10

12

Training Program 3

12

11

9

10

11

Training Program 4

13

10

9

11

12

This gives an F-value F = 0.824. Next, we look up in Table 9.13 of Chap. 9 the value F4−1.20−4;0.95 = F3.16;0.95 = 3.24. In this case, we have F = 0.824 < F3.16;0.95 = 3.24 and we don’t reject the hypothesis that the four group mean values are the same. That would indicate that the average outcomes of the four training programs don’t differ significantly.

6.4.9.1

For the Enthusiast: Some Details of ANOVA Theory

As we do in other contexts of statistical analysis, we consider various measured values shown in Table 6.7 as realizations of random variables (random variables are again denoted by capital letters). Especially, we have X ik → xik Similarly, we define the following quantities and relations: SST = X¯ i =

1 ni

k 

ni

k  2

2  n i X¯ i − X¯ ; SS E = X i j − X¯ i

i=1 ni  j=1

Xi j ;

X¯ =

1 n

ni k   i=1 j=1

i=1 j=1

Xi j =

1 n

k 

n i X¯ i

i=1

The derivation of the test is based on the assumption that all X ik are normally distributed and have the same variance σ 2 . The respective mean values we denote E[X ik ] = μi , (i = 1, 2, . . . k; k = 1, 2, . . . n i ). Once one has defined the abovementioned random variables, one would like to know their expectation values and variances. We proceed to calculate them next.  k  k  1 n 1 μ1 + n 2 μ2 + · · · + n k μk 1 ≡μ E X¯ = E n i X¯ i = n i E[ X¯ i ] = n i=1 n i=1 n ⎤ ⎡ ⎤ ⎡ k k    

n 1 j ¯ Var X¯ i − X¯ = Var⎣ X¯ i − n j X¯ j ⎦ = Var⎣ X j − δi j X¯ j ⎦ n j=1 n j=1

6.4 Tools and Concepts in Alphabetical Order

407

⎤ ⎡ k    n j = Var⎣ − δi j X¯ j ⎦ n j=1 =

k   nj j=1

n

− δi j

2 σ 2 nj

=

n − ni 2 σ ni n

As we also have 

2 

2 − E X¯ i − X¯ Var X¯ i − X¯ = E X¯ i − X¯ and

2

= (μ − μi )2 E X¯ i − X¯ we can calculate E[SST ] =

k 

k k 



2



2 n i E[ X¯ i − X¯ ] = n i Var X¯ i − X¯ + n i E X¯ i − X¯

i=1

=

k 

i=1

ni

i=1

n − ni 2 σ + ni n

k 

i=1

n i (μ − μi )2 = (k − 1)σ 2 +

i=1

k 

n i (μ − μi )2

i=1

Similarly, we may calculate E[SS E] =

k 

⎡ E⎣

i=1

ni 

2

⎤

X i j − X¯ i ⎦ =

j=1

k  (n i − 1)σ 2 = (n − k)σ 2 i=1

If the abovementioned hypothesis H0 is valid, the last term for the expression for E[SST ] is equal to zero and we can write  E

SST σ2



 = k − 1 and E

SS E σ2

 = n − k.

It can be shown that SST SS E 2 2 ∼ χk−1 and ∼ χn−k 2 σ σ2 Therefore (see Chap. 9), the quotient of these quantities distributes like Fisher’s F-distribution: σ 2 SST k−1 σ 2 SS E n−k

∼ Fk−1,n−k

408

6 How to Get Things Done: A Practitioner’s Toolbox

This is the basis of the ANOVA test. Just in passing, we mention the following decomposition, which is also used in some applications of ANOVA stotal =

ni k  

xi j − x¯

2

i=1 j=1

=

i=1 j=1

xi j − x¯i + x¯i − x¯

2

i=1 j=1

ni k  



=

ni k  

ni ni k  k   2 

 xi j − x¯i + xi j − x¯i (x¯i − x) ¯ 2 −2 ¯ (x¯i − x)

 sse



i=1 j=1





=

ni 



i=1 j=1



n i (x¯i −x) ¯ =sst 2



=0



i=1

This gives us the important decomposition stotal = sse + sst.

6.4.9.2

From 1-way to 2-way to M-way ANOVA

The basic ANOVA we sketched in this section is sometimes more specifically called one-way ANOVA. The idea behind it is to consider a population and divide it into treatment groups that are treated with different levels (amounts, intensity, etc.) of a selected factor. It is natural to ask the question, if this approach can be generalized. It can, and this leads to two-way and multi-way ANOVA. To see this, consider a population, but this time let it be influenced not by one, but two factors, which both come at different levels. In the example above, when different groups of patients were treated with different doses of a medicine, one could be interested to investigate the effects if groups of patients are treated with two medicines at the same time, with different combination of doses, respectively. If one creates a model with two categorial variables that can have K and L levels, respectively, one also calls it a K x L ANOVA. Once one gets the idea behind two-way ANOVA, it is straightforward to generalize it to a multi-way ANOVA (also called MANOVA = Multivariate Analysis of Variance). In this case, one has a number of M categorial factors, each of which may have an individual number of levels. The question is how a combination of factors at different levels impacts the outcome. Obviously, the details of these models will be more complex. However, some essential model requirements are usually kept the same: Normality, equal variance and independent errors.

6.4 Tools and Concepts in Alphabetical Order

409

6.4.10 Balanced Scorecards Typically, organizations have to digest several strategic projects in parallel. Very frequently, strategic planning of projects is done without adequately determining the mutual interaction of these projects, weighting the necessary capacities, skills and knowledge of personnel and other relevant aspects. Sometimes projects are started with adequate and balanced resources and other inputs, but overhauled by others, which are considered to be of higher priority. Resources get shifted; however, expectations on the whole bunch of parallel projects are neither reconsidered nor balanced. The Balanced Scorecard is a tool designed to support management and strategy teams to perform such tasks with a higher degree of precision. The tool is usually employed to control the evolution of strategic projects. However, there are no limitations to apply it in other contexts with comparable controlling needs. It should be noted that a Balanced Scorecard is not a plug-and-play tool. Practical applications frequently fail, because the tool needs some discipline using it. If employed properly, it may be super helpful. Using it just as a documentation framework, there is a high risk that it will lead nowhere. The nitty-gritty of the tool… A typical Balanced Scorecard has the following four dimensions: • • • •

Financial perspective; Customer perspective; Process perspective and Learning and growth perspective,

and is designed to show the key indicators of a project for those dimensions. A graphical example is given in Fig. 6.10. For each of the four dimensions, Balanced Scorecards are driven by objectives, measures, targets and actions. These are exactly the important triggers required by management system standards, and for that reason, the tool fits nicely into their general framework. Another way to look at Fig. 6.10 is to consider it being a management cockpit showing the essential data for the project management.

Fig. 6.10 Example: The dimensions of a Balanced Scorecard

410

6 How to Get Things Done: A Practitioner’s Toolbox

In this context: • • • •

Objectives are considered to be the essential issues for each perspective. Measures are used to show and track progress. Targets define levels of performance for individual objectives. Actions are the initiatives and steps to be done to reach the targets.

To get a better picture, consider the following example. An organization decides to establish and implement a management system for energy efficiency (EnMS), which is compliant with ISO 50001. This is clearly a strategic project and needs adequate planning. A Balanced Scorecard may help to keep the overview. Considering its four dimensions, here is a selection of aspect to be considered: • Financial perspective Establishing the EnMS will have financial impacts, including: Financial resources needed to establish and implement the EnMS? Financial benefits resulting from the EnMS? For both cases, what precisely are the objectives, measures and targets? What are the (financial) actions to be taken to achieve targets? • Process perspective Which processes of the organization are involved and must be considered? What changes of processes are required? What are the measures (e.g. reduction of energy consumption)? What actions need to be taken to achieve it? • Learning and growth perspective This perspective addresses primarily staff, facilities and equipment. What are the objectives, targets, measures and actions for these categories? Considering staff, adequate skills, training needs and employee satisfaction could be important. Concerning facilities and equipment, technical objectives and targets will be of primary importance and shall be considered in the Balanced Scorecard. • Customer perspective Potential aspects could include: Implementing the EnMS will need changes of processes, technology or facilities. Does this have any negative impact on business continuity or the quality of products? Will the implementation of the EnMS lead to results that comply with requirements defined by governmental or local authorities or other relevant interested parties? What are the relevant objectives, measures, targets and actions? As can be seen from this simple example, Balanced Scorecards are a useful tool to keep the overview about (strategic) projects. They also may be employed to balance a set of projects which run in parallel and must be supplied from one pool of resources. In addition, Balanced Scorecards may be used as a communication format that helps the involved staff to oversee requirements and achievements of projects. Balanced Scorecards are helpful to offer a guided way through things: For each project, consider the four perspectives and don’t forget to clearly identify respective objectives, targets, measures and actions. If several projects are running parallel, ensure that respective objectives, targets, measures and actions are balanced and

6.4 Tools and Concepts in Alphabetical Order

411

don’t contradict each other. Also ensure that necessary resources, skills of staff and other relevant factors are available.

6.4.11 Bayesian Analysis Dealing with management systems the right way requires fact-based and clear thinking. For example, decisions should be based on reliable information and data. Frequently, however, we encounter the following situation: – Concerning some topics of interest, we have solid data and information, which are supported by measurements and reliable sources. – Concerning other important topics, however, we may have some data and information from sources which are believed to be less reliable, may be questioned and cannot be considered to be safe. In such situations, we may formulate hypotheses or beliefs, but we are not sure about them. In such and similar situations, Bayesian analysis may be helpful to iterate step by step toward a better base of knowledge and understanding. The nitty-gritty of the tool… In Sect. 9.6.4 of Chap. 9, we derived Bayes’ theorem. We apply it here in the following form: 1. Consider we have a set of hypotheses Hi , i = 1, 2, . . . concerning a specific issue. 2. These hypotheses must be mutually exclusive, and we assume to have a good guess of the (a priori) probabilities P(Hi ). The P(Hi ) reflect our knowledge about the probabilities of the hypotheses Hi . 3. Suppose we get new relevant information and evidence E which has impact on the probabilities P(Hi ). 4. Suppose we know the conditional probabilities P(E|Hi ). This knowledge may come from research, or any other relevant form of analysis. Using Bayes’ theorem, we may calculate the (a posteriori) probabilities   P(E|Hi ) P(E|Hi )P(Hi ) =  × P(Hi ) P(Hi |E) =  k P(E|Hk )P(Hk ) k P(E|Hk )P(Hk ) Looking at the structure of this equation, we see that the gained evidence E condenses in the term in square brackets. Multiplied by the prior probabilities, we obtain the (a posteriori) probabilities P(Hi |E), which should be considered as the next iteration of our knowledge about the issue in question. These concepts may look sort of alien and abstract at first sight. To illustrate their relevance, we apply them to the subject of parameter estimation. The reader is

412

6 How to Get Things Done: A Practitioner’s Toolbox

referred to the section on this topic for further details. It must be stressed, however, that the scope of application of the Bayesian approach goes far beyond this special application.

6.4.12 Bow-Tie Analysis Bow-tie analysis is a graphical method that can be employed to trace the path from a risk to its potential consequences. The name of the tool derives from the shape of the diagram. The method shows similarities with the fault tree analysis (FTA) but looks at things from a slightly different angle. Bow-tie analysis looks especially after the so-called preventive and reactive controls. The nitty-gritty of the tool… The application of the tool follows the following typical steps. 1. Select the undesired event or risk you want to investigate. Symbolize it by a bubble in the center of the diagram. 2. The selected undesired event or risk may have several causes. Identify these causes and collect them in separate boxes on the left side of the diagram. 3. Draw straight lines from each of the causes to the event bubble. 4. Next, identify the consequences that the undesired event may have. List these consequences in separate boxes on the right. 5. Draw straight lines from event bubble to each of the consequences. 6. Identify barriers (preventive controls or actions). Preventive controls are intended to prevent the causes to be effective and don’t let the undesired event happen. In some cases, it may be necessary that some causes need several layers of controls (see Cause 1 in Fig. 6.11) to get neutralized. 7. Do the similar thing on the right side of the diagram. On the lines between the event and the consequence boxes place reactive control steps. These reactive controls intend to eliminate or diminish the impact of the undesired event and its consequences, once the event occurred. The information needed to draw the bow-tie diagram may come from different sources: Expert knowledge, brainstorming and others. As any other tool, bow-tie analysis has its strengths and weaknesses. It delivers a picture of the relationships between a risk (undesired event) and its causes and consequences. It also shows potential control gates. In some complex situations, the tool may lose its usability. This may happen, for example, if you have to investigate a whole bunch of risks or undesired events at the same time and their interactions between them. For such cases, other tools are more effective. Bow-tie analysis is primarily used in qualitative analyses. The tool is less useful when you have to deal with quantitative issues like probabilities of events or effectiveness of controls.

Reactive Control 4

Consequence 4

Reactive Control 3 Reactive Control 1

Consequeence 3

Consequence 2 Reactive Control 2

Preventive Control 2

Preventive Control 1

Cause 1

EVENT

Preventive Control 3

Cause 3

Cause 2

413

Preventive Control 4

6.4 Tools and Concepts in Alphabetical Order

Consequence 1

Fig. 6.11 Example of a bow-tie diagram

6.4.13 Brainstorming Brainstorming is a valuable method to let a group of people create a significant number of ideas or statements on a defined problem or general topic. The backbone of the method is to encourage participants “to let their mind flow”. Ideas and statements are collected. There is no censorship or any other means to filter ideas. In the first step of the approach, all contributions of the participants are equally welcomed and noted. One advantage of the method is to give all members of a team an equal chance to bring in, what they think. At the same time, the approach stimulates creative thinking. It may happen that ideas are noted, which turn out to be completely off at second sight. But that’s absolutely ok. Our brains just work like this. In the context of management systems, there will be countless occasions, when brainstorming may be employed. Examples include, but are by far not limited to: • An inter-professional team, consisting of medical doctors and nurses work on the optimization of processes in the diagnostic unit of a hospital. • A team is in charge to create a list of all interested parties for the organization, which is a toy-producing company. • A hotel nominated a small group of people with the target: “Develop suggestions, how to make our restaurant more attractive”. • Managers of your organization and people from two new suppliers, sit together to streamline the just started business relationship. The nitty-gritty of the tool… Although the method encourages free thinking, some rules are helpful: 1. Select the members of the brainstorming team.

414

6 How to Get Things Done: A Practitioner’s Toolbox

2. Clearly state the main topic of the brainstorming session and agree on it with the team members. 2.1. It will be helpful, to make sure, that all team members really understand the topic. 2.2. Write the topic down on a white board and make it visible to all team members. 3. Team members start to give their statements and ideas. 3.1. To give all team members equal chance to give statements, they should answer in structured rounds. 3.2. Ideas are recorded in visible letters on the white board, flipchart or similar device. 3.3. Ideas are recorded as given. Avoid any criticism of ideas. Don’t allow individual persons to dominate the process. A selected person should do all the writing. Ensure that all statements are recorded and not filtered right away. 4. Follow Step 3 until no further ideas are generated. In practice, this should take some fifteen minutes. Complex topics may take longer. It also may happen that members get stimulated by the process and the best ideas will not come right at the beginning. 5. Review all delivered ideas. 5.1. Make sure that they are well and clearly formulated. If not, ask what’s meant. 5.2. If some ideas are mentioned more than once, merge them and keep one. For those who find sticking cards on a flipchart or white board a bit outdated, note the following. There are nice apps for tablet computers which allow you to create boards, make notes on cards and move them freely on the board in different colors. You may export the data, share them—maybe, you like that more. However, the rules, to create the content, remain the same as just stated.

6.4.14 Brainwriting—6-3-5 Method This tool was developed in the sixties by Bernd Rohbach and may be employed to generate a large number of ideas related to a predefined topic. It can be considered as a variation of the standard brainstorming method. The name of the tool (6-3-5 method) derives from the ideal setting that six people each generate three ideas in 5 min.

6.4 Tools and Concepts in Alphabetical Order

415

The nitty-gritty of the tool… The method follows the following simple rules: 1. Select a problem and a group of six people, who needn’t be experts, but should be able to “say something reasonable” concerning the problem. This is done by the team leader or organizer of the exercise. 2. Explain the problem to the participants. Participants should sit around one table in a circle. 3. Hand out six identical worksheets (six lines and three columns each). On the top of the sheet, the problem statement is written. Each participant receives one sheet. 4. Participants are asked to write down three ideas in five minutes concerning the selected problem in the three fields of the first row of the worksheet. Doing this, there is silence in the room and no discussion among participants or with the team leader. 5. When all participants are done, they hand over their sheet to the group member right to him/her. Again, all participants are given five minutes, to fill the next empty row of the worksheet with their ideas or with comments on entries made already by other group members. 6. After five minutes, continue like described in Step 5. 7. Ideally, after 30 min (=6 times 5 min), the process should be finished. The output is six filled worksheets with eighteen entries each, which add up to 108 ideas and comments within 30 min! See Table 6.8 for an example how one of the sheets could look like. It should be stressed that there is nothing magic about having six people in the group and giving them 5 min to deliver three ideas or comments. There may be more Table 6.8 Example of a filled 6-3-5 worksheet Problem statement How can we improve the Spanish skills of our sales representatives? 1

2

3

1

Payed weekend courses

Watch Spanish movies

Hire Spanish sales guys

2

Find Mexican friends

Read professional books in Spanish

Fast learners receive additional bonus

3

Hire Spanish speaking sales admin

Payed evening courses

Watch Spanish TV

4

Read Spanish

Some of our internal meetings could be held in Spanish

Offer intensive on-the-job-training

5

Let’s talk Spanish from time to time

Exchange program with our affiliate in Mexico

Weekly conversation circles

6

E-learning course for Spanish

Self-teaching with book

Vacation in Mexico

416

6 How to Get Things Done: A Practitioner’s Toolbox

or slightly less people in the group. Also, nothing bad happens if they are given ten minutes to handle their tasks, instead of five. However, the 6-3-5 setting is a common one, and changing it much, will lead to a decrease of efficiency. When the 6-3-5 process is completed, the collected ideas will form input to the next steps: Selecting the best ideas, processing them further with other tools and so on. However, this is a different step and not part of the 6-3-5 process.

6.4.15 Causal Mapping and Relationship Diagrams Causal mapping is a concept for visualizing causal relationships between a set of factors. Relationship diagrams are a means to visualize relationships between a set of factors. Both methods may be helpful to get deeper insight into structures of complex relationships between selected factors. At the same time, they offer a picture of these relationships, which may be helpful to understand them better. The nitty-gritty of the tool… Causal diagram Start with a set of factors Fnn, which may literally be anything. Suppose, between some of these factors exist relationships of the type: “IF Fxx THEN Fyy”. This is interpreted in the current context as “Fxx being a cause of Fyy”. As the set of factors Fnn may be arbitrarily large and the causal relationships between the factors complex, it makes sense to visualize them by a graph as shown in Fig. 6.12. You may proceed like this, to draw a causal map: 1. Use a whiteboard, flipchart or just a sheet of paper and distribute your factors on it. In Fig. 6.12, this is F1–F10. Fig. 6.12 A causal diagram

6.4 Tools and Concepts in Alphabetical Order

417

2. Connect those factors with an arrow, between which a causal relationship exists. Remark Think of “IF … THEN …”. This work can be done by an individual or by a team. 3. Ensure there’s only one arrow between any two factors. 4. Use the graph as input to further analysis. Instead of doing the drawing work by hand, you may also employ available computer programs. Relationship Diagram The steps to create a relationship diagram differ just in one aspect from those drawing the causal diagram. Start with a set of factors Fnn between which there is any relationship. In the example of Fig. 6.13, these factors are the following: Customers, innovation, sales, EBIT, processes, auditors, accreditation, compliance, risks and liability. These are just ten factors somehow connected with each other in a certification body. For example, auditors are influenced by the organization’s processes and by accreditation requirements. On the other hand, auditor’s work influences customers, may create compliance issues and risks, if audits aren’t done properly. Note that the set of factors in Fig. 6.13 isn’t complete, and the set of relationships isn’t either. However, as may be seen from this simple example, relationship diagrams may help to get aware of the many mutual interrelations between the factors of the set considered. For that reason, it may also be used as a tool in the context of awareness trainings.

Fig. 6.13 A relationship diagram

418

6 How to Get Things Done: A Practitioner’s Toolbox

Remark The factor “quality” has intentionally been left out in this example, to illustrate the following. Creating a causal or relationship graph, you shouldn’t start with a too large set of factors. Take, for example, a set of ten factors and establish the relations between them. Then, step by step, add the next factors and connect them to the others already in the graph. In the example of Fig. 6.13, the factor “quality” (of what?) should definitely be next on the list.

6.4.16 CBA—Cost Benefit Analysis CBA is necessary to shed light on the economic side of projects and planned investments. Technically, it is not a singular tool, but a bunch of methods with the intent to analyze and answer the following questions: • What are the financial impacts and benefits of the selected project or planned investment? • How do its financial impacts and benefits compare with alternative variants of the project or investment? CBA pushes teams to express costs and benefits of projects and expected benefits in monetary terms. For that reason, it will be an essential part of improvement or other projects. The nitty-gritty of the tool… Typical steps include the following: 1. Select the project, investment or decision to be investigated with CBA. 1.1. If there are alternative projects, take them into consideration. 2. Express expected benefits and costs of the project. 2.1. Benefits and cost must be measured in monetary units and the same currency. 3. Calculate the net present value (NPV) of the project and its alternatives. 3.1. Employ the following standard formula: N PV =

N  k=1

Ck C0 r N

Ck − C0 (1 + r )k

Definitions: Net cash inflow during period k Total amount of initial investment costs Discount rate Number of time periods to be considered.

6.4 Tools and Concepts in Alphabetical Order

419

3.2. Remark To understand better the individual terms under the summation sign, consider the following: If you want a return of value C k in the kth year from now, what amount do you have to invest today under the assumption that the interest rate over the years is constant and equal p? Obviously, if A is that unknown investment,

p k = Ck (p/100 is just it may be calculated from the equation A 1 + 100 called r in the equation above). As may easily be seen, the terms under the summation sign in the formula above just are those amounts of investments you have to do today, to get the respective cash inflows in the first, second…etc., years. 4. If NPV > 0, the project is profitable. If NPV < 0, the project will generate loss. Be aware, our discussion is more than sketchy, and real calculations will turn out to be more complex. For example, uncertainties concerning inflation rate and the future economic development must be estimated and taken into account.

6.4.17 Checklist A checklist is a collection of items that need to be accomplished or considered, to complete a task. Checklists may be as short as a single page or be extended collections of items. Audit checklists used when doing internal or external audits against the requirements of management system standards are a good example. However, you will frequently find checklists in technical environments or being part of standard operation procedures. The nitty-gritty of the tool… Some simple design rules for checklists include: • Keep the language and instructions of the checklist simple and easy to understand. Avoid ambiguities. • Ensure the checklist is complete. • Arrange the entries of the checklist in an optimal order. The order may be determined by the sequence the individual points of the checklist have to be completed, as it is often the case in technical applications (Example Pilot checklist in aviation). In other fields of application (e.g. a management system checklist for auditing purposes), the sequence of entries is determined by the structure and content of the respective management system standard. • Decide what’s the best form of the checklist. Standard formats include paper or electronic forms to be used on (tablet) computers. Recently, apps for checklist applications became popular. In addition, audit tools are available for different fields and purposes. This includes tools that easily may be customized for specific purposes.

420

6 How to Get Things Done: A Practitioner’s Toolbox

Checklists are also an excellent means to document knowledge which may be used at other opportunities. Some examples for illustrational purposes: • Risk management: Knowledge about hazards and risks may find its way into checklists for further use. • Quality management: Controlling and auditing critical processes and other issues may be supported using specific checklists that contain knowledge from previous undesired events or other important issues. • All management systems: Checklists should be updated and revised on a regular basis. Especially, critical issues that have been detected during previous audits or during daily process, product and service surveillance should find their way into the checklist. Checklists are a very flexible tool to check requirements for systems, products and services, and they may be used to audit against these requirements.

6.4.18 Check Sheet A check sheet is a simple tool for data gathering. Although electronic data collection replaces data gathering with check sheets in many cases, they still defend their fields of application. Check sheets have a long tradition in quality management and data collection. They even are considered as one of its most fundamental tools. The nitty-gritty of the tool… To use a check sheet, you may proceed as follows: 1. Select what data you want to collect how, and which type of check sheet is adequate. The following types of check sheets are mostly used: 1.1. Classification check sheets Traits (e.g. defects, failures) are classified into defined categories. May answer questions like: What traits occur how often and when. 1.2. Frequency plot check sheets Frequencies of occurrence of traits are counted. May answer questions like: How often does a trait or combination of traits occur? 1.3. Location check sheets Locations of traits on items are considered. Usually, the check sheet contains a picture of the item and traits are marked on the picture (e.g. scratches on furniture before shipping). May answer questions like: Which traits do occur where on a selected item?

6.4 Tools and Concepts in Alphabetical Order

421

Table 6.9 Example—classification check sheet for complaints in a restaurant Department

Calendar week

Complaint category

Mon

Tue

Wed

Thu

Fri

Sat

Total

Prices

///

////

//

//

///

/

15

Food

//

/

///

////

/

//

13

Friendliness of personnel

/

/

//

/

//

Waiting time

///

//////

/////

//

//

/

19

Sums

9

12

12

9

8

4

54

7

1.4. Measurement scale check sheets Measurement intervals are indicated on the abscissa of check sheet and the measured values of a trait are noted on the ordinate. Hereby a frequency distribution of measured values is created for the respective intervals. 2. Ensure that the check sheet is used properly. Issues to be clarified include the following: • Determine who will collect the data. Do these persons have the necessary skills to collect the data properly? • Determine when, where, over what time period and how data will be collected. Design a sampling plan. • Ensure that data are collected correctly and reliably. 3. Evaluate the obtained data. Frequently, the collected data will need further analysis and evaluation. Statistical methods may be helpful in some cases. Check sheets should be as simple as possible and easy to use in the field (Table 6.9).

6.4.19 C&E Matrix—Cause-and-Effect Matrix The cause-and-effect matrix may be helpful if you have to identify those steps of a process that have a significant impact on the output of that process and on customer requirements and expectations. The nitty-gritty of the tool… The basic idea of the tool is to correlate selected process steps with process outputs and their perception by the customer. It’s just one more tool to weight causes and its effects. This is how you can proceed: 1. Determine the customer key requirements and expectations for a product or service. These are considered to be the necessary outputs of the process steps you later want to evaluate.

422

6 How to Get Things Done: A Practitioner’s Toolbox

Table 6.10 Cause-and-effect matrix (example) Process inputs

Outputs and customer criteria (CC)

Sums

Output & CC 1

Output & CC 2

Output & CC 3

Output & CC ..

Weight = 6

Weight = 2

Weight = 9

Weight = Y

Step 1

0

9

2

36

Step 2

5

2

5

79

Step 3

0

6

0

12

Step 4

3

1

7

83

Step X

1.1. Collect these requirement and expectation data with great care. Use a reliable and adequate method to measure the voice of the customer. 1.2. Arrange the outputs in a row. 1.3. Implement a score to weight the relative importance of individual outputs. Note these empirically determined weight scores of the outputs in a row below the outputs. You may use a score like: Weight = 0 means not of importance. Weight = 9 means utmost importance. 2. Select the process steps which impact the outputs you want to determine. These are considered as inputs and written one by one in the first row of the matrix. 3. Next walk through the lines for each process step and determine which impact that step has on the individual outputs. Example In the matrix of Table 6.10, the impact of Step 1 on Output 1 is rated with 0, which means no importance. However, the impact of Step 1 on Output 2 is 9 and of utmost importance. Proceed like this for each pair (Step X, Output Y). 4. Next walk through the row for each process step and multiply the respective rating with the weight of the respective output. Write down the results in the last column of the matrix. Example for the Step 1 row: 0 × 6 + 9 × 2 + 2 × 9 = 36 5. The sums you may read off in the last column of the matrix show the relative importance of the input factors to the output. In this example, Steps 2 and 4 are of special importance.

6.4.20 CIA—Cross-Impact Analysis The basic idea behind the CIA is to examine how a selected set of relevant variables influence future events or issues. There are qualitative and quantitative versions of the tool in use. It even may be coupled with simulation techniques like the Monte Carlo method.

6.4 Tools and Concepts in Alphabetical Order

423

Table 6.11 Draft of a cross-impact matrix Variable 1 Variable 1

Variable 2

Variable 3

Variable 4

Variable 5

Active

+3

+2

−1

+1

+5

−1

+1

−3

−3

+2

+3

+2

−1

0

Variable 2

0

Variable 3

−3

0

Variable 4

+1

−1

+1

Variable 5  Passive

+2

−3

+2

−2

0

−1

+4

0



−1 0

The nitty-gritty of the tool… CIA has several variants. We start with sketching the simplest. 1. Select a list of relevant variables that have impact on a selected future event or on a future issue. We want to analyze the mutual interaction of these variables. 2. Create a matrix (see Table 6.11) and list your variables one by one in separate rows of the first column. 3. List those variables also one by one in separate columns of the first row of the matrix.   4. Add one column and one row for “Active ” and “Passive ”, which will be explained in a moment. 5. Start with Variable 1 in the first column and walk down the second row of the matrix in Table 6.11. Ask for each field: How is Variable X influenced by a change of Variable 1? Obviously, Variable 1 will not get influenced by itself. For the other variables, use the scheme given in Table 6.12. In this scheme, the influence reaches from “Very strong negative” to “Very strong positive” influence. Other scales of classification may be employed that use different, or more/less classification categories. 6. It is important that these classifications (filling the cells with numbers) are done by adequate experts who have enough insight to the topic under examination. 7. Do the same for Variable 2, Variable 3, etc. Each time ask how changes of that variable influence the other variables listed in the first row. 8. After having filled all relevant cells of the matrix with respective evaluations, add up the numbers in each The results are noted in the row and each column.  respective cells of “Active ” and “Passive ”. Table 6.12 Classification used in Table 6.11 Very strong negative

Strong negative

Negative

Neutral

Positive

Strong positive

Very strong positive

−3

−2

−1

0

+1

+2

+3

424

6 How to Get Things Done: A Practitioner’s Toolbox

Remark The numbers filled in Table 6.11 are fictitious and intended to show only the algebra behind.   The numbers in “Active ” and “Passive  ” offer some insight into how much a variable influences the others (“Active ”) or how much it is influences  by others (“Passive ”). The value of +5 for Variable 1 shows that it influences the others relatively strongly. On the other hand, the influences of other variables on Variable 1 balance to 0. The numbers contained in the matrix of Table 6.11 are purely fictitious, and the matrix shows a toy example. In real applications, however, one may derive substantial information from a cross-impact matrix, including how individual variables react to the change of others. It is understood, of course, that the matrix was filled by experts and the impacts between variables are not just guesses or blurry expectations. To go one step further, one could proceed as follows. Once again, we write down a matrix like in Table 6.11. This time, however, we don’t ask the experts to classify interdependencies by a scheme like in Table 6.12, but to determine probabilities. For example, we could ask: “Given Variable i (or Event i) occurs, what is the probability that it impacts Variable k (Event k)?” Mathematically, this would lead us to conditional probabilities (see Chap. 9) of the type P(k|i). The estimation of those conditional probabilities would again be done by experts. However, this time things will be more difficult and demanding. It’s more difficult to estimate probabilities than using a scale like in Table 6.12.

6.4.21 Control Charts, Process Capability and Process Sigma Processes are the heart of management systems, and they need a maximum of attention. However, production, service delivery and other processes show variations which must be controlled. Variations may have many different origins, which include but are by no means limited to: • • • • • •

Technical details of the process; Employed facilities, equipment and personnel; Environmental conditions; Variations of the material used; Skills of personnel; Unavoidable random variations of the process.

The important thing is to systematically measure these variations, to analyze them, to understand their causes and relevance and to control them. Control charts are a bunch of tools based on statistical reasoning and widely used in statistical process control (SPC), quality control and related areas. Depending on the specific control needs, the right control chart must be selected. Different types

6.4 Tools and Concepts in Alphabetical Order

425

Fig. 6.14 Important control charts for variables and attributes

of control charts are available, depending on which variables or attributes must be controlled. Figure 6.14 shows some of the more important types. Control charts may be roughly classified into two groups: • Control charts to control variables Examples Mean values, variances, ranges, etc. • Control charts to control attributes Examples Good, bad, green, red, with scratches, without scratches, etc. The nitty-gritty of the tool… To illustrate the general ideas behind control charts, we shall have a closer look at some of the most important types.

6.4.21.1

General Ingredients to a Control Chart

To get a first picture of a control chart for variables, it may just be considered as a graphical representation of measured values. For example, Fig. 6.15 shows a time axis along which you can see when certain measurements have been made. The ordinate shows the measured values. The total graph shows 100 data points. Successive points are connected with straight lines to make the time series more transparent. Although

426

6 How to Get Things Done: A Practitioner’s Toolbox

Values 8

6

4

2

0 0

20

40

60

Time 100

80

Fig. 6.15 A time series of 100 values (measured values connected by lines)

just plotting data this way helps to get some overview, much more is needed and possible. To illustrate this, Fig. 6.16 shows the following: Values 10 UCL 8 3σ 6 CL 4 3σ 2 LCL 0

Time 0

10

20

30

40

50

60

Fig. 6.16 A control chart for variables (measured values connected by lines)

70

6.4 Tools and Concepts in Alphabetical Order

427

• The oscillating curve shows 60 data points. Neighboring points are connected by straight lines for better transparency. These data points are a random sample of size 60 from a normal distribution with

N μ, σ 2 = N [5; 1.96] • The so-called centerline CL marks the (in this case known) population mean, which is equal to 5. • Two more lines are included, marking the so-called Upper Control Limit (UCL) and the Lower Control Limit (LCL). In this example, they are ±3σ (σ = 1.4) away from the centerline. • Note that for a normal distribution, 99.74% of the data points are expected to be within the ±3σ bandwidth around the mean (see Chap. 9, Normal distribution). Indeed, Fig. 6.16 shows that only one point out of 60 (at Time = 33) is outside of this interval. • Remark Choosing an interval of ±3σ around the mean is very customary. However, for some applications, a tighter or wider interval may be more adequate. In a Six Sigma environment, the interval would be set equal ±6σ . With this design, we are already very close to the main idea behind a control chart. It is designed to visualize data and to separate unavoidable statistical variations from variations due to other causes. The data shown in Fig. 6.16 are of purely statistical nature, as they just represent a random sampling from a normal population. In a real example, when the data points represent measurements of some critical process output parameter, unavoidable random variations will be combined with others, which may reflect undesired behavior of the process. A control chart is employed to identify and separate these two components, as far as possible. In this context, the limits LCL and UCL should be chosen to be smaller than defined tolerance limits. Figure 6.17 shows for illustrational purposes another type of data representation, not connecting neighboring data points by lines. The data are again sampled from a N [5; 1.96]-distribution. One may find this representation in practice; however, with an increasing number of data points, it becomes difficult to keep overview. As we shall see, there are some relationships between the testing of hypotheses and control chart design. It may make sense, therefore, to use the section on hypothesis testing as a reference if needed.

6.4.21.2

Control Chart: Controlling the Mean

This type of control chart is usually called X¯ chart and used to control the mean value of a critical variable X . It is crucial that this variable is measurable. The mean of X is supposed to be equal to μ0 . The chart is used then to control the fluctuations of measured values around μ0 , which should not exceed certain limits.

428

6 How to Get Things Done: A Practitioner’s Toolbox

Values 10 UCL 8 3σ 6 CL 4 3σ 2 LCL 0

Time 0

10

20

30

40

50

60

70

Fig. 6.17 A control chart for variables (measured values represented by dots)

Under the line, the control chart will show us two things: • Random fluctuations around the mean value μ0 which can be kept small by designing and running processes with small variances. However, these fluctuations never can be avoided completely. In most of our considerations, we assume that they follow a normal distribution N μ0 , σ 2 . • On the other hand, the control chart will show deviations from the mean which cannot be traced back to normal statistical behavior. These deviations are of special interest, as they indicate that the process shows some undesired behavior which we must analyze, find its root-causes and try to eliminate. If we formulate this in the language of hypothesis testing (compare the section on this issue), we could say that we use the X¯ control chart to test H0 : μ = μ0 against H1 : μ = μ0 If we knew σ of the process, we could define the following test scenario: 1. At defined instants of time (enumerate them with an index i), take a random sample {X i1 , X i2 , . . . , X i N } of N items from the production process and measure the values {xi1 , xi2 , . . . , xi N }. 2. Calculate the mean for each of these samples according to N 1  X ik X¯ i = N k=1

6.4 Tools and Concepts in Alphabetical Order

429

3. Calculate the mean and variance of X¯ i as follows σ2 E X¯ i = μ0 ; Var X¯ i = N 4. Write down the probability statement (1 − α being the confidence level)  P −z α2
1 Of course, in the case C p = 1 USL and LSL coincide with the ±3σ lines. In the examples so far, we assumed that the process is centered, and USL and LSL are at equal distances from the mean. However, this is an ideal case. Usually, one faces a situation as shown for example in Fig. 6.24. In this case, USL lies outside of the ±3σ interval, and the black-colored part on the left shows the area of nonconforming units. To cover these cases, the quantities U S L − x¯ x¯ − L S L and C pl = 3σst 3σst

C pu =

Probabiility Density 0..4 LSL

USL

0..3

0..2

0..1 μ=5

- 3σ 3 2

Fig. 6.23 Illustration of C p > 1

4

+3σ 6

8

x 10

438

6 How to Get Things Done: A Practitioner’s Toolbox

 Fig. 6.24 Illustration of C pk = min C pu , C pl



are usually defined. These values are then used to calculate C pk = min C pu , C pl . The indices C pu , C pl are also employed if there is only a one-sided specification limit defined. From the above follows that if C p = 1, then 0.27% of the process output isn’t within the limits defined by the specifications. If C p < 1, the percentage of nonconforming output is higher, if C p > 1 the percentage of nonconforming output is smaller. These facts are used to define: – C p < 1 Process is not capable – 1 ≤ C p ≤ 1.33 Process capability is restricted – C p > 1.33 Process is capable. It should be mentioned that the value 1.33 ≈ 43 in these inequalities is a convention widely used. In some cases, for critical products 1.67 ≈ 53 is used instead of 1.33. Employing once again equation U S L − L S L = 6σst C p > 1.33 × 6 × σst ≈ 8σst we can see that σst must be smaller than 18 of the difference between upper and lower specification levels, for the process to be capable. It remains to be explained why in Table 6.13 two columns appear, with different σ values. In this context, σst means “short-term variance” and σlt “long-term variance”. The reason for considering two variances is that the variance measured during the initialization phase of a process frequently is not necessarily the same as later during normal operation. Accordingly, the capability index calculations should be made with σlt to get the right indices during normal operation. The math behind is, of course, exactly the same.

6.4 Tools and Concepts in Alphabetical Order

6.4.21.7

439

Process Sigma

Process sigma is another concept, frequently met when evaluating and characterizing the performance of processes. The idea behind is simple but allows us to compare performance quality of very different processes with each other. This is achieved by introducing some universal indicators, defined as follows: • Defect What doesn’t conform with (customer) specifications is called a defect D. • Opportunity In our current context, an opportunity O is a chance for a defect (you could also call it a risk, but they call it a chance). For example, a produced electrical device may show scratches, failures of power supply, and so on. • DPU—Defects Per Unit Consider a sample of size N from a population (in the statistical sense of the word). Specifically, take the output of N units from a process and determine the total number of defects D in that sample. DPU is calculated as follows DPU =

D N

D = Total number of defects in the sample, N = Total number of items in the sample Example Take a pizza delivery process. Out of 150 ordered pizzas, customers got in 7 cases the wrong pizza, in 12 cases it was cold, in 9 cases it was delivered too 28 = 0.187 late. DPU = 150 • DPO—Defects per opportunities DPO is calculated according to DPO =

D N×O

Example Let’s say in the pizza delivery example above, we determine four opportunities (things that can go wrong): Wrong sort of pizza delivered, delivery too late, pizza is cold and any other issue. Taking the same figures as above, DPO is the following DPO =

28 D = = 0.047 N×O 150 × 4

• DPMO—Defects per million opportunities This is defined as DPMO = DPO × 106 . DPMO is DPO per one million opportunities. Example For the pizza delivery example, we have DPMO = 46,666.67. • Yield This is calculated as follows:

440

6 How to Get Things Done: A Practitioner’s Toolbox

Yield = 100 × (1 − DPO) Example For the pizza delivery example, this would be Yield = 100 × (1 − 0.047) = 95.33% In plain English, the yield of a process is the percentage of nondefective units. Note that these concepts are generic and may be applied to the output of whatever production or service delivery process. For that reason, they show a way how to compare the quality of very different processes. Of course, other indicators can be defined which may be more adequate to the needs of a specific industry. In principle, calculating the DPO and Yield is good enough to see what the performance of a process looks like. It is customary, however, to express the results in statistical terms. For that reason, we link the defined concepts with statistics. Once more consider the normal distribution. Recall, a normally distributed random variable X with mean and variance μ, σ 2 can always be transformed to a standard normally distributed random variable Z with mean 0 and variance 1. This can be . It is enough, therefore, to focus achieved performing the transformation Z = X −μ σ on the standard normal distribution. The cumulative distribution function of the standard normal distribution !z

(z) = −∞

1 x2 √ e− 2 dx 2π

has been introduced in Chap. 9, which also contains a table of its values. Recall, (z) is the probability that the value of a standard normally distributed random variable is smaller or equal to z. These z values are also called sigma values in the current context. Recalling the pizza example from above, we had DPMO = 46,666.67 and Yield = 95.33%. We can use the equations  

DPMO = 100 (Sigma) DPMO = 106 1 − (Sigma) and Yield = 100 1 − 106 to calculate sigma values corresponding to the determined DPMO and Yield values. The result of this calculation is shown in Table 6.14. For our pizza example, one can read off a sigma value between 1.6 and 1.7, which is, of course, not quite good. Table 6.14 basically solves our problem, to link Yield and DPMO values with the standard normal distribution. However, the reader will frequently find in the literature and in practical applications a slightly different table, which is presented here as Table 6.15. The thing is that empirical studies show that in the long term, processes tend to show more variations than in the short term. It is important, therefore, to

6.4 Tools and Concepts in Alphabetical Order

441

Table 6.14 Sigma values related to yield and DPMO Sigma

DPMO

Yield

Sigma

DPMO

Yield

Sigma

DPMO

Yield

6

0.00

100.00000

4

31.67

99.99683

2

22750.13

97.72499

5.9

0.00

100.00000

3.9

48.10

99.99519

1.9

28716.56

97.12834

5.8

0.00

100.00000

3.8

72.35

99.99277

1.8

35930.32

96.40697

5.7

0.01

100.00000

3.7

107.80

99.98922

1.7

44565.46

95.54345

5.6

0.01

100.00000

3.6

159.11

99.98409

1.6

54799.29

94.52007

5.5

0.02

100.00000

3.5

232.63

99.97674

1.5

66807.20

93.31928

5.4

0.03

100.00000

3.4

336.93

99.96631

1.4

80756.66

91.92433

5.3

0.06

99.99999

3.3

483.42

99.95166

1.3

96800.48

90.31995

5.2

0.10

99.99999

3.2

687.14

99.93129

1.2

115069.67

88.49303

5.1

0.17

99.99998

3.1

967.60

99.90324

1.1

135666.06

86.43339

5

0.29

99.99997

3

1349.90

99.86501

1

158655.25

84.13447

4.9

0.48

99.99995

2.9

1865.81

99.81342

0.9

184060.13

81.59399

4.8

0.79

99.99992

2.8

2555.13

99.74449

0.8

211855.40

78.81446

4.7

1.30

99.99987

2.7

3466.97

99.65330

0.7

241963.65

75.80363

4.6

2.11

99.99979

2.6

4661.19

99.53388

0.6

274253.12

72.57469

4.5

3.40

99.99966

2.5

6209.67

99.37903

0.5

308537.54

69.14625

4.4

5.41

99.99946

2.4

8197.54

99.18025

0.4

344578.26

65.54217

4.3

8.54

99.99915

2.3

10724.11

98.92759

0.3

382088.58

61.79114

4.2

13.35

99.99867

2.2

13903.45

98.60966

0.2

420740.29

57.92597

4.1

20.66

99.99793 2.1 17864.42 98.21356 0.1 460172.16  

DPMO 6 Equations used: DPMO = 10 1 − (Sigma) ; Yield = 100 1 − . 6

53.98278

10

clearly distinguish if a DPMO or Yield is calculated for a short-term or long-term scenario. In our pizza case above, for example, the data presented could have been collected during a quiet day, when the processes were under control and showed small variations (short-term scenario). In the long run, however, things likely get worse, mean values shift and standard deviations of processes may have a tendency to increase. It is popular, to describe these effects with an empirical shift of Sigma values of 1.5 according to the transformation Sigma L T = Sigma ST − 1.5 where the indices stand for long-term and short-term sigma values, respectively. As an example, if you have a Six Sigma process measured short-term and shift it by 1.5, you end up with a DPMO of 3.4. These data can be read off also from Table 6.14. Table 6.15 is just added for convenience. To summarize, if you study a process and want to determine its Sigma level, you should proceed as sketched in Fig. 6.25.

442

6 How to Get Things Done: A Practitioner’s Toolbox

Table 6.15 Sigma values related to yield and DPMO with 1.5 shift Sigma

DPMO

YIELD

Sigma

DPMO

YIELD

Sigma

DPMO

YIELD

6

3.40

99.99966

4

6209.67

99.37903

2

308537.54

69.14625

5.9

5.41

99.99946

3.9

8197.54

99.18025

1.9

344578.26

65.54217

5.8

8.54

99.99915

3.8

10724.11

98.92759

1.8

382088.58

61.79114

5.7

13.35

99.99867

3.7

13903.45

98.60966

1.7

420740.29

57.92597

5.6

20.66

99.99793

3.6

17864.42

98.21356

1.6

460172.16

53.98278

5.5

31.67

99.99683

3.5

22750.13

97.72499

1.5

500000.00

50.00000

5.4

48.10

99.99519

3.4

28716.56

97.12834

1.4

539827.84

46.01722

5.3

72.35

99.99277

3.3

35930.32

96.40697

1.3

579259.71

42.07403

5.2

107.80

99.98922

3.2

44565.46

95.54345

1.2

617911.42

38.20886

5.1

159.11

99.98409

3.1

54799.29

94.52007

1.1

655421.74

34.45783

5

232.63

99.97674

3

66807.20

93.31928

1

691462.46

30.85375

4.9

336.93

99.96631

2.9

80756.66

91.92433

0.9

725746.88

27.42531

4.8

483.42

99.95166

2.8

96800.48

90.31995

0.8

758036.35

24.19637

4.7

687.14

99.93129

2.7

115069.67

88.49303

0.7

788144.60

21.18554

4.6

967.60

99.90324

2.6

135666.06

86.43339

0.6

815939.87

18.40601

4.5

1349.90

99.86501

2.5

158655.25

84.13447

0.5

841344.75

15.86553

4.4

1865.81

99.81342

2.4

184060.13

81.59399

0.4

864333.94

13.56661 11.50697

4.3

2555.13

99.74449

2.3

211855.40

78.81446

0.3

884930.33

4.2

3466.97

99.65330

2.2

241963.65

75.80363

0.2

903199.52

9.68005

4.1

4661.19

99.53388 2.1 274253.12 72.57469 0.1 919243.34  

DPMO 6 Equations used: DPMO = 10 1 − (Sigma − 1.5) ; Yield = 100 1 − 106 .

8.07567

Fig. 6.25 Steps to determine sigma level of a process

Determine DPMO for the process

Calculate the yield

Determine sigma level with Table 63

Once again, DPO, DPMO, Yield and Sigma level are general concepts that may be applied to basically any process, hereby offering a means of comparison.

6.4.22 Correlation Analysis In many applications, one encounters random variables: Sales per day, number of customers entering a store per hour, performance indices, lifetime of a product and many more. Given two random variables X, Y , the following may happen:

6.4 Tools and Concepts in Alphabetical Order

443

(a) The two variables are completely independent and just don’t have anything to do with each other. (b) The two variables are linked by a function of the type Y = f (X ), f being some function. In this case, the two variables are completely determined by each other. If you know X, you know Y. The question arises, if there’s anything in between these two cases? Correlation analysis is a tool that lets you answer this type of questions in a straightforward way, just doing a little number crunching. Note that knowing if data are correlated or not is an important input to many other tools sketched in this chapter. The nitty-gritty of the tool…

6.4.22.1

Pearson’s Correlation Coefficient

The (Pearson) correlation coefficient ρ(X, Y ) of two random variables X, Y is defined as E[(X − E[X ])(Y − E[Y ])] ; with σ X σY

σ X2 = E (X − E[X ])2 and σY2 = E (Y − E[Y ])2 ρX Y =

This may also be written as ρX Y =

E[X Y − E[X ]E[Y ]] σX Y = , with σ X Y = E[X Y ] − E[X ]E[Y ] σ X σY σ X σY

In the last two equations, ρ X Y should be understood as a random variable, depending on the random variables X, Y . Next, we need an estimator for ρ X Y . Starting with a sample of values {(x1 , y1 ), (x2 , y2 ), (x3 , y3 ), . . . (xn , yn )}, the following quantities can be calculated: n − x)(y ¯ i − y¯ ) xi yi − n x¯ y¯ = i=1 n−1 n−1 n n 2 − x) ¯ (x (yi − y¯ )2 i and s y2 = i=1 . sx2 = i=1 n−1 n−1 n

sx y =

i=1 (x i

With these quantities, the estimator for Pearson’s correlation coefficient r x y is defined as follows: n n ¯ i − y¯ ) xi yi − n x¯ y¯ sx y i=1 (x i − x)(y = i=1 = rx y = sx s y (n − 1)sx s y (n − 1)sx s y n − x)(y ¯ − y ¯ ) (x i i =  i=1 . n 2 n 2 − x) ¯ − y ¯ ) (x (y i=1 i i=1 i

444

6 How to Get Things Done: A Practitioner’s Toolbox

In any concrete application, these quantities may be calculated by a spreadsheet program or with the help of a more advanced statistics software package. Note that r x y is considered to be an estimator of the correlation function ρ X Y = σσXXσYY . The quantities just defined may be calculated for any set of variables {xi , yi }, no matter what’s their distribution. However, for normally distributed variables, they play a special role. As was shown in Chap. 9, a bivariate normal distribution has the standard form 

f (x, y) =

1 "

2π σx σ y 1 − ρ 2

−

1 2 1−ρ 2

e (

)

(x−μx )2 σx2

−2ρ

x−μx y−μ y σx σy

+(

y−μ y )2 σ y2



 It may be seen from this expression that the quantities σx , σ y and ρ ≡ ρx y characterize the distribution. If ρ = 0, the correlation between the two variables vanishes and they are independent from each other (and only in this case). It is important, therefore, to have a statistical test at hand, which can be used to test for the correlation of normally distributed variables. We shall not derive the test scenarios in detail, but just present the results. The reader may refer to the selected literature cited in the appendix for more details. Also see the section on statistical tests for more details on hypothesis testing. Test If X, Y are Jointly Normally Distributed Three test scenarios are possible: 1. H0 : ρ X Y = ρ0 & H1 : ρ X Y = ρ0 2. H0 : ρ X Y ≤ ρ0 & H1 : ρ X Y > ρ0 3. H0 : ρ X Y ≥ ρ0 & H1 : ρ X Y < ρ0 Case A: ρ XY = ρ 0 = 0 The test statistics is: T =

√ r n − 2 √ xy

1−r x2y

which (as can be shown) follows Student’s t-distribution. The critical regions for the three cases above are respectively:

 

CR1: −∞, tn−2;1− α2 ∪ tn−2;1− α2 , +∞

 CR2: −∞, −tn−2;1−α  CR3: tn−2;1−α , +∞ where tn−2;x x are the respective quantiles of Student’s t-distribution with n − 2 degrees of freedom. Case B: ρ XY = ρ 0 = 0

  √ 1+r x y 1+ρ0 ln The test statistics is: T  = n−3 − ln 2 1−r x y 1−ρ0 which follows the N[0, 1]-distribution. The critical regions for the three cases above are respectively:

6.4 Tools and Concepts in Alphabetical Order

445

CR1: T  > z 1− α2 CR2: T  > z 1−α CR3: T  < −z 1−α where z x x are the quantiles of the N[0, 1]-distribution.

Example 1 To give a handwaving example, consider Fig. 6.26, which shows planned and actual EBIT data of an organization for a time period of 16 years. The organization has well-defined procedures for the determination of EBIT forecasts, which are applied since years in the same way. However, observing the yearly differences between planned and actual data, a critical mind of the organization comes up with the criticism that those procedures are good for nothing and there is no correlation between plans and reality. We consider Case A above and assume that there is no correlation between the two variables (planned, actual). From the data, we calculate r x y = 0.8276 and the test statistics T =

√ n−2

rx y 1 − r x2y

=

√ 0.8276 16 − 2 √ = 5.52 1 − 0.82762

Choosing a confidence level of 90% (α = 0.1), we can find in the tables of Chap. 9, t16−2;0.05 = 1.761. As 5.52 > 1.761, we reject the hypothesis that there’s no correlation between the planned and actual EBIT data. Example 2 Suppose we are given a sample {xk , yk }, k = 1, 2, 3 . . . , 20 and calculate its r x y = 0.765. We want to test the hypothesis (at level α = 0.05): EBIT - Plan vs. Actual 8 7

EBIT in %

6 5 4 3 2 1 0 2002

2004

2006

2008

2010

Plan Fig. 6.26 Example—time series of EBIT data

2012

2014

Actual

2016

2018

2020

446

6 How to Get Things Done: A Practitioner’s Toolbox

H0 : ρ0 = 0.8 against H1 : ρ0 = 0.8 √   1 + rx y n−3 1 + ρ0 ln − ln 2 1 − rx y 1 − ρ0 √   1 + 0.765 1 + 0.8 20 − 3 ln − ln = −0.3729 = 2 1 − 0.765 1 − 0.8

T =



The critical region of the test is outside of −z 1− α2 , z 1− α2 = [−1.96, +1.96]. To determine these values, compare Fig. 9.27 in Chap. 9. As −1.96 < −0.3729 < +1.96 our calculated value is within this interval, we don’t reject the hypothesis H0 . It is important to keep in mind the prerequisite for these calculations: The data follow the bivariate normal distribution. Note, if this cannot be justified otherwise, one has to validate it prior to the test for correlation.

6.4.22.2

Spearman’s Rank Correlation Coefficient

When we deal with measurable and paired data, Pearson’s coefficient is the tool of choice to determine correlation between variables. However, what can we do if we have categorial data that can only be arranged in order? Examples include: • The 10 participants of a beauty contest are ranked by two voters from 1 to 10. The favored candidate receives number 1; at the other side of the scale, there is candidate with number 10. • In a sensory test, five different cheeses are tested by two testers. Again, ranks reach from 1 to 5. In this kind of rankings, each rank must occur only once. Spearman’s rank correlation is employed to measure correlations between two rankings. In a first step, we show how it is defined and bring some basic aspects of its theory. 1. Start with two random variables X, Y and a corresponding sample {(x1 , y1 ), (x2 , y2 ), . . . (xn , yn )}. 2. Assume all {xi , i = 1, . . . n} are different. Assume all {yi , i = 1, . . . n} are different. Rank/order both sets of values separately according to their size (ascending/descending). 3. The procedure described in (2) defines a relation that maps each xi to its so-called rank R(xi ), after the elements of xi have been ordered according to their size. In other words, the set of elements xi , i = 1, 2, . . . n is mapped (xi → R(xi )) on

6.4 Tools and Concepts in Alphabetical Order

447

the set of natural numbers 1, 2, . . . , n in an unambiguous way. The same holds for {yi }. 4. Consider the Pearson correlation coefficient n ¯ i − y¯ ) (xi − x)(y r x y =  i=1 . n 2 n 2 − x) ¯ − y ¯ ) (x (y i i i=1 i=1 and calculate it for the ranks R(xi ), R(yi ). This means, we have to evaluate the expression for the so-called Spearman rank correlation: n

rsp =

 R(xi ) − R(x) (R(yi ) − R(y)) . n n 2 2 R(x)) R(y)) − − (R(x ) (R(y ) i i i=1 i=1 i=1

This expression can be dramatically simplified, performing the following steps. n n+1 1 1 n(n + 1) = R(x) = R(xk ) = n k=1 n 2 2

The last equation holds because R(xk ), k = 1, 2, . . . n are just the first n natural numbers in a specific permutation. In addition, from elementary algebra we know . that 1 + 2 + · · · + n = n(n+1) 2 The same argument can be repeated for R(y). As the ranks for the yk are just another permutation of the first n natural numbers, it is clear that R(x) = R(y) =

n+1 2

With similar arguments, we can show that n  k=1

R(xk )2 =

n  k=1

R(yk )2 =

n  k=1

k2 =

n(n + 1)(2n + 1) 6

where we employed another well-known result from elementary algebra for the sum of squares of the first n natural numbers. Next, transform the above given expression for the Spearman correlation as follows:  n

i=1 R(x i ) − R(x) (R(yi ) − R(y)) rsp =  n n 2 2 i=1 (R(x i ) − R(x)) i=1 (R(yi ) − R(y))

448

6 How to Get Things Done: A Practitioner’s Toolbox

n

=

R(xk )R(yk ) − n R(x) R(y) 2 n 2 2 2 k=1 R(x k ) − n R(x) k=1 R(yk ) − n R(y)

n

k=1

Plugging into the last equation the just calculated values for the mean of the ranks, the squares of the ranks, etc., we end up with the following expression for Spearman’s correlation  6  rsp = 1 − 2 [R(xi ) − R(yi )]2 n n − 1 k=1 n

To make the story short, you get Spearman’s correlation coefficient rsp , employing the formula for the Pearson correlation, and replacing the xi , yi in that formula by its respective rank numbers R(xi ), R(yi ). Spearman’s correlation is equal to +1, if R(xi ) = R(yi ) for i = 1, 2, . . . n. This means the same ranking for all corresponding x, y values. It is equal to -1, if R(xi ) = n + 1 − R(yi ) for i = 1, 2, . . . n. This is the case, if the lowest ranked x value is paired with the highest ranked y value, the second lowest ranked x value is paired with the second highest ranked y value, etc. One could also say that x and y are ranked reversely. Generally, we have −1 ≤ rsp ≤ +1. Example 1 A consumer consultancy organization ranks seven electrical shavers. In this context, two testers give their votes independently as follows (1 is the best, 7 the worst): Shaver model

1

2

3

4

5

6

7

Tester 1

4

1

6

5

3

2

7

Tester 2

4

2

5

6

1

3

7

The question we are interested in is how close the two testers agree in their ratings? Plugging the figures into the formula for the Spearman rank correlation coefficient, we get the following: 6 (4 − 4)2 + (1 − 2)2 + (6 − 5)2 + (5 − 6)2 −7

+ (3 − 1)2 + (2 − 3)2 + (7 − 7)2 = 0.8571

rsp = 1 −

73

As this value is relatively high, we conclude that the correlation between the two testers was likely not obtained by chance. Example 2 This example just illustrates the general scheme of calculation. The two variables X and Y and their values are fictitious and represent anything.

6.4 Tools and Concepts in Alphabetical Order

449

Id. number

X

Y

R(X )

R(Y )

(R(X ) − R(Y ))2

1

12.6

0.12

6

1

25

2

5.7

1.34

2

7

25

3

3.9

0.64

1

3

4

4

15.2

0.91

7

5

4

5

8.1

1.12

4

6

4 1

6

7.3

0.75

3

4

7

10.5

0.55

5

2

9 72

 6 6 

 × 72 = −0.28571 rsp = 1 − 2 [R(xi ) − R(yi )]2 = 1 − n n − 1 k=1 7 × 72 − 1 n

This result shows a very weak negative correlation between the two data rows.

Spearman’s Test for Rank Correlation The test scenarios for Spearman’s rank correlation are the following: Case A: H0 : ρ = 0 against H1 : ρ = 0 Case B & C: H0 : ρ = 0 against H1 : ρ > 0 and H1 : ρ < 0 The test statistics employed in all cases is:  6  rsp = 1 − 2 [R(xi ) − R(yi )]2 n n − 1 k=1 n

% % Critical (rejection) region for Case A: %rsp % > r α2 Critical (rejection) region for Case B and Case C, respectively: rsp > rα and rsp < −rα The critical values rα are tabulated and may be calculated with statistics software packages.

6.4.23 CTQ—Critical to Quality It is important to have a clear picture of what are the critical features of your products or services from the customer’s point of view. Depending on the relationship between your organizations with the customer, these features may be obvious, as they are stated

450

6 How to Get Things Done: A Practitioner’s Toolbox

in a contract or other document specifying requirements. In other cases, however, they may be not so clear, and the organization must implement adequate tools to identify those critical issues. Obviously, there is more than one approach to get CTQ data, reaching from surveys, direct interviews of the client, analyzing expectations and requirements of focus customers and much more. Here we just sketch two tools which are frequently met in this context. The nitty-gritty of the tool…

6.4.23.1

Critical to Quality Tree (CTQ Tree)

A CTQ Tree is a diagrammatic tool to visualize customer expectations and requirements, their drivers and the respective CTQ requirements. It is frequently used in the Six Sigma context and beyond. The general structure of a CTQ Tree is given in Fig. 6.27. CTQ characteristics/requirements are • Critical customer requirements or those critical to the customer’s perception; • Translatable into a measurable product or service specification. The process creating a CTQ Tree is typically the following: 1. Identify your customer’s critical needs and expectations. Ask and answer the question: “What are the critical requirements of the customer, concerning this product or service?”

Fig. 6.27 Example—general structure of a critical to quality tree

6.4 Tools and Concepts in Alphabetical Order

451

Use existing customer data to answer this question. If there are no reliable data available, collect them (by survey, interview, focus group analysis, etc.). 2. Identify the quality drivers Take each of the identified critical customer needs and determine the relevant quality drivers that are needed to meet those needs. Important: This should be done from the customer’s perspective with the customer’s perception in mind. Continue asking questions like: “What does that mean from the customer’s perspective? Why is this quality driver important?” 3. Identify the critical to quality requirements Finally, identify the critical to quality performance requirements needed for each quality driver. This identification should be done with care and not in a rush. There may be CTQ requirements that are not obvious at first sight or have significant impact on cost. Frequently, there are also several units of the organization touched by the CTQ environment. To illustrate the approach a bit more, consider the following example (Fig. 6.28). An auditing company offers different audit services to a client. The overall customer need is “Reliable Audit Services”. Brake this need down to the key drivers. These include an “Efficient Scheduling Process”, “Competent Auditors” and some others, left blank. In the last step, make the CTQ requirements concrete in the right part of the figure.

Fig. 6.28 Example—some CTQ requirements for an auditing company

452

6 How to Get Things Done: A Practitioner’s Toolbox

6.4.23.2

Kano Analysis

The so-called Kano Model was designed by Noriaki Kano from Tokyo University around 1984. The intent of the model is to support design and development teams for products and services, to identify the critical requirements and expectations of customers. One of the basic ideas of the model is to classify product and service attributes into three categories as follows (Fig. 6.29). (1) Must-Have Attributes These are basic attributes characterizing features of the product or service that the customer considers to be absolutely necessary. Example If you buy a printed book, you just assume that its binding will not brake after flipping pages a few times around. (2) Nice-to-Have Attributes These are attributes that are not absolutely necessary but contribute to customer’s positive perception of the product or service. Example In our book example, the book cover is made of a material that doesn’t get dirty easily. (3) Excitement Attributes These are attributes that the customer didn’t expect (in a positive sense) and that may boost your product or service ahead of competitors’. Example In our book example, if you buy a hardcopy of the book, you’ll get for a ridiculous small additional amount of money also its electronic version. The Kano analysis typically consists of the following steps: 1. Consider all your VOC data. It is really important to consider all accessible sources of customer voice. Don’t confine yourself to one source only. If you feel some data could be missing, complete your data set first, before you proceed. 2. Classify your data into the categories • Must-have attributes; • Nice-to-have attributes; • Excitement attributes. Fig. 6.29 Attribute categories of the Kano model

6.4 Tools and Concepts in Alphabetical Order

3. 4. 5. 6. 7.

453

Frequently, one more category is considered, containing all attributes that the customer doesn’t care of. He simply doesn’t need them and wouldn’t be willing to pay for them: Irrelevant attributes. Ensure that your product or service has all “must-have attributes”. It makes sense to eliminate all “irrelevant attributes”. Decide which of the “nice-to-have attributes” you want to add to the product or service. Decide which of the “excitement attributes” you want to add to the product or service. Ensure you have the economic part under control. In real life, you will have to decide which of the “excitement attributes” you’ll add and which of the “niceto-have attributes” you’ll cancel. At the end, your choices must be profitable.

To summarize, the Kano model links nicely to the CTQ Tree and supports teams to make rational decisions. Keep in mind, however, that customer excitement about a product or service frequently also has an emotional dimension that should be taken into account.

6.4.24 CVAM—Customer Value Assessment Matrix CVAM is a simple tool that may be employed to get a better overview of your customers’ preferences and expectations. If your company delivers products or services to different types of customers, these individual groups of customers may value different things. It is important to get an overview about these differences and take actions if needed. The nitty-gritty of the tool… The tool is simple to use: 1. In the first column of a matrix, list the issues you would like to assess. Add a column for each customer segment you would like to assess. 2. Choose a ranking scale. Frequently, five ranking levels are employed (1 = very important, 5 = completely unimportant). 3. Collect the data from your customers. This may be done in face-to-face interviews, surveys or any other method that delivers reliable data. It may be adequate, that for different customer segments data are collected by different means. Example A certification organization wants to analyze differences in service perception by some of its customer groups. The (fictitious) data are given in Table 6.16. In this case, for example: • All assessed customer groups are very sensitive concerning total costs of certification.

454

6 How to Get Things Done: A Practitioner’s Toolbox

Table 6.16 CVAM method applied by a certification organization to some of its customer segments Customer needs

Automotive industry

Hospitals

Local food companies

Furniture industry

Public sector

Total costs

2

1

2

2

1

Personal contact person

1

3

4

4

5

Responsiveness

2

3

3

2

1

Quality of auditors

2

1

2

2

2

Presence in my industry (e.g. participation in conferences)

2

2

1

3

2

• Only clients in the automotive industry urgently would like to have a dedicated person which they can access in case of issues. • The quality of auditors is a highly expected issue for all customer groups, especially for those in the hospital sector. • Likewise, almost all customer groups want to see their certification organization being active in their industry, as for instance on conferences. To make it short, the CVAM delivers an overview about important aspects concerning customer perception on just one sheet of paper. It is important that the organization derives actions from the results. In the example above, it may be wise to change the certification body’s processes and to offer clients from the automotive industry a qualified person they can address with their issues. Another initiative should be to actively plan to play an active role on industry-specific conferences and comparable events. In this sense, a CVAM is a tool which may be used to fine-tune the relationship with your customers.

6.4.25 Data Collection and Presentation All management system standards presented in this book require data-based approaches and decision making. For that reason, it is of utmost importance to have a clear vision how to collect data, how to process and analyze them, and how to present them. Concerning the analysis of data, this topic is treated in other sections. See, for example, those on control charts, hypothesis testing, confidence intervals, acceptance sampling and others. Here we just list some overarching aspects to increase the reader’s awareness.

6.4 Tools and Concepts in Alphabetical Order

455

The nitty-gritty of the tool… When you need to collect data, there are many aspects that should be considered, including the following: 1. Clearly distinguish different types of data. Typically, you’ll have to consider: 1.1. Continuous data These are data that can be measured on a continuous scale. As examples consider physical data like length, time, voltage, current, temperature, mass and others. Also think of data expressed in currency like cost, EBIT, etc. 1.2. Discrete data These are values of variables that can attain only discrete numbers. Examples include: Number of customers entering a store per hour, number of failures a process shows per day, number of calls in a call center, etc. 1.3. Attribute data These types of data are attributes of the entities under consideration. Examples include: – Colors of objects are used for classification (e.g. red, green, blue). – State of objects (operating, out of order). – Objects are enumerated: Object 1, Object 2, …. Object n. – Customer survey data: Agree—Don’t agree—Agree strongly, …. One of the reasons why it is important to distinguish between types of data is that they need different statistical methods to analyze them. 2. Before you start collecting data, be sure you really understand what sort of data you need. Although this may sound super trivial, it is not. Very frequently, data collection is done without any solid theory behind. The outcomes then are so-called data cemeteries which are useless. 3. As the collection of data may be expensive, consider efficiency aspects when planning data collection. 4. Define how data will be collected. In practice, there are almost no limitations. Data may be collected along processes simply manually or be generated automatically by the IT along the process. Data may be created during customer satisfaction surveys in many different ways, and so on. It makes sense to describe the details of data collection in procedures, whenever necessary. These should contain information about the following: – – – –

Which data are collected? Where and when are data collected? Who will collect data? How are data collected? This includes, for example, sampling plans and detailed processes for data collection. – How are the data documented and stored?

456

6 How to Get Things Done: A Practitioner’s Toolbox

5. Data collection is critical and needs experience. As data collection is such a huge subject, there is no chance to even touch all relevant aspects here. However, the following should be mentioned: – Collecting data, avoid bias! – Ensure randomization, if it is needed! – It may make sense to involve a statistician in the design phase of your data collection project. 6. The collection of data needs measurement systems. Ensure that measurement systems are adequate and validated. Examples include the following. If physical measurement data (length, time, current, mass, temperature, etc.) are collected, physical measurement systems are needed. Ensure their calibration, validation and correct use. If attribute data are collected (e.g. products are released in an inspection according to the criteria “good product/bad product”), decisions may be based on a checklist, but still be made by individual inspectors. Here we have two interacting measurement systems (checklist and inspector), which both must be adequate and validated to obtain correct and meaningful results. 7. Evaluate and optimize your processes for data collection. Once processes for data collection were followed for a while, it makes sense to evaluate them and check whether they delivered what you expected. It may turn out that data collection processes need to achieve improved economic efficiency. However, it can also become necessary to adapt data collection processes to changing needs, changing organizational issues or changing processes. In this context, used measurement systems should be newly evaluated and checked if they still are adequate. 8. The presentation of data is not part of the data collection process. However, adequate data presentation is super important. Reasons include: – Good data presentation makes collected data easier to understand. – Different forms of data representation may unveil complementary facts otherwise hidden in the data. – Adequate graphical presentation of data makes them more transparent and accessible to a wide range of people. 9. Be careful when mixing data from different sources! When you start a data collection process, it may be tempting to merge your data with existing ones that were collected earlier, come from other sources or were collected with different methods. Although such data may be highly welcomed in some cases, as a rule you should be careful to combine them with your own. Clearly understand previous data or data from other sources and make sure that they don’t destroy the integrity of your own data.

6.4 Tools and Concepts in Alphabetical Order

457

6.4.26 Decision Tree Analysis A decision tree is a tool that may be used to analyze complex decision problems and take into account external and random influence factors that are not under the control of the decision maker. Starting from an initial decision, the method tries to figure out all relevant paths that lead from that initial decision to the set of potential or planned outcomes. The method is graphical in nature. However, it can be transformed into other formats, as follows from the fact, that a decision tree is mathematically a rooted tree (see graph theory). For that reason, the mathematical technology available for graphs can be utilized, if needed and meaningful. Decision trees are applied in many different fields, including probability theory, risk management, computer sciences, machine learning, economics and others. The nitty-gritty of the tool… To create a decision tree, a handful of symbols is needed. The ones given in Table 6.17 will be sufficient for most applications in our context. Figure 6.30 shows a simple decision tree. Starting on the left, an “INITIAL DECISION” is shown. In this example, the initial decision is followed by three additional parallel decisions. Then, following decision point 1 (DP1), there are two alternatives that lead to branch points BP1 and BP2. At this point, probabilities enter the play. BP1 leads to three alternatives that may have different probabilities of occurrence. For example, if the INITIAL DECISION was to develop some new software products, let DP1 be the decision, which software should be developed for the B2C sector. The decision tree shows that two alternative projects have been decided. Both Table 6.17 Symbols frequently used in decision trees Symbol

Meaning This symbol is called a chance node or a branch point Chance nodes indicate events in a decision three that can’t be completely controlled. Branches that leave a chance node show complementary events that are influenced by external or random factors. Whenever possible, probabilities of occurrence should be assigned to these branches This symbol is called a decision node or choice node Decision nodes are those branch points in a decision tree that result from an active decision. Decision nodes are under our control This symbol is called an endpoint node or simply an outcome. Endpoint nodes indicate the final consequences or result of the respective branch of a decision tree This symbol is called a branch Branches are used to indicate actions, outcomes or alternatives. Branches connect the other symbols of a decision tree This symbol indicates a branch and a rejected branch When creating complex decision trees, it may turn out that certain branches have to be rejected due to some reasons. This should be indicated in the tree

out out out out out

RESULT 05 5

out

DP2

RESULT 04 4

RESULT 06 6

out

INITTIAL DECISSION

RESULT 03 3

RESULT 07 7

out

BP2

RESULT 02 2

RESULT 08 8

out

DP1

RESULT 01 1

RESULT 09 9

out

BP1

RESULT 10 0

out

6 How to Get Things Done: A Practitioner’s Toolbox

RESULT 11 1

out

458

RESULT 12 2

BP3

BP4

DP3 BP5

Fig. 6.30 Example: General structure of a decision tree

come with some unpredictable chances and risks. These risks are symbolized by the outgoing vertices from BP1 and BP2. In this example, there are three such vertices for both alternatives. As an example, let BP1 stands for the risks and chances, associated with the project to develop a new consumer app. The three outgoing branches from BP1 could indicate: • Branch 1: With probability 60%, this project will be a full success. • Branch 2: With probability 20%, this project will be a complete flop. • Branch 3: With probability 20%, the outcome is for the moment being completely unpredictable. At this stage, we reach the right end of the decision tree. The general idea of the decision tree method is to achieve a quantification of outcomes for each individual alternative shown. Outcomes are usually given in currency units. However, outcomes may also be measured in other units, if more adequate. Having a quantified result for each of the paths leading from the INITIAL DECISION to the result column on the right, the job is done. In the present example, the decision DP1 of developing a B2C app could come with a sales expectation of 3 million US$ per year. This figure is uncertain, however, according to the mentioned chances and risks identified in BP1. For that reason, the following are the sales expectations: • RESULT 1: 1.8 million US$; • RESULT 2: very likely zero sales; • RESULT 3: no realistic figure may be given. Working out the effects of the other strategy paths in the same way, the RESULT column should give a picture of the consequences following the ORIGINAL DECISION.

6.4 Tools and Concepts in Alphabetical Order

459

The main advantages of decision tree analysis include: • • • •

Clear logical thinking is encouraged and needed to create a decision tree. Consequences and imponderables of (strategic) decisions are worked out in detail. Delivers quantifications/estimation of these consequences. Delivers a visual picture of decisions, consequences and impacts.

It should be mentioned that software solutions are available to create decision trees. This may be helpful if decision trees become very complex. Generally speaking, the creation of decision trees includes the following steps: 1. Select the INITIAL DECISION that determines the decision tree. 2. Constitute the team that will create the decision tree. Expert knowledge will be needed to deliver relevant input. For different parts of the decision tree, special expertise may be needed. 3. When it comes to determine chances and risks that follow decision and branch nodes, it may be necessary to refer to other tools to form consensus. In addition, qualified estimates of probabilities should be found. 4. In some cases, decision trees may need reevaluation, if new or additional information is available. As already mentioned, decision trees find extensive applications in various fields. For example, probability trees are just another realization of decision trees. Figure 6.31 shows an example of a probability tree. It starts with a node on the left, considered as the primary event, that splits up into two complementary alternatives “A” and “not A”, with complementary probabilities. At the next nodes, alternatives split into two alternatives with the conditional probabilities shown. This may be continued further to arbitrary complexity. The advantage of the graphical representation of probability trees is to keep overview about the network. One field of application is risk analysis, applied to Fig. 6.31 Probabilities along branches of a probability tree

460

6 How to Get Things Done: A Practitioner’s Toolbox

complex systems with many alternative states. Also, there is a close relationship with event tree analysis (ETA).

6.4.27 Delphi Technique The name of this tool derives from the ancient Greek oracle in Delphi. The nitty-gritty of the method is to get a reliable and potentially harmonized statement on a specified topic from a group of experts. As such, it may be employed in many situations where expert knowledge is needed. The nitty-gritty of the tool… During the whole lifetime of a management system (quality, environment, risk management, etc.), you’ll frequently need expert knowledge, and there are many ways to employ it. The Delphi technique is an important one and suggests the following approach: 1. Specify clearly the problem for which you want to receive expert opinion. 2. Select the experts you want to include in your Delphi project. 2.1. Divide these experts into one or more panels. 2.2. Ensure that none of the experts knows the identities of the other experts participating in the Delphi project. 3. Prepare the questionnaire you will send out to the participating experts. 4. Send out the questionnaire to the selected experts and ask for their responses and statements. Note there is no verbal contact in this phase of the project. 5. Receive the filled questionnaires and expert comments. Evaluate them and check how far consensus is reached among the experts. 6. Use the information received and evaluate it. Prepare the next iteration of the process. In this next round, all participating experts receive the feedbacks from the others. However, the identities of the experts are not uncovered, to avoid biases. 7. Having received the feedback from the experts, you are basically back to Step 5 above and you may continue the process until a final consensus among all participating experts is reached. The overall idea behind the method is the hope and expectation that after a final number of iterations of the process, the participating experts should come up with a statement, on which all of them may agree. Of course, there may be cases in practice, where this will not happen. Although this process has obvious advantages, it also is cost-intensive. For that reason, it should be applied only if the expected output makes it worthwhile. However, potential fields of application may be found in the context of all management systems.

6.4 Tools and Concepts in Alphabetical Order

461

6.4.28 DOE—Design of Experiments Gaining information is a crucial task in science, engineering, development, business and in many other contexts, including management systems. Experiments are one of the sharpest weapons to be employed. DOE is a tool that may help to plan experiments of different types and to draw conclusions from their results. In many applications, we face the situation that a result or an output we are interested in depends on several factors that we can control and on a certain amount of noise that is of random nature and that we cannot control (Fig. 6.32). Studying the dependence of the output on the input factors, we have to design experiments which allow us to gain a maximum of information with a minimum of effort. The reason is clear: Experiments may be time-consuming and expensive, and there are a variety of other issues that call for an optimal design of experiments. DOE is a bunch of techniques which help us to do exactly this. The nitty-gritty of the tool… Before we sketch some basic ideas of DOE, it makes sense to define some vocabulary, used in this context: – A factor is a variable that influences and affects the response variable. In our context, a factor can be changed and set by the experimenter. Factors may be continuous or discrete. In the first case, they can be changed continuously within a certain range. A discrete factor can be changed step wise, and it attains only discrete values. – The response variable is the dependent variable and characterizes the outcome of an experiment. – The levels of a factor variable are the values that variable can take. – The interaction of factor variables characterizes how factors interact with each other and how this interaction influences the response variable. – The replication of an experiment is the repetition of some or all experiments of a DOE study. Layouts of design of experiments vary in types and include the following: Fig. 6.32 Factors A, B, C and noise influencing the output Y

462

6 How to Get Things Done: A Practitioner’s Toolbox

• Simple design of experiment Imagine we have N factor variables X k , k = 1, 2, . . . N . Assume these factor variables X k have n k levels, respectively. In a simple design of experiment, we start with a specific configuration and then we vary one factor at a time. This leads to the following number of experiments n =1+

N 

(n k − 1)

k=1

• Full factorial design Again, imagine we have N factor variables X k , k = 1, 2, . . . N and assume these factor variables have n k levels, respectively. In a full factorial design of experiments, all factors at all levels are combined with each other. The total number of experiments in this case is therefore n = n1 × n2 × · · · × nk • Partial or fractional factorial design We have N factor variables X k , k = 1, 2, . . . N and assume these factor variables have n k levels, respectively. Contrary to the full factorial design, we select for each factor variable a number n k of levels and run the experiments only for them. The number of experiments in this case is then obviously n 1 × n 2 × · · · × n k Hereby the number and type of levels must be selected with care, to gain the desired information from the experiments. The reason to choose a fractional factorial design is, of course, to reduce the complexity of the design and to achieve the needed results in shorter time and with lower costs. • 2 k design A popular and frequently met design of experiments is the so-called 2k design. In this setting, we have to deal with k factors, and we select only two levels for each of them. This is sort of a “black-and-white” setting, but it has the advantage that it can be handled relatively easily. For example, the two selected levels of a factor variable could be its minimum and maximum levels, or any other combination which is especially important for the experiment under consideration. When planning to use DOE, some things should be very clear in advance: • Have a clear picture of what is the intent of the experiment and what type of results do you expect. • What kind of equipment and knowledge do you need? • What is the input to the experiment (material, financial resources, etc.)?

6.4 Tools and Concepts in Alphabetical Order

463

• Which factor variables are essential for your experiment and did you select their ranges? • What do you expect, how the factor variables interact? • What are your expectations about the outcome? These and other relevant issues should be clarified before any application of DOE starts, as these questions are to be considered as input to the method. Example To illustrate some of the abovementioned concepts, we consider a 22 design of experiments. It is not necessary to specify what are the details of the factors x1 , x2 and of the response variable y, as all that counts for the moment, is the mathematical structure of the model. It is customary and very helpful, to code the factor variables. This means that the two values they may attain are coded with the values +1 and −1. We assume the functional relationship between the factor variables and the output variable can be described by the following model equation y = c0 + c1 x1 + c2 x2 + c12 x1 x2 This shows linear dependencies on both factor variables and a nonlinear term which may be interpreted as an interaction between the two factor variables. Note that this polynomial function may be considered as being the first few terms of a Taylor expansion (see Chap. 9). We shall see later how additional terms of that expansion may be taken into account. Table 6.18 summarizes a potential outcome of our experiments. While x1 and x2 attain their possible (coded) values, the response variable y is measured to have the values shown. In order to determine the values c0 , c1 , c2 and c12 in the above equation for y, we plug the values from Table 6.17 into this equation. This leads us to the following linear set of equations and its respective solution: c0 − c1 − c2 + c12 = 20 c0 + c1 − c2 − c12 = 30 c0 − c1 + c2 − c12 = 50 c0 + c1 + c2 + c12 = 25 Table 6.18 Example for a 2k design (k = 2) Experiment setting

y

x1

x2

x1 x2

1

20

−1

−1

1

2

30

1

−1

−1

3

50

−1

1

−1

4

25

1

1

1

464

6 How to Get Things Done: A Practitioner’s Toolbox

Table 6.19 Sign table for the full 23 design Experiment setting

I

x1

x2

x3

x1 x2

x1 x3

x2 x3

x1 x2 x3

1

+

−

−

−

+

+

+

−

2

+

+

−

−

−

−

+

+

3

+

−

+

−

−

+

−

+

4

+

+

+

−

+

−

−

−

5

+

−

−

+

+

−

−

+

6

+

+

−

+

−

+

−

−

7

+

−

+

+

−

−

+

−

8

+

+

+

+

+

+

+

+

c0 =

y

125 15 25 35 ; c1 = − ; c2 = ; c12 = − 4 4 4 4

The functional relationship determined by this experiment reads, therefore, y=

125 15 25 35 − x1 + x2 − x1 x2 4 4 4 4

The next step of complexity would be a 23 design with the underlying model equation y = c0 + c1 x1 + c2 x2 + c3 x3 + c12 x1 x2 + c13 x1 x3 + c23 x2 x3 + c123 x1 x2 x3 This model has 23 = 8 coefficients, and therefore, eight experiments are needed to determine them. The general layout of the so-called sign table (one just writes + instead of +1, etc.) for this case is shown in Table 6.19. The calculations can be done in the same way as in the above example. As can be seen from these examples, the complexity of the models rapidly increases (exponentially) with increasing number of factor variables. For 10 variables, 210 = 1024 experiments would be needed and for 15 factor variables, 215 = 32768 experiments would be needed to determine all model parameters. This is the reason why in practical applications one will have to reduce the number of degrees of freedom, based on some rational arguments. One of the most important is that in many cases, one will not need all the nonlinear interaction terms appearing in the polynomial expansion for y, because not all factors interact with each other. Going back to Table 6.18, there is one more important topic to mention. The 22 design shown in that table needs four experiments to determine the model parameters. However, the reality is a bit more complex. In fact, if we repeat the experiments again and again, the measured values of the response variable will not be the same, but typically show variations. Table 6.20 sketches this point. The values y1 , y2 , … show

6.4 Tools and Concepts in Alphabetical Order

465

Table 6.20 Variations of the response variables Experiment setting

y1

y2

yn

y¯

x1

x2

x1 x2

1

20

20.1

19.8

19.97

−1

−1

1

2

30

30.9

29.8

30.23

1

−1

−1

3

50

49.1

49.5

49.53

−1

1

−1

4

25

24.4

25.3

24.90

1

1

1

…

the measured values of the response variable for the various experimental settings and in the respective experiments. Obviously, variations of the response variables imply variations of the model parameters. For each set of the response variables, we receive a different set of model parameters. However, we may employ the method of regression analysis (see the section on this) to estimate the model parameters. It should be stressed that DOE is a wide and rich field with important applications in many areas. We only sketched some basic ideas. More advanced statistical methods will be needed in many applications.

6.4.29 Estimation of Parameters and Confidence Intervals Management system standards require the collection of data, their analysis and actions based on their evaluation. In this context, statistical methods are more or less indispensable. The estimation of parameters and the determination of confidence intervals are essential parts of the toolbox. Frequently, we are given a data sample {x1 , x2 , x3 , . . . xn } that stems from a population we are interested in. We may not know much about that population; however, in many cases, we know the type of its probability distribution function (e.g. exponential distribution, normal distribution, binomial distribution). This knowledge may be based on theoretical considerations or on practical experience. Then, some standard questions include the following: – – – – –

Given the data set {x1 , x2 , x3 , . . . xn }, what is the random variable behind? What is the probability distribution of that random variable? What are the parameters of the distribution function of that random variable? How can we determine approximations to these parameters? How can we find out how good these approximations are?

The good news is that this type of questions frequently can be answered. However, because we deal with random variables and incomplete information about underlying populations, we need special statistical methods to do the job: Estimation of parameters and determination of confidence intervals.

466

6 How to Get Things Done: A Practitioner’s Toolbox

As we shall draw conclusions based on a limited set of data from a population, it should be clear from the very beginning that the results we derive will be true or false with a certain probability only. That probability, however, can be estimated. In this paragraph, we summarize some of the basic and most popular approaches for the estimation of parameters of probability distributions and the calculation of confidence intervals for them. The nitty-gritty of the tool…

6.4.29.1

Get Motivated by an Example

To illustrate some basic ideas, consider the following example. An organization sells two products A and B which are selected by customers with different probabilities. We would like to know two things: – What is the probability p that a randomly selected customer chooses product A? – Remark Obviously, the probability to select product B is 1 − p. – How many customers n should we ask for their preference to receive a reliable estimate for p? Our setting assumes that customers will buy one of the two products A or B. Cases like “the customer will buy both” or “the customer doesn’t like both products” are not considered within this model and would need a slightly different treatment. However, it can be done. This problem may be solved as follows. Interviewing n customers, n A,n vote for product A and n B,n for product B. Obviously, n = n A,n + n B,n . We may define the relative frequencies (which are estimates for the respective probabilities, we hope) p A,n =

n A,n n B,n and p B,n = n n

Intuitively, we expect that p A,n → p, n→∞

if we interview more and more customers (n → ∞). Note that n A,n should be considered as the numerical value of a random variable N A,n , which counts the number of preferences for product A during n interviews. The same holds for N B,n . As each interview is independent from the others and only two outcomes are possible, N A,n is a random variable that follows a binomial distribution with unknown parameter p. For such a binomial distribution, we know the general expression for the mean value and the variance (derived in Chap. 9): μ = np, σ 2 = np(1 − p).

6.4 Tools and Concepts in Alphabetical Order

467

With these ingredients, we come back to our initial question concerning p and formulate it more precisely writing down the following probability statement in form of an inequality: %  % n % A,n % P % − p % < 0.01 > 0.95 n It says the following: The probability of the event that the observed relative probability n A,n deviates absolutely less than 1% from the true (but unknown) probability p n should be higher than 95%. This probability statement is the root of all that follows. It is super important when solving problems of this type to formulate the probability statement clearly and at the very beginning. Probability statements like the one just given formulate things precisely in mathematical terms: – What do we want to calculate? – With what precision do we want to calculate it? – What is the accepted probability level that the calculated result is true or false? In our example, this means: – The deviation of 1% is our choice; one can choose 5%, 0.1% or any other adequate value. – The same holds for the confidence value of 95%. One could choose 99%, 99.9% or any other limit that sets the confidence that should be reached. – In other words, in our case the probability statement tells us that p should lie within the interval n A,n n A,n − 0.01 < p < + 0.01 n n with a probability of 0.95. This reflects what we indicated before: We can play around with the required degree of precision, but we basically cannot do more than determine an interval in which we will find the parameter p with a given probability. However, that’s good enough. This illustrates the idea of a confidence interval. Next, we transform our probability statement in an equivalent but more usable form as follows: %  % n %

%  % % A,n − p % < 0.01 = P %n A,n − np % < 0.01n P % n % %  % n A,n − np % % < √ 0.01n = P %% √ np(1 − p) % np(1 − p) √ The division by the positive term np(1 − p) = σ in the last equation is a matter of convenience as we shall see in the next step. As is shown in Chap. 9, for large n the binomial probability density may be approximated by the normal density

468

6 How to Get Things Done: A Practitioner’s Toolbox

distribution and the cumulative binomial distribution may therefore be approximated by the cumulative normal distribution. Applying this to the last equation, we can rewrite it as       0.01n 0.01n 0.01n − −√ = 2 √ − 1 > 0.95

√ np(1 − p) np(1 − p) np(1 − p) This can be written   0.01n

√ > 0.975 np(1 − p) Using a table for the (z) function (see Chap. 9), we find the solution of (z) = 0.975 as z = 1.96. This leads to 0.01n = 1.96 √ np(1 − p)

⇒



n > 38416 p − p 2

As may be seen, n depends on the value of p. The right side of the last inequality attains its biggest value for p = 21 , leading to the condition n > 9604. This says we would have to interview some 9600 customers to determine p with the given amount of precision. This example should give a first picture what confidence intervals are about and how they may be calculated.

6.4.29.2

Some Important Auxiliary Results

If we knew the exact distribution function f (x) of a population, we could straightforwardly calculate its mean μ, variance σ 2 and any other expectation value. For example, the mean value would be given by the following expressions (see also Chap. 9, Sect. 9.6.5): & E[x] ≡ μ =

'k

xk f (xk ), for discrete distributions f

x f (x)dx, for continuous onedimensional distributions f

Similarly, the expressions for the variance Var[X ] are

Var[x] ≡ σ 2 =

⎧ ⎨ (xk − μ)2 f (xk ), for discrete distributions f k ⎩ ' (x − μ)2 f (x)dx, for continuous onedimensional distributions f k

If we don’t know f (x), we obviously can’t use these formulas to calculate mean values or other expectation values. However, given a set of data {x1 , x2 , x3 , . . . xn } sampled from the population, we may calculate, for example, the following quantities:

6.4 Tools and Concepts in Alphabetical Order Table 6.21 Difference between sample values and associated random variables

469

Sample version  x¯ = n1 nk=1 xk 1 n s 2 = n−1 ¯ 2 k=1 (x k − x)

x¯ = s2 =

1 n

n 

Random variable version  X¯ = n1 nk=1 X k  n

¯ 2 S2 = 1 k=1 X k − X n−1

xk (Mean value of the sample)

k=1

1 n−1

n 

¯ 2 (Sample variance) (xk − x)

k=1

The question is do x¯ and s 2 have anything to do with E[x] and Var[x]? To answer this and similar questions, one employs the following trick: We consider the values {x1 , x2 , x3 , . . . xn } of our sample being realizations of the random variables {X 1 , X 2 , X 3 , . . . X n } respectively, which all are independent from each other and have the same distribution function. Note that functions of the random variables {X 1 , X 2 , X 3 , . . . X n } are also random variables. Examples include: n n 2 1 

1 X k − X¯ X k or S 2 = X¯ = n k=1 n − 1 k=1

It is super important to clearly understand the conceptual difference between the sample version and the random variable version of these formulas (Table 6.21). Sample values are usually written in small letters, random variables in capital letters. The random variables X¯ and S 2 are of utmost importance in practical applications. The following theorem tells us why: Given a set {X 1 , X 2 , X 3 , . . . X n } of n independent random variables, all having the same distribution with mean value μ and variance σ 2 , it can be shown that E X¯ = μ (1);

σ2 V ar X¯ = (2); n

E S 2 = σ 2 (3);

The verification of these relations may be given by direct calculation. To prove Eq. (1): n 1 nμ =μ E X¯ = E[X k ] = n k=1 n

To prove Eq. (2):

470

6 How to Get Things Done: A Practitioner’s Toolbox

Var X¯ = Var

 n k=1

n

Xk

 =

n 1  σ2 nσ 2 Var[X = = ] k n 2 k=1 n2 n

This relationship is frequently considered as being one of the most important one in statistics. It says that the variance of the random variable X¯ goes to zero, if the sample size increases (n → ∞). To prove Eq. (3):  n

 n 2 

   ((X k − μ) − X¯ − μ )2 X k − X¯ =E n−1 n−1 k=1  n  

2 1 nσ 2 − σ 2 E = σ2 = = (X k − μ)2 − n X¯ − μ n−1 n − 1 k=1

E S2 = E

k=1

And we are done. The last calculation for E S 2 also shows why in the definition of S 2 appears the 1 1 factor n−1 and not n1 as one perhaps might have guessed. Only the factor n−1 makes 2 E S independent of n, which is useful in many calculations. One also calls this an unbiased estimator.

6.4.29.3

Point Estimation—Maximum Likelihood Method

Suppose, we have a set of sampled data {x1 , x2 , x3 , . . . xn }, which all come from the same density distribution f (x; θ ), where θ is one or a set of parameters. For example, for the normal distribution, these would be the parameters μ, σ 2 for the mean and variance, respectively. The problem is, how could we determine the value of θ from the sampled data set {x1 , x2 , x3 , . . . xn }? Note clearly that we got only two things: • The form of the probability density f (x; θ ) and how it depends on its parameters θ ; • The set of sampled data {x1 , x2 , x3 , . . . xn }. Only this information about the underlying population can be employed to find estimates for θ . We just don’t have any other! One popular way to approach the problem is to define the so-called likelihood function L(x1 , x2 , . . . xn ; θ ), as follows: L(x1 , x2 , . . . xn ; θ ) = f (x1 ; θ ) f (x2 ; θ ) f (x3 ; θ ) . . . f (xn ; θ ) This may be seen to be proportional to the probability of the simultaneous occurrence of the sample {x1 , x2 , x3 , . . . xn }, if the parameter θ of the density distributions f (xk ; θ ) has a certain value. With this in mind, the Maximum Likelihood Method suggests, to determine the parameter θ such, that L(x1 , x2 , . . . xn ; θ ) is maximized. This implies as a necessary condition to determine the solutions of the equation(s)

6.4 Tools and Concepts in Alphabetical Order

471

∂ L(x1 , x2 , . . . xn ; θ ) =0 ∂θ Depending if there is only one parameter or a set, this will result in one or a set of equations that may be used to determine the parameter(s) θ . Instead of finding the maximum of L(x1 , x2 , . . . xn ; θ ), we may also determine the maximum of its logarithm. This is possible because the logarithm is a monotonically increasing function of its argument. This makes some calculations easier: ∂ lnL(x1 , x2 , . . . xn ; θ ) =0 ∂θ Depending on the complexity of f (xk ; θ ), this will be a more or less complicated equation (or set of equations) that usually must be solved numerically with the help of adequate software. In many cases of practical importance, however, solutions can even be found in closed form. We illustrate the method by some standard but important examples. Example 1: Exponential Distribution Recall, the exponential distribution is given by + f (t) =

λe−λt , t ≥ 0 . 0, t b|x) =

α 2

Example To see how these concepts work in a real application, we study the following example. Consider a set of random variables X 1 , X 2 , . . . X n , each of which follows the distribution f (x|θ ) = θ x (1 − θ )1−x with x = 0 or 1 This is the Bernoulli distribution which was introduced in Chap. 9. Next, we need a reasonable choice for the distribution of the parameter θ . To keep the following calculations simple, we choose a uniform distribution for illustrational purposes as follows + 1 if θ ∈ (0.1) p(θ ) = 0 otherwise Plugging these inputs into the abovementioned formula for the posteriori density, we get the following expression θ s (1 − θ )n−s f (x1 , x2 , . . . xn |θ) p(θ ) = '1 n−s s f (x1 , x2 , . . . xn |θ ) p(θ )dθ dθ 0 θ (1 − θ ) (n + 1)! s θ (1 − θ)n−s = s!(n − s)!

f (θ |x1 , x2 , . . . xn ) = '

 In these expressions, the abbreviation s = nk=1 xk has been used throughout. The evaluation of the integral can be made by looking it up in an integral table. Having determined the posteriori distribution in explicit form, we can use it to calculate expectation values. Employing the expressions derived above, we have ! E[θ |x1 , x2 , . . . xn ] =

θ f (θ |x1 , x2 , . . . xn )dθ =

s+1 n+2

Again, the evaluation can be done with the help of an integral table or a computer algebra system. This result can be used further to write down the explicit form of the Bayes estimator for our model: n E[θ |X 1 , X 2 , . . . X n ] =

Xk + 1 n+2

k=1

490

6 How to Get Things Done: A Practitioner’s Toolbox

6.4.30 ETA—Event Tree Analysis ETA shows graphically the cascade of events that may follow a selected initial event. The method may be employed qualitatively, as well as quantitatively. The paths a system can take from the initial event via several intermediate steps to the final set of potential consequences are followed with different probabilities. These probabilities may be calculated, if certain input data are available. ETA can also be used to determine the effectiveness of control mechanisms to prevent or diminish negative impacts following an undesired initial event. The nitty-gritty of the tool… The typical steps applying the tool are as follows. 1. Select the initial event you want to analyze. 2. Identify successive events, barriers and controls that follow the initial event. 3. Create the event tree. 3.1. Make sure the event tree shows all relevant scenarios (successive events, action of barriers and controls). 3.2. Make sure the events shown in the event tree are all mutually exclusive. 4. Decide if the ETA is going to be qualitative or quantitative. 4.1. A qualitative ETA can be helpful to consider or analyze the sequence of successive events, barriers and control mechanisms. 4.2. A quantitative ETA focuses on all issues of a qualitative ETA, but in addition, the probabilities of successive events and final impacts are considered. 5. In a quantitative ETA: Determine the probabilities of all successive events in the event tree. Remark Note the following examples, considering absolute and conditional probabilities. 6. Draw conclusions from the ETA. In real-world examples, event trees may be of arbitrary complexity. However, the philosophy of dealing with them is always the same. To illustrate the method, we consider some simple examples. As a first case, consider Fig. 6.33. Start reading the graphic on the left, where the initial event is shown. As we are talking about a risk management tool, the initial event will likely be an undesired event and its potential consequences are to be analyzed. Next to the right, a successive event is indicated, which occurs with a 95% probability and does not occur with a 5% probability. Once the successive event occurred, there are two barrier levels that should prevent negative impacts; however, both have limited reliability and the probabilities of working or not working are given in the graph. At the right side of the diagram, the possible final states are shown. In this example, there are nine potential final states.

6.4 Tools and Concepts in Alphabetical Order

491

Fig. 6.33 Example: event tree analysis

Each path from the initial event to one of the final states on the right describes a potential scenario of the system. As all branches and sub-branches of the diagram are considered to be independent from each other, the probabilities of the final states are calculated by multiplying the probabilities along the respective branches. The figures in the column “final states” show the probabilities of occurrence of these states. Probabilities of the final states add up to 1, as it should be, as the system must be in one of the available final states. An important comment on probabilities used in ETA: It should be kept in mind that the events in an ETA like in Fig. 6.33 are sequential and their probabilities of occurrence must be understood as being conditional probabilities. An event in the ETA occurs, after or because a preceding event occurred. For that reason, walking along any of the event tree’s branches, probabilities are conditional. This has consequences how to determine those probabilities. The probability of an event like “barrier xyz works” must be determined under the condition that the initial event and other succeeding events occurred. Note also that probabilities of perturbed devices and systems are not necessarily the same, as under unperturbed normal conditions. Figure 6.34 shows an initial event IE and a sequence of following events A, B and C. Each of these can occur or not occur. To illustrate the calculation with conditional probabilities, select a specific path, like the one indicated in Fig. 6.34. It consists of ¯ Recall that C¯ stands for “not C”. the sequence of events (I E → A → B → C). To calculate the probability of this path, employ the formulas derived in Chap. 9 for conditional probabilities: % 

P I E ∩ A ∩ B ∩ C¯ = P(I E )P(A|I E )P(B % I E ∩ A)P(C¯ |I E ∩ A ∩ B)

492

6 How to Get Things Done: A Practitioner’s Toolbox Event C: YES

Initial Event IE

Event B: YES Event A: YES

Event C: No Event C: YES

Event B: NO

Event C: No Event C: YES

Event B: YES Event A: No

Event C: No Event C: YES

Event B: NO

Event C: No

Fig. 6.34 Calculation of conditional probabilities of an event path

This equation holds very generally for any type of dependencies between the four events. Fortunately, in many practical applications, this type of general expression is not necessary and may be simplified. In the case that the probabilities of occurrence of the events A, B, C¯ don’t depend on each other, but only on IE , the equation may be simplified to % 

P I E ∩ A ∩ B ∩ C¯ = P(I E )P(A|I E )P(B % I E )P(C¯ |I E ). This type of reasoning is illustrated in Fig. 6.35. Figure 6.35 shows yet another aspect of event tree analysis. This very short event tree starts with an initiating event that has a probability of occurrence “once in a hundred years”. The consecutive events A, B, C and D occur with (conditional) probabilities as shown in the graph. The right-hand side contains the probabilities of occurrence for each of the three outcomes of the event tree in number of occurrences per ten thousand years. In this oversimplified example, things may even be calculated without a pocket calculator. However, in complex models, there is no limit for the number of events to be taken into account. The more complicated the underlying model becomes, the

Event C: 1 %

1/10000 year

Event D: 99 %

94.1/10000 years

Event A: Pr = 95 % Initiating Event 1/100 years Event B: Pr = 5 %

Fig. 6.35 Event tree analysis: determination of number of occurrences per year

5/10000 years

6.4 Tools and Concepts in Alphabetical Order

493

less obvious the outcome of the calculations will be. This is the type of application where ETA shows its real power. There is an international standard offering additional guidance for using ETA: • IEC 62502:2010—Analysis techniques for dependability—event tree analysis (ETA).

6.4.31 Five Max Method The main battlefields of the Five Max Method are improvement of performance and process innovation programs. The method is part of the Six Sigma toolbox, but of course may be employed in any environment with innovation focus. Teams may use the method when the target is to leave conventional thinking behind and try a new route. In many organizations, it may be considered blasphemy, to question established processes. In others, there may not be enough people who have the courage to even come close to questioning. In such cases, the Five Max Method could help to get out of the mud. The nitty-gritty of the tool… The standard approach to employ the method goes like this: 1. Identify the process or other issue that should be questioned. 2. Select and nominate the team members. Take care that a balanced composition of experts and individuals with innovation capabilities is on the team. 3. Have a bird’s-eye view on the process and sketch it. Don’t go into subtle details of the process but consider a simplified picture of it. Create a process flowchart, which typically shouldn’t show more than five steps (that’s where the name of the tool derives from). Don’t care what happens on the microlevel! (Fig. 6.36). 4. Represent the selected process on a flipchart, whiteboard or other device. 5. Select one (after the other) of the sketched process steps and let the team brainstorm ideas, how this step could be redesigned and improved. Note the results on the flipchart or whiteboard. You also may use sticky notes to collect the ideas of the team. 5.1. It is important and one of the crucial flavors of the method, that during this process of idea collection, there shouldn’t be constraints or “don’ts”. Ideas that may sound weird at first sight are also welcome.

Step 1

Step 2

Step 3

Fig. 6.36 Max five method—bird’s-eye view of the process

Step 4

Step 5

494

6 How to Get Things Done: A Practitioner’s Toolbox

5.2. Ensure the process of idea collection takes place in a relaxed and open atmosphere. Time pressure or other distracting factors (e.g. smartphones) should be avoided. 6. Evaluate the received ideas and select those, which sound promising and deserve priority and further investigation. 6.1. Use an accepted approach to select ideas (e.g. Nominal Group Technique and Prioritization Matrix). Make it transparent, why some ideas are selected and others not. 6.2. Ideas that aren’t selected right away still may be worthwhile to be filed for later reference. In a management system context, the Five Max Method may be employed in basically every situation, when it comes to look at processes from a different angle and with innovation and improvement in your mind. You may consider it as a first iteration in improvement projects, which may identify quick wins and deliver results that can serve as input to a more advanced analysis.

6.4.32 FMEA—Failure Modes and Effects Analysis FMEA (Failure Modes and Effects Analysis) is an established and widely used method to identify potential failures, estimate their impacts and define actions how to prevent them. It also helps to identify priorities of needed actions. The method is easy to use, however, requires some training and practice to employ it successfully. The FMEA is very well established in several industries. This includes automotive, where it is a must have. A sound understanding of its methodology is, therefore, important. Although mostly used in production industries, the potential scope of application is much broader. Service industries discovered in recent years that the method may be helpful for their purposes. The nitty-gritty of the tool… FMEA is applied in different contexts, including the following: • Design FMEA This is applied in the design phase of products, services and processes to find out during the earliest phase possible, what could go wrong or how a product, service or process could fail. When applied to products, one of the utmost important topics addressed in this phase are safety hazards, usability problems and others. Think of products, services and processes in the broadest sense. For example, this type of FMEA is also applied in software development. • System FMEA As systems may show high degrees of complexity, it is important to try to foresee potential undesired behavior in each phase of their life cycle. System FMEA is a

6.4 Tools and Concepts in Alphabetical Order

495

useful tool to contribute to such analyses. The tool is very often employed in the design and concept phase of systems. • Process FMEA Process FMEA is typically done in the context of improvement projects. Fields of application include the study of undesired or sub-optimal process flow. Issues of human–machine–system interaction may be treated as well. • Application FMEA This form of the FMEA is used to investigate wrong or misuse of a product, the estimation of its consequences and potential preventive actions. Examples include medical devices and other products with increased safety requirements for use. • Usability FMEA This type of FMEA has the usability of a product in its focus. The central issue to follow is: “What could go wrong with this product during using it?”. An extension of the FMEA method is FMECA (Failure Mode, Effects and Criticality Analysis). This variant has an increased focus on the probability of occurrence of critical failure modes and its potential consequences. Depending on the field of application, the details of the method and steps to follow may vary. However, the main things to do are the following: 1. Select the product, service, process or system you want to analyze with FMEA. 2. Establish the team that is intended to do the FMEA. Make sure that team members are trained how to apply the FMEA method and may contribute to the specific issue to be analyzed. As failure modes and their consequences have to be considered, a deep enough understanding of the products, processes or systems to be analyzed is needed. 3. Consider potential failure modes of the product, system, etc. 3.1. Example Consider a coffee machine and try to identify potential failure modes. These may include: Electrical safety issues; hygiene issues due to design mistakes; durability issues of parts, due to wrong selection of material, etc. 3.2. Remark If you do the FMEA during the design phase of a product, the team could proceed by brainstorming potential failure modes. This is done in answering the question: “What could go wrong with the thing?” 3.3. Results are collected in a matrix as sketched in Table 6.22. In the first column “Issues or Process Steps”, you may group type of problems or (in case of a process FMEA) the individual process steps. Table 6.22 Example—basic content of a FMEA matrix Issue or process step

Failure mode

Failure effects

Severity

Causes

Occurrence

Detection method

Detection

RPN

496

6 How to Get Things Done: A Practitioner’s Toolbox

In the second column, you’ll collect the potential failure modes. In the coffee machine example above, the different issues that lead to an electrical safety issue (e.g. cable damaged, electrical switch shows malfunction, overheating of the device). 4. Consider potential and factual effects of the identified failure modes. 4.1. Example In the coffee machine example in 3.1, this would imply (among other things) the identification of effects due to electrical safety issues. These safety issues would include those that appear during normal use, unintended use, during repair mode, in cleaning mode, etc. The same for failure modes connected with hygiene, e.g. how does aging material impact hygiene issues after long use. 5. Next figure out the causes for the identified failure modes and failure effects. 5.1. Example One of the failure modes in the coffee machine example was overheating the device. One potential effect could be the device heats up to critical temperature and sets the surrounding on fire. What could be the cause of this highly critical effect? For example, the protection relay could not work. Detailed causes could include: It doesn’t work because of a malfunction caused by bad quality of that critical part, or because of a design mistake of the coffee machine. 5.2. Causes should be traced back to root-causes. 6. Next figure out how the different failure modes may be detected. The results are collected in the column “Detection Method” (see Table 6.22). 7. Quantify things 7.1. The three dimensions to consider are: P = Probability of occurrence of failure’s cause; S = Severity of failure effects; D = Detectability of failure. 7.2. It is of utmost importance that the categories “Severity, Occurrence and Detection” are reasonably gauged and people involved in an FMEA analysis are aware of it and able to apply the criteria. In principle, this gauging may be done according to the needs of the applications in mind. In some industries or between members of a supply chain, the details how to quantify are agreed, to ensure the same procedures are used. To show the principles, compare the example given in Table 6.23. In Table 6.23 a simple five-level scale is given for Occurrence, Severity and Detection. More advanced scales with ten levels may be found in some applications. Note that the five levels for Occurrence, Severity and Detection may be combined independently, so there are 5 × 5 × 5 = 125 potential combinations in this model.

6.4 Tools and Concepts in Alphabetical Order

497

Table 6.23 Example: Simplified quantification of Occurrence, Severity and Detection for a FMEA Level

Occurrence

Severity

Detection

Rating High

5

Very high probability of occurrence >5% of cases

Very serious impact on life and environment

Can’t be detected before occurrence

4

High probability of occurrence t + τ ) = ≡ R(τ |t) P(T > t) R(t)

The function R(τ |t) is sometimes called the conditional survivor function of the component at time t. With this concept at hand, one can ask another question: Given the component at time t, what is its mean remaining lifetime MRL(t)? The answer is !∞ MRL(t) = 0

1 R(τ |t)dτ = R(t)

!∞ R(x)dx. t

6. Failure intensity Let’s introduce a random variable φ(t) that denotes the total number of failures of the component or system by time t. We may consider the expectation value of this random variable ¯ ≡ E[φ(t)] φ(t) The so-called failure intensity function ϕ(t) is defined as the derivative of ¯ φ(t): ϕ(t) = dE[φ(t)] . dt ¯ and ϕ(t) are employed to investigate the reliability over The functions φ(t) time. For example, if after some teething troubles a system stabilizes and becomes more reliable, this should imply an absolutely decreasing ϕ(t).

6.4 Tools and Concepts in Alphabetical Order

6.4.61.2

579

Components, Systems, Reliability Block Diagrams and Structure Functions

Our intention is to study the reliability of systems. Intuitively, it is clear that a system’s reliability depends on the reliability of its components. For that reason, we need tools that link these two levels and offer us a conceptual framework within which qualitative and quantitative analysis can be done. In a first step, we consider the components of a system. With each component Ck , we associate a binary variable xk (called state variable), which has the following property + xk =

0, if the component doesn t function 1, if the component functions normally

Each component of the system is in one and only one of the two states: “operating” or “not operating”. It should be mentioned that there are more general approaches, allowing a component to be in more than two states. However, we shall confine ourselves to this binary sort of components, as they form a reasonably flexible tool to model a wide spectrum of systems. If a system is composed of N components, we may associate a n-tuple {x1 , x2 , . . . x N } of state variables with it. As each of these variables may be in one of two states (0, 1), the total number of states of the system is 2 N . As an example, a system with ten components may be in one of 210 = 1024 states. Next, we connect the reliability of a system with the reliability of its components. For that purpose, we introduce the concept of a binary function that is defined as follows: + 0, the system doesn t function φ(x1 , x2 , . . . , xn ) = 1, the system functions normally the xk being binary variables representing the n components of the system. The concept of a binary function is very general. In our context, φ is usually called the structure function of the system under study and it depends on the state variables xk representing its components. To understand how the functional dependence of φ(x1 , x2 , . . . , xn ) on the state variables may be determined, we need the concept of reliability block diagrams. The reliability block diagram of a system is the result of a careful analysis of that system, including the reliability of its components and their interactions. It shows the architecture of the system, as far as relevant to its reliability. Figure 6.61 shows some elementary examples of such diagrams: • Example A shows the block diagram of a parallel architecture of three components C1 , C2 , C3 . Typically, such a structure is found in systems when at least one of the components is required to function, to make the whole system function.

580

6 How to Get Things Done: A Practitioner’s Toolbox

Fig. 6.61 Block diagrams showing a parallel (A), serial (B) and combined (C) structure

• Example B shows a series structure of components. In such a setting, all three components must function, in order to keep the system working. • Example C shows a combination of a parallel and a series structure. Real-world systems may be arbitrarily complex. However, parallel and series components will be found everywhere around. Next, we determine the structure functions for some important examples, keeping in mind its definition that φ(x1 , x2 , . . . , xn ) = 1 if the system is functioning. For example, how can we find the functional dependence on x1 , x2 , . . . , xn for the series structure B (Fig. 6.61)? We claim it is φ B (x1 , x2 , x3 ) = x1 x2 x3 = min(x1 , x2 , x3 )

6.4 Tools and Concepts in Alphabetical Order Table 6.47 Values of the structure function φ A (x1 , x2 , x3 )

581

x1

x2

x3

φ A (x 1 , x 2 , x 3 )

0

0

0

0

0

0

1

1

0

1

0

1

0

1

1

1

1

0

0

1

1

0

1

1

1

1

0

1

1

1

1

1

Indeed, if all three state variables are equal to 1, φ B (x1 , x2 , x3 ) = 1. If at least one of them is 0, φ B (x1 , x2 , x3 ) = 0. For the parallel structure A, the state function is a bit more complicated. A little thinking shows, however, it may be written φ A (x1 , x2 , x3 ) = 1 − (1 − x1 )(1 − x2 )(1 − x3 ) = x1 + x2 + x3 − x1 x2 − x2 x3 − x1 x3 + x1 x2 x3 = max(x1 , x2 , x3 ) For illustrational purposes, consider Table 6.47 of values of φ A (x1 , x2 , x3 ), showing all possible states a parallel structure with N = 3 elements and therefore 23 = 8 states may attain. In block diagram C, we have modules 1 and 5 in series, and modules 2, 3 and 4 are parallel to each other, but in series with modules 1 and 5. To calculate the structure function for this diagram, we just consider the parallel structure of the three modules “sandwiched” by x1 , x5 . The structure function of the parallel structure already was determined for block diagram A. This results in φC (x1 , x2 , x3 , x4 , x5 ) = x1 [1 − (1 − x2 )(1 − x3 )(1 − x4 )]x5 = x1 x5 max(x2 , x3 , x4 ) Structure functions of more complicated block diagrams may be determined similarly. One just has to divide them into smaller blocks for which the structure functions may be easily determined; then, the results are combined.

6.4.61.3

Calculating the Reliability of a System

Once we have found the structure function of a system, the next step is to calculate system reliability with the help of it. To do this, keep in mind that the abovementioned state variables xk may be considered as the realizations of random variables X k . This reflects the random character of functioning or not functioning of the respective components.

582

6 How to Get Things Done: A Practitioner’s Toolbox

In many cases of practical importance, it may be assumed that the random variables X 1 , X 2 , X 3 , . . . X N are independent. That means the state of any selected component of the system does not depend on the state of the others. However, there are cases, where this requirement is violated. As an example, consider a system with components controlled by the same software program that causes malfunctions of several components. Such cases need a more general treatment. The probability that an arbitrary component k is functioning is Rk = P(X k = 1) = E[X k ] As X k may attain only the values 0 or 1, it may be considered as a Bernoulli random variable. The structure function φ(x1 , x2 , . . . , xn ) introduced above attains the value 1 if the system is functioning and the value 0 if the system fails. We may calculate the reliability of the system Rsys from the reliabilities of its components in the following form Rsys = P(φ(x1 , x2 , . . . , xn ) = 1) = E[φ(x1 , x2 , . . . , xn )]. As an example, let’s calculate Rsys for the simple architectures in Fig. 6.61. For the series structure B, we have R B = P(φ B (x1 , x2 , x3 ) = 1) = E[φ B (x1 , x2 , x3 )] = E[X 1 X 2 X 3 ] = E[X 1 ]E[X 2 ]E[X 3 ] = R1 R2 R3 Similarly, for the parallel structure A, we get R A = P(φ A (x1 , x2 , x3 ) = 1) = E[1 − (1 − X 1 )(1 − X 2 )(1 − X 3 )] = 1 − (1 − R1 )(1 − R2 )(1 − R3 ) Finally, for the mixed structure C, we obtain RC = P(φC (x1 , x2 , x3 , x4 , x5 ) = 1) = E[φC (x1 , x2 , x3 , x4 , x5 )] = E[X 1 [1 − (1 − X 2 )(1 − X 3 )(1 − X 4 )]X 5 ] = E[X 1 X 2 X 5 + X 1 X 3 X 5 + X 1 X 4 X 5 − X 1 X 2 X 3 X 5 − X 1 X 2 X 4 X 5 − X 1 X 3 X 4 X 5 + X 1 X 2 X 3 X 4 X 5] = R1 R2 R5 + R1 R3 R5 + R1 R4 R5 − R1 R2 R3 R5 − R1 R2 R4 R5 − R1 R3 R4 R5 + R1 R2 R3 R4 R5 All these expressions for R A , R B , RC simplify further if some of the Rk are equal. To illustrate this, imagine RC and assume all component reliabilities are equal: R = R1 = R2 = R3 = R4 = R5 . This results in the expression

6.4 Tools and Concepts in Alphabetical Order

583

 RC = R 2 − 3R + 3 R 3 If, for example, R = 0.95, we get RC = 0.90239. Figure 6.62 shows the full functional dependence between RC and R. We can do the same calculation for R A and R B . Again, we assume that all Rk = R for k = 1, 2, 3, . . .. The result is shown in Fig. 6.63. As was to be expected, for all values of R the system reliability of the parallel structure is higher than that of the series structure. In addition, both system reliabilities increase monotonically with increasing R.

-

+

Fig. 6.62 Example—functional dependence between RC and R

- ( -

Fig. 6.63 Example—functional dependence between R A , R B and R

)

584

6.4.61.4

6 How to Get Things Done: A Practitioner’s Toolbox

Time-Dependent System Reliability

In the examples above, the reliabilities Ri of system components were considered as being constant in time. Although this is a useful approximation in many situations for a limited time interval, in reality the reliability of components changes with time and usually shows a tendency to decrease with increasing age. It is no problem, however, to take this time dependence into account. A frequently used ansatz for time-dependent reliability is to assume an exponential life distribution of the components. This leads to Rk (t) = e−λk t for the kth component. Imagine the reliabilities of the three components in the parallel structure considered above were of this type; then, we get the expression R A (t) = 1 − (1 − R1 (t))(1 − R2 (t))(1 − R3 (t)) If, for simplicity, we assume that λ ≡ λ1 = λ2 = λ3 , we end up with the simpler time-dependent system reliability function

 R A (t) = e−λt 3 − 3e−λt + e−2λt . We may use this expression for R A (t) and calculate, for example, the MTTF of the simple parallel structure under consideration according to the formula given above !∞

!∞ R A (τ )dτ =

MTTF = 0

 11 e−λτ 3 − 3e−λτ + e−2λτ dτ = 6λ

0

Calculations for more complex system architectures, follow exactly the same sort of reasoning. The exponential distribution for Rk (t) used in this example is pretty popular in reliability calculations due to two reasons: It is simple and allows to express many results in closed form; in addition, it contains one parameter λ that can be fitted to describe many situations reasonably precise. However, calculations based on the Weibull, Gamma and other distributions are frequently encountered. These distributions contain more parameters and may, therefore, be fitted to broader classes of systems. It all depends on the reliability behavior of the system components, and of course, different sorts of components will usually have different distributions.

6.4.61.5

A Second Look at Structure Functions

Structure functions play a central role in reliability theory. We add some additional facts:

6.4 Tools and Concepts in Alphabetical Order

585

1. Relevant components and irrelevant components A component Cn+1 of the system is called irrelevant, if the following holds φ(x1 , x2 , . . . , xn ; xn+1 = 1) = φ(x1 , x2 , . . . , xn ; xn+1 = 0) In plain English, this means that taking into consideration the component Cn+1 is not necessary, as it doesn’t have an impact on the structure function and the reliability of the system. All other components are called relevant. 2. Coherent systems If for a system with only relevant components the structure function fulfills φ(x1 , x2 , . . . , xn ) ≤ φ(y1 , y2 , . . . , yn ) and xk ≤ yk for all k = 1, 2, 3, . . . n and xl < yl at least for one l out of 1, 2, 3, . . .. then the system with structure function φ(x1 , x2 , . . . , xn ) is called a coherent system. In other words: As xk and yk can attain only values 0 and 1 for a coherent system, the structure function increases monotonically. As increasing φ means increasing performance, for a coherent system the performance increases with the increase of the performance of each of its components. It is obvious that this class of coherent systems is of special practical interest, as this is what good system design wants to achieve: Increasing system reliability when component reliabilities are increased. 3. Series versus parallel structures Given a system with n components and structure function φ(x1 , x2 , . . . , xn ). The following inequality holds: φserial (x1 , x2 , . . . , xn ) ≤ φ(x1 , x2 , . . . , xn ) ≤ φparallel (x1 , x2 , . . . , xn ) This simply follows from φserial (x1 , x2 , . . . , xn ) = min(x1 , x2 , . . . , xn ) φparallel (x1 , x2 , . . . , xn ) = max(x1 , x2 , . . . , xn ), as was shown above for the example with three components. That result may trivially be extended to the n-component case. In yet other words, one may say that a coherent system’s performance is bounded from below by a series system and bounded from above by a parallel system. This has some obvious impacts on the design of systems.

586

6 How to Get Things Done: A Practitioner’s Toolbox

6.4.61.6

Determining Reliability Data Distribution Parameters and Functions

We shall now consider two examples and show how parameters of a reliability distribution may be determined. The basic tools needed are regression analysis and estimation of parameters. 1. Exponential distribution In this case, we assume that the reliability data follow the exponential distribution. The reliability function used before in the example above is R(t) = e−λt and we want to determine the parameter λ of the distribution. Taking the natural logarithm of both sides leads us to ln R(t) = −λt This is a linear relationship between ln R(t) and t. Plotted on semilogarithmic paper, it describes a straight line from which λ may be determined graphically. Another approach is to use the method of linear regression to determine an estimate for λ. In this case, the necessary calculations may be done effectively with the help of statistics software or spreadsheet programs. For some details, compare the section on regression analysis. 2. Weibull distribution As another example, we assume the reliability data to follow the Weibull distribution. We recall from Chap. 9 f (t) =

&  β t β−1 α α

β

e−( α ) , t ≥ 0 ; α, β > 0 0, t < 0 t

and !t F(t) = 0

β  τ β−1 −( τ )β t β e α dτ = 1 − e−( α ) α α

From the last equation, we may read off the expression for the reliability function to be R(t) = e−( α ) t

β

This function contains two parameters α, β. We take the natural logarithm on both sides and have

6.4 Tools and Concepts in Alphabetical Order

587

 β t ln R(t) = − α Taking the natural logarith once more we get lnlnR(t) = −β ln t + β ln α Again, this is a linear relationship defining a straight line. β giving its slope and β ln α the intersection with the ordinate. There is probability paper for the Weibull distribution available for plotting this type of relations and determine the parameters graphically. However, the method of choice today will be to employ the linear regression method and fit the parameters numerically to the measured reliability data. Many other reliability distributions exist and different methods to determine their parameters may be employed.

6.4.61.7

Some Special Notation Used in Reliability Theory

As every discipline, reliability theory comes with some special notation. Writing down once again the structure function for a series arrangement of n components, we have φseries (x1 , x2 , . . . , xn ) = x1 x2 x3 . . . xn =

n ,

xk = min(x1 , x2 , . . . , xn )

k=1

In this formula, the standard product operator

n /

xk has been used.

k=1

The structure function for a parallel arrangement of components contains a more complicated combination of products. Although this too could be expressed with the help of the product operator easily as 1 − (1 − x1 )(1 − x2 )(1 − x3 ) . . . (1 − xn ) = 1 −

n ,

(1 − xk )

k=1

it became customary to use the following notation: φparallel (x1 , x2 , . . . , xn ) = 1 − (1 − x1 )(1 − x2 )(1 − x3 ) . . . (1 − xn ) n 0 ≡ xk = max(x1 , x2 , . . . , xn ) k=1

588

6 How to Get Things Done: A Practitioner’s Toolbox

The symbol

n 1

xk is just a shorthand for 1 − (1 − x 1 )(1 − x 2 )(1 − x3 ) . . . (1 − xn ).

k=1

It may be employed to simplify expressions when parallel system architectures are involved. It is also customary to use the -symbol in the following way: xi  xk = 1 − (1 − xi )(1 − xk ) = xi + xk − xi xk = max(xi , xk ) Keep in mind that all variables xk are binary variables in this context of reliability theory.

6.4.61.8

Redundancy at Component Level Versus Redundancy at System Level

Comparing the redundancy at the component level with that at the system level is a critical issue in reliability and design theory. There is an important result of general validity which we quickly derive. The following theorem holds: Given x = (x1 , x2 , x3 , . . . , xn ) and y = (y1 , y2 , y3 , . . . , yn ), called status vectors, and define x  y ≡ (x1  x1 , x2  x2 , . . . , xn  yn ) Then, the inequality holds φ(x  y) ≥ φ(x)  φ( y) The proof of this inequality is straightforward and may be derived just juggling around with the definition of the operation . From the definition of xk  yk follows xk  yk = max(xk , yk ) ≥ xk and xk  yk = max(xk , yk ) ≥ yk Keeping in mind that φ is a monotonous function, we get from this φ(x  y) ≥ φ(x) and φ(x  y) ≥ φ( y) Combining both equations leads to φ(x  y) = max(φ(x), φ( y)) ≥ φ(x)  φ( y)

6.4 Tools and Concepts in Alphabetical Order

589

In plain English, this means that redundancy at the component level is more efficient than redundancy at the system level. General as this theorem is, it is an important guideline for designers of systems. To illustrate this with a simple example, consider Fig. 6.64.

Fig. 6.64 Redundancy at system (D2) and component level (D3)

590

6 How to Get Things Done: A Practitioner’s Toolbox

Drawing D1 shows an arbitrary part of a system consisting of component A1 and A4 in series. Between these two, we have a parallel structure of components A2 and A3 in series with A1 and A4. Drawing D2 shows a redundant structure at system level, whereas D3 illustrates redundancy at component level for this case.

6.4.61.9

Some General Rules for the Analysis of Complex Systems

We summarize a few general rules for the analysis of complex systems. 1. The minimum failure time of a set of components Consider a system with components C1 , C2 , . . . , Cn with corresponding failure times T1 , T2 , . . . , Tn , which are considered to be independent. Suppose the system fails at time T if any one of its components fails. Obviously, we can write: T = min(T1 , T2 , . . . , Tn ). We would like to determine the distribution function FT (t) of T . If the FCk (t) are the distribution functions for the respective components Ck , we have the following probability statement: FT (t) = P(T ≤ t) = P((T1 ≤ t) ∪ (T2 ≤ t) ∪ · · · ∪ (Tn ≤ t)) = 1 − P((T1 > t) ∩ (T2 > t) ∩ · · · ∩ (Tn > t)) = 1 − P(T1 > t)P(T2 > t) . . . P(Tn > t) = 1 − (1 − P(T1 ≤ t))(1 − P(T2 ≤ t)) . . . (1 − P(Tn ≤ t)) n , = 1 − (1 − P(Tk ≤ t)) k=1 n ,

 =1− 1 − FCk (t) k=1

Deriving this result,

we employed repeatedly the general rule for complementary ¯ sets P(A) = 1 − P A¯ and the relation (de Morgan’s law) A ∪ B = A¯ ∩ B. 2. The maximum failure time of a set of components Consider a system with components C1 , C2 , . . . , Cn with corresponding failure times T1 , T2 , . . . , Tn , which are considered to be independent. Suppose the system fails at time T if all of its components have failed. Obviously, we can write: T = max(T1 , T2 , . . . , Tn ). We would like to determine the distribution function FT (t) of T . If the FCk (t) are the distribution functions for the respective components Ck , we have FT (t) = FC1 (t)FC2 (t)FC3 (t) . . . FCn (t) =

n , k=1

FCk (t)

6.4 Tools and Concepts in Alphabetical Order

591

3. n out of N components have failed at time t Consider a system with components C1 , C2 , . . . , Cn with corresponding failure times T1 , T2 , . . . , Tn , which are considered to be independent. Suppose the system fails at time T if k or more out of n components fail. It is assumed that all components have identical distribution functions: FC1 (t) = FC2 (t) = · · · = FCn (t) The probability FT (t) may be calculated as follows FT (t) = P(k components failed) + P(k + 1 components failed) + P(n components failed)

This leads us to FT (t) =

n    n j=k

j

n− j FCk (t) j 1 − FCk (t)

4. Hierarchical analysis We would like to mention yet another type of application of probability theory to calculate reliabilities. Consider the modular system in Fig. 6.65, whose components are arranged in modules (sub-systems). Modules C, D and E contain parallel functional units to increase the respective reliabilities at the component level. To have a concrete picture in mind, consider the following: • • • •

Components Ck : Energy supply modules Components Dk : Pumps Components E k : Computer controls Component F: Data storage.

The system will be up as long as at least one of the components in each module (sub-system) is up.

Fig. 6.65 A model system to illustrate hierarchical analysis

592

6 How to Get Things Done: A Practitioner’s Toolbox

The probability Fsystem (t) that the system will be down at time t may be shown to be



 Fsystem (t) = 1 − 1 − FC1 (t)FC2 (t)FC3 (t) 1 − FD1 (t)FD2 (t)

 × 1 − FE1 (t)FE2 (t) (1 − FF (t)) Although this expression may look a bit complicated at first sight, you may write it down immediately if you follow the following steps: (1) Consider the first module with the three components C1 , C2 , C3 : Assuming that their probabilities to fail are independent from each other, the probability that at time t all three components are down is FC1 (t)FC2 (t)FC3 (t). The probability that module C is up at time t is the complementary event and given by:  1 − FC1 (t)FC2 (t)FC3 (t) . (2) Applying the same sort of reasoning to modules D, E and F, we end up with similar expressions for the respective probabilities. (3) Assuming that the failure probabilities of modules C, D, E and F are independent of each other, we get the probability that all modules (sub-systems) are up at time t:





 1 − FC1 (t)FC2 (t)FC3 (t) 1 − FD1 (t)FD2 (t) 1 − FE1 (t)FE2 (t) (1 − FF (t))

Again, this says that at least one component of each module is working correctly at time t. (4) The event that at least one of the sub-systems is down at time t is the complementary event to “all sub-systems are working”. This leads to the given expression for FSystem (t). One More Example Consider once again the configuration in Fig. 6.65. However, this time all components Ci have the same distribution: Fc (t) = FC1 (t) = FC2 (t) = FC3 (t), and at least two out of three C-components must be up to ensure the system is working. By similar arguments as just given, the distribution of the system is then  Fsystem (t) = 1 − 1 −

3    3

 

FC (t)k (1 − FC (t))n−k 1 − FD1 (t)FD2 (t)

k k=2

 × 1 − FE1 (t)FE2 (t) (1 − FF (t))

6.4 Tools and Concepts in Alphabetical Order

6.4.61.10

593

Minimal Path Sets and Minimal Cut Sets

Structure functions of real problems may become pretty complex. It is important, therefore, to have some techniques at hand that help to keep the overview. The following concepts are important in this context: • Path set Consider the set C = {C1 , C2 , . . . Cn } of reliability relevant components Ck of a system. Any set of components (subset of C) which functioning ensures the functioning of the system is called a path set. • Minimal path set A minimal path set is defined as the minimal set of system components whose functioning ensure the system’s functioning. • Minimal cut set A minimal cut set is defined as being the minimal set of system components whose simultaneous failures lead to a system failure. We consider the concept of minimal path sets first. To have a picture of it, compare Fig. 6.66. The first block diagram on top of the figure shows a model system with five components, arranged in series and parallel form. A little thinking shows that there are exactly four minimal path sets that ensure the system is working if the respective components do. These are the following: {2, 3, 4}, {2, 5}, {1, 3, 4}, {1, 5}. As may be seen from this example, for a given set of components forming the system, there may be more than one minimal path. As can also be seen from the example given in Fig. 6.66, the components along a minimal path are arranged in series. Nothing prevents us to introduce the concept of a structure function for a minimal path set as follows. Be N the number of minimal paths sets of a system. Let’s denote and enumerate the minimal path sets as Pk , k = 1, 2, 3, . . . , N . A structure function ψk may then be defined for each minimal path as ψk (x) =

,

xi , Pk = k th minimal path set, k = 1, 2, 3, . . . , N

i∈Pk

Recall, this is just the standard expression which we have used when analyzing series structures above. The importance of the minimal path concept derives from the fact that the minimal paths of a system exactly represent the possible combinations of functioning components that ensure the system is up. As the different minimal paths Pk may be considered as the alternative settings of the system, the structure function φ(x) of the system may be expressed as that of a parallel structure, the parallel elements being the minimal paths:

594

6 How to Get Things Done: A Practitioner’s Toolbox

Fig. 6.66 Four minimal path sets of the system at the top

φ(x) =

N 0 k=1

ψk (x) = 1 −

N ,

(1 − ψk (x))

k=1

Note that we employed again the notation that was introduced above when studying series and parallel system architectures. To illustrate the parallel arrangement of the minimal paths, consider Fig. 6.67.

6.4 Tools and Concepts in Alphabetical Order

595

Fig. 6.67 Parallel structure composed of the minimal paths of Fig. 6.66

Using the parallel architecture as shown in Fig. 6.67 of the system based on its minimal paths, we may represent the structure function as follows φ(x) = 1 − (1 − x2 x3 x4 )(1 − x2 x5 )(1 − x1 x3 x4 )(1 − x1 x5 ) Next, we consider the concept of a minimal cut set for the system shown on top of Fig. 6.66. Recall, a minimal cut set is defined as being the minimal set of system components whose simultaneous failures lead to a system failure. A little thinking shows that for the model system under consideration, the minimal cut sets are as follows: {2, 1}, {5, 3}, {5, 4}. In Fig. 6.68, they are arranged as parallel structures in series, as each of the minimal cut sets leads to a system breakdown. Usually, a system has more than one minimal cut set. Let L be the number of minimal cut sets of the system under consideration; we enumerate and denote them as follows: M = {Ml , l = 1, 2, . . . L}. As we did for the minimal path sets above, we associate a structure function ϕk to each minimal cut set. This results in ϕl (x) =

0 i∈Ml

xi = 1 −

,

(1 − xi ), Ml = l th minimal cut set, l = 1, 2, 3, . . . , L

i∈Ml

Fig. 6.68 Minimal cut sets for the model system of Fig. 6.66 (top)

596

6 How to Get Things Done: A Practitioner’s Toolbox

where the operators act on all elements in the respective minimal cut set Ml . As a minimal cut set is defined as the smallest set of components whose simultaneous failure leads to a failure of the system, ϕk (x) should have the following properties: + ϕk (x) =

0, if all elements of the minimal cut set are down 1, in all other cases

It may be easily verified that ϕk (x) fulfills these requirements. The structure function of the system may be represented then as φ(x) =

L , l=1

ϕl (x) =

L 0 ,

xi

l=1 i∈Ml

Another way to look at minimal cut sets is the following. If you want to identify the smallest set of system components whose destruction would lead to a system failure, you will exactly end up with the minimal cut sets. A look at Fig. 6.68 shows that for the example given, the combinations {2, 1} or {5, 3} or {5, 4} would be these critical combinations.

6.4.62 Sampling of Data and Surveys In the context of management systems, sampling of data is an extremely important topic. Consider examples like: • Sampling of customer survey data; • Sampling of quality, environmental, health and safety, and other data; • Sampling of data during internal audits. In these and many other cases, we rarely get a complete basis of data but a sample. In a second step then, we base our analysis and our decisions on samples of data and information. It is important to have a reasonably sound understanding how data and information should be sampled, in order to avoid drawing wrong conclusions from them. If we understand how data have been sampled, we may in many cases employ statistical methods and say something about the probability or validity of our conclusions we draw from these data. We also may better understand if a given set of sampled information or data is useful or worthless. For that reason, some understanding of sampling methods is important. The nitty-gritty of the tool… Sampling methods may be classified into two groups: • Random sampling methods; • Nonrandom sampling methods.

6.4 Tools and Concepts in Alphabetical Order

597

Fig. 6.69 Popular sampling techniques

Roughly speaking, random sampling involves probability theory to select the sample, whereas nonrandom sampling does not. Figure 6.69 shows an overview about popular sampling methods. 1. Random Sampling 1.1. Simple random sampling In this type of sampling, every member of the underlying population is selected with the same likelihood. To achieve this, one can proceed as in the following example. Example Given a population of 5000 elements from which a sample of 100 elements should be drawn at random. In a first step, assign the numbers 0000–4999 to the 5000 elements of the population. Next, use a random number table as they may be found in many textbooks on statistical methods or in other collections of tables. Frequently, these tables contain five-digit numbers. To start, take any of these numbers from somewhere in the table and consider the first four numbers only. If this random number is less than 5000, select the element with the respective number and make it part of your sample. To select the second element, consider the number in the column or row next to the previously chosen number from your table of random numbers. Again, consider the first four digits of the random number only. If this four-digit number is less than 5000 and the corresponding

598

6 How to Get Things Done: A Practitioner’s Toolbox

element of your population is not selected already in the previous step, select it and make it part of your sample. In case the first four digits of a random number are larger than 5000 or the element with the respective number has been already drawn in a previous step, continue with the next random number until the complete sample of 100 elements has been drawn. Note that spreadsheet programs and pocket calculators offer random number generators that may be used equally well to select your sample. 1.2. Systematic random sampling In this type of sampling, the elements of the sample are selected from the population in a random but ordered way. The method is applied if you can align your population in a row. Example To illustrate this approach, take once again the example that you want to select 100 elements from a population of 5000. Choose a random number R between 1 and 50 and select the respective element with order number R from your population. Next, take the order number R+50 and select it as your second element. Continue with R+100, R+150, etc., until you have your 100 elements. One has to take some care with systematic random sampling. For example, if the ordered elements of your population show a periodicity, you will not receive an unbiased sample. 1.3. Stratified random sampling In this sampling approach, the population is divided into different nonoverlapping groups from which then sampling is done randomly. These groups are called strata. Example Consider the population of all smartphone users in your town. Divide the population into k groups, k being the number of smartphone brands used. Each user can be associated to exactly one brand which defines the group. In the next step, apply random sampling to each group. Combining the drawn random samples from each group gives you a stratified sample. There are several variants how to create the stratified sample from group samples. One aspect is that samples drawn from individual groups may have different importance for the investigation in question. In such cases, it may make sense to weight the groups differently. 1.4. Cluster sampling In the first step of this sampling approach, the population is divided into different nonoverlapping clusters (e.g. geographical). The elements of the cluster are not necessarily homogeneous. In a second step, some of the clusters are selected at random. Then, elements within the clusters are selected with simple random sampling. Remark The difference between cluster sampling and stratified random sampling should be noted. In stratified random sampling, the strata are homogeneous within themselves with respect to the selected attributes, however heterogeneous between them. Consider, for example, the above

6.4 Tools and Concepts in Alphabetical Order

599

strata of smartphone users. The classification attribute was the smartphone brand. In cluster sampling, the clusters are allowed to be heterogeneous within themselves, but they are homogeneous between them. 2. Nonrandom Sampling 2.1. Self-selected sampling In this sampling method, it is the population which determines which of its elements will form the sample. Example A lead auditor prepares a surveillance audit in organization XYZ. He does not determine by himself which members of the management he wants to interview during the onsite audit but leaves it to the organization to select them. 2.2. Convenience sampling Convenience sampling is done without the application of probability theory or specific rules for selecting the sampled elements. Those elements are selected that are just available or willing to become part of the sample. Example You would like to know how many voters sympathize with political party X. To get an idea, you ask all guests on a Saturday night party about their political preferences. It is obvious that this is not an adequate sample from which you could derive any conclusions. However, still it may give you an idea. 2.3. Judgement sampling In this sampling method, elements from a population are sampled based on expert knowledge. It’s one or a group of experts who determine which elements are selected from the population to create the sample. One obvious drawback of this approach is that experts may be wrong or may have prejudices. However, judgement sampling is a popular approach in many situations, although it’s not always called so. 2.4. Quota sampling This method has some similarities with stratified random sampling in the sense that in a first step, the underlying population is divided into nonoverlapping homogeneous groups. In a second step, however, no random sampling is employed, but elements from each group are selected in a nonrandom manner. Example All professors of a college are grouped according to their faculty membership. In a second step, representatives from each faculty are selected, the number depending on the number of professors belonging to the faculties. 2.5. Snowball sampling This type of sampling is applied when it is difficult or impossible to determine the size of a population and its elements. In such a case, if we identified one element of the population, we may gain information from it

600

6 How to Get Things Done: A Practitioner’s Toolbox

to identify other elements. From these, we may go on to find additional elements and so on. The name Snowball Sampling derives from the similarity of the process with a rolling and growing snowball. Example Imagine we identified a patient with a rare infectious decease. As the patient was in contact with several people during the last few days, he/she either was infected by or has infected others. Interviewing the patient, we may reconstruct its contacts and identify other members of the infected population. Each type of sampling method has its pros and cons. It is important in practical applications not to mix them up and to have a rationale why to select one or the other. Very frequently data are collected in surveys. These include customer-focused surveys, surveys of employees, business partners, suppliers and more. It is important to plan surveys adequately, as they define a framework for the data sampling process. It should be clear that there is no “one-fits-all” design of surveys. Typical aspects to be considered include: 1. Define the precise scope, content and objective of the survey. 2. Select the adequate methodology of the survey. 3. Determine the statistical foundation of the survey. For example, what is the necessary sample size, to achieve the attempted level of significance? Which sampling procedure should be chosen? 4. Determine the critical design elements of the survey. For example, who will sample the data how, when and where? 5. If necessary, conduct a pilot survey to test your design. 6. Fix how survey data will be documented for further processing. 7. Determine data protection and security requirements.

6.4.63 Scenario Analysis In the context of management systems, on the strategic as well as on the operational level, we frequently face the need to produce a reasonable picture of future developments, situations and events. Scenario analysis is a whole bunch of methods and approaches to support these needs. The nitty-gritty of the tool… Giving an overview about existing scenario analysis techniques is beyond the scope of this book. However, some important issues include the following: • Scenario analysis may be qualitative or quantitative in its nature. In the first case, it attempts to determine a qualitative picture of future developments. If it is quantitatively oriented, it focuses on the determination of some measurable aspects of the future.

6.4 Tools and Concepts in Alphabetical Order

•

• • •

•

•

•

601

For example, it could focus to determine the general path of electro-mobility or try to determine the market share of e-Bikes in five years from now. No matter if qualitative or quantitative in nature, scenario analysis must determine the critical input factors that have influence on the scenario. The number of input factors may reach from a handful to hundred and more. It is obvious that the details of the scenario analysis will heavily depend on the number and type of variables to be taken into account. As a rule, scenario analysis is one way or the other based on expert knowledge. The reliability of that knowledge is critical. Scenario analysis approaches differ in the way how they employ expert knowledge. Most scenario analysis approaches also focus on the determination of risks and opportunities the future could bring. For that reason, there is a strong link with risk management approaches. Scenario analyses may have various time horizons. These may reach from a few months, which may relatively easily be overseen by extrapolating from currently known factors. They can also need to get a picture from now in a few decades. This would be the case, for example, if one wants to develop a vision of the traffic expectations and their impact on the infrastructure. Scenario analysis has to deal with nonlinear aspects and developments. Relevant influencing factors to a scenario interact with each other and their impact on scenarios may depend heavily on that interaction. For example, future demand of flats in a geographical region depends among other things on its overall attractiveness, economic development, infrastructure and more. All these factors depend on each other, and their development in time is not easy to predict. An important but nontrivial approach to scenario analysis are simulation techniques which are established on probabilistic models. In this sort of approaches, one determines in a first step the full set of essential input factors that have impact on relevant future developments. Experts are involved to determine the probabilities of occurrence of these factors. In a second step, conditional probabilities of the type P(factori |factork ) are estimated. This means: If factor k occurs with an estimated probability, what is the impact on and probability of that factor i occurs? As a rule, these probabilities have to obey certain consistency conditions and cannot be chosen arbitrarily. Simulation software is employed to propagate the initial state of the model and to receive potential scenarios. Within the standard environment of most organizations, however, scenario analysis is done in a much more pragmatic way: Get the input of available managers and internal and external experts and try to develop the most probable scenarios by educated guessing. Some of the risk management tools presented in this chapter can be employed to make these guesses more rational.

602

6 How to Get Things Done: A Practitioner’s Toolbox

6.4.64 SIPOC Diagrams SIPOC derives its name from supplier-input-process-output-customer. While detailed process flow descriptions may turn out to be complicated and not always easy to oversee, a SIPOC diagram is a sort of simplified presentation, indicating the key aspects of a process: • • • • •

Who are the suppliers to the process? What is the input to the process? What are the main process steps? What outputs does the process deliver? Who are the customers of the process?

SIPOC diagrams are frequently used in Six Sigma approaches. They show clearly the boundaries of a process and its key aspects. They may be helpful to a process improvement team, for example, to get a quick but relevant picture of the process (Fig. 6.70). The nitty-gritty of the tool… To create a SIPOC diagram, you may proceed as follows: 1. Determine clearly the process to be investigated and draw a high-level process map or describe the process. 1.1. In the example below, this is a process for special laboratory analytics, provided for a specified group of clients that need this service. 2. Define where the process starts and where it ends. 2.1. In the example below, it starts with receiving the test specimen and it ends with sending out the test report. 3. Determine the outputs of the process and the customers for each output 3.1. In the example below: Test reports go to the customer; reference samples go to the storage; entries in the laboratory information system are crosschecked by the laboratory admin.

Supplier

Input

Fig. 6.70 High-level SIPOC process

Process

Output

Customer

6.4 Tools and Concepts in Alphabetical Order

603

Table 6.48 SIPOC—process example SIPOC-template Example: chemical laboratory, special analytical processes for specific clients Suppliers

Inputs

Process

Outputs

Customers

List all relevant suppliers of inputs here

List all relevant inputs to the process here

Insert a high-level process flow here

List all outputs of the process here

List all relevant customers who receive the outputs here

For example: Client

For example: Specimen and clear statement, what has to be tested until when

For example: Test reports

For example: Client

Transportation service

Delivery on time

Reference samples

Storage for reference samples

Sub-contracted laboratory XYZ

Delivery of test reports within specified time

Laboratory admin

Head of laboratory

Release of test report within specified time

Entries in laboratory information system

Head of laboratory

Testing procedures

Step 1 Step 2 Step 3 Step 4 Step 5

4. Determine the needed inputs to the process and its corresponding suppliers. Where needed, specify requirements for each input. 4.1. In the example below: The client supplies the laboratory with the specimen and a clear specification of what has to be tested. There may be a transportation service involved, which has to deliver the specimen on time. If special procedures have to be followed during the transport, these should be mentioned here. If the laboratory outsources some of the testing, the sub-contracted laboratory has to deliver the test results in time and according to specifications. The head of the laboratory will be important for the release of reports. Lastly, testing specifications shall be employed, which also have to be released by the head of the laboratory (Table 6.48).

6.4.65 Solution Selection Matrix Solution Selection Matrices may be employed to find the best solution out of several possible ones. They also help to find strengths and weaknesses of options and to rank potential choices. As finding optimal or at least good solutions is an objective of all management systems, the tool has a wide scope of application.

604

6 How to Get Things Done: A Practitioner’s Toolbox

The nitty-gritty of the tool… The typical steps to follow are these: 1. Start with a set of potential solutions to the selected problem. Ensure that the selected options comply with the intent of the project and that they are feasible. Only realistic options should be on the list out of which you want to select your solution. 1.1. Feasibility may include the following aspects: Financial feasibility, management support, compliance with stakeholder and customer expectations and requirements, compliance with legal and regulatory requirements, available manpower, available technology and facilities, and much more. 1.2. Also make sure that the selected solutions go hand in hand with the strategic objectives of your organization. 2. Select the team that will work on the Solution Selection Matrix. As the tool will require to do several rankings and evaluation of criteria, it is important that the team members are professionals in the field and can contribute. The rankings to be done in the next steps make sense if and only if they are done by experts. 3. Create the Solution Selection Matrix. 3.1. In the first column of the matrix, list the solutions/options you want to evaluate. 3.2. In the first row of the matrix, list the main criteria which you will use as selection criteria. 4. Define a score system. Several options are possible. You may choose ten levels: 1 = very little importance or impact; 10 = very high importance or impact. 5. To illustrate the further procedure, see the following example (Table 6.49). 5.1. In the second row of the matrix score the importance of the criteria. In the example given, “Cost” and “Brand/Image” are both scored with (3). “Risk reduction” has the highest score (9). Depending on the project, these scores may derive from customer expectations or from other sources. 5.2. Next, estimate the expected impact of each of your solutions on the criteria in the first row. In the example, the impact of Solution 1 on “Cost” is just (1). However, the impact of Solution 3 on “Cost” is (6). The impacts of both Solution 1 and Solution 2 on “Risk reduction” are estimated as being (9). 5.3. Multiply the scores and note the results in the matrix. In the example, the multiplied scores for “Process Lead Time”, for instance, appear in the fifth column and are calculated by just multiplication: 6 × 6 = 36, 3 × 6 = 18, etc.

(3)

(6)

Solution 2

Solution 3

9

18

(1)

(3)

(6) 6

18

36

(6)

3

(3)

(1)

Solution 1

Process lead time

Cost

Table 6.49 Example—solution selection matrix

(9)

(6)

(9)

(9)

81

54

81

Risk reduction

(1)

(5)

(3)

(3) 9 3

15

Brand/image

108

96

129

SUMS

2

3

1

Ranking

6.4 Tools and Concepts in Alphabetical Order 605

606

6 How to Get Things Done: A Practitioner’s Toolbox

5.4. To determine the final score of each solution, add up the just determined multiplied scores and get the sums in column 10. As an example, consider the row for Solution 3: 18 + 6 + 81 + 3 = 108, etc. 5.5. The last column of the matrix shows the ranking of the three solutions based on the impact of the criteria in the first row and the different rankings. In this example, Solution 1 would be the best choice. As may be seen by the example given, the application of the tool is straightforward. However, it requires sufficient expert knowledge, to make reasonable and reliable rankings when working down the process. The more complex the criteria against which solutions have to be weighted, the more helpful the tool may be.

6.4.66 Stakeholder Profile Matrix All management system standards require the organization to determine its stakeholders. As this may be a highly diverse and complex set of organizations and people, some systematic approach should be in place, to do the job. In addition, the concept of stakeholders also appears in the context of processes. Here stakeholders are those parties that are influenced by a process or that need to have influence how processes perform. The nitty-gritty of the tool… To keep all groups of stakeholders on the radar, there is a nice acronym: SOCCER. • Suppliers Think of any organizations or persons supplying products, services or information to your organization. • Owners Think of persons or organizations owning your organization. This may be stockowners, individuals, legal entities and more. • Customers Think of persons or organizations receiving products or services from your organization. Primarily, customers are considered to be entities outside of your organization. However, it makes sense to consider internal parties as being customers, if products, services or information are provided to them. • Community Think of organizations and people your organization has to do with and are not in one of the other five categories listed here. This may include the town or state communities you’re operating in and more. • Employees Think of all employed personnel, but don’t forget about freelancers and other people doing directly or indirectly work for your organization.

6.4 Tools and Concepts in Alphabetical Order

607

• Regulators Think of regulatory or governmental organizations and similar bodies. Note that there’s nothing sacred with this grouping of stakeholders into six groups. If you find it preferable to subdivide some of these groups or add some more, it’s perfectly fine. For example, you might wish to subdivide the categories of customers or suppliers into subclasses. The important thing is to build up a register, which can easily get updated, as the stakeholders will change with time. To feed in the data into a database, will likely be most adequate and state of the art. The stakeholder profile matrix is just a tool to give your process a direction.

6.4.67 Strategy Alignment with Operational Capabilities and Needs When an organization establishes, implements, maintains and improves its management systems for quality, environment, information security and others, it touches continuously strategic issues. The reality is that frequently strategic planning and strategic initiatives are done without sufficient alignment of all necessary aspects. Strategy alignment is an important topic and should be part of the toolbox to ensure, for example, balance between strategic planning and the organization’s reality and operational capabilities. The nitty-gritty of the tool… When working on strategy alignment, the following issues should be on the radar at the company level, as well as at the level of individual organization units: 1. What is the overall purpose of the organization and its respective organizational unit? 2. Who are the customers and what are their relevant and critical expectations? 3. What are the strategic pillars of the organization? 4. Is the strategy of the organization balanced with operational requirements and realities? 5. Are specific requirements of individual management system modules (quality, environment, information security, energy efficiency, etc.) balanced with strategic plans and expectations? 6. Who is responsible for that necessary balancing and strategy alignment? Are they done on a continual basis? 7. How are conflicts between different objectives and targets resolved? Who is responsible for this? Example It may be helpful to illustrate the importance of the alignment of strategy objectives with operational capabilities and needs by an example. The managing board of an organization fixed the strategic pillars, which include a substantial increase of sales and EBIT margins over the next three years. Although the strategy

608

6 How to Get Things Done: A Practitioner’s Toolbox

includes also other objectives, managers at all levels are aligned primarily to financial targets. This is underlined and enforced by connecting their bonuses directly to financial performance and mainly to it. It is more than likely that such a setting will lead to managerial decisions that prefer actions that lead directly to the improvement of financial performance. Other issues may easily loose priority or may get shifted to the future. This could include: • Although it would be necessary to reduce the risk appetite of the organization concerning liability issues of products and services, this topic is shifted to the future. • To increase energy efficiency of production, investments would be needed to replace outdated technologies and facilities. The respective ROIs would realize, however, after the current time horizon of three years and the investments are, therefore, postponed. • Human resources department identifies a substantial lack of experts during the next few years, as current experts will retire, and strategic needs would need hiring even additional ones. Also, substantial training needs of personnel are identified, to comply with changing requirements. Here too, the management decides to postpone the necessary actions. These simple but realistic examples may be enough to illustrate the need for continual strategy alignments.

6.4.68 SWIFT—Structured What-IF Technique SWIFT was originally designed as a team-oriented approach to identify hazards in chemical industry process plants. However, it can and is being applied beyond that original scope of application. SWIFT may be considered as a complementary method to Hazard and Operability Study (HAZOP), whereas SWIFT is a high-level systemoriented approach, tools like HAZOP or FMEA focus on issues on the sub-system level (e.g. components, parts). A SWIFT analysis may be followed by methods like FMEA or HAZOP, when sub-systems or specific parts (microlevel) must be analyzed. SWIFT is built on a structured brainstorming process by a team of experts that oversee the system under consideration. The teamwork is guided by specifically designed checklists or similar documents which are created prior to SWIFT team sessions. The expertise of team members is crucial, as they need to have the ability to identify hazards and to oversee its potential consequences. The nitty-gritty of the tool… The core of the method consists of the following characteristic aspects: • Based on prior expert knowledge about the system under consideration, the SWIFT team of experts asks questions of the type “what-if?”.

6.4 Tools and Concepts in Alphabetical Order

609

• The expertise of the multi-professional SWIFT team is crucial to make its work a success. • The approach is “straight-to-the-point” in the sense that the team works down a list of prepared issues or questions (checklist). SWIFT meetings don’t start from scratch. The quality and completeness of the SWIFT checklist is crucial for success. • Flexibility: SWIFT may be applied to a wide range of systems and associated hazards. • SWIFT meetings deliver qualitative results. Quantification of identified hazards needs additional investigation but may be done. SWIFT meetings roughly follow the following storybook: 1. Select topics to be treated 1.1. The objective and scope of the SWIFT meeting shall be fixed. 1.2. Depending on the complexity of objectives and the scope of the meeting it may be necessary, to create smaller packages of topics that may be handled more efficiently. 2. Nominate members of the SWIFT team 2.1. SWIFT teams should be a small round of experts (typically μ0

Depending on the selected alternative H1 , H1 or H1 to H0 , the test and statistical argument will be different. Let us consider first the case H0 : μ = μ0 ; H1 : μ = μ0 We already know that the random variable Z=

X¯ − μ0 √σ n

618

6 How to Get Things Done: A Practitioner’s Toolbox

is  distributed as N [0, 1] (compare Chap. 9, Normal distribution). Of course, X¯ = n 1 k=1 X k is as usual the random variable representing the statistic for the mean of n our sample from the population. Recalling our findings in the subsection on parameter estimation, we know that we can construct a confidence interval for X¯ as follows σ σ μ0 − z α2 √ ≤ X¯ ≤ μ0 + z α2 √ n n Given, for example, a confidence level of 95%, then α = 0.05. We can look up the respective values for z α2 in a table for quantiles of the normal distribution (see tables in Chap. 9) and find out that z α2 = 1.96. Figure 6.73 illustrates the situation graphically. Now comes the crucial trick! The last inequality defining the confidence interval for X¯ can be used to state the following:

If our random variable is normally distributed as X ∼ N μ0 , σ 2 , then hypothesis  H0 : μ = μ0 should be accepted, if the estimator for μ, which is X¯ = n1 nk=1 X k , is in the interval μ0 − z α2 √σn ≤ X¯ ≤ μ0 + z α2 √σn , the width of which depends on the chosen confidence level, the size of the sample and the variance (which we assume to be known). If it is outside of this interval, it should be rejected. Why should H0 be accepted under these conditions? Because it is highly unlikely (α %) that X¯ lies outside, if H0 is true. If we take a sample from the population of size n and find the estimate X¯ lies outside that interval in the “dark zone” of Fig. 6.73, then we reject hypothesis H0 . That “dark zone” is technically called the “critical region” of the test. Fig. 6.73 Critical regions of the two-tailed test

6.4 Tools and Concepts in Alphabetical Order

619

This approach may be considered as a general recipe for hypothesis tests that focus on parameters of a distribution (μ in the current example): – – – –

State the hypothesis H0 and its alternative(s) H1 ; Find an adequate distribution that can be used to formulate the test; Select the confidence levels; If the test tells us that the value of the estimated parameter (based on our sample) falls into the critical region, we reject H0 .

Be aware, however, it may happen that we reject hypothesis H0 although it is true! After all, the test is based in our example on a 95% confidence interval only. There is a risk, we make the wrong decision. Changing the confidence interval, however, that risk may be controlled to a certain degree. The following example shows how to calculate a critical region directly. Example The manager of a call center claims that the center receives on the average μ0 = 400 calls per day with σ = 10. To verify this, we count the daily calls on seven subsequent working days and determine a mean value equal to X¯ = 362 calls per day. We also assume that σ = 10. To verify the manager’s claim, we formulate the following hypothesis: H0 : μ0 = 400;

H1 : μ0 = 400

We want to work at a 95% confidence level. For the critical region, we can write down the inequalities & Critical Region:

X¯ ≤ μ0 − z α2 X¯ ≥ μ0 + z α2

√σ n √σ n

= 400 − 1.96 √107 = 392.6 = 400 + 1.96 √107 = 407.4

These results are received by just plugging in the numbers into the above formulas. As we determined X¯ = 362 < 392.6, we see that this value falls into the left critical region. Based on this result, H0 : μ = 400 is rejected. This decision is safe with 95%. What we did so far was established on the alternatives H0 : μ = μ0 and H1 : μ = μ0 . This led us to the test scenario above, which is called a two-tailed test, because of the two critical areas as sketched in Fig. 6.73. If instead we choose the alternatives (H0 : μ = μ0 ; H1 : μ > μ0 ), we have only one critical region, which is given by σ Critical Region: X¯ ≥ μ0 + z α √ n In terms of a graph, this looks like in Fig. 6.74. Just for completeness, we point out that the set of alternatives H0 : μ = μ0 and H1 : μ < μ0 leads to the

620

6 How to Get Things Done: A Practitioner’s Toolbox

Fig. 6.74 Critical region of the one-tailed test (or right-tailed test)

Fig. 6.75 Critical region of the one-tailed test (or left-tailed test)

σ Critical Region: X¯ ≤ μ0 − z α √ n and the graphical representation in Fig. 6.75: The technicalities of these one-tailed tests are the same as for the two-tailed one. Just one word of caution: Ensure you use the right quantile z α ! It is important to understand how the just discussed three tests for the mean with known variance work. The machinery for the next few tests largely follows similar templates.

6.4.72.2

Test for the Mean—Normal Distribution—Variance Unknown

Consider the situation that a population is known to follow a normal distribution, but its variance is unknown. We want to develop a test scenario for the mean. To do so, we basically work down the same steps as in the above case, when the variance was known; however, we shall estimate the variance by the expression introduced in the section on parameter estimation:

6.4 Tools and Concepts in Alphabetical Order

621

2 1 

X k − X¯ n − 1 k=1 n

S2 =

As was shown there and in Chap. 9, this is an unbiased estimator for the variance. The random variable T =

X¯ − μ0 √S n

follows a Student’s t-distribution with n − 1 degrees of freedom. Again, we have the null hypothesis H0 : μ = μ0 , with three potential alternatives: H1 : μ = μ0 ;

H1 : μ < μ0 ;

H1 : μ > μ0

To derive the critical regions for the mean, in our above considerations we basically have to replace the normal distribution by the Student’s t-distribution that is followed by the random variable T. We can distinguish the following three cases: Case A: H0 : μ = μ0 ;

H1 : μ = μ0 &

Critical regions two-sided case:

X¯ ≤ μ0 − t α2 ;n−1 √sn X¯ ≥ μ0 + t α2 ;n−1 √sn

Case B: H0 : μ = μ0 ;

H1 :μ < μ0

S Critical region one-sided left: X¯ ≤ μ0 − tα;n−1 √ n Case C: H0 : μ = μ0 ;

H1 : μ > μ0

s Critical region one-sided right: X¯ ≥ μ0 + tα;n−1 √ n

622

6 How to Get Things Done: A Practitioner’s Toolbox

Fig. 6.76 Critical region for a two-tailed test based on t-distribution

Figure 6.76 illustrates the location of the critical regions for a two-tailed t-test based on μ0 = 0 and n = 16. To illustrate the application of the test, consider the following simple example. Example A marathon run is attended by 560 people and the organizer claims the average age of attendees is μ0 = 30, variance unknown. It is assumed that the population of attendees has a normal distribution. A random sample consisting of 20 persons is drawn, and the average age and variance of the sample determined to be X¯ = 26.7; s 2 = 10.24 The hypothesis to be tested is H0 : μ = μ0 = 30;

H1 : μ = μ0 = 30

We select a 95% confidence level. Employing the inequalities defining the critical regions and using t0.025;19 = 2.093, we obtain s 3.2 μ0 ± t α2 ;n−1 √ = 30 ± 2.093 √ = 30 ± 1.50 n 20 As the determined value X¯ = 26.7 is in the critical region, we reject hypothesis H0 and accept H1 .

6.4 Tools and Concepts in Alphabetical Order

6.4.72.3

623

Test for the Variance—Normal Distribution

Sometimes we know a population follows a normal distribution, but we don’t know its parameters. We want to establish a test for the variance and determine its critical region(s). The underlying hypotheses are the following H0 : σ 2 = σ02 H1 : σ 2 = σ02 ;

H1 : σ 2 < σ02 ;

H1 : σ 2 > σ02

Once again, we have one two-tailed and two one-tailed tests. As we don’t know the variance of the population, we shall estimate it by S 2 =

 1 n ¯ 2 from the sample values. To derive the critical regions and the k=1 X k − X n−1 respective tests, we recall (see Chap. 9 and section on parameter estimation) that (n − 1)S 2 2 ∼ χn−1 σ02 Therefore, the critical regions of the test can be written down immediately as follows: Case A: H0 : σ 2 = σ02 ;

H1 : σ 2 = σ02

⎧ ⎨ S 2 ≤ σ02 χ 2α n−1 2 ;n−1 Critical region two-sided case: 2 ⎩ S 2 ≥ σ0 χ 2 α n−1

1− 2 ;n−1

Case B: H0 : σ 2 = σ02 ;

H1 : σ 2 < σ02

Critical region one-sided left: S 2 ≤

σ02 2 χ n − 1 α;n−1

Case C: H0 : σ 2 = σ02 ;

H1 : σ 2 > σ02

Critical region one-sided right: S 2 ≥

σ02 2 χ n − 1 1−α;n−1

624

6 How to Get Things Done: A Practitioner’s Toolbox

6.4.72.4

Test for the Difference of Means of Two Normal Distributions—Variances Known

In some cases, we have to deal with two independent normal distributions N μ1 , σ12 , N μ2 , σ22 , with unknown μ1 , μ2 , but known σ12 , σ22 . We want to establish the following test scenarios: H0 : μ1 − μ2 = 0 H1 : μ1 − μ2 = 0;

H1 : μ1 − μ2 < 0;

H1 : μ1 − μ2 > 0

In words: Are the mean values of the two distributions equal, or which one is larger? Note that the random variable Y =

( X¯ 1 − X¯ 2 ) − (μ1 − μ2 ) σ12 n1

+

σ22 n2

follows the normal distribution N [0, 1]. To see this, recall our discussion when we derived a confidence interval for the difference of means in the section on parameter estimation. If H0 : μ1 − μ2 = 0 is true, then Y may be simplified as follows Z=

( X¯ 1 − X¯ 2 ) σ12 n1

+

σ22 n2

∼ N [0, 1]

To determine the critical regions for this test, no additional machinery is needed, as it can be traced back completely to the case treated above when we determined the critical regions for the mean of a normal distribution with known variance. As an example, consider the alternatives H0 : μ1 − μ2 = 0;

H1 : μ1 − μ2 = 0

We then have the following condition ⎛ ⎞ ¯ 1 − X¯ 2 ) % ( X P −z α2 ≤ Z ≤ z α2 % H0 = P ⎝−z α2 ≤ ≤ z α2 |H0 ⎠ = 1 − α σ12 σ22 + n2 n1

This type of notation is frequently met in hypothesis testing. It says in plain English. Under the condition

that H0 is true, the probability that Z will be found within the interval −z α2 ; z α2 is equal to 1 − α. If Z is found outside that interval, it is in the critical region of the test.

6.4 Tools and Concepts in Alphabetical Order

625

The interval −z α2 ; z α2 is also called the interval of acceptance of the test and is complementary to the critical region. We illustrate the result by a simple example. Example Two factories (called Factory 1 and Factory 2) produce a food ingredient. It is assumed that shelf lives of these ingredients follow normal distributions. Their means are unknown but assumed to be equal. Variances are known and equal to σ12 = 2 and σ22 = 2.2. We take a sample of 30 probes from Factory 1’s production and determine an average shelf life equal to X¯ 1 = 7 weeks. We take 25 probes from Factory 2’s production and determine an average shelf life equal to X¯ 2 = 6.7 weeks. We look for a 95% confidence level. Plugging in the numbers into the above formula, we have −1.96 ≤

7 − 6.7 2 30

+

2.2 25

≤ 1.96

⇒

−1.96 ≤ 0.76 ≤ 1.96

This shows that the test quantity is equal to 0.762 and lies within the interval of acceptance. Therefore, H0 is accepted at this level. Although in the last example the calculation for the test is done and the conclusion is drawn, one still could wish to repeat it with larger samples, to see how things change. A general remark on the method of hypothesis testing: It is important to get some experience in using the concepts “critical region” and “interval of acceptance”, being two complementary ways how to look at the same thing. The two one-tailed tests resulting from the two other complementary hypotheses H1 , H1 shall not be considered in detail, as their application is straightforward. 6.4.72.5

Test for the Difference of Means of Two Normal Distributions—Variances Unknown, but Equal



Imagine we are given two independent normal distributions N μ1 , σ12 , N μ2 , σ22 like in the last paragraph and want to design a test for the alternatives H0 : μ1 − μ2 = 0 H1 : μ1 − μ2 = 0;

H1 : μ1 − μ2 < 0; H1 : μ1 − μ2 > 0

We assume that the variances are unknown, but equal: σ12 = σ22 ≡ σ 2 . Following the same reasoning like in the section on confidence intervals, we employ the following relations:

626

6 How to Get Things Done: A Practitioner’s Toolbox

W =

 X¯ 1 − X¯ 2 − (μ1 − μ2 ) sp

1 n1

+

(n 1 − 1)s12 + (n 2 − 1)s22 n1 + n2 − 2

with s 2p ≡

1 n2

In these equations, n 1 , n 2 are the sizes of the samples taken from the two populations, respectively, and the estimated variances of these samples are s12 , s22 . s 2p is just an auxiliary quantity which enters the equations. The variable W follows a tn 1 +n 2 −2 -distribution. If H0 is true, W can be simplified as

W =

X¯ 1 − X¯ 2 1 n1

sp

+



1 n2

We can immediately write down the inequalities defining the two critical regions for the two-tailed test: %

 %% % ¯ % X 1 − X¯ 2 % % > t α ;n +n −2 |W | = %% 1 2 % 2 % sp 1 + 1 % n1

n2

For the two one-tailed tests, we obtain:

H1 : μ1 − μ2 < 0 W =

H1 : μ1 − μ2 > 0 W =

X¯ 1 − X¯ 2

sp

1 n1

+



1 n2

X¯ 1 − X¯ 2

sp

1 n1

+

< −tα;n 1 +n 2 −2



1 n2

> +tα;n 1 +n 2 −2

To illustrate the application of these formulas, we consider the following example. Example After we finished an improvement project which focused on a critical service delivery process, we assume that all our offices applying the new process should have improved. Especially, the mean value of a certain critical service key performance indicator should be the same for all offices. This indicator (e.g. lead time) is known to follow a normal distribution, and there are reasons to assume that variances of that indicator are the same for all offices. We are going to compare offices 1 and 2. Based on our hypothesis, we have H0 : μ1 − μ2 = 0. We test it against H1 : μ1 − μ2 = 0. We choose a 95% level, which means α = 0.05 We sample in each of the two offices the values of the key performance indicator for a number of working days: In Office 1 for n 1 = 17 days, in Office 2 for n 2 = 35 days. The mean values and variances are determined to be: Office 1: X¯ 1 = 28.7; s12 = 2.89 Office 2: X¯ 2 = 32.8; s22 = 2.41

6.4 Tools and Concepts in Alphabetical Order

627

With these data, we have (17 − 1)2.89 + (35 − 1)2.41 = 2.5636 17 + 35 − 2 

X¯ 1 − X¯ 2 28.7 − 32.8 =√ = −8.66 W = 1 1 1 1 s p n1 + n2 2.5636 17 + 35 s 2p =

We have a two-tailed test here, and looking up the value for the quantile, we find t0.025;50 = 2.009. This shows that for the data given, the region of acceptance is defined by the interval [−2.009; +2.009]. Left and right of this interval the critical region spreads out, and our calculated value (-8.66) lies right in the left part of it. For that reason, based on the test and data, H0 is rejected. The process improvement program seems not to have reached its target for the two offices considered.

6.4.72.6

Test for Paired Samples

In some applications, we are given two samples Sample1 : X k , k = 1, 2, 3, . . . n Sample2 : Yk , k = 1, 2, 3, . . . n however, the respective elements X k , Yk are not independent from each other and must be considered as pairs like (X k , Yk ); k = 1, 2, . . . n Examples include many types of “before-after” situations: • A group of n patients considered before (X k ) and after (Yk ) a medical treatment. • Number of accidents in n organizations before and after the implementation of a health and safety program. • Water consumption in n hotels before and after the implementation of an environmental management program. • Bribery-related compliance cases in n of our offices before and after passing an ISO 37001 certification. • Measuring a critical length of n objects with two different instruments and comparing the results. In all these and similar cases, the two samples (X k ) and (Yk ) are not independent. After all, they are the same elements in a “before” and “after” status. We would like to test the identity of means of the two samples:

628

6 How to Get Things Done: A Practitioner’s Toolbox

H0 : μ1 − μ2 = 0 H1 : μ1 − μ2 = 0;

H1 : μ1 − μ2 < 0;

H1 : μ1 − μ2 > 0

To derive a test, we proceed as follows. 1. Define the quantities: Dk = X k − Yk 2. Create a sample {D1 , D2 , . . . Dn } 3. Calculate the estimate of the mean: D¯ =

1 n

n

k=1 Dk

1 n k=1 Dk n−1

2 4. Calculate the estimate of the variance: = − D¯ 5. Assume that the Dk are distributed according to a normal distribution, but with unknown mean and variance. Remark This is an assumption frequently valid in applications. S D2

Recall that under these conditions the quantity T =

D¯ SD √ n

follows a Student’s t-distribution. This leads us to the region of acceptance equal to −t α2 ;n−1
0

To design the test, we basically can follow the logic given in the section where σ2 we calculated a confidence interval for σ12 . We sample n 1 elements from the first 2

population, n 2 from the second and calculate the empirical sample variances s12 , s22 , respectively. The crucial argument is that under the conditions given, the two random variables (n 1 − 1)

s12 s2 ∼ χn21 −1 , (n 2 − 1) 22 ∼ χn22 −1 2 σ1 σ2

follow χ 2 -distributions as indicated, and the random variable F defined by the expression (n 1 −1)

F=

s12 σ12

(n 1 −1) (n 2 −1)

s22 σ22

(n 2 −1)

σ 2 =σ 2

1 2 σ 2 s 2  s2 = 22 12 = 12 σ1 s2 s2

630

6 How to Get Things Done: A Practitioner’s Toolbox

follows Fisher’s F-distribution with Fn 1 −1,n 2 −1 , as was shown in Chap. 9, section on Fisher’s distribution. The last equation holds if H0 is true, as then σ12 = σ22 , and the unknown variances drop out from the expression for F. For the various alternative hypotheses H1 mentioned above, we obtain the following expressions for the critical regions: • H1 : σ12 − σ22 = 0 The critical region is: F < F α2 ;n 1 −1,n 2 −1 & F > F1− α2 ;n 1 −1,n 2 −1 . • H1 : σ12 − σ22 < 0 The critical region is: F < F1−α;n 1 −1,n 2 −1 . • H1 : σ12 − σ22 > 0 The critical region is: F > Fα;n 1 −1,n 2 −1 . If the values of F are, respectively, in these critical regions, the hypothesis H0 : σ12 = σ22 is rejected; in all other cases, it is accepted. The values of Fisher’s Fα;μ,ν function are tabulated, may be determined with the help of generally available spreadsheet programs and of course are part of all statistics program packages. Determining the critical region of the test in each case boils down to plugging the data into the above formulas. The only prerequisite is to calculate s12 , s22 from the sampled values. To illustrate how this test may be applied, consider the following example. Example At an airport, two offices offer tax refund services. To check if lead times for both offices coincide, the following measurements have been performed. Office 1—Lead times in minutes (20 measured values): 6, 11, 4, 5, 7, 9, 8, 10, 12, 7, 8, 5, 12, 11, 7, 9, 8, 6, 10, 7 Office 2—Lead times in minutes (15 measured values): 9, 11, 4, 8, 10, 7, 12, 6, 9, 5, 9, 5, 7, 8, 6 Mean and variance for Office 1: μ1 = 8.1000; s12 = 5.5684 Mean and variance for Office 2: μ2 = 7.7333; s22 = 5.3524 We want to test (at level α = 0.05), if for both offices average lead times are the same. This means: H0 : μ1 = μ2 against H1 :μ1 = μ2 To solve this, we may apply the two-sample t-test, as shown earlier in this section. This test is applicable only, however, if the variances of the two samples are the same (although they may be unknown). Therefore, in real-world examples we have to check first if this assumption is justified. Consider that σ12 , σ22 are the unknown variances for the first and second offices, respectively, and employ the test

6.4 Tools and Concepts in Alphabetical Order

631

H˜ 0 : σ12 = σ22 against H˜ 1 : σ12 − σ22 = 0 Calculate F=

5.5684 s12 = = 1.0404 2 5.3524 s2

As shown above, the critical region is F < F α2 ;n 1 −1,n 2 −1 = F0.025;19.14 = 0.3778 & F > F0.975;19.14 = 2.8607 As our calculated F-value is not in the critical region, we don’t have a reason to reject the hypothesis that the variances for the lead times of the two offices differ. Having this in our pocket, we employ the two-sample t-test and evaluate the following quantities: 19 × 5.5684 + 14 × 5.3524 (n 1 − 1)s12 + (n 2 − 1)s22 = = 5.4768 n1 + n2 − 2 20 + 15 − 2 8.1 − 7.7333 (μ1 − μ2 ) W = = = 0.46 1 1 1 1 s p n1 + n2 2.3402 × 20 + 15 s 2p ≡

The respective t-value may be looked up in the table to be t0.975;33 = 2.03. As |0.46| < 2.03, we don’t reject the hypothesis that mean values of lead times for the two offices don’t differ.

6.4.72.8

Test for the Proportion of a Population

In some applications, we want to test for the unknown probability p(E) of an event E. The typical test scenario may be described as follows: H0 : p = p0 versus H1 : p = p0 or H1 : p < p0 or H1 : p > p0 To derive a test for this situation, proceed as follows. 1. Consider a random variable X , such that + X=

1 if E occurs 0 if E does not occur

This is a Bernoulli-distributed variable with the following mean and variance: E[X ] = p; Var[X ] = p(1 − p); with

 P(X = 1) = P(E) ≡ p & P(X = 0) = P E¯ ≡ 1 − p

632

6 How to Get Things Done: A Practitioner’s Toolbox

2. Consider a sample X 1 , X 2 , . . . X n of size n and define the following estimate for the unknown probability p(E) pˆ =

n 1 X k = X¯ n n k=1

It is easy to calculate the mean and variance of this estimate to be p(1 − p) E pˆ = p; Var pˆ = n 3. Employ the central limit theorem (see Chap. 9) and note that the normalized variable T =

pˆ − p0 p0 (1− p0 ) n

∼ N [0, 1]

follows the standard normal distribution for large enough n. 4. Knowing the distribution of T , we conclude that we reject hypothesis H0 , if % % % % % pˆ − p0 % % z α2 < %% % % p0 (1− p0 ) % n

where the value z α2 is as usual the respective quantile of the standard normal distribution. This result holds for the two-tailed test. 5. For the two one-tailed tests, we have the test scenarios 5.1 H0 : p = p0 ; H1 : p < p0 ˆ p0 T = pp− < −z α (1− p ) 0

0

n

5.2 H0 : p = p0 ; H1 : p > p0 ˆ p0 z α < pp− =T (1− p ) 0

0

n

Example Consider a component supplied to a manufacturer. The requirement is that the fraction defective does not exceed 5%, otherwise the production process for the component is not considered to be capable. A random sample of 300 units is taken from the production and tested. Out of the sample, 25 units are defective. We perform a one-tailed test as follows: H0 : p = 0.05;

H1 : p > 0.05

We choose a value of α = 0.05. Using the test statistics defined above (in points 3 and 5), we have

6.4 Tools and Concepts in Alphabetical Order

T =

pˆ − p0 p0 (1− p0 ) n

=

633 25 300

− 0.05

0.05(1−0.05) 300

= 2.65

From the tables in Chap. 9, we find z 0.05 = 1.64. As T = 2.65 > 1.64, we reject H0 and accept H1 . In fact, this was to be expected with such a high proportion of 25 = 0.08. defectives 300

6.4.72.9

A Parameter-Free Test: The Sign Test

The tests considered so far in this section were established for parameters of given distributions. It is possible, however, to design so-called parameter-free tests which are of great value in many applications. To illustrate how such tests work, consider two random variables X, Y . We don’t know their distribution functions but would like to test if they are identical. If the distribution functions were identical, the following equations would hold: P(X > Y ) = P(X < Y ) =

1 2

We assume that P(X = Y ) = 0. These equations just say that taking an arbitrary pair of values (xi , yi ), the probability of xi > yi is the same as the probability of xi < yi . As we suppose this holds for all (xi , yi ), this probability is necessarily 21 . Now consider we draw a sample of n pairs {(x1 , y1 ), (x2 , y2 ), . . . , (xn , yn )} from the populations. If among these sampled pairs would be some with P(xk = yk ) = 0, we ignore them and take them out of the sample space. The reason is that they don’t help us in our test. Next, we ask for the probability that more than m differences (xi − yi ) are positive (you can also choose the number of negative differences). The answer may be found with the help of the binomial distribution and is equal to  p(m < n) =

n m+1



 +

n m+2



  1 n + ··· + n 2n

Remark The reason why the binomial distribution enters the play here is that an arbitrary difference (xi − yi ) can be either larger or smaller than zero. This is the structure of a binomial experiment. What we need next is a way how to determine levels of significance α. For that purpose, let m α be the smallest natural number that fulfills the equation p(m α ) ≤ α

634

6 How to Get Things Done: A Practitioner’s Toolbox

Employing the above series for p(m), this inequality can be solved numerically. In addition, the solution values m α may be found in tables. To summarize, the test works as follows: The hypothesis that the random variables X, Y have the same distribution is rejected at significance level α if the number of positive (negative) differences xi − yi is larger than m α .

Note clearly that this test does not need and not deliver the details of the underlying distribution of the random variables X, Y . We mention it here to illustrate another approach and thinking to derive a test.

6.4.72.10

χ 2 -Test: Goodness of Fit

This is one of the most important tests and designed to deal with problems of the following type. Given a random variable X with a (yet unknown) cumulative distribution function F(x), we would like to test the hypothesis H0 at the level of significance α that H0 : F(x) = F0 (x) against the alternative H1 : F(x) = F0 (x) for all x from the interval of definition. Hereby F0 (x) is a given distribution function. In practical applications, F0 (x) reflects our knowledge and expectation about what F(x) could look like. To derive a test for this sort of problems, one can proceed as follows: 1. Divide the domain D X of the random variable X into a finite number M of not necessarily equal but not overlapping intervals Ii . Using set theory notations, this reads: D X = I1 ∪ I2 ∪ · · · ∪ I M ;

Im ∩ In = ∅; if m = n

Example 1 If X is a discrete random variable, a potential partition of its domain could be defined by identifying each Ik with a possible value of X . Alternatively, one could also cluster some neighboring discrete values to define the Ik . Example 2 If X takes on continuous values on an infinite interval (−∞, +∞), a partition of the domain could be defined by I1 = (−∞, b1 ),

I2 = (b1 , b2 ), . . . , I M = (b M−1 , +∞)

2. What is the probability for X attaining a value in Im ? If we assume that H0 is true and X has distribution F0 (x), this probability would be equal to pm = P(X ∈ Im ); m = 1, 2, . . . , M Example For a continuous variable X and the just mentioned partition

6.4 Tools and Concepts in Alphabetical Order

635

Table 6.53 Throwing the dice 120 times: Observed versus expected frequencies Values

1

2

3

4

5

6

Observed frequency

19

23

17

19

18

25

Expected frequency

20

20

20

20

20

20

I1 = (−∞, b1 ), I2 = (b1 , b2 ), . . . , I M = (b M−1 , +∞), the probability being in I2 = (b1 , b2 ), is equal to P(I2 ) = F0 (b2 ) − F0 (b1 ). 3. Next, consider we got a sample {x1 , x2 , . . . , xn } of X values. Each individual value xi belongs to one and only one interval Im , such that xi ∈ Im . The empirical number of sample values in an interval Im is denoted by n m . 4. The test statistics usually employed with this input is T ≡ χ2 =

M  (n m − npm )2 npm m=1

2 T can be shown to follow with good approximation a χ M−1 -distribution with M − 1 degrees of freedom, if n is large enough. For practical calculations, one should determine the intervals Im such that for each of them, the inequality npm ≥ 5 holds. 5. If a significance level α is selected, then the critical region of the test is T ≡ 2 . If T is in this region, the hypothesis H0 is rejected. χ 2 > χ M−1;1−α

We first show a simple application of the test and then sketch (for the interested reader) the theory behind it. Example: Throwing the Dice We throw a dice 120 times, to check if it is fair. The expectation is that each potential outcome should occur with the same frequency (20). Table 6.53 shows these expected frequencies and the observed ones. 2 We choose a significance level of 95% (α = 0.05) and find the value χ5;1−0.05 = 11.070 (see tables in Chap. 9). Calculating T , we find (23 − 20)2 (17 − 20)2 (19 − 20)2 (19 − 20)2 + + + 20 20 20 20 (25 − 20)2 (18 − 20)2 + = 2.45 + 20 20

T =

2 As T = 2.45 < χ5;0.05 = 11.07, based on the test, we don’t have a reason (at the chosen significance level) to reject the hypothesis that the dice is fair.

636

6.4.72.11

6 How to Get Things Done: A Practitioner’s Toolbox

Excursion for the Enthusiast: Theory of the χ2 -Test

One can apply the χ2 -test without knowing details of the mathematics behind it. For the interested reader, however, we include some mathematical details, as they illustrate the type of thinking employed in the context of statistical tests. A—The exact distribution of T As described above, consider the domain of the variable X is subdivided and completely covered as follows D X = I1 ∪ I2 ∪ · · · ∪ I M ;

Im ∩ In = ∅; if m = n

Given a sample {x1 , x2 , . . . , xn }, we distribute each of its values to one and only one of the Ii . If the hypothesis H0 is true, the sample follows the distribution F0 (x). Then, the probability than a value of the sample {x1 , x2 , . . . , xn } falls into an interval Ii is pm = P(X ∈ Im ); m = 1, 2, . . . , M. Putting all elements of the sample into their respective interval Ii , we will have n 1 elements in I1 , n 2 elements in I2 and so on. Of course, it holds n 1 + n 2 + · · · + n M = n. The probability of such a distribution of values follows the multinomial distribution (see Chap. 9, Binomial distribution) p(n 1 , n 2 , . . . n M ) =

M  n! p1n 1 p2n 2 . . . p nMM ; ni = n n 1 !n 2 ! . . . n k ! i=1

It is clear, therefore, that 

P χ2 ≡ T ≤ x =

 n1, n2, . . . n M χ2 ≡ T ≤ x

M  n! p1n 1 p2n 2 . . . p nMM ; ni = n n 1 !n 2 ! . . . n M ! i=1

The summation in the last equation has to be taken over all tuples of n i , which obey the inequality χ 2 ≡ T ≤ x. Although this is the exact expression for the

probability P χ 2 ≡ T ≤ x and it can be evaluated numerically, it is pretty difficult to apply it in daily practice. Especially, if n and the n i are large. We have, therefore, to look for a simpler and approximate expression. B—The domain is divided into two intervals only To give the reader an idea how the above test statistics T can be motivated in a special case, we consider the simplified situation that the domain D X is divided into two intervals I1 , I2 only. With probability p1 , X attains a value in the left of the two intervals and with probability p2 in the right interval. Of course, p1 + p2 = 1. For the random variable X , we write X = X 1 + X 2 . X counts the total number of values in both intervals, X 1 those in the left interval and X 2 those in the right.

6.4 Tools and Concepts in Alphabetical Order

637

Consider a sample {x1 , x2 , . . . , xn }. As we know that X 1 follows a binomial distribution (either an element is in or out). If the value n is large, the binomial distribution may be approximated well by the normal distribution (see Chap. 9) with the follow2 1 −np1 ) ing parameters X 1 ∼ N [np1 , np1 (1 − p1 )]. From this, we see that T = (X np1 (1− p1 ) follows a χ12 -distribution, because it is the square of a normalized random variable that follows the N [0, 1]-distribution. Next, we perform some manipulations of T . 1

   (X 1 − np1 )2 (X 1 − np1 )2 (X 1 − np1 )2 (X 1 − np1 )2 = ( p1 + p2 ) = + T = np1 (1 − p1 ) np1 p2 np1 np2 2 2 2 (X 1 − np1 ) (X 1 − n + np2 ) (X 1 − np1 ) (n − X 1 − np2 )2 = + = + np1 np2 np1 np2 Concerning the last term, we recall that X 1 counts the number of values in the left interval and X the total number of elements of the sample, which is n. Using n − X 1 = X 2 , we end up with the following more symmetric expression for S: T =

(X 2 − np2 )2 (X 1 − np1 )2 2 + ∼ χ12 = χ2−1 np1 np2

This looks exactly the same as the above expression for the test statistics T , and the terms in both expressions also have the same interpretation. What has been derived here for the case of two intervals I1 , I2 can be generalized; however, this is sort of more complicated. C—The general case To derive an asymptotic distribution for the general case is relatively involved, and we sketch the main steps only. We go back to subsection A and start with the distribution p(n 1 , n 2 , . . . n M ) =

M  n! p1n 1 p2n 2 p3n 3 . . . p nMM ; ni = n n 1 !n 2 ! . . . n M ! i=1

which was explained there. We want to derive an approximate expression for this distribution in closed form. To do so, once more we employ the concept of characteristic functions. As was shown in Chap. 9 (Binomial distribution), the characteristic function for this multinomial distribution is n

ϕ(t1 , t2 , . . . t M ) = p1 eit1 + p2 eit2 + · · · + p M eit M Here we want to determine its asymptotic behavior. Introducing the variables i , we can write the abovementioned test statistics as yi = n√i −np npi

638

6 How to Get Things Done: A Practitioner’s Toolbox

T ≡ χ2 =

M M   (n m − npm )2 = ym2 np m m=1 m=1

It is worthwhile to mention the following relation for the yi : √ npi yi = n i − npi

M  √

⇒

pi yi = 0

i=1

This basically reflects that not all yi are independent, which will become important later. Using the characteristic function for the multinomial distribution, we get the following characteristic function for the joint distribution of the yi : ψ(t1 , t2 , . . . t M ) = e

−i

M √  npi ti  i=1

t

1 i √np

p1 e

1

t

2 i √np

+ p2 e

2

t

M i √np

+ · · · + pk e

n

M

To investigate the behavior of this function, we take the logarithm of both sides and develop then the right side into a Taylor series up to second order  M i √ npi ti + n ln 1 + √ pi ti n i=1 i=1  M 

1  2 − ti + O n −3/2 2n i=1 2  M M 

1  2 1 √ t + pi ti + O n −1/2 =− 2 i=1 i 2 i=1

ln ψ(t1 , t2 , . . . t M ) = −i

M  √

From this, we get the result  − 21

lim ψ(t1 , t2 , . . . t M ) = e

M 

i=1

2  M √ ti2 − pi ti i=1

n→∞

The exponential on the right side is a quadratic form in the variables ti which may be written in matrix form as follows M  i=1

ti2

−

 M √ i=1

2 pi ti

=

M  i=1

ti2 −

M  √ i, j=1

pi p j ti t j =

M 

√ δi j − pi p j ti t j i, j=1

 Note that δi j is just the unit matrix. To proceed, some details from matrix theory would be needed. For the advanced reader, we just sketch the main arguments, avoiding the detailed calculations. They

6.4 Tools and Concepts in Alphabetical Order

639

may be found in the statistics literature cited in the appendix. A matrix K is idempotent if it has  K × K = K . As can be shown by direct multiplication,

the property √ matrix A ::= δi j − pi p j is idempotent. In addition, its trace may be calculated to be T r (A) = M − 1. It can be shown that the trace of an idempotent matrix is equal to its rank. This implies that the rank matrix A is M − 1. This reflects the fact that  Mof √ pi yi = 0, as shown above. the variables yi obey the relation i=1 The eigenvalues of an idempotent matrix are either 1 or 0. This can be derived as follows. Be A an idempotent matrix, its eigenvalues λ and eigenvectors x are determined by the equation Ax = λx. It follows by multiplication with A on both sides: Ax = λx

⇒

A2 x = λAx = λ2 x = Ax = λx

⇒

λ(λ − 1) = 0

Because the determinant of a matrix is equal to the product of its eigenvalues, the following holds for matrix A. As its trace is M − 1, it is clear that one of its eigenvalues is zero and the determinant is also zero. That means matrix A is singular. Putting these results together, one can show there is a linear map from variables yi to z i , such that we get  − 21

lim ψ(t1 , t2 , . . . t M ) = e

M 

i=1

2  M √ ti2 − pi ti i=1

n→∞

=e

− 21

M−1  i=1

z i2

The right side is the product of M − 1 generating functions for the N [0, 1]distributed random variables z i (compare Chap. 9, normal distribution).  M (n m −npm )2 M Recalling the above relation T ≡ χ 2 = m=1 = m=1 ym2 , it follows npm 2 that T ∼ χ M−1 , which is the result we were looking for. 6.4.72.12

χ 2 -Test: Test of Independence and Contingency Tables

In many applications, we have to do with two random variables X, Y , and we would like to know if they are independent. In the language of tests, this can be formulated as follows: H0 : X, Y are independent H1 : X, Y are not independent There are many tests available, to test independence. However, the χ 2 test is very popular. It is established as follows: 1. Start with a sample {xk , yk }, k = 1, 2, . . . n, and consider it as realizations of the random variables X, Y . 2. Divide the domains of X, Y into classes as follows:

640

6 How to Get Things Done: A Practitioner’s Toolbox

Table 6.54 General layout of a contingency table Random variable Y Random variable X

B1

B2

B3

…

Bs

Sum rows

A1

n11

n12

n13

…

n1s

n1.

A2

n21

n22

n23

…

n2s

n2.

A3

n31

n32

n33

…

n3s

n3.

…

…

…

…

…

…

…

Ar

nr1

nr2

nr3

…

nrs

nr.

Sum columns

n.1

n.2

n.3

…

n.s

n

D X = A1 ∪ A2 ∪ · · · ∪ Ar ; Am ∩ An = ∅; if m = n DY = B1 ∪ B2 ∪ · · · ∪ Bs ; Bm ∩ Bn = ∅; if m = n These partitions exhaust the respective domains, and they are not overlapping. This is just a generalization of the one-dimensional partition we used earlier. 3. Each pair of values {xk , yk } from the sample is allocated to one and only one field in the following matrix (Table 6.54). This is frequently called a contingency table. 4. The numbers in Table 6.54 show the number of pairs in the respective field of the contingency table. The right column shows the row sums. The last row shows the column sums. The respective formulas are the following: n i. =

s  j=1

ni j ; n. j =

r 

ni j

i=1

Of course, the sum of the row sums and the sum of the column sums are both equal to n. 5. We need to know that the probabilities of the events pi = P(X ∈ Ai ) and qi = P(Y ∈ Bk ) for i = {1, 2, 3 . . . r } and k = {1, 2, 3 . . . s}. If the hypothesis H0 is true and the random variables X, Y are independent, then we should have a factorization of the joint probability as follows P(X ∈ Ai , Y ∈ Bk ) = P(X ∈ Ai )P(Y ∈ Bk ) = pi qk It would follow then that on the average npi qk , elements should be in the combination of categories Ai and Bk . 6. If the probabilities pi , q j are known, the following test statistics is employed. 2 r  s

 n i j − npi q j T = npi q j i=1 j=1

6.4 Tools and Concepts in Alphabetical Order

641

2

Based on what has been said under point (5), the quantity n i j − npi q j measures the random deviations between the observed and expected frequencies, if hypothesis H0 is true and the variables X, Y are independent. It can be shown that if hypothesis H0 is true, the test statistics T follows a χr2s−1 -distribution. H0 is rejected if T > χr2s−1;1−α . 7. If the probabilities pi qk are not known, which is mostly the case, we have to estimate them from the sample values. This leads to the following test statistic 

T =

r  s

 ni j −

n i. n . j 2 n n i. n . j n

i=1 j=1

The statistic T  follows from T , inserting the estimated values pˆ i =

n. j n i. ; qˆi = n n

It can be shown that if hypothesis H0 is true, the test statistics T  follows a H0 is rejected if T  > χ(r2 −1)(s−1);1−α .

χ(r2 −1)(s−1) -distribution.

Example Table 6.55 shows the results of a small market survey, in which 379 persons from different social groups were asked for their preferences considering products A, B and C. The table shows all relevant data. For example, 119 people from group 4 and 90 from group 1 have been in the survey. In total, 148 people voted for product A, 112 voted for product B and so on. We would like to know with 95% of significance, if preferences for products A, B and C are independent of the social group of respondents. In a first step, one calculates the value of the test statistic T  according to the formula 

T =

r  s

 ni j − i=1 j=1

n i. n . j 2 n n i. n . j n

=

55 −

 90×148 2 379 90×148 379

47 −

 119×119 2 379 119×119 379

+ ··· +

= 48.91

Table 6.55 Example: contingency table—preferences of different social groups for Social group Product type

1

2

3

4

Sum rows

Product A

55

33

15

45

148

Product B

25

40

20

27

112

Product C

10

25

37

47

119

Sum columns

90

98

72

119

379

642

6 How to Get Things Done: A Practitioner’s Toolbox

Performing the number crunching is a bit tedious but straightforward. If one has to do with problems of this sort more frequently, statistics software may be used. Alternatively, spreadsheet programs can be employed to do the calculations. 2 2 = χ6;0.95 = Next, we need to find the value of χ(r2 −1)(s−1);1−α = χ(3−1)(4−1);0.95 12.6 (see tables in Chap. 9). As 48.9 > 12.6, we reject the hypothesis that the different social groups don’t differ in their preferences concerning the different product types. To illustrate further the use of contingency tables, we consider yet another typical application. Table 6.56 shows a setting, where two people classify N objects according to n dichotomous categories A1 to An . The entries n11 , n22 , … nnn show those classifications, on which both people explicitly agree. Assuming that all classifications (leading to entries nik ) are independent from each we get estimates for the probability of each entry other and dividing each nik by N, n pik = 1. (see Table 6.57). Of course, i,k=1 n pii as the relevant One might be tempted to consider the probability po : = i=1 quantity, to measure “agreement” between the two persons. However, having a look at Tables 6.56 and 6.57, one needs to understand that Person 1 votes for all criteria A1 to An , with respective probabilities p1. to pn. (see last column in Table 6.57). Similarly, Person 2 votes for A1 to An , with probabilities p.1 to p.n (see last row in Table 6.57). Table 6.56 n × n contingency table for two raters Person 2 Person 1

A1

A2

A3

…

An

Sum rows

A1

n11

n12

n13

…

n1n

n1.

A2

n21

n22

n23

…

n2n

n2.

A3

n31

n32

n33

…

n3n

n3.

…

…

…

…

…

…

…

An

nn1

nn2

nn3

…

nnn

nn.

Sum columns

n.1

n.2

n.3

…

n.n

N

Table 6.57 Probability matrix related to the contingency table of Table 6.56 Person 2 Person 1

A1

A2

A3

…

An

Sum rows

A1

p11

p12

p13

…

p1n

p1.

A2

p21

p22

p23

…

p2n

p2.

A3

p31

p32

p33

…

p3n

p3.

…

…

…

…

…

…

…

An

pn1

pn2

pn3

…

pnn

pn.

Sum columns

p.1

p.2

p.3

…

p.n

1

hypothesis testing

Typical steps in

6.4 Tools and Concepts in Alphabetical Order

643

Formulate the null hypothesis H0 and its alternative H1 for the population considered. Ensure adequate data and select type of statistical test. Select confidence interval and carry out the test. Based on test result, accept or refuse hypothesis H0.

Fig. 6.77 Typical steps in hypothesis testing

In Table 6.57, the last column (sum rows) shows, for that reason, the probability distribution of the voting of Person 1. Similarly, the last row in Table 6.57 (sum columns) shows the probability distribution n of the voting of Person 2. p.i pi. is also easy to understand. For The meaning of probability terms i=1 example, a term like p.i pi. is the probability that both persons vote for category Ai . It should be mentioned that the concept of contingency tables may be generalized to higher dimensions. For example, tables of the sort i × j × k ×l may be constructed if four classifications have to be made. In the last example above, not two but four persons would classify N objects in such a setting. Obviously, the data would in such a case be arranged in a four-dimensional rectangular parallelepiped. Although this cannot be presented nicely in a table, handling of such arrangements is not a problem. The reader should also note the relationship of these concepts with Kappa index calculations treated in the respective section of this book.

6.4.72.13

The Zoo of Statistical Tests

The tests considered in this section, mainly focus on some standard situations that occur frequently in applications. Although these tests are important, they don’t cover by far all situations met in practice. There are many more tests, designed for specific scenarios. The reader is referred to the specialized literature on this topic, if needed. The general steps to be considered in any test are sketched in Fig. 6.77.

6.4.73 To-Do-List A To-Do-List is a simple documentation tool to sort required actions and to keep control of them. The tool may be employed basically in any context and phase of a project. Another popular field of application is to summarize meeting results and to assign specific actions to individuals.

644

6 How to Get Things Done: A Practitioner’s Toolbox

Table 6.58 Example of a To-Do-List To-Do-List Number

Date

Priority

Subject

Responsibility

Deadline

Status

1

01-02-19

High

Form the team for xyz project

H. Miller

01-15-19

Done

2

01-02-19

High

Finish voice of customer analysis

F. Smith

01-31-19

Open

3

01-31-19

Medium

Update training videos

D. Conrad

02-20-19

Open

The nitty-gritty of the tool… The basic information content of a To-Do-List is: • What has to be done? • By whom? • Until when? A simple template may be used to summarize this type of information. Its format may be adapted to your individual needs. IT-based To-Do-Lists may be an alternative, but they follow basically the same principles (Table 6.58). Although you may use a To-Do-List just as a summary of actions whose status reaches from “open” to “done”, it may be helpful to enhance it with some additional information. A typical example is priorities. The so-called Eisenhower-Principle is often employed in this context. This principle categorizes items into four priority levels: • Priority 1: This task is critical and of utmost importance. Must be handled with highest priority. • Priority 2: This task is important, but not critical. May be handled with some delay. • Priority 3: This task should be handled timely, but it isn’t critical to the intended outcome of the project. • Priority 4: This task is neither critical nor important to the outcome of the project. May be labeled as “nice to have” (Fig. 6.78). It is worthwhile to mention that software programs and apps are available which offer comfortable electronic forms of To-Do-Lists. They are highly recommended.

6.4.74 Tree Diagrams Tree diagrams are a graphical way to divide an issue or target into its parts and show important relationships and dependencies between them. Ideas and solution steps may be structured logically and represented graphically. It is a nice tool to be used by individuals, as well as by teams.

6.4 Tools and Concepts in Alphabetical Order

645

Low

High

Degree of importance

Priority 2 Tasks

Priority 1 Tasks

Priority 4 Tasks

Priority 3 Tasks

Low

High

Degree of urgency

Fig. 6.78 Prioritization of To-Dos

The nitty-gritty of the tool… 1. Select the issue that is to be analyzed. It doesn’t matter from where it comes from. It may derive from a root-cause analysis, from a customer satisfaction survey, from a new regulatory requirement or from whatever. It may be related to an information security issue, a topic important to business continuity or any other system management standard. 2. Nominate the team which is selected to work on the issue. Select only members, which can reasonably be expected to contribute to the issue in question. 3. Starting from the main goal, write down its sub-goals necessary to achieve it. This will define the first layer of the tree diagram. 3.1. In the example sketched in Fig. 6.79, an audit company discovered a nonacceptable variance in audit results produced by its auditors. To deal with the issue, three subclasses of topics shall be approached: 3.1.1. Problems appear in the food sector, where auditors repeatedly came up with inconsistent results. 3.1.2. Another source of problems is the affiliate in Spain. 3.1.3. A third field where action is required is the way how the human resource department hires auditors and how personnel is trained on the job. 4. Dealing with the first layer of issues identified in Step 3, next one has to identify actions to eliminate these issues. Doing so, layer two is created. 4.1. In the example of Fig. 6.79, it was found that all food auditors need additional periodic intensive training. The reason is to align their audit approaches and to train them in critical issues that must be handled during audits onsite. In addition, the employed audit software tool must be improved. The intent behind is to guide the audit process by “forcing” auditors to fill certain parts of a standard checklist.

646

6 How to Get Things Done: A Practitioner’s Toolbox

Additional periodic trainings of all auditors.

Food Sector Improve standardization of audit tool. Some freelancers don't adapt to the defined quality level.

Branch office Spain Reduce variances in audit results

Improve HR hiring procedures and training opportunities

Work with fewer. Increase quality of auditors. Stop offering audit services A and B.

Additional trainings and surveilance of full time auditors needed in Spanish.

Involve lead auditors in job interviews. Implement e-learning tool. Hire licensed auditors with at least five year of job experience only.

Grant 5 days per year additional special training for each auditor.

Change training procedures. Select senior auditors who will consult and supervise newcomers.

Fig. 6.79 Example of a tree diagram

4.2. Similarly, steps are defined for the other two problem categories of layer one. 5. This process is continued, until the team agrees that all required issues and actions have been identified and no more sub-layers are needed. 6. When the tree diagram is completed, it should be reviewed by the team for completeness and potential mistakes. It may be helpful to present the chart to people not involved in the team work and ask them for comments. In practice, you may chart tree diagrams with sticky notes on paper or colored cards on a white board, or you may use just color pens on the white board. More IT-affine people may like to chart things on a tablet PC and show the tree diagrams on the screen. This is a question of preferences and of taste. Note that tree diagrams may be charted in different forms: Left to right, top down and others. You may use mind-mapping apps to draft the diagrams.

6.4.75 Visual Management In production as well as in service industries, we very frequently need to transport important and critical information to people effortlessly, immediately but still reliably. This may happen in the context of a process, facility, tool, environmental issue or others. In such scenarios, process descriptions, operation procedures and the like are not the methods of choice. Instead, visual management tools are frequently used.

6.4 Tools and Concepts in Alphabetical Order

647

The nitty-gritty of the tool… The fields of applications of visual management are very diverse. We confine ourselves to give some typical examples: • Universal symbols and markings are used in many situations. Examples include specific words (e.g. EXIT, ENTRANCE, KEEP OUT! DANGER!) which are frequently combined with signs (e.g. dangerous goods transport marking). They include also pictograms and similar signs. One of the advantages of this type of markings is the universal (interlingual and intercultural) comprehensibility. • Standardized presentation, allocation and positioning of items, tools and parts is another approach in visual management. For example, surgery teams usually place instruments and devices needed during an operation in a standardized manner the team is used to, and which proved to be adequate. The same may be found in production working environments. • Layout of working places. Adequate layout of working places (production and service) contributes enormously to their efficiency and management. • Comics, pictograms and short movies. These are frequently employed to bring important messages to a diverse group of people. Think, for example, of safety instructions before takeoff. These are only a few examples of application of visual management tools. They should be employed with priority wherever possible.

6.4.76 VOC—Voice of the Customer This is a whole bunch of tools and techniques for the sole purpose to understand your customers. Actions include: • Collect and analyze reliable and significant data to understand, what your customers want and value. • Ensure statistical integrity and validity of your customer data, where possible. • Find out the key drivers of customer satisfaction. • Determine trends in changing customer needs and expectations. The nitty-gritty of the tool… To have reliable VOC data is critical. Depending on the size of your organization, the industry you’re in and the spectrum of your customer segments, you shall determine the adequate set of tools to measure VOC. Typical sources of information are sketched in Fig. 6.80. Although the details of approaches will vary with individual needs of your organization, industry-specifics and customer segments, some general recipes may be given:

648

6 How to Get Things Done: A Practitioner’s Toolbox

Direct Customer Feedback

Customers Interviews

Customer Specifications

Marketing & Sales Data

Surveys

Analysis of Customer Focus Groups

VOC

Other Sources

Fig. 6.80 Data sources to understand the VOC

1. Identify your customers and group them into clearly defined segments. 1.1. Example 1 If you run a hotel with huge banquet facilities, restaurants and a rooms division, customers include individual hotel guest, as well as international conference organizers. These are clearly different customer segments. To get a full picture of the VOCs, you should employ different research tools for each of them. For example, do a standard survey of your individual hotel guests, but use an individual interview approach for the conference organizers. 1.2. Example 2 You are the manager of a medium-sized software development company, which sells a couple of mass software products with thousands of individual clients. In addition, you create special purpose software modules for individual clients in the automotive industry and offer remote maintenance services for this group of customers. For this second group of clients, individual continual talks on software and service specifications and future needs will likely be adequate. The mass clients buying your other software packages could well be approached with survey techniques, evaluation of customer feedbacks, error statistics, etc. 1.3. Criteria for your customer segmentation may include but aren’t limited to: Product or service they buy, loyalty, revenue, geographical location, size, industry and more. 2. Keep in mind that relevant VOC data will have a huge impact on your business. Strategic decisions, investments, exit plans, needs for product and service developments, change of processes and more may derive from them. 2.1. Remark All management system standards described in this book require alignment with customer requirements and expectations. It is obvious that VOC is really critical for your organization.

6.4 Tools and Concepts in Alphabetical Order

649

Table 6.59 VOC information gathering VOC—information gathering Method

Comments

Surveys

Surveys are employed if big data collections are needed that can be used for further statistical analysis. Data sampling may be done in several ways, including questionnaires, telephone interviews and others

Marketing and sales data

Marketing and sales data are important inputs to VOC analysis. Keep in mind that this means data from your organization, as well as those from competitors and other relevant participants in the market

Direct customer feedback

Includes direct positive feedback from customers, as well as negative and complaints

Customer interviews

This method is usually employed if very specific information is required from individual customers. This may be the case at the beginning of an important business relationship, or in any later phase

Analysis of customer focus groups

This method is employed if you need data from very specific customer groups. Information can be gathered with interviews or surveys. Another good location is trade fairs, where special focus groups meet. Frequently, customer focus data are collected with direct focus on selected products or services As an example, take the collection of customer statements related to a new product (or prototype)

Customer specifications

These are requirements specified directly by your customers. For that reason, they should be a most reliable source of VOC data

Other sources and methods

Examples include market studies and analyses, trends in your industry and more The huge field of big data analysis must be mentioned here, which is in some areas one of the most important sources to understand the VOC

3. No matter what tools you choose to obtain reliable VOC data, you will need to adapt them to the specific needs and data requirements of your organization. It is of utmost importance to do this with great care. Sometimes it’s shocking to see how many organizations create cemeteries of data collected by inadequate procedures and, therefore, with little use (Table 6.59).

6.4.77 VSM—Value Stream Mapping Value stream mapping is a tool that illustrates and analyzes the flows of material and information within an organization and possibly beyond, including suppliers and

650

6 How to Get Things Done: A Practitioner’s Toolbox

customers. Its main intent is to optimize those flows reducing waste, improving lead times and other aspects. The nitty-gritty of the tool… VSM comes with a more or less standardized graphical method and methodological approach. The main aspects are as follows: • Select the part of the organization and processes to which VSM will be applied. • Select the team which will do the VSM. It is important that team members received a solid training on the VSM method and have prior practical experience with it under guidance of an experienced person. • Study existing process descriptions, organization charts and other relevant documents and information. • Visit the relevant organizational units included in the VSM project and observe the selected processes onsite. This is frequently called “walking the process”. • Make records of the factual processes onsite. There are specific symbols which are usually used in this context. Fig. 6.81 shows a simplified drawing of this sort, using some of the typical symbols. Usually, the VSM methodology suggests to draw this sort of flows by hand, using just paper and a pencil. There are software tools available which may be employed as well. However, purists don’t like them. In the example shown in Fig. 6.81 a sketchy drawing shows the material flow in a laboratory and the interaction with the customer. Starting at the top of the drawing,

Fig. 6.81 A very sketchy value stream map

6.4 Tools and Concepts in Alphabetical Order

651

customers send their test material to the laboratory using a transportation service. The material arrives in the laboratory and is stored for later testing. A pull system is employed, and the material enters the first testing step. Part of the material is pushed forward and stored in an inventory, from where it enters a second testing process. The results are pushed forward and enter the process of writing the test report. From here, the test report is sent to the customer. A scheduling process is shown which interacts with the customer and with the laboratory facility. Some flash signs are shown which illustrate the flow of information. The box-like symbols under the process symbols contain relevant information like • – Cycle time (C/T) – Process time (P/T) – Changeover time (C/T) – Number of shifts in the laboratory – Other relevant information. • In the example, the drawing shows the current state of material and information flow. As mentioned above, the main intent of the VSM method is to optimize lead times, material flow and information processing. Based on the initial drawing and the boundary conditions and potentials of the organization, the team will develop alternatives to the current process and information flows with improved lead times and other improved indicators. VSM is one of the methods used in process improvement programs in Six Sigma environments, but its application is not limited to this field.

6.4.78 Y = F(X) This is a simple mathematical equation showing a functional dependence of Y on x. Hereby x may be one or a whole set of variables. The concept is widely used in the world of Six Sigma and in other contexts. How to employ this tool One of the underlying ideas of modern management systems is: You can only manage what you can measure. You may measure Y, but Y depends on a number of variables or factors. Some of them may be purely random variables. If you want to manage Y, you will have to try to control the factors x and to understand the random nature of some of these factors. As an example, consider customer satisfaction. On what does it depend? Customer satisfaction = F(product quality, price, service support, image of the product, usability of the product, compatibility with other products, reliability, other options on the market offered by competitors, … etc.)

You may measure customer satisfaction in some units. However, in order to control it, you need to deal with the variables it depends on.

652

6 How to Get Things Done: A Practitioner’s Toolbox

Note that in this context, the equation Y = F(x) should be considered as a model of thinking, how to look at relations between output and input variables. The message is: Keep this equation in your mind, and it should help you to remember that without fixing the input variables, you can’t reasonably trigger the output. You need to understand as much as possible the functional relationship Y = F(x). There are many methods how relations between x and Y may be found and analyzed. They include: • • • • • •

FMEA; Ishikawa diagram; Affinity diagram; Correlation and regression analysis; Hypotheses testing; Monte Carlo simulation;

and many more. You may find short descriptions of them in the current chapter of the book.

Reference Kapur, J. N. (1993). Maximum-entropy models in science and engineering. Wiley.

Chapter 7

Auditing the Management System

In this chapter, you’ll find: • • • • •

A general introduction to first-, second- and third-party audits; A discussion of the content of ISO 19011:2018; General guidelines on how to plan, conduct and evaluate audits; Requirements for auditors; Remarks on some generally accepted rules for the determination of audit durations.

7.1 Introduction: The Need for Performance Control and the Role of Audits Internal audits are a fundamental requirement of all management system standards. Although they are by far not the only and most important means to survey their performance and effectiveness, they constitute one of the generally accepted pillars. Besides of these so-called internal audits (frequently also called first-party audits), one distinguishes second- and third-party audits, which play an essential role in the context of certification and other forms of external surveillance. This said it should be clear that the whole topic of planning, conducting and evaluating audits calls for adequate standardization. It should be ensured that the qualifications of auditors are adequate comparable and the way how audits are done follows some generally accepted principles. This is the primary intent of ISO 19011, which defines a framework for all these aspects. For that reason, we mainly follow the template of this standard to sketch the main aspects of audits (Fig. 7.1).

© Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7_7

653

654

1st Party Audits Audits conducted by auditors within the own organiza on.

7 Auditing the Management System

2nd Party Audits Supplier audits conducted by customers or other relevant interested par es.

3rd Party Audits Audits conducted by independent audit and cer fica on organiza ons. Audits done by other independent authori es.

Fig. 7.1 Types of audits and typical examples

7.2 Audits: A Means to Control the Performance of Management Systems 7.2.1 The Role and Content of ISO 19011:2018 The third edition of the standard. • ISO 19011:2018—Guidelines for auditing management systems was published in July 2018, and it may be considered as the general reference standard for auditing management systems. The following should be mentioned: • ISO 19011 offers guidance, but it does not define requirements. • The standard addresses first-, second- and third-party audits of management systems. • The standard addresses all phases of audits. • For some management systems, the general guidelines of ISO 19011 are complemented by additional guidelines and requirements defined in other standards and documents. For example, this is the case for energy efficiency management systems, information security management systems, food safety management systems and others. We mentioned these things in the respective sections previously in this book and will come back to some topics in Chapter 8 on certification and accreditation. Generally speaking: • An audit is a systematic and formal process to sample information called the audit evidence. • Audits should have a clear scope and follow generally accepted rules defined in ISO 19011. • Audits are based on audit criteria which are to be verified or falsified during the audit. In other words, you need a catalog of criteria against which to audit.

7.2 Audits: A Means to Control the Performance of Management …

655

Table 7.1 Principles of ISO 19011:2018 Integrity Auditors and personnel involved in audits and related activities should • Demonstrate professional competence, honesty, diligence and responsibility • Comply with applicable legal requirements • Show impartiality, be fair and unbiased • Not get distracted by anything that could influence their judgment during the audit process

Professional care Auditors should have the ability to make professional judgments based on their professional and other experience They should be aware of the confidence placed in them by the audited organization

Confidentiality Information gathered during an audit is confidential and should be treated as such

Evidence-based approach Audit results should be verifiable. Although audits are usually based on information sampling methods, conclusions drawn from this process should be rational and produce confidence

Independence Auditors should be unbiased and independent of the activities to be audited. Objectivity of the auditors is super important

Fair presentation Audit findings should be presented truthfully and in an objective way. Potential obstacles met during the audit process should be reported. Audit reports shall be accurate

Risk-based approach All phases of an audit should be based on risk-based thinking and approaches. This includes that an audit should have a defined focus on relevant and risky issues, as these are the ones that can shake the management system

• Audits are done by auditors or auditor teams who must comply with professional and ethical standards. In addition, they shall show enough independence from the organization to be audited. ISO 19011 suggests that audits should be based on the following general principles (Table 7.1). The clauses of ISO 19011 are divided into three groups: • The management of audit programs; • The conduction of audits; • Auditors: Their competence and evaluation. We shall not walk through the standard clause by clause but describe its main messages in the following. An audit is a method to gather information about defined aspects and the performance of a management system or some of its parts. It is always based on information sampling and to make the audit meaningful it should be based on a reasonably well designed and planned audit program. This program should minimize the risk of not getting the necessary information from the audit or drawing the wrong conclusions from audit findings. Auditors should be selected with great care. The audit should be conducted in a professional manner and follow good practices. Audit results should

656

7 Auditing the Management System

Define the scopes s es of the and objec ve udit program m clearly au

Members o of the audit tea am? Qualifica o ons of auditorrs?

Write audit report

Whatt kind of audit appro oaches shoulld be e choosen?

Design the e audit program properly p

Conduct the audiit

What arre the findings/re esults of the aud dit?

Are the e objec ves of the audit met?

Consequencces of the auditt? Follow-up ac a vi es neede ed?

Fig. 7.2 Audit program and audit execution according to ISO 19011

be well documented and meet the objectives. The general phases of an audit are shown in Fig. 7.2. The scope of an audit program may be very small or very broad. For example, it may include the quality management system of a multinational organization or some of its parts. An audit may focus on just a production line or on an integrated management system including quality, environmental and information security. An audit may be scheduled as a routine audit, or it may be needed because of the apparent severe nonconformities of the management system, processes, etc. The number of potential situations is almost infinite. It’s obvious that the diversity of potential audit scopes and needs calls for a systematical and careful planning of audits in each case. The personnel designing an audit program may or may not include the auditors nominated for the audits. In any case, expertise and a true understanding of the needs of audits are needed to draft a reasonable audit program. There is one guiding principle which may help you through the whole process without getting lost in complexities. An audit shall have clear scopes and objectives, and its results should be as close to the (unknown) truth as possible. In other words, an audit program should be designed such that the risks to accept audit results which are wrong or don’t describe the reality of the audited management system are as small as possible. Some immediate implications follow: • Define the mission and objectives of audits as clearly as possible. • Make sure you have a deep enough understanding of the organization and its management system to be audited, as without you will fail to draft an adequate audit program.

7.2 Audits: A Means to Control the Performance of Management …

657

• Consider which team of auditors is needed to cover the planned scope of the audits. Be aware that a sound understanding of the organization and its processes is expected from the auditors combined with the independence from the organization to decrease the risk of bias. • Plan the time plot for audits: Which auditor will audit what when and who will be the respective auditee in which part of the organization. • Which audit approaches should be followed? Dealing with management systems, risk-based thinking is a key. This holds as well for audit programs and audits. There are many potential risks that can make audit programs fail. Keep them in your mind and try to foresee as many potential failures as possible. Unfortunately, too many (internal) audit programs you may see in practice are lousy. Many are done as they are a formal requirement of the respective management system standard, but objectives are defined weakly and found nonconformities or opportunities for improvements are not really followed up. Too often you’ll see that audit programs focus on general topics but avoid addressing the true risks or other relevant issues. Reasons for this include lack of insight, lack of resources, not supportive management and many others. Such malpractice doesn’t make sense and ignores the very positive impact that tough audit programs may have on an organization. However, in industries where suppliers face a high enough pressure from their customers, the spirit is usually different and internal audits form a fixed part of the continual improvement and internal control processes. Let us illustrate some of these ideas by an example. A medium-sized general hospital implemented a quality management system according to ISO 9001. The top management of the clinic is aware that hacking the clinic’s IT-system represents a high risk. Therefore, the clinic just started in addition to the implementation of an information security management system according to ISO 27001 to get a systematic focus on the issue. Imagine you’re in charge to develop an audit program for the clinic: How should you proceed and what are the main topics to keep in mind? • No matter in which country you’re located, relevant healthcare organizations are usually considered as being part of the critical infrastructure, and there are specific legal and other requirements defined by authorities your organization shall comply with. Working on the audit program you should keep these requirements in mind. No matter which additional objectives you want to reach with the implemented ISO 9001/ISO 27001 system, compliance with relevant legal and other requirements are of utmost priority. For this reason, your audit program should include them. • You should consider the quality performance indicators (critical incident statistics, etc.) collected by your organization when designing the audit program. Obviously, departments with critical performance measures should receive a special focus in the audit program. • Standards for management systems call for risk-based thinking and audit programs should reflect this. Some of the departments of your clinic may deserve more attention than others as they host more risk-relevant processes.

658

7 Auditing the Management System

This is the reason, why one of the ISO 19011 principles calls for risk-based audit approaches. • Selecting the auditors designed to conduct the audits you should keep two principles in mind: – Auditors shall show enough independence from the department they are going to audit. You should fix how much is “enough”. In practice, for example, someone from the surgery department should not conduct audits in his or her department. – Keeping risk-based thinking in the focus: Auditors shall be aware of the specific risks in the departments they’re going to audit. May a specialist from the surgery department adequately audit the IVF laboratory? Likely not. Sometimes it may be hard or impossible to find an adequate auditor in one’s own organization who simultaneously shows enough independence and professional background. You should think of inviting someone from outside in such cases. • Different audit approaches are available in practice, and you should choose the right one to meet the objectives of your audit program. – “Vertical audits” are designed to be in-depth audits in specific parts of your organization. You should choose this approach if you want to collect specific information in a department or organizational unit. Consider the check of processes and work instructions in the administration department or in the radiology department as typical examples. – “Horizontal audits” may be employed if you want to audit processes involving several departments and especially the interfaces between them. Auditing clinical pathways would be a good example for this type of approach. Note that many problems occur on the interface between two functional units. For that reason, this sort of audits will give you a better chance to detect them. – Audits are usually announced in advance such that the auditee may get prepared. However, announced audits show the disadvantage that auditors will be expected by the auditee and auditors will face a “prepared state” which may or may not reflect the daily reality in that department. Not announced audits don’t have this disadvantage. In practice, a good mix of both approaches may be most appropriate. • Considering the special topic of information security (ISO 27001), you should find an auditor/expert with a profound background in IT (hardware and software). But keep in mind that information security goes beyond IT topics and includes many other aspects of handling information in your organization, for example, patient-related information (Fig. 7.3). Be aware that the topics mentioned in this example cover important, but not all aspects of an audit program. However, you should get the message that depending on the organization and its objectives an audit program may be a complex thing. ISO 19011 gives us very nice guidance on which topics to deal with designing and executing an audit program. Keep in mind, however, that your organization may need additional aspects to be covered.

7.2 Audits: A Means to Control the Performance of Management …

659

Clinic Management

Administra on Department

Facility Management

Department of Surgery

Department of Gynecology

Department of Internal Medicine

Opera ng Theatre

IVF Lavoratory

Clinical Laboratory

Outpa ent Department

CryoConserva on

Blood Transfusion Department

Fig. 7.3 Ensure that all organizational parts are audited adequately

Summing up, you should: • Clearly define the scope and objectives of the program. Input to the program may include: – Which parts of the organization are targeted by the program? – What standards, regulatory documents, laws, internal standard operating procedures, customer requirements, contractual requirements and others are to be considered? – What are the expectations and objectives of top management concerning the audit program? • Make clear who has overall responsibility for the audit program and who is involved in planning, executing and controlling the program. In most small organizations, all this may be covered by one individual, but in large organizations, a multinational team may be required. • Define the methods to be applied in executing the audit program. These may include: – Horizontal and vertical audits. – Specific sampling procedures to be applied during audits (e.g. statistical methods). – Input to be used in the audits (quality data, compliance complaints, etc.). – Onsite versus remote audits. (Onsite audits: The auditors are physically present in the unit to be audited. Remote audits: Auditors use technologies like videoconferences to audit a unit. The latter method may be meaningful if the audited

660

7 Auditing the Management System

unit is far away from the auditor’s location, and the physical presence of the auditor is not needed to achieve planned audit objectives). – Announced versus not announced audits. • Plan the frequency of the audits and draft a detailed plan of which unit is to be audited when by which team and what will be the respective audit objectives. • Define the management of audit documentation: How should audits be documented? How should audit documents be distributed and filed? etc. • Implement a procedure of how nonconformities found during audits are to be corrected and how corrective actions are controlled. Note the importance of this topic. It’s far from trivial to run a reliable system to deal with a few dozen of corrective actions. • Follow-up audits should be planned where the realization and effectiveness of corrective actions must be checked onsite. • Evaluate the effectiveness of the audit program from time to time and check if its objectives are met. If needed, redesign the audit program properly.

7.2.2 Auditors: General Requirements A good design of the audit program is essential. However, to bring it on the road and to make it a success, the quality of the auditors and their performance is of utmost importance. An audit is as good, as are the auditors conducting it! Again, you may find some general ideas concerning the necessary auditor qualification and skills in ISO 19011. Here we go to summarize some of the more important issues that are critical in practice. Referring to the abovementioned classification of first-, second- and third-party audits, the requirements on auditors may vary for each type of audit. For most third-party audits conducted by audit and certification organizations, auditors are requested to hold licenses specific for individual certification schemes. For some of these schemes like automotive, food and other industries, the requirements are especially tough. Licenses are granted for a limited period only, and auditors shall repeatedly demonstrate that they continue to comply with the requested requirements. In most cases, this is done formally via tests and examinations. Whereas some standards for management systems like ISO 9001 and ISO 14001 are applicable in any industry, the details of their implementation vary enormously between industries. Auditing a quality or environmental management system in an organization assumes the auditor team has a clear understanding of what’s going on in that respective industry. You can’t apply risk-based thinking in an audit without a real understanding of the organization’s context, processes and technologies. Auditors should have several years of relevant professional experience in the respective industry before they are selected to do audits. This holds for all types of audits. It is evident that auditing a production site, the auditor (team) shall have adequate professional experience with the technologies used by the auditee.

7.2 Audits: A Means to Control the Performance of Management …

661

Whereas qualification requirements for auditors are fixed by standards, accreditation body requirements and other sources for most third-party schemes, they should also be determined for first- and second-party schemes in each case according to individual needs. To put audit programs on solid ground, auditor qualification shall be clearly determined and made transparent. Besides their professional experience, auditors should show some more skills: • Be honest and incorruptible. • Able to communicate openly and fluently in verbal and written form with a broad community of auditees (includes language skills, where needed). • Understand audit principles, processes and methods of management. • Understand the underlying standards for management systems and other documents of reference. • Ability to understand organizations and their contexts. • Knowledge of legal and other requirements. During an audit, auditors will have to communicate with representatives of an organization from different levels, including managers, workers, specialists of all types. It’s not a strength of everyone to do interviews with this variety of people and to stay focused on the objectives of the audit, not getting distracted or even corrupted. Reasonable language skills are important in many cases too. It makes little sense to conduct an audit in a country where things happen in the local language and to rely solely on a translator. The audit team should be capable to communicate directly with the auditee. A clear understanding of audit principles and audit methods is important. Sometimes during an audit, a situation may evolve which calls for a change of the audit approach in order not to get stuck in the process or to bypass potential lack of collaboration of the auditees. From time to time, some fine feeling is needed as well. Auditors should have a talent to master complex situations. Routine and experience will be good teachers, but the talent should be there from the beginning as it cannot be learned. There will be audit situations where the auditee feels overwhelmingly stressed by the audit process. This may influence the audit process or even endanger it. Auditors should get prepared for such situations and trained how to handle them. Trainings should be offered, if and where needed. Audit business is people business. Auditors need to be evaluated regularly, and the criteria should be fixed and transparent. Feedbacks from audit program managers and auditees are important inputs. As already mentioned, in some cases even formal examinations of auditors may be requested to keep their appointments or licenses. Audit teams are often composed of lead auditors, auditors and technical experts. Lead auditors should have an outstanding experience and lead and coordinate the team of auditors and experts involved in an audit. Experts get involved in audits, if special technical know-how is needed during an audit. They don’t necessarily need the appointment and qualifications as auditors, but clearly should pass some other kind of reasonable and transparent selection process. Auditor experience exchanges are a standard approach to bring auditors together, offer trainings on specific topics and to “calibrate” auditors. If you send five auditors

662

7 Auditing the Management System

Does the auditor have the right academic or other educa onal background?

Does the auditor have sufficient professional experience in the field in ques on?

Did/does the auditor have management experience concerning the management system in ques on?

Does the auditor have the necessary licenses for the audit standards in ques on?

Does the auditor have the necessary so skills?

Schedule monitoring audit and appoint auditor.

Fig. 7.4 Issues to be clarified prior to the appointment of a (third party) auditor

individually on an audit with the same objective, you’ll find out that audit results may vary. This may be due to differences in sampled information, but it will also depend strongly on the experience and approach of individual auditors. Also, what one auditor calls an obvious nonconformity, and another may call an opportunity for improvement. It is important to narrow these variances as much as possible and to train auditors to apply the same measures (Fig. 7.4). As far as third-party audits are considered, the series of standards ISO 17021-xx defines additional general requirements for auditors auditing management systems. We shall refer to them in Chapter 8 of the book (see Table 8.3).

7.2.3 Audits: General Process Based on a reasonably designed audit program, all audits of management systems follow basically the same plot, drafted in Fig. 7.5. 1. A clear definition of audit objectives is critical. Audit objectives give the audit a clear direction. 2. The audit plan is the agenda of an audit. It fixes which parts of an organization and which processes or other aspects shall be audited by whom and when. 3. In most audits of management systems, the audit information is collected by interviewing personnel and checking documented information. This is supplemented by observing relevant processes and other issues. 4. Collecting audit evidence is the main objective of an audit. It is crucial to ensure that audit evidence is representative and complete. Collected information must be sufficient to answer the questions: Are requirements fulfilled? If not, to which extent?

7.2 Audits: A Means to Control the Performance of Management …

663

Define the e objjec ves of the audit

Re eview audiit findings

Decide on audit co onclusions

plan Dessign audit p or the audit fo

Evalua on: Au udit evid dence again nst au udit criteriaa

menta on Docum n of udit and au the au udit results

Get audit a evide ence

Define e noncconformi es and otther ac on ns if needed

Colleect informaa on ng approprriate usin informa on sampling apprroach

Fig. 7.5 Main steps of a management system audit

5. Audit findings shall be clearly formulated. They form the input to audit conclusions. 6. Audit conclusions should make a statement about the robustness of the audited management system and its parts. During an audit, major nonconformities may be detected which call for immediate actions. These may reach from necessary corrective actions and a due date for their completion to very severe measures like a temporary shutdown of a facility, exchanging responsible personnel and others. Audits may and should also help to identify opportunities for improvement. 7. Audits should be documented in an adequate way. The documentation should be complete and clear. Make sure that people not involved in the audit can understand the plot of the audit, the audit documentation as well as the conclusions drawn from the audit results. Today, most audits are done with checklists or even special software, tailor-made for the specific audits in question. Often photograph or video documentation is included. Tools like this contribute essentially to make audits more standardized, reliable and comparable. The whole audit process is shifted on a higher level of quality if it is supported by the right software tools in the hands of experienced auditors.

664

7 Auditing the Management System

7.2.4 Determining Audit Time and Some Related Issues Consider once again the hospital example treated earlier in this chapter. How would the person responsible for planning internal audits estimate necessary audit times? If the surgery department is selected for an internal audit: How long should the auditor team audit it? To make it short: There is no generally accepted rule for determining audit times for internal audits. Instead, they should be fixed depending on the planned intensity of audits, size of the department and other relevant factors. However, when third-party certification and surveillance audits are planned by an auditing and certification organization, things are a bit different. There is a need for rules, how these organizations should determine audit times. If rules were missing, the intensity of audits would not be comparable and would vary drastically between organizations. Competition between certification organizations would be one of the driving forces. General guidance on this topic may be found in the standard • ISO/IEC TS 17023:2013—Conformity assessment—Guidelines for determining the duration of management system certification audits. However, this document offers guidelines but no specific requirements for audit times. It includes the following factors that should be considered when determining audit time: • What is the underlying management system standard and what is the type of audit? Certification audits, surveillance audits, special audits, recertification audits and other types usually require different audit times. • What is the size and number of locations to be audited? Necessary audit time should increase with the size of the organization and with the number of sites. This will include also temporary sites like in the building industry, facility management and so on. • What is the complexity of the organization to be audited and its management system? Necessary audit times increase with the complexity of an organization and its management system. • What are the regulatory and technological details of the organization to be audited? Organizations with complex regulatory requirements or complex technologies will require more complex audits and more audit time. • What is the scope of the organization’s management system? Audit time should increase as the scope gets broader. Which parts of the organization are included? Which processes are included? • What is the effectiveness and maturity of the management system to be audited? Audit time should decrease if there is evidence for maturity and effectiveness of the management system of the organization. • Which risks are associated with the organization’s products, services and processes?

7.2 Audits: A Means to Control the Performance of Management …

665

The higher the risk level, the more audit time should be invested. • What is the cultural environment of the organization? This includes, for example, relevant aspects of local management practices, cultural issues and related aspects that may have an impact on audit duration. • Does the organization have an implemented integrated management system? If an organization has an integrated management system, the different parts of it will interact with each other. Auditing such a system will need to take these aspects into account, and they have an impact on audit time. • Other issues that may influence audit duration. Although these aspects are valid and should be taken into account, for concrete audit planning more explicit guidance is needed. For that reason, IAF—International Accreditation Forum (www.iaf.nu) has published rules which must be considered by accredited certification organizations. We shall describe the role of IAF a bit more in detail in Chapter 8. The following list shows important examples of mandatory documents published by IAF: • IAF MD 1:2018—IAF Mandatory Document for the Audit and Certification of a Management System Operated by a Multi-Site Organization. • IAF MD 2:2017—IAF Mandatory Document for the Transfer of Accredited Certification of Management Systems. • IAF MD 3:2008—Advanced Surveillance and Recertification Procedures (ASRP). • IAF MD 4:2018—IAF Mandatory Document for the Use of Information and Communication Technology (ICT) for Auditing/Assessment Purposes. • IAF MD 5:2019—Determination of Audit Time of Quality, Environmental, and Occupational Health and Safety Management Systems. • IAF MD 11:2019—IAF Mandatory Document for the Application of ISO/IEC 17021-1 for Audits of Integrated Management Systems. They all can be downloaded from the IAF homepage. We shall not dive into the details of documents like IAF MD 5, which offer general rules on how audit time should be determined. Factors include but are not limited to: • • • • •

Overall complexity of the organization; Number of sites; Number of processes; Number of employees; Number of shifts.

To have a rough idea of how audit time should increase with the average number of employees see Fig. 7.6. If you have a deeper look inside documents like IAF MD 5, you might come up easily with the following question. Although it’s evident that there should be a correlation between the number of employees in an organization and the necessary audit time, it is by no means obvious why the relations defined in the document should be adequate. In fact, there is no theory behind it! Once upon in the past, these dependencies have been fixed by some working groups, basically based on practice.

666

7 Auditing the Management System

Fig. 7.6 Average increase of audit time for the initial audit of a QMS according to IAF MD 5

The unfortunate thing is that accreditation bodies nowadays more or less insist that audit and certification organizations follow those rules, because they are rules and it can be easily checked if they are followed. However, due to rapidly changing realities in many industries, the number of employees becomes a less significant factor for determining adequate audit times. In this context, always keep in mind that audits have the objective to deliver a significant statement about the status and effectiveness of a management system in a concrete organization. There are many other factors that should be considered during an audit to deliver that result. Based on its certification and surveillance audits, a certification organization should be able to answer the question: How big is the risk that we make the wrong certification decision, because the audited organization doesn’t really comply with the requirements, but our audits didn’t detect it? It should be mentioned that although IAF MD 5 holds for quality and environmental management system audits, due to lack of other ideas, many scheme owners from different areas design their certification schemes just following basically the same principles: Audit time to be spent follows the number of employees. Compared to this rigid requirement, adequate auditor qualifications are frequently defined relatively loosely. For example, consider the following case. An intensive care department of a university clinic is audited in one case by a medical doctor being an expert of internal medicine. In another case, the department is audited by an expert for intensive care. Even if the auditor with a background in internal medicine would spend a day in the department, he/she would usually deliver a less significant and relevant audit result than the expert for intensive care. From this and similar examples, one can easily see what is truly important to obtain reliable audit results.

7.2 Audits: A Means to Control the Performance of Management …

667

Although the mentioned IAF mandatory and related documents are bread and butter for accredited certification organizations, it makes more than sense to keep a lookout how other communities solve similar issues. As a nice example, we would like to recommend the following publications of the International Auditing and Assurance Standards Board (IAASB). For details, see www.iaasb.org. Among the most interesting publications, you will find the following: • Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Service Pronouncements—2018 Edition—Volume I. • Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Service Pronouncements—2018 Edition—Volume II. • Supplement to the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements—Volume III. We cannot dive into the details of these documents here, but they are strongly recommended as offering really interesting ansatzes for all aspects of auditing. Methodologically, they frequently go far beyond what is common practice in the management system auditing community.

Chapter 8

Certification and Accreditation: Types and Rules

In this chapter, you’ll find • • • •

An introduction to different types of certification; An introduction to accreditation; A discussion of ISO 17021-1:2015; An overview about the processes of a certification body for management systems; • A description of the role of IAF; • An overview about the international accreditation landscape.

8.1 Why This Chapter? You may implement one or more of the management systems discussed in this book but never plan to apply for their certification. Indeed, profiting from the benefits of a well-implemented management system does not depend at all on its certification. In practice, however, most organizations consider a certification of their management system as an important step, and frequently, it is their ultimate motivation for implementing it. Also, many organizations need to show certificates as part of customer requirements. It is for that reason why anyone working in the field of management systems should have a sound understanding of the international accreditation landscape and of the rules’ certification organizations have to follow. This will help you to select the right certification body and to check and control if it follows best practices and the rules defined by accreditation organizations. It may be important to check, for example, that your certification body has the right accreditations as only then you may be assured that the certificates it issues will receive the needed national and international recognition. You should also be © Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7_8

669

670

8 Certification and Accreditation: Types and Rules

aware that there are certification organizations out there which do not follow the rules and their approaches vary substantially. Selecting a certification body usually means choosing a business partner for years. You should proceed with care and on rational grounds.

8.2 Types of Certification There are basically three types of certification which should be clearly distinguished as they differ profoundly but are sort of complementary to each other: • Certification of management systems; • Certification of products and services; • Certification of personnel. Table 8.1 shows examples for each of them. Be aware and understand clearly: The certification of the quality management system of an organization does not include the certification of its products or services nor does it include the certification of its personnel. For example, if an organization has a certified environmental management system, this does by no means say that its products are best in class with respect to environmental aspects. Any type of certification is a statement of conformity for a management system, product or qualification of an individual with a standard and its requirements. This underlying standard must be transparent and clearly described. It’s worthwhile to realize, how much we get influenced by certifications and different types of corresponding test marks even in private life. One may hardly buy a shirt or coffee machine without some labels on them. It’s rare to find a retailer platform with no marks and service certificates dazzling your eyes. The number of Table 8.1 Types of certification

Type of certification

Examples

Management systems

Quality management system Environmental management system Business continuity management system Information security management system

Products and services

Safety of products (e.g. electrical safety) Electromagnetic compatibility Usability of products

Personnel

Special technical qualifications (e.g. welding) Internal and external auditors for management systems Food safety inspectors

8.2 Types of Certification

671

labels is huge as is the diversity of statements behind them. As a rule, certificates and test marks should support customers and consumers to make better and rational decisions concerning products or services they want to buy, management systems they want to rely on or personal qualifications. Due to the inflation and diversity of labels, however, this objective may easily move to the clouds. It is for that reason that corporate and individual customers should have a real understanding of what’s behind those marks and how they are created. To make the story short: If you don’t know the content of the standard underlying the specific certification scheme or test mark, be prepared to get tricked. Certification without transparency is worse than no certification, and you may easily just buy an illusion. However, the underlying idea of certification is honest and a very helpful one. For example, buying a toy for your child you want to be assured that it complies with all health and safety regulations in your country, no matter where the manufacturer is located or who imported it.

8.3 Accreditation: Organizations, Rules and Achievements Certificates of what type ever are issued by certification bodies, and these should be competent for what they do. However, how can you be sure? Who approves the competency of certification bodies? The formal approval of competence for a specific scope of certification activities is called accreditation, and it’s granted by accreditation bodies. Keeping in mind the huge variety of certification schemes and their national and international diversities, it should be expected that the global landscape of accreditation organizations reflects to some extend this complexity. This is partially the case. On the other hand, a lot of harmonization has been done. The standards that certification bodies have to comply with have been globally harmonized and are shown in Fig. 8.1. Besides the requirement standards for certification bodies for systems, products and personnel, Fig. 8.1 contains three more types of organizations. Their competence is also approved by accreditation bodies on the basis of the standards shown: • Laboratories play a super important role as was already pointed out in Chap. 2.04. The correctness and reliability of their results are crucial. For that reason, this type of organizations is accredited according to ISO 17025. • Depending on the details of their organization, inspection bodies are classified into Type A, Type B, Type C. independent third-party inspection bodies are of Type A. Type B inspection bodies are separated parts of an organization for which inspection services are offered. Type C inspection bodies are similar to Type B, but they don’t form a separate inspection unit. Accreditations are done according to ISO 17020. • ISO 17029 defines general requirements for validation and verification bodies. This is a new standard which was published in October 2019.

672

8 Certification and Accreditation: Types and Rules

AccreditaƟon Standards

Management System CerƟficaƟon

ISO 17021-1

CerƟficaƟon of Products

ISO 17065

CerƟficaƟon of Personnel

ISO 17024

Labotatories

ISO 17025

InspecƟon Bodies

ISO 17020

ValidaƟon & VerificaƟon Bodies

ISO 17029

Fig. 8.1 Accreditation standards for different types of activities

In this context, the standard ISO 14065 may be mentioned in passing, as it describes accreditation requirements for organizations offering validation and verifications of greenhouse gas. Certification bodies, inspection bodies, laboratories and validation/verification bodies are usually brought together under the general heading of conformity assessment bodies. When accreditation bodies accredit these organizations, they have to comply with the international standard • ISO/IEC 17011:2017—Conformity assessment—Requirements for accreditation bodies accrediting conformity assessment bodies. In most countries today, there is a national accreditation law which regulates the legal environment for its accreditation bodies. Most frequently, there is even only one national accreditation body. At the end of this chapter, you may find a list containing many of them and some other organizations, including their homepage addresses. In what follows, we shall confine ourselves to ISO 17021-1, as this is the standard relevant to certification bodies for management systems. Figure 8.2 shows the general interaction between an accreditation body, a certification body and a certificate holder, being the customer of the certification body. Although ISO 17011 defines general requirements for accreditation bodies and most countries around the globe have only one or a handful of accreditation bodies, some questions remain: • How can it be guaranteed that accreditation bodies apply ISO 17011 in the same manner? • How is the work of accreditation bodies surveyed? • How can we be sure that accreditation bodies accredit conformity assessment bodies according to the same rules?

8.3 Accreditation: Organizations, Rules and Achievements

•Accrredits dy CertiificaƟon Bod •Survveys dy CertiificaƟon Bod

AccreditaaƟon Bodyy

CerƟficaƟo C on Body •CerƟfiees CerƟficatee Holder •Surveys CerƟficate Holder

673

•Receives CerƟficate •Maintainss ment Managem System

Ce erƟficate Holder

Fig. 8.2 Relationship between accreditation body, certification body and management system certificate holder

Clear answers to these questions are important if certificates, test reports and other work of conformity assessment bodies are to be internationally recognized. The following two organizations play a major role to achieve these objectives: • IAF—International Accreditation Forum For the areas of management systems, products and services, personnel and related programs accreditation. • ILAC—International Laboratory Accreditation Cooperation For the areas of laboratory and inspection body accreditation. In our context, IAF is of special interest. On its homepage www.iaf.nu, the list of national accreditation bodies can be found which signed the “IAF Multilateral Recognition Agreement (MLA)”. Signing that agreement, the respective accreditation body agrees and confirms to fulfill the IAF policies and the application of relevant IAF documents in its accreditation and surveillance processes. The surveillance of MLA members is usually done by the so-called regional accreditation groups, which are the following: • • • • • •

AFRAC—African Accreditation Cooperation; IAAC—Inter-American Accreditation Cooperation; ARAC—Arab Accreditation Cooperation; EA—European Accreditation; APAC—Asia Pacific Accreditation Cooperation Incorporated; SADCA—Southern African Development Community Cooperation in Accreditation.

For example, if you consider the German or Italian accreditation bodies DAkkS and ACCREDIA, these would be surveyed by EA.

674

8 Certification and Accreditation: Types and Rules

The mentioned six regional accreditation groups are surveyed directly by IAF, typically every four years. Management system certificates which are issued by a certification organization that is accredited by an accreditation body which signed the IAF MLA should be equivalent in global markets, and usually, there shouldn’t be problems with their recognition. This doesn’t mean, however, that in some instances and special cases still there may be problems. One of the reasons for this derives from the fact that not all signatories of the IAF MLA have signed it for all relevant management system standards. You should check the IAF homepage to get the most recent scope for the accreditation body of interest. For the convenience of the reader, Table 8.2 lists some of the most important national accreditation bodies and other organizations of interest in this context.

8.4 Organizational Requirements for Organizations Certifying Management Systems In this section, we shall give a short overview about the requirements of the standard • ISO 17021-1:2015—Conformity assessment—Requirements for bodies providing audit and certification of management systems, Part 1: Requirements, which is the central document an audit and certification organization for management systems must comply with. If you work for such an organization, you should know this standard inside out. In the context of accreditations, accreditation bodies audit certification bodies against this standard. Some of the requirements of ISO 17021-1 are important also to clients of certification bodies. For example, that a certification organization is not allowed to offer consulting or inhouse training services to its clients. Therefore, even for certified organizations it’s important to have some basic understanding of these rules. A certification body shall comply with the following basic principles: • Impartiality: Impartiality is important as it is a prerequisite for having confidence in the work of a certification organization. It is expected that certification organizations don’t have any self-interest which could endanger its impartiality. Selfreviews are requested to detect potential threats. Threats may include financial, organizational or other issues, as well as collisions of interests. • Competence: Certificates issued by a certification body include a statement of conformity that the management system of an organization complies with respective standards and their requirements. The reliability of such a statement depends completely on the competence of the certification body’s personnel. • Responsibility: Although it is the certified client who is responsible to keep a certified management system alive and compliant with the respective standards, the certification organization shall base its certification decisions on evidence and

8.4 Organizational Requirements for Organizations Certifying …

675

Table 8.2 Selected accreditation bodies and related organizations Organization

Name

Webpage

A2AL

American Association for Laboratory Accreditation

www.a2al.org

AA

Akkreditierung Austria

www.bmdw.gv.at

ACCREDIA

Italian National Accreditation Body

www.accredia.it

AFRAC

African Accreditation Cooperation

www.intra-afrac.com

ANAB

ANSI-ASQ National Accreditation Board

www.anab.org

ANSI

American National Standards Institute

www.ansi.org

APAC

Asia Pacific Accreditation Cooperation

www.apac-accreditation.org

ARAC

Arab Accreditation Cooperation

www.arac-accreditation.org

ASQ

American Society for Quality

www.asq.org

ATS

Accreditation Body of Serbia

www.ats.rs

BAS

Bulgarian Accreditation Service

www.nab-bas.bg

BELAC

Belgian Accreditation Structure

www.belac.fgov.be

BoA

Bureau of Accreditation (Vietnam)

www.boa.gov.vn

BSCA

Belarus State Centre for Accreditation

www.bsca.by

CAI

Czech Accreditation Institute

www.cai.cz

CEOC

International Confederation of Inspection and Certification Organizations

www.ceoc.com

CIECA

The International Commission for Driver Testing

www.cieca.eu

CITA

International Motor Vehicle Inspection Committee

www.citainsp.org

CNAS

China National Accreditation Service for Conformity Assessment

www.cnas.org.cn

(continued)

676

8 Certification and Accreditation: Types and Rules

Table 8.2 (continued) Organization

Name

Webpage

CNCA

Certification and Accreditation Administration of the People’s Republic of China

www.cnca.gov.cn

COFRAC

Comité Français d’accréditation

www.cofrac.fr

DAC

Dubai Accreditation Department

www.dac.dm.ae

DAK

Kosovo Accreditation Directorate

www.mti.rks-gov.net

DAkkS

Deutsche Akkreditierungsstelle

www.dakks.de

DANAK

Danish Accreditation

www.danak.org

DPA

Directorate of Accreditation (Albania)

www.dpa.gov.al

DSM

Standards Malaysia

www.jsm.gov.my

EA

European Accreditation

www.european-accreditation.org

ECA

Ente Costarricense de Acreditación

www.eca.or.cr

EFAC

European Federation of Associations of Certification Bodies

www.efac.eu.com

EFNDT

European Federation for Non-Destructive Testing

www.efndt.org

EGAC

Egyptian Accreditation Council

www.egac.gov.eg

EMA

Entidad Mexicana de Acreditación

www.ema.org.mx

ENAC

Entidad Nacional de Acreditación

www.encac.es

ENAO

Ethiopia National Accreditation Office

www.enao-eth.org

EOQ

European Organization for Quality

www.eoq.org

ESYD

Hellenic Accreditation System

www.esyd.gr

ETICS

European Testing, Inspection and Certification System

www.etics.org

EURACHEM

Eurachem

www.eurachem.org (continued)

8.4 Organizational Requirements for Organizations Certifying …

677

Table 8.2 (continued) Organization

Name

Webpage

EURAMET

The European Association of National Metrology Institutes

www.euramet.org

EUROLAB

European Federation of National Associations of Measurement, Testing and Analytical Laboratories

www.eurolab.org

FINAS

Finnish Accreditation Service

www.finas.fi

FSC

FSC International

www.ic.fsc.org

GAC

Gulf Cooperation Council Accreditation Center

www.gcc-accreditation.org

GMPPlus

GMP + International

www.gmpplus.org

HKAS

Hong Kong Accreditation Service

www.itc.gov.hk

IAAC

Inter-American Accreditation Cooperation

www.iaac.org.mx

IACS

International Association Of Classification Societies

www.iacs.org.uk

IAF

International Accreditation Forum

www.Iaf.nu

IARM

Institute for Accreditation of the Republic of Macedonia

www.iarm.gov.mk

IAS

International Accreditation Service

www.iasonline.org

IEC

International Electrotechnical Commission

www.iec.ch

IFCC

International Federation of Clinical Chemistry and Laboratory Medicine

www.ifcc.org

IFIA

International Federation of Inspection Agencies

www.ifia-federation.com

IIOC

Independent International Organization for Certification

www.iioc.org

ILAC

International Laboratory Accreditation Cooperation

www.ilac.org

INAB

Irish National Accreditation Board

www.inab.ie (continued)

678

8 Certification and Accreditation: Types and Rules

Table 8.2 (continued) Organization

Name

Webpage

INACAL-DA

Instituto Nacional de Calidad

www.inacal.gob.pe

INMETRO

National Institute of Metrology, Quality and Technology

www.inmetro.gov.br

INN

Instituto Nacional de Normalización

www.inn.cl

IPAC

Portuguese Institute for Accreditation

www.ipac.pt

ISO

International Organization for Standardization

www.iso.org

ITU

International Telecommunication Union

www.itu.int

JAB

Japan Accreditation Board

www.jab.or.jp

JAS-ANZ

Joint Accreditation System of Australia and New Zealand

www.jas-anz.org

KAN

National Accreditation Body of Indonesia

www.kan.or.id

KAS

Korea Accreditation System

www.web.kats.go.kr

KENAS

Kenya Accreditation Service

www.kenas.go.ke

MAURITAS

Mauritius Accreditation Service

www.mauritas.org

NA

Norwegian Accreditation

www.akkreditert.no

NAA

National Accreditation Association of DPR Korea

NAAU

National Accreditation Agency of Ukraine

www.haau.org.ua

NABCB

National Accreditation Board for Certification Bodies (India)

www.nabcb.qci.org.in

NACI

National Accreditation Center of Iran

www.naci.ir

NAH

National Accreditation Authority (Hungary)

www.nah.gov.hu

NCA

National Center of Accreditation (Kazakhstan)

www.nca.kz

NSC

National Standardization Council of Thailand

www.tisi.go.th

OAA

Organismo Argentino de Acreditación

www.oaa.org.ar (continued)

8.4 Organizational Requirements for Organizations Certifying …

679

Table 8.2 (continued) Organization

Name

Webpage

OLAS

Luxembourg Office of Accreditation

www.portail-qualite.public.lu

ONAC

Organismo Nacional de Acreditación de Colombia

www.onac.org.co

OUA

Organismo Uruguayo de Acreditación

www. organismouruguayanodeacreditacion.org

PAB

Philippine Accreditation Bureau

www.dti.gov.ph

PCA

Polish Centre for Accreditation

www.pca.gov.pl

PEFC

PEFC International

www.pefc.org

PNAC

Pakistan National Accreditation Council

www.pnac.org.pk

QuEST

QuEST Forum

www.questforum.org

RENAR

Romanian Accreditation Association

www.renar.ro

RvA

Dutch Accreditation Council

www.rva.nl

SA

Slovenska Akreditacija

www.slo-akreditacija.si

SAC

Singapore Accreditation Council

www.sac-accreditation.gov.sg

SADCA

Southern African Development Community Cooperation in Accreditation

www.sdca.org

SADCAS

Southern African Development Community Accreditation Service

www.sadcas.org

SAE

Servicio de Acreditación Ecuatoriano

www.acreditacion.gob.ec

SAI

Social Accountability International

www.sa-intl.org

SANAS

South African National Accreditation System

www.sanas.co.za

SAS

Schweizerische Akkreditierungsstelle

www.sas.admin.ch

SCC

Standards Council of Canada

www.scc.ca

SEMAC

Moroccan Accreditation Service

www.mcinet.gov.ma

SLAB

Sri Lanka Accreditation Board for Conformity Assessment

www.slab.lk

(continued)

680

8 Certification and Accreditation: Types and Rules

Table 8.2 (continued) Organization

Name

Webpage

SNAS

Slovak National Accreditation Service

www.snas.sk

STC-IS

Scientific Technical Centre on Industrial Safety

www.oaontc.ru

SWEDAC

Swedish Board for Accreditation and Conformity Assessment

www.swedac.se

TAF

Taiwan Accreditation Foundation

www.taftw.org.tw

TL9000

The Telecom Quality Management System

www.tl9000.org

TUNAC

Tunisian Accreditation Council

www.tunac.tn

TURKAK

Turkish Accreditation Agency

www.turkak.org.tr

UAF

United Accreditation Foundation

www.uafaccreditation.org

UKAS

United Kingdom Accreditation Service

www.ukas.com

•

• • •

adequate sampling of information. The certification body is legally responsible for its certification decisions. Openness: The results of audit and certification processes for specific clients are confidential. However, certification schemes and their rules shall be open to the public. It must be transparent what the requirements of offered certification schemes are. Confidentiality: Certification bodies receive many types of information from their customers. It is understood that this information is confidential, and certification bodies ensure confidentiality. Responsiveness to complaints: The certification organization shall be responsive to complaints which are related to issued certificates and other relevant issues. Risk-based approach: Certification organizations are expected to be aware of the risks associated with providing audit and certification services. Potential risks include missing the objectives of audits and issuing certificates for management systems that do not comply with the respective standards, legal and regulatory issues and others.

These principles could be considered as being trivial and not worth to mention. However, they are not trivial, and they give ISO 17021-1 its direction. For example, consider confidentiality. A typical certification organization may have thousands of client’s conducting audits and checking documents, and it has access to huge amounts of information which could easily be misused. The certification body must ensure that its staff aligns with the principle of confidentiality, which isn’t easy to control.

8.4 Organizational Requirements for Organizations Certifying …

681

Let’s have a look at the clauses of ISO 17021-1! A certification body shall be a legal entity or part of a legal entity. It is responsible and liable for its certification decisions. A certification body shall have a contractual legal relationship with its customers. Impartiality is assumed, but the certification body shall implement processes and structures to ensure it. Potential conflicts of interests or other risks to impartiality shall be detected and eliminated. Especially, a certification body is not allowed to offer management system consulting services. Subcontracting audits to consulting companies is not allowed. Joint offering of consulting and certification services isn’t allowed either. Certification bodies shall require its internal and external personnel to reveal situations of potential conflicts which may endanger its impartiality. To give an illustrative example: If an auditor is assigned to do an audit in a company where a close relative of this auditor is in the management, this may seriously threaten its impartiality during the audit and such an assignment should be avoided. One can imagine there is a continuum of potential conflict situations, and for that reason, this topic is of utmost importance. It should be the certification body’s policy to protect its brand and reputation by avoiding such critical constellations. The certification body is requested to analyze its financial situation and identify issues that could endanger its independence. This could be the case, for example, if the organization heavily depends financially on only a few of its clients. Another conflict could arise if auditors and other personnel are too much under pressure to reach their financial targets. The organizational structure of the certification body shall be transparent and clear. Responsibilities and accountabilities shall be defined. This holds especially for personnel (internal and external) involved in certification processes. Adequate empowerment and authorization of this personnel are necessary. Ensure certification decisions are done on professional grounds, not being influenced by management functions or any other part of the organization. An adequate system for operational control shall be implemented. It shall include the control of branch offices, partnerships and other members of the certification body’s network. A risk-based approach is necessary. A typical certification body for management systems employs or contracts the following types of personnel: • • • • • •

Auditors and technical experts; Certification personnel; Sales representatives; Administration; IT personnel; Others.

Adequate qualification criteria shall be defined for all of them. Certification of management systems is pure people business, and people are the main resource. This follows the importance to implement transparent and adequate processes for all relevant aspects of human resource management. These include:

682

• • • •

8 Certification and Accreditation: Types and Rules

Recruiting and selecting personnel; Training; Monitoring of personnel; Keeping records.

Competence of auditors and technical experts is super important. ISO 19011 offers general guidance on needed technical and other skills for auditors. Standards like those in Table 8.3 and others go in depth and define more specific competence requirements for certification bodies and its auditors. It’s a tendency now that basically each standard for management systems comes with a companion standard to define competence criteria. That’s the case also for industry-specific management system standards as discussed in Chapter 3 of this book. It should be mentioned that IAF—International Accreditation Forum and national accreditation bodies may define or suggest additional requirements or good practices concerning this topic. The certification body is requested to implement a process for the monitoring of its auditors and technical experts. Input to such a monitoring typically are quality checks of audit reports and other work of auditors, feedbacks from customers and other auditors, training results of the auditor and others. What has been said for auditors holds true also for other personnel like those deciding on certification or those who appoint and monitor auditors. As these two professional groups do highly quality-relevant work, adequate criteria shall be defined for them too. Monitoring of personnel shall be done on a regular basis by competent people, and results shall be documented. Checking auditor files including qualification and monitoring records is a standard topic on the agenda of accreditation organizations when surveying certification bodies. ISO 17021-1 defines several information requirements which shall be fulfilled by a certification body. These include: • Legal entity status of the certification body and its affiliates. • Publication of the certification body’s scope. – Audit and certification schemes offered. – Accreditations held. • List of organizations certified by the certification body (including scopes of certification). • In case certification standards or other relevant procedures change, the certification body shall inform its certified clients. • Certificates or test marks shall be clearly traceable to certified organizations. This is usually done by a special numbering or code system for certificates and test labels. • Rules, how certificates and test marks may be used, shall be published and shall be accessible to certified clients. Certification organizations shall implement a system which enables traceability of all relevant information connected with certificates. In practice, this includes

8.4 Organizational Requirements for Organizations Certifying …

683

Table 8.3 Important standards defining requirements for audit organizations and auditors Management system standards (examples)

Requirements for bodies providing audit and certification of management systems

ISO 14001

ISO/IEC 17021-2:2016

Competence requirements for auditing and certification of environmental management systems

ISO 9001

ISO/IEC 17021-3:2017

Competence requirements for auditing and certification of quality management systems

ISO 20121

ISO/IEC TS 17021-4:2013

Competence requirements for auditing and certification of event sustainability management systems

ISO 55001

ISO/IEC TS 17021-5:2014

Competence requirements for auditing and certification of asset management systems

ISO 22301

ISO/IEC TS 17021-6:2014

Competence requirements for auditing and certification of business continuity management systems

ISO 39001

ISO/IEC TS 17021-7:2014

Competence requirements for auditing and certification of road traffic safety management systems

ISO 37101

ISO/IEC TS 17021-8:2019

Competence requirements for auditing and certification of management systems for sustainable development in communities

ISO 37001

ISO/IEC TS 17021-9:2016

Competence requirements for auditing and certification of anti-bribery management systems

ISO 45001

ISO/IEC TS 17021-10:2018

Competence requirements for auditing and certification of occupational health and safety management systems

ISO 41001

ISO/IEC TS 17021-11:2018

Competence requirements for auditing and certification of facility management systems

ISO 22000

ISO/NP TS 22003

Requirements for bodies providing audit and certification of food safety management systems (continued)

684

8 Certification and Accreditation: Types and Rules

Table 8.3 (continued) Management system standards (examples)

Requirements for bodies providing audit and certification of management systems

ISO 27001

ISO/IEC 27006:2015

Requirements for bodies providing audit and certification of information security management systems

ISO 50001

ISO 50003:2014

Requirements for bodies providing audit and certification of energy management systems

contracts with clients, quotations, documents received from clients, documented information created during the audit and certification process, auditor-related documentations and others. The general workflow in a certification organization for management systems is sketched in Fig. 8.3. It starts with an application for certification by the potential customer which should come with a set of basic information, including the type of certification the client applies for, industry of the client, locations of affiliates and their sizes, potential time schedule and others (Fig. 8.4). This is followed by an application review in which the certification organization checks its readiness to deliver the service. Hindrance factors may include: No presence in certain geographical regions, lack of auditors, no accreditation for all or part of the certification services requested.

ApplicaƟon ApplicaƟon Review

Planning Contract

QuotaƟon

EvaluaƟon of Stage 1-Audit

AdministraƟon

Stage 2-Audit

Project CoordinaƟon

Stage 1-Audit

EvaluaƟon of

CerƟficaƟon Decision

Stage 2-Audit

Surveillance

Fig. 8.3 Certification bodies for management systems: process from quotation to certification

8.4 Organizational Requirements for Organizations Certifying …

685

Fig. 8.4 Workflow of the sales, planning, auditing and certification process

If no objections remain, the client receives an offer. As certificates for management systems are usually issued with a validity of three years, offers for management system certification are created for the same period. This has the advantage that the client oversees the whole certification cycle and knows precisely what the costs will be. It should be mentioned, that drafting a good and reliable offer requires a realistic sketch of the whole audit program for the certification project in question. The document “IAF MD 5:2019—Determination of Audit Time of Quality, Environmental, and Occupational Health & Safety Management Systems” will play a crucial role

686

8 Certification and Accreditation: Types and Rules

if the quotation is for a quality, environmental or occupational health and safety management system. We discussed the ideas behind this paper in Chapter 7. As IAF MD 5 is a mandatory document, it should be respected by all certification bodies accredited by an accreditation body who signed the MLA with IAF. In principle, therefore, all quotations done for the same certification project by any certification body around the globe should be based on the same rules and there shouldn’t be much difference between them. In practice, however, they may vary considerably. As certification organizations find themselves in competitive markets, they employ all degrees of freedom IAF MD 5 offers—sometimes even degrees of freedom which aren’t there. Organizations should be careful when comparing offers from different certification bodies and ensure they are realistic and comply with the rules. This is just another reason why you should know the basics of how certification business works. If the client accepts the quotation, a contract on certification will be signed with the certification organization. Typically, such a contract is for three years, as this is the standard validity of certificates for management systems. Be aware, contracts from different certification bodies may differ substantially. Sometimes they even contain hidden costs. Whereas small certification projects may be scheduled quickly and without much effort, large projects need a substantial amount of coordination and planning with the client. This holds true, for example, when audits shall be scheduled in various countries or when the scope of certification is broad. As a rule, the more affiliates of the client are involved in the certification project, and the more auditors are needed, the more complex the planning process usually gets. A good working contact with the client shall be established to handle it to the satisfaction of both—the client and the certification organization. If the management system in question never got certified before, ISO 17021-1 requests a stage 1 audit. The basic idea behind such an audit is to check the client’s readiness for certification. Some clients typically don’t like this audit, as it creates additional costs. However, it’s a good means to give the client a feedback whether to go on with the certification audit or which corrective actions are needed to be completed prior to the main audit. Stage 2 audits that follow the stage 1 audit are the official certification audits. Compare Chapter 7 for some aspects that are important when conducting such audits. During the evaluation of stage 2 audits, auditors collect their findings, draw a final picture of the audit project and write their audit reports. It’s quite normal that nonconformities will be detected during the audit, and some of them may lead to necessary corrective actions before a certification decision can be made. Special audits onsite may be needed to verify the effectiveness of corrective actions made. The certification decision is a formal process. Authorized persons (certification personnel) not involved in the audit decide about the certification of the management system. As they never have been onsite with the client, their decision is based on document reviews. This is the stage of the whole process where a final look is made on audit reports, audit plans, qualification of auditors and so on. You may look at it as a final quality control. However, from a legal point of view, it is the certification

8.4 Organizational Requirements for Organizations Certifying …

687

personnel who releases the certificate and not the auditors or technical experts who did the audit. For that reason, the certification process is a super important one and must be done by adequately skilled people. In the next step, admin comes on stage printing certificates, preparing bills and others. As yearly surveillance audits are mandatory, the certification project is shifted from here back to the project coordinators who’ll keep it on the radar for next year’s surveillance activities which basically will need the same type of scheduling decisions as mentioned above. The standard ISO 17021-1 offers certification bodies two options to implement their quality management system. Option A addresses just the very basics of a management system, as shown in Table 8.4. Option B requests the implementation of a complete quality management system according to ISO 9001 designed such that compliance with ISO 17021-1 is given. Big certification organizations should choose option B, as it offers a more complete framework. As an example, the certification body may want to develop own certification schemes, and the general requirements for design and development of ISO 9001 are worthwhile to follow. The same holds concerning the explicit requirements on customer focus of ISO 9001 which is more than helpful especially for large certification organizations with a broad spectrum of clients in different industries and countries. It should be stressed, however, that although a certification body may (and should) organize its management system according to ISO 9001, it may not apply for certification. In clause 5.2.4 of ISO 17021-1, this is even explicitly excluded. The requirements of ISO 17021-1 hold for any auditing and certification organization. Accreditation bodies check compliance of certification bodies with this standard on a regular basis. Table 8.4 Options to structure a certification body’s QMS Options

Requirements

Option A

• Compliance with all requirements of ISO 17021-1 • All requirements of 17021-1 are addressed and documented in a manual or other written form • System for control of document is in place • System for control of records is in place • Certification body’s top management is responsible to implement a procedure to review the implemented management system on a regular basis • System for internal audits is in place • Certification body will establish procedures to identify necessary corrective actions and how to handle them

Option B

• Compliance with all requirements of ISO 17021-1 • Implementation of quality management system according to ISO 9001

688

8 Certification and Accreditation: Types and Rules

8.5 How to Select the Right Certification Body? When selecting a certification body for a certification project of your organization, ensure the following: • The certification body is accredited for the scopes you need. • The certification body covers all geographical regions you need. • The certification body has sufficient experience in your industry and with organizations of your size and type. • The certification body is recognized in your industry and accepted by your customers and relevant stakeholders. • The certification body has auditor resources already available and will not start looking for them once you sign its contract. • The certification body is able to comply with the service level you expect. Ask for evidence! • The certification body has implemented effective integrity programs for auditors and other personnel. • The price policy of the certification body is transparent and fair. • The certification body is able and ready to develop according to your changing needs.

Chapter 9

Mathematical Methods and Statistical Tables

In this chapter, you’ll find a summary of important mathematical facts about: • • • • •

Logic; Set theory; Analysis, especially differential and integral calculus; Algebra, matrix theory, determinants and Boolean algebra; Probability and statistics, including general facts about probabilities, Bayes theorem, random variables and their probability distributions, approximations of expectation values, functions of random variables, inequalities for probabilities, characteristic functions, central limit theorem, definitions of important probability distributions and their properties. • A collection of statistical tables that will be needed for example in statistical tests.

9.1 Introduction The intent of this final chapter is to summarize some basic mathematical concepts which you will likely encounter when diving deeper into the subject of management systems. Although you will hardly find a single mathematical formula in any of the standards discussed in Chaps. 2–4, implicitly they all call for statistical and other mathematical methods when you apply them in real life. What type of mathematics will you need? Management systems focus on processes, risk-based thinking and management by fact. Random events and statistical methods play a crucial role in this context. To mention just a few examples: • Statistical process control; • Quality control; © Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7_9

689

690

• • • •

9 Mathematical Methods and Statistical Tables

Methods for risk assessment and risk control; Reliability theory; Key performance indicators; Application of Six Sigma methods.

As a professional in the field of quality or environmental management, risk management, energy efficiency management, or whatever field of management systems, you can’t escape some basic mathematical concepts in the long or even short run. However, you don’t have to be a mathematician. Most mathematical tools you will encounter are accessible with a solid background in college algebra and calculus. But it needs some willingness and work to achieve maturity. In this chapter, we briefly summarize some of the mathematical tools which you very likely have met before. You should use it as a refresher. The presentation is in a down-to-earth style and we try not to get lost in mathematical intricacies. We hope to animate your mathematical instincts and calculational capabilities. Use a textbook on practical mathematics and statistics for more details. Be aware, we don’t just list up results but derive most of them in a straightforward way. Examples include the proof of the super important Central Limit Theorem, derivations of the main distributions like Student t, Fisher F and χ 2 . The intent is to make this book as self-contained as possible and to show the reader how to derive results and not just plugging numbers into magic formulas that came down from nowhere. This approach is also followed in Chap. 6, where we derive important results concerning point estimation, confidence intervals, reliability theory, regression analysis, hypothesis testing and others.

9.2 Why Logic Is Important Mathematics is established on logic and without it, there is no mathematics. If you practice mathematics correctly, you consciously or unconsciously practice logical thinking. However, the applications of logical principles and thinking go beyond mathematics. In the context of management systems, we might get confronted with statements or assertions like these: • 78% of our customers like our service XYZ; • Mean time to failure of product P is 700 days; • The design D3 of process P will lead to three times better critical performance indicators than design D1. In logic, such assertions are called propositions and the important thing is, each of them can be either true (T) of false (F). There is nothing in between, no 3rd possibility. One prerequisite and necessary condition to make your management system (quality, environmental, etc.) a success are to practice clear and logical thinking. Management system standards require management by fact. In that context, the above statements may either be true or false. If you want to build on these propositions,

9.2 Why Logic Is Important

691

Table 9.1 Truth table A

B

NOT A

NOT B

A and B

A or B

IF A THEN B

A equivalent B

¬A

¬B

A∧B

A∨B

A⇒B

A⇔B

T

T

F

F

T

T

T

T

T

F

F

T

F

T

F

F

F

T

T

F

F

T

T

F

F

F

T

T

F

F

T

T

you must know its “truth values”. You can and must determine these truth values by doing experiments or measurements. Take the first proposition as an example and consider the following conversation on a meeting: A: 78% of our customers like our service XYZ; B: How do we know? A: We did a customer satisfaction survey; B: What’s the design of that survey? How many and which customers have been in the sample? What is the confidence interval for these 78%? C: Did the survey include only our French and German customers or was it a global research? How do the results vary between the countries? You probably know such discussions and too frequently, they end up in nothing. In other cases, conclusions are drawn from the assertions without really knowing their truth values. The so-called propositional calculus of logic deals with propositions, their truth values and ways to draw conclusions from them. To do so, some basic operations are introduced; the most important of them are summarized in Table 9.1. To illustrate this, consider two propositions A and B. As both can be either true (T) or false (F), we have 2 × 2 = 4 possible combinations of the truth values for these two variables, which are shown in the first two columns. Given two propositions A, B, their negations ¬A, ¬B are defined with the truth values shown. In the example above, if A = “Mean time to failure of product P is 700 days”, then ¬A = “Mean time to failure of product P is not 700 days”. As can be seen from the table, the truth values of A and ¬A are complementary to each other. If A is true, ¬A is false and vice versa. Of course, the same holds for B. Two propositions may be combined as A∧ B, frequently called a conjunction. The proposition A ∧ B is usually called AND. It’s true “if and only if” both propositions A, B are true. The truth values can be seen accordingly (fifth column). As an example, consider the following:

692

9 Mathematical Methods and Statistical Tables

Table 9.2 Truth table for “IT IS NOT THE CASE THAT A AND NOT B” A

B

¬B

A ∧ ¬B

¬(A ∧ ¬B)

T

T

F

F

T

T

F

T

T

F

F

T

F

F

T

F

F

T

F

T

A = “It’s Monday April 1st” B = “On April 1st we have that meeting with customer X” A ∧ B = “It’s Monday April 1st and we have a meeting with customer X today” Similarly, two propositions A, B may be combined by the so-called OR-operation which is true if one or both propositions A, B are true. It is denoted by A ∨ B. As an example, consider the following: A = “Safety system S1 for the divice is working” B = “Safety system S2 for the divice is working” A ∨ B = “Safety system S1 or safety system S2 is working”. It is important to note that the OR-operation includes the case that both safety systems are working. Another important combination of two propositions is “IF A THEN B”, usually denoted as A ⇒ B. The truth values for it can be seen in the above truth table. Sometimes, it is a bit difficult to understand the truth table for this combination of propositions. It may be easier to consider an alternative definition of the “IF A T HEN B”. It is: “IT IS NOT THE CASE THAT A AND NOT B”. For this statement, the truth values can be evaluated step by step as follows. Work down Table 9.2 from left to right. Which is identical with the seventh column of Table 9.1. Another combination of two propositions is “A EQUIVALENT B”, denoted by A ⇔ B. This combination is true if A, B both have the same truth value, otherwise, it’s false. The truth values are given in the last column of Table 9.1 and they are easy to understand. Although the presented concepts of the propositional calculus are the very basic ones, they are of high practical importance. And again: Logical thinking is one of the main pillars of management systems and their applications.

9.3 Sets

693

9.3 Sets 9.3.1 Introduction to Sets Sets play a major role in almost all fields of modern mathematics. Understanding the basic properties of sets and the rules on how to combine them with other sets to build even more sets is crucial. For example, sets and their elements are the basic ingredients to probability theory and statistics. In this context, events are very generally considered to be elements of sets. These sets then may be combined with other sets such that complex events and their probabilities may be studied. The probability of a complex event may be calculated if the probabilities of its elementary events are known.

9.3.2 Definition and Basic Properties of Sets For our purposes, it is enough to specify a set somewhat loosely as a collection of material or immaterial entities. The standard notation to specify a set and its elements is the following A = {x|Pr oper ties o f x} In this terminology, A is the set and x are its elements. The statement “Properties of x” must be clear and allow an unambiguous identification of the elements. In some cases, the elements of a set are just listed as follows: A = {2, 4, 6, 8, 10} This set consists just of five elements, namely the first five even numbers. The following example shows that the description of properties must be clear and complete. For example, the description A = {x|5 ≤ x ≤ 70} would not allow to uniquely specify the elements of the set, as long as the type of numbers x is not further specified. In the present case, one would assume it’s all real numbers between 5 and 70. However, what if only natural numbers 5, 6, 7, …70 are meant? Clearly, the two sets would be very different. Keep in mind, elements of a set can be almost anything, but their specification needs to be clear and unambiguous: A = {All system failures between 5 AM and 5 PM, January 3rd 2019} B = {All solutions of the equation sin(x) = 0.3}

694 Table 9.3 Basic laws for combining sets

9 Mathematical Methods and Statistical Tables Commutative law

A∪B = B∪ A

A∩B = B∩ A

Associative law

(A ∪ B) ∪ C = A ∪ (B ∪ C)

(A ∩ B) ∩ C = A ∩ (B ∩ C)

Distributive law

(A ∪ B) ∩ C = (A ∩ C) ∪ (B ∩ C)

(A ∩ B) ∪ C = (A ∪ C) ∩ (B ∪ C)

If x is an element of set A, this is denoted as follows (read x is element of A): x ∈ A. There are two basic operations for sets that may be used to combine them: Union of sets: A ∪ B = {x|x ∈ A or x ∈ B} Intersection of sets: A ∩ B = {x|x ∈ A and x ∈ B} The operations ∪ and ∩ obey the following very frequently used rules (Table 9.3): For formal reasons, the so-called empty set ∅ is defined to be the set with no elements. It is needed for certain set algebraic manipulations, as the following application shows. The so-called complement of a set is defined and denoted as A¯ = { x|x ∈ / A} In words: A¯ is the set of all elements x that are not in set A. From this, we have A ∩ A¯ = ∅ and A ∪ A¯ = S In such a context, S is considered to be the “super set”, sometimes also called the “universal set”, which contains all relevant elements that are important in a certain context. For example, the set of real numbers R may be considered as such a universe if all elements and sets we have to do with are or contain only real numbers and no other objects like cars, animals, people, etc. The following so-called De Morgan’s rules are frequently used A ∪ B = A¯ ∩ B¯ and A ∩ B = A¯ ∪ B¯ They may easily be proved by just using the definitions of the respective sets entering these set equations. Set A is called a subset of B, written A ⊆ B, if the following holds A ⊆ B = {x|x ∈ A ⇒ x ∈ B} Employing these basic set algebraic rules, more complex set algebraic expressions may be handled, just following those rules. It is important to get some practice

9.3 Sets

695

with this sort of manipulations. We will encounter applications in the main text; the following two are just illustrations. (A ∩ B) ∪ C¯ = { x|All elements x that are in A and B or not in C}   (A ∪ B) ∩ C¯ ∪ D = { x|All elements x that are in A or B and in D or not in C} Frequently, it is important to know the number of elements in a set A. This number is denoted by |A| and called the cardinality of A.

9.3.3 Combinatorics and Principles of Counting In many situations, one has to determine the number of elements of a given set. This may be arbitrarily tricky, but there are some standard situations that appear frequently and are easy to solve. Examples include the following: 1. Given n distinct objects. In how many ways can they be placed in a row? 1.1. Answer: n! = n × (n − 1) × (n − 2) . . . 2 × 1. (Remark: The symbol n! is just a shorthand but occurs frequently in counting problems.) 1.2. Demonstration: You have n possible choices to select the first element. To choose the second out of the remaining n − 1 elements, there are n − 1 potential choices. Continue this process until only one element remains. Multiply the number of possible choices in each step and end up with the formula given. This number of arrangements of n elements is called the number of permutations. 2. Given a set A of n elements. In how many ways can k elements (0 ≤ k ≤ n) be selected from A, if the order of the arrangements doesn’t matter?   n n! = k!(n−k)! 2.1. Answer: ≡ n(n−1)(n−2)...(n−(k−1)) k! k 2.2. Demonstration: There are n(n − 1)(n − 2) . . . (n − (k − 1)) ways to select k elements out of n, as may be seen following the reasoning in the last example. However, this number includes all permutations of the k selected elements. (Example for k = 3: (1, 2, 3), (1, 3, 2), (2, 3, 1), (2, 1, 3), (3, 1, 2), (3,2,1)). If we are only interested in the elements and not in their order, we count the selected sets several times (in the example, six times). To avoid this overcounting, divide n(n − 1)(n − 2) . . . (n − (k − 1)) by k! and get the stated result.

696

9 Mathematical Methods and Statistical Tables

3. Given a set of n elements which are divided into i groups, such that each element falls exactly in one group. Let k1 , k2 , k3 , . . . ..ki be the number of elements in each of the respective groups, with k1 + k2 + · · · + ki = n. In how many distinguishable ways may the n objects be arranged? (Example: Imagine n balls, each falling exactly into one of the three groups “green”, “red” and “blue”).   n ≡ k1 !k2n!!...ki ! 3.1. Answer: k1 k2 . . . ki 3.2. Demonstration: This is just a generalization of the last example. If all n elements were different, they could be arranged in n! different ways. As there are k1 indistinguishable elements in group 1, k2 indistinguishable elements in group 2 and so on, we have to correct the number n! of arrangements by dividing it by the kl !, l = 1, 2, . . . i, to avoid overcounting. 4. Given a set A of n elements. What is the total number of subsets of A ? 4.1. Answer: 2n

  n 4.2. Demonstration: The number of subsets with k elements is ,k = k 0, 1, 2, . . . n, as was shown above.    n = (1 + 1)n = 2n Calculate nk=0 k 5. Given a set of n distinct elements. In how many ways can we choose k objects, if repetition is allowed and the order of elements matters? 5.1. Answer: n k 5.2. Demonstration: Choosing the first element, there are n possibilities. Choosing the second element, there are again n possibilities (repetitions allowed!). k

 

This ends up in n × n × n × . . . × n = n k 6. Given a set of n distinct elements. In how many ways can we choose k objects, if repetition is not allowed and the order of elements matters? n! 6.1. Answer: n(n − 1)(n − 2) . . . (n − (k − 1)) = (n−k)! 6.2. Demonstration: Choosing the first element, there are n possibilities. Choosing the second element, there are only (n − 1) possibilities and so on. This results in the number given.

Principle of inclusion and exclusion This principle is frequently needed when solving some complex counting problems. Given two sets A, B and their cardinalities |A|, |B|: What is the cardinality of the union |A ∪ B|? A little thinking easily shows that it is

9.3 Sets

697

|A ∪ B| = |A| + |B| − |A ∩ B| This equation says: Counting the number of elements that are in one or the other of two sets, you first add the numbers of elements of both sets. However, doing so, you overcount: Elements that are in both sets are counted twice. Therefore, one has to subtract the number of elements that are in both sets (|A ∩ B|). This can be generalized to three sets as follows: |A ∪ B ∪ C| = |A| + |B| + |C| − |A ∩ B| − |A ∩ C| − |B ∩ C| + |A ∩ B ∩ C| The easiest way to prove this is by plugging B ∪ C for B into the previous formula for |A ∪ B| and apply straightforwardly the rules of set algebra. Proceeding this way, one can show (by mathematical induction) that generally we have   n n  



      Ai ∩ A j  +  Ai ∩ A j ∩ A k  − · · · |Ai | −  Ai  =   i=1

i=1

1≤i< j≤n

1≤i< j N . The limit of the sequence an is denoted A = lim an . n→∞ If a sequence an has a limit, it is said to converge. Stated simply, for a convergent sequence, almost all of its terms lie arbitrarily close to its limit A. In the examples above, sequence (1) does not converge, as the values of an exceed any limit one may choose. On the other hand, sequence (2) converges to 1, as can easily be seen.

702

9 Mathematical Methods and Statistical Tables

Fig. 9.1 Convergence of a sequence toward e

In most cases, finding the limit of a sequence (if it exists) is not a trivial issue. Techniques to solve such problems may be found in standard texts on mathematical analysis. It should be stressed that almost all mathematical analysis is established on the concept of limit. Examples include differential and integral calculus. For illustrational purposes, Fig. n 9.1 shows the relatively fast convergence of the  important sequence an = 1 + n1 toward its well-known limit e = 2.718….

9.4.3 Maps and Functions A map establishes a relation between the elements of two sets. Depending on the details of this relation, maps and its properties may be very diverse. However, for the purpose of this book, the following simple definition suffices: Given two sets X and Y, a map M is a rule which assigns to each element x ∈ X one or more elements y ∈ Y . That’s also called “M is a map from X to Y ” and denoted by M: X → Y . X is usually called the domain and Y the range or image of the map. Functions are a special type of maps and frequently denoted by f. A function f is a map M which assigns to each element x ∈ X one and only one element y ∈ Y . In many applications, the map is given by an explicit functional relationship. It is then usually written as y = f (x). This is called “y is a function of x”. In the applications we shall see in this book, maps are functions, usually given in explicit closed form. Examples 2

(1) y = f (x) = x 3−2x , x ∈ (0.5)

9.4 Analysis

703

2

Fig. 9.2 Plot of a function y = x 3−2x ; x ∈ (0.5)

To get a better picture of a function, a plot of its values over the whole or part of its domain ismore than helpful. For this example, it is given in Fig. 9.2. 1 2 2 (2) z = f (x, y) = x 2 − 3y 2 xe− 4 (x +2y ) , x ∈ (−5, +5), y ∈ (−4, +3) This is an example of a function depending on two variables on the domain shown. In such cases, it is even more recommendable to plot the function and get an overview what it looks like. Figure 9.3 shows this for the current example. (3) In practical applications, frequently, functions of more than two variables appear. They are denoted similarly as y = f (x1 , x2 , x3 , . . . xn ). However, if there are more than two independent variables involved, graphical representations become difficult or impossible.

Fig. 9.3 Plot of the function indicated

704

9 Mathematical Methods and Statistical Tables

Given a function f (x), one of the most important properties it may have is continuity. It is defined as follows: A function f (x) defined on a domain D is said to be continuous at a point x in that domain, if for all sequences x1 , x2 , x3 , . . . that converge to that point (limn→∞ xn = x), we have f (xn ) → f (x). This definition also holds for functions depending on more than one variable. The important thing about continuous function for practitioners is that they “behave nicely” and are simpler to handle.

9.4.4 Differential Calculus A function f (x) is called differentiable, if the limit f  (x) ≡

f (x + h) − f (x) df = lim h→0 dx h

exists and has a finite value. For practical purposes, you just can take this definition as an operative rule where you plug in a function f (x), calculate the limit as described and get the derivative f  (x). As a simple example, take f (x) = x 3 : x 3 + 3x 2 h + 3xh 2 + h 3 − x 3 (x + h)3 − x 3 = lim h→0 h→0 h h  2  2 2 = lim 3x + 3xh + h = 3x

f  (x) = lim

h→0

Each and every derivative of a differentiable function f (x) may be found evaluating the limit the way just shown. In practical calculations, the functions to be differentiated may be complex and some additional rules help, doing the math. Tables exist, where one can look up derivatives of common functions. In addition, computer algebra programs are able to differentiate huge classes of functions in closed form. The following general rules are very helpful when calculating derivatives of functions (Table 9.6). Table 9.6 Elementary rules of differentiation

f (x), u(x), v(x) being differentiable functions

… the derivative of f (x) is

f (x) = u(x) ± v(x)

f  (x) = u  (x) ± v  (x)

f (x) = u(x)v(x)

f  (x) = u  (x)v(x) + u(x)v (x)

f (x) =

u(x) v(x)

f  (x) =

u  (x)v(x)−u(x)v (x) v(x)2

f (x) = u(v(x))

f  (x) = u v (v)vx (x)

f (x) = ev(x)

f  (x) = ev v  (x)

9.4 Analysis

705

All these formulas may be proved using the given definition of the derivative. Higher order derivatives of functions may be defined in a straightforward manner. For example, the second derivative of a function is defined as f  (x) ≡

f  (x + h) − f  (x) d2 f = lim h→0 dx 2 h

Differentiation of functions of several variables The concept of differentiation can easily be generalized to functions of several variables. For example, given the function f = f (x, y, z) of three variables, the first partial derivative according to x is defined and denoted as f (x + h, y, z) − f (x, y, z) ∂f ≡ f x (x, y, z) = lim h→0 ∂x h Similarly, the partial derivatives according to y and z are defined. Example Given f = ex y + sin(zy + x), the partial derivatives may be calculated as follows: ∂f ex+h y + sin(zy + (x + h)) − ex y − sin(zy + x) = lim h→0 ∂x h ex+h − ex sin((zy + x) + h) − sin(zy + x) = lim y + lim = ex y + cos(zy + x) h→0 h→0 h h ∂f = ex + zcos(zy + x) ∂y ∂f = ycos(zy + x) ∂z

It is important to keep in mind that calculating for example the partial derivative according to x, the other variables y and z are treated as constants. Calculating the derivative according to y, the variables x and z are treated as constants and so on. Higher order partial derivatives may be calculated straightforwardly, just applying the above definition iteratively several times. For example: f x (x + h, y, z) − f x (x, y, z) ∂2 f ≡ f x x (x, y, z) = lim 2 h→0 ∂x h In the same manner, mixed partial derivatives may be calculated, as for example: ∂3 f f x x (x, y + h, z) − f x x (x, y, z) ≡ f x x y (x, y, z) = lim h→0 ∂ x 2∂ y h

706

9 Mathematical Methods and Statistical Tables

One of the most important applications of differential calculus is the determination of extremal values of functions. Given a differentiable function y = f (x), a necessary condition for its extrema is y  = f  (x) = 0 This can be easily seen intuitively even without a deeper mathematical proof from the definition of the derivative: f  (x) = lim

h→0

f (x + h) − f (x) h

If f  (x) = 0, then lim ( f (x + h) − f (x)) = 0, which means the function does h→0

not change in a small neighborhood around the point x. This is a necessary condition for a minimum or maximum. Note, however, that f  (x) = 0 is not a sufficient condition for a minimum or maximum, as it is also fulfilled for a so-called saddle point. Similarly, for functions of several variables y = f (x1 , x2 , x3 , . . . xn ), all partial differential derivatives of first order must be zero for a local extremum. f x1 (x1 , x2 , x3 , . . . xn ) = f x2 (x1 , x2 , x3 , · · · xn ) = . . . = f xn (x1 , x2 , x3 , . . . xn ) = 0 Note that this is again only a necessary, but not a sufficient condition. Especially, in the n-dimensional case, the situation may be quite complex, and the investigation of higher order derivatives is necessary, to understand the character of extremal values. Frequently, they are not absolute, but different sorts of relative extrema. Mean value theorems of differential calculus Mean value theorems of differential calculus are important and very helpful in many applications. Among other things, they can be used for the numerical approximation of derivatives. Another application is the evaluation of undetermined expressions. Given a function f : [a, x] → R, that is continuous on the closed interval [a, x] and differentiable on the open interval (a, x). Then there is a ξ ∈ (a, x) such that f (x) − f (a) = f  (ξ ) x −a In plain English: You start with the differentiable function f (x) on the interval (a, x) and the theorem ensures there is a ξ within that interval that fulfills the equation. An extended version of this mean value theorem is the following: Given two functions f, g: [a, x] → R on the closed interval [a, x] which are differentiable on the open interval (a, x). Assume that the function g  = 0 on the open interval (a, x). Then there is a ξ ∈ [a, x], such that the following equation holds.

9.4 Analysis

707

f  (ξ ) f (x) − f (a) =  g(x) − g(a) g (ξ ) Obviously, for g(x) = x, this second mean value theorem contains the first. To illustrate an area of application of the last mean value theorem, imagine the case that f (a) = g(a) = 0. In that case, the expression lim

x→a

f  (a) f (x) − f (a) f (x) f  (ξ ) = lim = lim  =  x→a g(x) ξ →a g (ξ ) g(x) − g(a) g (a)

on the left side will make trouble if x → a, as 00 is undetermined. However, using the right side of the equation may save us, as this quotient may exist. We illustrate this by an example. Example Consider the expression lim

x→0

x − sin x x − sin x − 0 1 − cos x sin x = lim = lim = lim 3 3 2 x→0 x→0 x→0 x x −0 3x 6x cos x 1 = lim = x→0 6 6

Note that in this example, the second mean value theorem was applied three times, to get the final determined result. This is allowed, of course, as long as the requirements of the theorem are fulfilled. Taylor series Taylor series is an important tool to represent a large class of functions by infinite series. Truncating the infinite series after a finite number of terms gives us the possibility to calculate complicated functions like sin(x), ln(x), ex and many others, up to any degree of precision. Despite doing numerical calculations with the help of Taylor series, they are important as algebraic approximations of functions. A hand-waving derivation goes like this. Consider a function f (x) which has derivatives of all necessary orders. It’s obvious, that we can write it down as follows: f (x) = f (a) +

f (n) (a) f  (a) f  (a) (x − a) + (x − a)2 + · · · + (x − a)n + Rn (x) 1! 2! n!

Hereby, a is a point within the domain of f (x). No matter how good the first n terms in this series approximate f (x), we can compensate any error with the term Rn (x). Therefore, this expansion holds exactly. What we wish, of course, is that with increasing n, Rn (x) gets smaller and smaller. Differentiating the last equation (n + 1)-times, lets disappear the first n terms on the right-hand side, and we receive the following expression for Rn(n+1) (x) Rn(n+1) (x) = f (n+1) (x).

708

9 Mathematical Methods and Statistical Tables

Integrating this relation (n + 1)-times by part and using Rn (a) = Rn (a) = Rn (a) = · · · = Rn(n) (a) = 0 we end up with the following expression for the rest term Rn (x) 1 Rn (x) = n!

x

(x − t)n f (n+1) (t)dt

a

Employing the mean value theorem of integral calculus, we get the following alternative expression for Rn (x) Rn (x) = f (n+1) (ξ )

(x − a)n+1 ; ξ ∈ (a, x) (n + 1)!

The Taylor series converges for those x, for which lim Rn (x) = 0. n→0

9.4.5 Integral Calculus Indefinite Integral Integration may be considered as the inverse operation to differentiation. In differential calculus, we start with a function f (x) and want to find its derivative f  (x).   f  (x) = ex x n + nx n−1 . For example, given f (x) = x n ex ⇒  The pair of functions f (x), f  (x) belong together, as the second is the uniquely determined derivative of the first. This leads us to the question, if this process can be reversed: Given a function f (x), can we find a function F(x) such that F  (x) = f (x)? In other words, for a given function f (x) we’re looking for a function F(x), the derivative of which is f (x). It can be shown that for a large class of practically important functions f (x), this is indeed possible. A function F(x) that fulfills the relation F  (x) = f (x) is called an indefinite integral of f (x). It turns out, however, to be much more difficult to find the integral of a function f (x) than its derivative. The process of finding the integral of a function is called integration. Definite Integral For the context of this book, the following application of integrals is of utmost importance: It can be used to calculate the area enclosed by the graph of a given function f (x) and the coordinate axis.

9.4 Analysis

709

Fig. 9.4 Example—discretized Gamma distribution

To see this, consider Fig. 9.4, which shows the plot of a Gamma density distribution (full line) and a discretized version in form of a histogram. Consider that we would like to calculate the area enclosed by the curve and the x-axis. As can be seen, the histogram approximates that area pretty well and we could make it fit even better, just refining the widths of the narrow strips that make up the histogram. Calculating the area of any of these strips doesn’t pose a problem, as it just equals the product of its two sides. The idea is to make the narrow strips narrower and narrower, and sum them up. In the limit, that sum should give us the size of the area we want to determine. However, there will be an infinite number of strips. How can we sum them up practically? Imagine we want to calculate the black area in Fig. 9.5. It is enclosed by the curve of a function f (x), the x-axis, the ordinate left and a vertical line at the right-hand side, perpendicular to the x-axis at point x = 30. Without even calculating anything, we can assume that this area depends on the details of the function f (x), on the position of the ordinate (which is the left boundary of the area) and on the x-value on the right, which defines the right boundary of the area. Keeping everything fixed, but changing that x-value, the black area will get smaller or it will increase. Therefore, the area we want to determine is a function F(x), x being the position of its right border. F(x) will somehow depend on the function f (x) and on the lower limit point of the area, which we, however, consider to be fixed. To derive that functional relationship in an intuitive manner, we proceed as follows: 1. The area function F(x) depends on x. 2. Moving x slightly a small distance x to the right up to the point x + x, we increase the black area by a small amount of size f (x) × x. 3. This implies: F(x + x) = F(x) + f (x)x 4. Write this as f (x) =

F(x + x) − F(x) → F  (x) x

710

9 Mathematical Methods and Statistical Tables

Fig. 9.5 Derivation of the definitive integral formula

and let x → 0. Then the last formula tells us that the derivative of the area function F(x) is the function f (x). This result is usually called the main theorem of integral calculus. Its beauty and simplicity are amazing. There is a special notation for definitive integrals, given by x F(x) =

f (x)dx a

The values a, x are called the lower and upper limit of the integral, respectively. To calculate an example, consider the parabola shown in Fig. 9.6 and calculate the definite integral between 1 and 4. The result is   4 63 1 3 5 2 F(4) − F(1) = − x + x + 5x  = 1 3 2 2 Many integrals appearing in practical calculations cannot be evaluated in analytic form. Numerical algorithms must be used to evaluate them. Whereas it is straightforward to calculate derivatives of functions, calculating integrals one has to do the following:

9.4 Analysis

711

– For certain classes of functions, their integrals can be determined in closed form and there are standard procedures and tricks on how to do this. See the standard texts of calculus for details. – Frequently, however, even for relatively simple functions, integrals cannot be expressed in terms of known elementary functions, even though the respective z − x 2 e 2 dx. integrals exist. As an important example, consider (z) = √12π −∞

In this and similar cases, one must employ numerical methods to evaluate the integral. – Computer software can be used to do the numerical calculations and even find integrals in closed analytic forms if they exist. – As an alternative, one can employ extensive tables of integrals. Comprehensive tables contain thousands of functions and their respective integrals. Mean value and related theorems of integral calculus There are a few facts that are extremely important and helpful when dealing with integrals. Some of them are listed in the following: 1. Consider an interval (a, b) on which two continuous functions are defined such that everywhere on that interval we have f (x) ≤ g(x). Then it follows that b

b f (x)dx ≤

a

g(x)dx a

Fig. 9.6 Example—definitive integral of a quadratic polynomial

712

9 Mathematical Methods and Statistical Tables

2. Consider an interval (a, b) on which a continuous function f (x) is defined that is bounded from below and above, such that we have m ≤ f (x) ≤ M Then it follows that b f (x)dx ≤ M(b − a)

m(b − a) ≤ a

This can also be written 1 m≤ b−a

The expression

1 b−a

b

b f (x)dx ≤ M a

f (x)dx is called the average value of the function f (x)

a

in the interval (a, b). 3. Consider an interval (a, b) on which two continuous functions are defined such that g(x) ≥ 0 and f (x) is bounded from below and above by the values m, M. Then it follows that mg(x) ≤ f (x)g(x) ≤ Mg(x) Integrating on both sides gives b

b g(x)dx ≤

m a

b f (x)g(x)dx ≤ M

a

g(x)dx a

From this, we can immediately conclude that b

b f (x)g(x)dx = f (ξ )

a

g(x)dx a

where ξ ∈ (a, b). This follows from the fact that m ≤ f (x) ≤ M and the continuity of function f (x). These results may be proved rigorously under even broader and weaker conditions. However, they should be intuitively clear as they follow from the geometrical interpretation of the definitive integral. They are frequently needed when dealing with integrals.

9.5 Algebra

713

9.5 Algebra 9.5.1 Introductory Remarks on Algebra Algebra is a subject which has many facets. In this section, we summarize some basic facts about: • Linear algebra, especially matrices, vectors and determinants. These tools are needed very frequently in statistical calculations. • Boolean algebra. This tool is indispensable in many logical analyses, as for example fault tree nalysis (FTA) or reliability theory. We shall meet both in Chap. 6.

9.5.2 Matrices and Vectors A matrix is a set of numbers, arranged in a special two-dimensional form. For example, the following matrix A is an array of (m × n) numbers. ⎡

a11 ⎢ a21 A=⎢ ⎣ ... am1

⎤ a12 . . . a1n a22 . . . a2n ⎥ ⎥ ... ⎦ ... ... amn am2

Quadratic matrices (n × n) are especially important in applications. The following example shows a 3 × 3 matrix ⎤ a11 a12 a13 M = ⎣ a21 a22 a23 ⎦ a31 a32 a33 ⎡

Matrices are frequently denoted as A = (aik ). To make the concept of a matrix useful, one has to supplement it with some definitions and algebraic rules. 1. 2.

3.

A matrix A = (aik ) with i = 1, 2, . . . m and k = 1, 2, . . . . n is said to have size m × n Two matrices A = (aik ) and B = (bik ) are called equal A = B, if and only if aik = bik for all pairs i, k. This is possible only, if both matrices have the same size m × n. Two matrices A = (aik ) and B = (bik ) with the same size m × n may be added to form a matrix C = (cik ): C = A + B with (cik ) = (aik ) + (bik )

714

4.

9 Mathematical Methods and Statistical Tables

Any matrix M = (m ik ) may be multiplied by a scalar α. The result is per definition: α M = (αm ik ).

5. 6.

The so-called zero matrix is defined as O = (0), all its elements are zero. The following obvious rules follow from the definition of addition of two matrices: 6.1. 6.2. 6.3. 6.4.

7.

A+B = B+ A A + B + C = (A + B) + C = A + (B + C) A + (−A) = O A+O = A =

There is a matrix multiplication defined between two matrices A (aik ) and B = (bik ), if A has size m × n and B has size n × p. Given A = (aik ), B = (bik ), their matrix product is defined as C = AB = (cik ),

with cik =

n

ail blk

l=1

Example 

   3 1 4 , B= 5 2 3     2∗1+3∗2 2 3 1 4 C = AB = = (cik ) = 6∗1+5∗2 6 5 2 3   8 17 = 16 39 2 A= 6

8. 9.

2∗4+3∗3 6∗4+5∗3



Note that the matrix product is generally not commutative: AB = B A. Matrix multiplication fulfills the rules: 9.1. 9.2. 9.3. 9.4.

(AB)C = A(BC) (A + B)C = AC + BC C( A + B) = C A + C B For a scalar (number) α, hold the following simple rules of scalar multiplication: α AB = (α A)B = A(α B)

10. Given a matrix A = (aik ) of size m × n. The transposed matrix AT = (aki ) (having size n × m) is obtained from matrix A by interchanging its rows and columns:

9.5 Algebra

715

1st row of matrix A → 1st column of matrix AT 2nd row of matrix A → 2nd column of matrix AT 3rd row of matrix A → 3rd column of matrix AT and so on. Example  A=

1 5 9 3 −2 8



⎡

⎤ 1 3 leads to AT = ⎣ 5 −2 ⎦. 9 8

11. Rules of transposition include:  T 11.1. AT = A 11.2. (A + B)T = AT + B T 11.3. (AB)T = B T AT These rules follow directly from the definition of a transposed matrix and can be verified by direct calculation. As an example, consider 11.3:  Be ci j the elements of C = AB ⇒ ci j =  k aik bk j  Be di j the lements of C T ⇒ di j = c ji = k a jk bki = k bki a jk ⇒ C T = B T AT 12. Given a n × n matrix (so-called quadratic matrix) A, there is an associated matrix A−1 , called its inverse, with the following properties: A A−1 = A−1 A = 1, where 1 is called the unit matrix (all elements in its main diagonal being 1 and all other elements being 0). A matrix has an inverse if and only if its determinant is nonvanishing: det(A) = 0. If a matrix has a vanishing determinant and therefore no inverse, it’s called a singular matrix. The inverse A−1 of a matrix A is uniquely determined. 13. Calculation of the inverse of a matrix There are several methods to calculate the inverse of a matrix A. The most obvious one is to write down the equation AX = 1 and solve for the matrix X. This is a linear equation problem for the elements of the matrix X being the inverse matrix of A. Numerical codes are available. Another way is to use the formula

716

9 Mathematical Methods and Statistical Tables

⎡

A11 1 ⎢ A ⎢ 21 = det(A) ⎣ . . . An1

A−1

⎤T A12 . . . A1n A22 . . . A2n ⎥ ⎥ ... ⎦ ... ... Ann An2

The elements Aik are called the cofactors of matrix A and determined as follows: To determine Aik , select element aik of matrix A and delete the ith row and the k-th column of matrix A, that cross in the element aik . The determinant of the remaining (n − 1) × (n − 1) matrix multiplied with the factor (−1)i+ j gives the element Aik . The proof is a bit lengthy and we shall avoid it here. 14. Be A, B two nonsingular matrices with A−1 , B −1 being their inverses, the following rule holds: (AB)−1 = B −1 A−1 . The proof is simple: AB = 1 ⇒ 1 = AB B −1 A−1 = (AB)(B −1 A−1 ) = (AB)(AB)−1 15. Matrices with only one column or one row appear frequently in applications and are called vectors. They are typically denoted as Row Vector x = [x1 x2 . . . xn ] ⎡ ⎤ x1 ⎢ x2 ⎥ ⎥ Column vector x = ⎢ ⎣...⎦ xn They are used frequently to express general linear relations of the type y = Ax, A being a matrix and x, y being vectors. In components, this would read ⎡

a11 ⎢ a21 [y1 y2 . . . ym ] = ⎢ ⎣ ... am1

⎤⎡ ⎤ a12 . . . a1n x1 ⎢ x2 ⎥ a22 . . . a2n ⎥ ⎥⎢ ⎥ . . . ⎦⎣ . . . ⎦ ... ... xn amn am2

Note that y must be of dimension (1 × m), A (m × n) and x(n × 1). Otherwise matrix multiplication wouldn’t be possible. 16. Some special types of important matrices include: Symmetric matrix: AT = A Skew-symmetric matrix: AT = −A Orthogonal matrix: AT = A−1

9.5 Algebra

717

17. In many situations, the so-called eigenvalues and eigenvectors of a matrix are important. These are the solutions of the following problem. Given a quadratic (n × n)matrix A, consider the equation Ax = λx, which may be written Ax − λx = 0 and constitutes a homogeneous system of n linear equations for the components of vector x. This equation has nontrivial solutions for the eigenvectors x only if det(A − λI ) = 0, I is the n-dimensional unit matrix. This is called the characteristic equation of matrix A and it’s a polynomial of nth degree in λ. As such it typically has n solutions, which may be real or complex. 18. Given a quadratic and symmetric matrix A, the following can be shown. There exists an orthogonal matrix C which can be used to transform A to a diagonal matrix A D = C −1 AC = C T AC. We shall not go into the details of how the diagonalizing matrix C can be determined. The important thing in our context is that it exists. 19. An important application of the diagonalizing orthogonal matrix C is the following. Given a symmetric (n × n)-matrix A, a n-dimensional vector x and a so-called quadratic form Q = x T Ax For many applications in statistics and beyond, it is helpful to transform the vector x according to x = C y, x T = y T C T Hereby, C is the orthogonal matrix that diagonalizes matrix A. The quadratic form Q then transforms to   Q = x T Ax = y T C T AC y = y T C T AC y = y T A D y This leads us to a much simpler version of the quadratic form Q when expressed in variables y. In this form, Q contains diagonal terms only.

718

9 Mathematical Methods and Statistical Tables

9.5.3 Determinants Given a quadratic matrix A = (aik ) of size n × n, there is a number associated to it, called the determinant det(A) of the matrix. Determinants are denoted as follows:   a11  a det(A) ≡  21  ... a

n1

a12 . . . a1n a22 . . . a2n ... ... ... ann an2

     ≡ |aik |   

The evaluation of a determinant is done according to the rule det(A) =

(−1) P a1i1 a2i2 a3i3 . . . anin ,

P

The sum is taken over all n! permutations of the indices i 1 , i 2 , i 3 , . . . , i n . Even permutations enter the sum with a positive sign, odd permutations with a negative. Any determinant can always be calculated by evaluating this sum. The thing is, however, that even for a (10 × 10)-matrix, there would be 10! = 3,628,800 summands. For that reason, other and more efficient methods of evaluation have been developed, which are employed when calculating determinants numerically.

9.5.4 Derivatives of Matrices and Vectors In many applications (e.g. regression analysis), one has to do with a set of data which depend linearly on another set of data. Matrix calculus is employed to express such linear relationships. The data are usually represented as ordered data sets called data vectors. In this context, one often needs the concept of derivative of a matrix or vector. We briefly summarize some facts and concepts. 1. Given two vectors y = [y1 , y2 , . . . , ym ] and x = [x1 , x2 , . . . , xn ]. Consider that each yk is a function of the xl . This is usually written as y = y(x) and may also be considered as a transformation (e.g. of coordinates) x → y. The derivative of vector y with respect to x is defined as ⎡ ∂y ⎢ ⎢ =⎢ ⎣ ∂x

∂ y1 ∂ x1 ∂ y2 ∂ x1

∂ y1 ∂ x2 ∂ y2 ∂ x2

∂y

. . . ∂ x1n ∂y . . . ∂ x2n ... ... ... ... ∂ ym ∂ ym ∂ ym ∂ x1 ∂ x2 . . . ∂ xn

⎤ ⎥ ⎥ ⎥ ⎦

9.5 Algebra

719

This m × n matrix is usually called the Jacobian matrix of the transformation y = y(x), named after a German mathematician. An especially important case is given if m = n. 2. If y = y(x) is a linear relationship, it may be written as y = Ax. Remark The most general linear relationship would actually be y = Ax + c. However, c can always be gauged away and absorbed in y. 3. If y = Ax and A is a m × n matrix that does not depend on x, one can show that ∂∂ xy = A To proof this, consider that yi =

n

aik xk

k=1

From this, we have ∂ yi = aik ∂ xk which proves the statement. 4. Given two vectors x(n × 1), y(m × 1) and a matrix A(m × n), they can be combined to form c = yT Ax. Obviously, c is a scalar. Using the above definition of vector differentiation, it can be shown that ∂c ∂c = yT A and = x T AT ∂x ∂y To prove this, define the auxiliary vector vT = yT A. Then we can write c = vT x and obtain ∂c = vT = yT A ∂x As c is a scalar, we may write c = cT = ( yT Ax)T = x T AT y From this, we get ∂c = x T AT ∂y 5. Given a quadratic matrix A = aik and the quadratic form c = x T Ax, one can show that

720

9 Mathematical Methods and Statistical Tables

∂c = Ax + AT x ∂x n To prove this, note that c = i,k=1 xi aik xk is a scalar. From this, we get     n  ∂ xi ∂c ∂ xk ∂c = aik xk + xi aik = ∂x ∂ xl ∂ xl ∂ xl i,k=1   n

= (alk xk + xi ail ) = Ax + AT x i,k=1

  ∂ x T Ax = A + AT x = ∂x   In the special case when A is a symmetric matrix A = AT , we get ∂ x T Ax = 2 Ax ∂x We shall use these relationships when deriving the equations for linear regression analysis in Chap. 6.

9.5.5 Boolean Algebra Boolean algebras are frequently employed in applications when one has to deal with so-called binary elements. These are elements which can exist in one of two states. We will meet Boolean algebras in several contexts. For example, when describing tools for risk analysis or reliability theory. The area of their application is, however, much larger. A Boolean algebra consists of a set B that is closed under: • A binary operation +, called addition; • A binary operation *, called multiplication; • A monadic operation ‘, called complementation. B includes two distinct elements, called 0 and 1. For all elements, a, b, c ∈ B, the following laws hold (Table 9.7). Whenever an analysis of logical networks is needed, Boolean algebras are important. We shall encounter them in the context of FTA—failure tree analysis. This will also serve as an example of application. In the context of applications in electronics or logic gates, the operation + is also called OR-operation and the operation * is called AND-operation.

9.6 Probability and Statistics

721

Table 9.7 Properties of the binary operations

For +

For *

Commutative laws

a+b =b+a

a∗b =b∗a

Distributive laws

a ∗ (b + c) = (a ∗ b) + (a ∗ c)

a + (b ∗ c) = (a + b) ∗ (a + c)

Identity laws

a+0=a

a∗1=a

Complement laws

a + a = 1

a ∗ a = 0

Associative laws

a + (b + c) = (a + b) + c

a ∗ (b ∗ c) = (a ∗ b) ∗ c

Idempotent laws

a+a =a

a∗a =a

Absorption laws

a ∗ (a + b) = a

a + (a ∗ b) = a

Domination laws

a∗0=0

Involution laws

a+1=1    a =a

De Morgan’s laws

(a + b) = a  ∗ b

(a ∗ b) = a  + b

Unique complement law

I f a + b = 1 and a ∗ b = 0 then there is b = a 

9.6 Probability and Statistics 9.6.1 Why Is Probability Theory Important in Our Context? Modern management systems, as discussed in the first chapters of this book, are built on performance management, risk-based thinking and other pillars that require quantitative methods and thinking. Mathematical statistics is one of the fundamental things you must have in your toolbox if you want to dive into the topics of management systems any deeper. Here are some reasons: • Risk management is based on probability theory, mathematical statistics and related issues; • Performance measurement has to rely on adequate statistical models and methods; • Setting quality, environmental, or other objectives, it should be clear that their achievement and management will be impacted by random events. Dealing with them requires methods from the field of mathematical statistics; • Statistical process control is a central topic in many industries. It is built on statistical methods; • Quality control (e.g. determination of confidence levels) is based on mathematical statistics; • Reliability theory needs probability and statistical concepts; • Simulation techniques are indispensable now in many areas. Methods like Monte Carlo simulation and others are statistics based. In this part of the chapter, we summarize some of the basic facts about probability and statistics.

722

9 Mathematical Methods and Statistical Tables

9.6.2 The Intuitive Versus Formal Approach to Probability In daily life, frequently an intuitive concept of probability is met and employed. Statements like “there is a 60% chance to win that game tomorrow” or “you will be 100% satisfied by that service” are hardly built on evidence or any probability theory. Instead, they may express the hope of the person confronting us with the statement. On the other hand, when rolling the dice, we have some reason to say that the probability to roll a five is 1/6. In this case, we simply argue that the total number of possible outcomes is 6 and rolling a five is just one of them. Therefore, writing down a formula like Probability of outcome =

#favorable outcomes #possible outcomes

sounds pretty convincing. In fact, with this so-called frequentist approach, one can handle many problems of practical importance. However, there are situations where it doesn’t work. For example, we just may not know the number of favorable cases and there may be no obvious way how to determine it. For this and many other reasons, it turns out to be most adequate to base probability theory on a handful of axioms. They bear the name of the Russian mathematician Kolmogorov, who first wrote them down. One of the crucial aspects of this formalized approach to probability theory is to identify events with sets that follow the usual set algebraic rules and to assign measures (numbers between 0 and 1) to these sets (events). This enables one to derive very general results that cover large areas of application. For example, the belowmentioned examples for consequences from the Kolmogorov axioms are completely general and may be applied to any sort of events, including for example • Quality control (events may be measurement results, products having certain attributes, etc.); • Reliability theory (events may be failure times); • Performance of students of an educational organization (events may be final grades of students); • Risk management (number of disruptive events in a production plant); • Quality management (number of customer complaints per week, treatment success rates in a hospital). It should be mentioned that modern probability theory employs measure theory and other advanced concepts. However, for most practical applications, a down-toearth approach is sufficient, and we adopt it here too. Let’s be given a sample space S (set of all admissible events) and its subsets {A, B, . . . , A1 , A2 , . . . . E 1 , . . .} called events. Note that we shall use several notations to represent events. The Kolmogorov axioms are: 1. To every set A ⊆ S, there is associated a real positive number P(A) such that 0 ≤ P(A) ≤ 1

9.6 Probability and Statistics

723

2. For the sample space S, we define P(S) = 1 3. For mutually exclusive events A and B (A ∩ B = ∅), we define P(A ∪ B) = P(A) + P(B) 4. For A1 , A2 , . . . ⊆ S mutually exclusive events we define P(A1 ∪ A2 ∪ · · ·) = P(A1 ) + P(A2 ) + · · · Some straightforward yet important consequences may be derived immediately from Kolmogorov’s axioms. Consequence 1 P(S) = 1 = P(S ∪ ∅) = P(S) + P(∅) ⇒ P(∅) = 0 The probability of the empty set is 0. Consequence 2       P(S) = 1 = P A ∪ A¯ = P( A) + P A¯ ⇒ P A¯ = 1 − P(A)   The probability P A¯ of the complementary set A¯ to A is 1 − P(A). Consequence 3 P( A1 ∪ A2 ) = P(A1 ) + P(A2 ) − P(A1 ∩ A2 ) The probability of the union of two sets is the sum of the probabilities of the two sets minus the probability of their intersection. This is intuitively immediately clear, as if the sets A1 , A2 have a nonempty intersection, then adding probabilities P(A1 ) + P(A2 ), we count the probability of the intersection twice. Therefore, the term P(A1 ∩ A2 ) must be subtracted. This important result may be generalized to three and an arbitrary number of sets (events): Consequence 4 P( A1 ∪ A2 ∪ A3 ) = P( A1 ) + P(A2 ) + P( A3 ) − P(A1 ∩ A2 ) − P(A1 ∩ A3 ) − P( A2 ∩ A3 ) + P(A1 ∩ A2 ∩ A3 )

724

9 Mathematical Methods and Statistical Tables

Consequence 5 P(A1 ∪ A2 ∪ · · · ∪ An ) =

i

P(Ai ) −

−



   P Ai ∩ A j + P Ai ∩ A j ∩ A k



i< j

1< j0 0, x 0 x 0, μ ∈ R f (x) = √ 2π σ x Expectation value and variance may be calculated to be

Fig. 9.18 Hypergeometric probabilities for the example

Fig. 9.19 Cumulative distribution for the example

9.6 Probability and Statistics

761

Fig. 9.20 Examples for the PDF of the lognormal distribution

E[X ] = eμ+

σ2 2

% 2 & 2 Var[X ] = e2μ+σ eσ − 1 Figure 9.20 shows examples of lognormal distributions for various parameters. The first parameter entry of lognormal distribution stands for μ, the second for σ . The importance of the lognormal distribution derives from its close relationship with the normal distribution. Examples include: • Given a random variable X, which follows a lognormal distribution with parameters μ, σ , then the transformed variable Y = ln(X ) follows a normal distribution with mean μ and variance σ 2 . • If X 1 , X 2 , . . . X n are independent random variables that all follow lognormal distributions with parameters μi , σi , i = 1, 2, . . . n respectively, then the random variable Y = X 1 × X 2 × · · · × X n is also lognormally distributed, but with parameters μY = μ1 + μ2 + · · · + μn σY = σ1 + σ2 + · · · + σn

9.6.12.11

Negative Binomial Distribution

The negative binomial distribution is a generalization of the geometric distribution. To derive it, consider a Bernoulli experiment with two possible outcomes F (fail) and S (success). The probabilities of these outcomes are q and p, respectively. We would like to know, how often we have to repeat the Bernoulli experiment, to achieve s ≥ 1 successes. To determine the respective probability, we proceed as follows. According to the assumption, the sth success occurs for the final trial x. Trivially, the x − 1 previous trials must contain s − 1 successes (each with probability p).

762

9 Mathematical Methods and Statistical Tables

Working this way backwards, we just have to determine that in how many  ways,  x −1 those x − 1 trials can be combined with s − 1 successes. The answer is . s−1 This leads us to the following expression for the probability:  P(X = x) =

 x −1 s p (1 − p)x−s ; x = s, s + 1, s + 2, . . . s−1

The mean value and the variance may be calculated to be E[X ] =

s p

Var[X ] =

9.6.12.12

s(1 − p) p2

Normal Distribution

The normal distribution is given by the following expressions: f (x) = √

1 2πσ

e−

(x−μ)2 2σ 2

E[X ] = μ Var[X ] = σ 2 The characteristic function is given by ψ(t) = eiμt−

σ 2t2 2

The normal distribution may be considered as the most important distribution in probability theory and statistics. The one-dimensional normal distribution is determined by its mean value and its variance. We shall meet this distribution again and again in this book. Frequently, the n-dimensional generalization of the normal distribution is needed, which is called the multivariate normal distribution. It is given by f (x) = 

1

e− 2 (x−μ) 1

(2π) det() n

Its characteristic function is (t) = eiμ

T

t− 21 t T t

T

 −1 (x−μ)

9.6 Probability and Statistics

763

In these equations, , x, t, μ are matrices and vectors. The matrices ,  −1 contain all the information about the covariances Cov(X i , X k ) between the random variables distributed according to the multivariate normal distribution. As an important special case, we give the explicit standard version of the bivariate normal distribution: 

f (x, y) =

1 

2π σx σ y 1 − ρ 2

−

1 2 1−ρ 2

e (

)

(x−μx )2 σx2

x −2ρ x−μ σx

y−μ y σy

+(

y−μ y )2 σ y2



In this expression, μx , μ y are the means of x, y, respectively, σx , σ y are the respective standard deviations and ρ is the so-called correlation coefficient between x, y. We shall come back to this in the section on correlation analysis. If and only if ρ = 0, the two random variables x, y are independent and the correlation between them is equal to zero. In this case, f (x, y) factorizes into two ordinary one-dimensional normal distributions. The cumulative distribution function for the one-dimensional normal distribution is given by F(x) = √

x

1 2π σ

e−

(u−μ)2 2σ 2

du

−∞

It makes sense to transform it to a standard form by just making the following transformation of variables: v = u−μ , dv = du . This leads us to the standard integral σ σ 1 (z) = √ 2π

z

v2

e− 2 dv

−∞

This function is tabulated (see tables at the end of the book) and also may be found in computer program libraries and spreadsheet programs. There are two more special functions frequently used in statistics: 2 erf(x) = √ π

x

−t 2

e 0

2 dt, erfc(x) = √ π

∞

e−t dt, erf(x) + erfc(x) = 1 2

x

The first of these functions is called the error function and the second the complementary error function. These two functions are connected with (z) as follows:    x 1 1 + erf √ (x) = 2 2

764

9 Mathematical Methods and Statistical Tables

  Fig. 9.21 PDF and CDF of the normal distribution μ = 0, σ 2 = 1

The function erf(x) and erfc(x) are tabulated and may be found in computer program libraries. Figure 9.21 shows plots of the standard normal distribution and the corresponding cumulative distribution function.

9.6.12.13

Poisson Distribution

The Poisson distribution is frequently met when one has to determine the distribution of certain rare events. As an example, consider events that occur with low probability during a fixed interval of time and their occurrence is independent from each other. Examples include: • • • •

Number of customers entering a store during a short time interval; Number of mistakes made by a bookkeeper per hour; Number of observations of a rare animal species per hour in a defined region; Number of decays of a radioactive substance per second. The Poisson distribution is defined by the following expression: p(X = k) =

μk −μ e k!

E[X ] = μ Var[X ] = μ The generating function of the Poisson distribution is given by G(t) = eμ(e −1) t

This may be calculated as follows

9.6 Probability and Statistics

765

x ∞ 

μet μx −μ t −μ e =e = e−μ eμe G(t) = e x! x! x=0 x=0 ∞

tx

Heuristic derivation of Poisson’s distribution from first principles We start with the well-known Taylor expansion of the function ex : ex =

∞

x0 x1 x2 xn xk = + + + ··· + + ··· k! 0! 1! 2! n! k=0

Dividing both sides of the equation by ex , we receive the identity 1=

∞

x k −x x0 x1 x2 xn e = e−x + e−x + e−x + · · · + e−x + · · · k! 0! 1! 2! n! k=0

Obviously, the terms on the right-hand side just reproduce the above definition of k the Poisson distribution. As the terms xk! e−x add up to 1, they may be considered as k discrete probabilities p(k) = xk! e−x of independent events. Example Recall that E[k] = x, so the Poisson distribution produces a mean value equal to x. Let, for example, x be the average number of incoming calls per hour k in a complaint hotline. Then, p(k) = xk! e−x could be an ansatz for the probability distribution of k incoming calls per hour with a mean equal to x. Whether this ansatz is right, may be tested with the methods of parameter estimation, discussed in Chap. 6 of the book. More advanced derivations and applications of the Poisson distributions may be found in the literature on stochastic processes. Relationship between the Binomial and Poisson distributions There is a relationship between the Binomial and the Poisson distribution, which is of practical use in some situations and helps to understand the importance of both   n distributions. Be g(x) = p x (1 − p)n−x a Binomial distribution and consider x the following limiting procedure: np = μ = constant, n → ∞, p → 0. This means, n → ∞ and p → 0 in such a way that the product np = μ remains constant. Plugging this into the Binomial distribution, one obtains: % μ &−x μx μ &n−x % μ &n % 1− , (1 − p)n−x = 1 − = 1− x n n n n   % x n(n − 1) . . . − x + 1) μ &n % μ &−x μ (n n 1 − 1 − g(x) = p x (1 − p)n−x = x x! n x  n  n  px =

→1

→e−μ

→1

766

9 Mathematical Methods and Statistical Tables

Collecting the terms on the right-hand side, one receives the following result:   n p x (1 − p)n−x x

→ 

μx −μ e x!

np=μ=const. n→∞ p→0

In simple words: for p very small and n very large, and such that np = constant, the Binomial distribution may be approximated by the Poisson distribution. Operation characteristics The operation characteristic of the Poisson distribution may be determined as follows. f (μ, c) =

c

μx x=0

x!

e−μ

  2μ cμc−1 ∂f μc = − f (μ, c) + e−μ 1 + + ··· + = −e−μ ∂μ 2! c! c! This is a differential equation for the function f (μ, c) with the following initial condition ∂f μc + e−μ = 0; ∂μ c!

f (μ = 0, c) = 1

The solution is found by simple integration to be 1 f (μ, c) = 1 − c!

μ

x c e−x dx = 1 −

0

μ (c + 1) (c + 1)

In the last step, the standard definitions for the complete and incomplete -functions have been used, defined as follows: ∞ Complete -function: (c + 1) =

x c e−x dx; i f c = 0, 1, 2, 3, . . . ⇒ (c + 1) = c!

0

μ Incomplete -function: μ (c + 1) =

x c e−x dx

0

The complete and incomplete -function s may be found in standard computer libraries, so that its values may be calculated with ease.

9.6 Probability and Statistics

9.6.12.14

767

Student’s t-Distribution

The t-distribution is a probability distribution used in several statistical tests and defined as follows:   − n+1 2 x2 1  n+1 2 n 1 + f (x) = √ ; n∈N n πn  2 E[X ] = 0; n ≥ 2 n Var[X ] = ; n≥3 n−2 Derivation of the t-distribution To give some motivation, why the t-distribution is important, we consider the following problem, which arises in statistical test theory and other contexts. Given two independent random variables, X ∼ N [0, 1] and Y ∼ χk2 : What is the distribution function of the random variable T = √X Y ? k

Consider the joint distribution function y 1 1 x2 k f (x, y) = √ e− 2 k  k  y 2 −1 e− 2 2π 22  2

This is just the product of the N [0, 1] normal distribution and the χk2 distribution. Next, we perform a transformation of variables (X, Y ) → (T, U ): X T = - ; U =Y Y k

The inverse transformation is . X=T

U ; Y =U k

The Jacobian of the transformation is  ∂(X, Y )  ∂∂ TX |J | = =  ∂Y ∂(T, U ) ∂T

∂X ∂U ∂Y ∂U

 .  = U  k

Denoting the density in the (T, U )-variables as g(t, u), we have g(t, u)dtdu = f (x, y)dxdy = f (x, y)|J |dtdu ⇒ g(t, u) = f (x, y)|J | Plugging the above transformation equations into the density function f (x, y), one obtains

768

9 Mathematical Methods and Statistical Tables

Fig. 9.22 Example: student t-distributions for the indicated indices

1

g(t, u) = √  √ u k 2π 2 2  k2 k

k−1 2

− u2

%

e

t2 k

+1)

&

To get the distribution for t, we integrate out the variable u and receive the desired result 1

∞

f (t) = √  √ k 2π 2 2  k2 k

u

k−1 2

e

− u2

%

t2 k

0

+1

&

   − k+1 2  k+1 t2 2 1+ du =  k √ k  2 πk

This is exactly the abovementioned Student’s t-distribution. Some examples for illustrational purposes are shown in Fig. 9.22.

9.6.12.15

Triangular Distribution

The triangular distribution is given by the following expressions: ⎧ 0, x ≤a ⎪ ⎪ ⎪ 4(x−a) ⎨ , a < x ≤ a+b 2 (b−a)2 f (x) = 4(b−x) a+b ⎪ , < x < b 2 ⎪ (b−a) 2 ⎪ ⎩ 0, x ≥b The mean and the variance may be calculated to be (Fig. 9.23) E[X ] =

a+b 2

9.6 Probability and Statistics

769

Fig. 9.23 Example: triangular probability density and its CDF

(b − a)2 24 &2 % at bt ei 2 − ei 2 ψ(t) = −4 (b − a)2 t 2

Var[X ] =

The triangular density distribution can be generalized to get an asymmetric form of the distribution: ⎧ ⎪ 0, x b Figure 9.24 shows an example.

Fig. 9.24 Example: generalized triangular probability density distribution and its CDF

770

9 Mathematical Methods and Statistical Tables

The triangular distribution is frequently used as an initial approximation for a probability distribution if little is known about the true distribution. For example, it serves as a model input distribution to Monte Carlo simulations (see Chap. 6).

9.6.12.16

Uniform Distribution

The uniform distribution is defined by the following expressions: ( f (x) =

1 , b−a

a≤x ≤b everywhere else

0, a+b E[X ] = 2 (b − a)2 Var[X ] = 12

The generating function may be easily calculated to be b ψ(t) = a

ei xt eibt − eiat dx = b−a (b − a)it

Figure 9.25 shows the example of a uniform distribution and its cumulative distribution function on the interval [1, 5]. The uniform distribution is likely the simplest one may find. However, it is of utmost importance in practice. If nothing is known initially about the true probability distribution of a random variable, it may be reasonable to take the uniform distribution as a first approximation to the unknown probability distribution. It reflects that all outcomes of a random variable may occur with equal probability. If nothing is known about the true distribution function, the uniform distribution is the one which avoids

Fig. 9.25 PDF and CDF of a uniform distribution on the interval [1, 5]

9.6 Probability and Statistics

771

prejudices and biases and doesn’t pretend knowledge about the true distribution which one doesn’t have. We shall meet the uniform distribution, for example, when presenting the principles of Monte Carlo simulations.

9.6.12.17

Weibull Distribution

The Weibull distribution is given by the following expressions: ⎧ % & ⎨ α x α−1

% &α − βx

e ,x ≥0 β β ; α, β > 0 ⎩ 0, x xα ) = α It is important to mention that in the literature, quantiles are alternatively indexed by q or α. Both notations are equivalent; however, some care is needed when comparing formulas or statistical tables from different sources. For statistical tests or parameter estimations, α-values close to 0 or 1 are of special interest, as these define the regions of importance in this sort of applications. For that reason, statistical tables focus mainly on those areas. If the random variable X is continuous, the given definition needs no further comments and it defines the quantiles unambiguously, as F(x) is monotonously increasing. However, if X is a discrete random variable, the given definition needs a slight modification. Especially, one needs to keep in mind that for a discrete random variable, the cumulative distribution function is a step function. For that reason, one defines in that case xq = inf{x|F(x) ≥ q}

9.7 Statistical Tables

773

(Remark Recall, the biggest lower bound of a set of numbers is called its infimum and denoted by inf). For the applications, in this book, we will need the continuous version given above only. In some applications, the so-called median of a distribution is used. It is defined by the equation F(x0.5 ) = 0.5. Sometimes, the special notation x˜ = x0.5 is used. Another concept frequently found is that of percentiles. Given an α-quantile x α , we know it divides the distribution F(x) of the random variable X into two parts. The left of it (given by (−∞, xα ]) contains 100(1 − α)% and the right part (given by (xα , +∞)) contains 100α% of the distribution of X. Thus, the percentiles express the respective quantiles in percent.

9.7.2 Description and Usage of the Tables Table 9.9 gives selected values of the standard normal distribution density 1 x2 ϕ(x) = √ e− 2 2π As this function is even (ϕ(x) = ϕ(−x)), it is enough to tabulate values for x ≥ 0 only. Example Given the value x = 3.47, Table 9.9 delivers the function value 0.000969. Table 9.10 gives selected values of the cumulative distribution function (z) of the standard normal random variable (Gauss distribution). Its definition is 1 (z) = √ 2π

z

x2

e− 2 dx

−∞

It is sufficient to tabulate only values for 0 ≤ z, because values of (z) for negative arguments may be calculated using the relation (−z) = 1 − (z), z ≥ 0 Example Given z = 1.35, Table 9.10 delivers the value (1.35) = 0.911492. Figure 9.27 may be used to read off quickly approximate values for selected quantiles (percentiles) of the cumulative standard distribution. As the normal distribution plays a crucial role everywhere in statistics, these values are frequently needed. Alternatively, they can be determined from Table A10. Example For the percentile of 98.5%, the plot delivers the value of 2.17. 2 of the Chi-square distribution. These Table 9.11 gives the quantiles xq = χn;q quantiles depend on the number n of degrees of freedom.

774

9 Mathematical Methods and Statistical Tables

2 The χn;q are the solutions of the equation

χn;q 2

 2  F χn;q =

1   n 2 2  n2

x 2 −1 e− 2 dx = q n

x

0

2 = 71.420. Example If q = 0.975 and n = 50, Table 9.11 delivers the value χ50;0.975

Table 9.12 gives selected quantiles of the Student t-distribution. These values are needed when doing a t-test or when calculating certain confidence intervals. Note that the t-distribution is symmetric. The table essentially shows the solution of the equation   tn;q − n+1 2    n+1 t2 2 1+ dt = q F tn;q =  n √ k  2 πn −∞

Example Determine t20;0.975 in the context of a one-tailed t-test. Table 9.12 shows the value 2.086. Tables 9.13 and 9.14 give the selected quantiles Fm,n;q for Fisher’s F-distribution for q = 0.95 and q = 0.99, respectively. The values of Fn 1 ,n 2 ,α are determined by solving the following equation numerically 

F Fn 1 ,n 2 ;q



  2 n1 n2  n 1 +n 2 =  n 1   n 2  n 12 n 22  2  2



Fn 1 ,n 2 ;q

z

n1 2

−1

(n 2 + n 1 z)−

n 1 +n 2 2

dz = q

0

Example Determine the quantile on 95%-level and n 1 = 17, n 2 = 12. Table 9.13 delivers the value 2.583. Table 9.15 gives 1250 pseudorandom numbers in the range from 00 to 99. To select a series of random numbers, go to any point in the table where a row and a column cross. This is your first random number. From that number, move left, right, up or down in the table to the next entry and so on to create your sequence of random numbers. Example You want to assign 100 employees of your organization randomly to four different training groups. Enumerate people from 00 to 99. Then draw 100 random numbers from the table and allocate people according to the following pattern: Group 1: 00–24, Group 2: 25–49, Group 3: 50–74, Group 4: 75–99. In case a random number appears a second time, ignore it and go on to draw another.

0.00

0.398942

0.396953

0.391043

0.381388

0.368270

0.352065

0.333225

0.312254

0.289692

0.266085

0.241971

0.217852

0.194186

0.171369

0.149727

0.129518

0.110921

0.094049

0.078950

0.065616

0.053991

x

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

0.052919

0.064378

0.077538

0.092459

0.109155

0.127583

0.147639

0.169147

0.191860

0.215458

0.239551

0.263688

0.287369

0.310060

0.331215

0.350292

0.366782

0.380226

0.390242

0.396536

0.398922

0.01

0.051864

0.063157

0.076143

0.090887

0.107406

0.125665

0.145564

0.166937

0.189543

0.213069

0.237132

0.261286

0.285036

0.307851

0.329184

0.348493

0.365263

0.379031

0.389404

0.396080

0.398862

0.02

0.050824

0.061952

0.074766

0.089333

0.105675

0.123763

0.143505

0.164740

0.187235

0.210686

0.234714

0.258881

0.282694

0.305627

0.327133

0.346668

0.363714

0.377801

0.388529

0.395585

0.398763

0.03

0.049800

0.060765

0.073407

0.087796

0.103961

0.121878

0.141460

0.162555

0.184937

0.208308

0.232297

0.256471

0.280344

0.303389

0.325062

0.344818

0.362135

0.376537

0.387617

0.395052

0.398623

0.04

0.048792

0.059595

0.072065

0.086277

0.102265

0.120009

0.139431

0.160383

0.182649

0.205936

0.229882

0.254059

0.277985

0.301137

0.322972

0.342944

0.360527

0.375240

0.386668

0.394479

0.398444

0.05

Table 9.9 Selected values of the normal probability density in the interval 0 ≤ z ≤ 4.09

0.047800

0.058441

0.070740

0.084776

0.100586

0.118157

0.137417

0.158225

0.180371

0.203571

0.227470

0.251644

0.275618

0.298872

0.320864

0.341046

0.358890

0.373911

0.385683

0.393868

0.398225

0.06

0.046823

0.057304

0.069433

0.083293

0.098925

0.116323

0.135418

0.156080

0.178104

0.201214

0.225060

0.249228

0.273244

0.296595

0.318737

0.339124

0.357225

0.372548

0.384663

0.393219

0.397966

0.07

0.045861

0.056183

0.068144

0.081828

0.097282

0.114505

0.133435

0.153948

0.175847

0.198863

0.222653

0.246809

0.270864

0.294305

0.316593

0.337180

0.355533

0.371154

0.383606

0.392531

0.397668

0.08

(continued)

0.044915

0.055079

0.066871

0.080380

0.095657

0.112704

0.131468

0.151831

0.173602

0.196520

0.220251

0.244390

0.268477

0.292004

0.314432

0.335213

0.353812

0.369728

0.382515

0.391806

0.397330

0.09

9.7 Statistical Tables 775

0.00

0.043984

0.035475

0.028327

0.022395

0.017528

0.013583

0.010421

0.007915

0.005953

0.004432

0.003267

0.002384

0.001723

0.001232

0.000873

0.000612

0.000425

0.000292

0.000199

0.000134

x

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

4.0

Table 9.9 (continued)

0.01

0.000129

0.000191

0.000281

0.000409

0.000590

0.000843

0.001191

0.001667

0.002309

0.003167

0.004301

0.005782

0.007697

0.010143

0.013234

0.017095

0.021862

0.027682

0.034701

0.043067

0.02

0.000124

0.000184

0.000271

0.000394

0.000569

0.000814

0.001151

0.001612

0.002236

0.003070

0.004173

0.005616

0.007483

0.009871

0.012892

0.016670

0.021341

0.027048

0.033941

0.042166

0.03

0.000119

0.000177

0.000260

0.000380

0.000549

0.000785

0.001112

0.001560

0.002165

0.002975

0.004049

0.005454

0.007274

0.009606

0.012558

0.016254

0.020829

0.026426

0.033194

0.041280

0.04

0.000114

0.000170

0.000251

0.000366

0.000529

0.000758

0.001075

0.001508

0.002096

0.002884

0.003928

0.005296

0.007071

0.009347

0.012232

0.015848

0.020328

0.025817

0.032460

0.040408

0.05

0.000109

0.000163

0.000241

0.000353

0.000510

0.000732

0.001038

0.001459

0.002029

0.002794

0.003810

0.005143

0.006873

0.009094

0.011912

0.015449

0.019837

0.025218

0.031740

0.039550

0.06

0.000105

0.000157

0.000232

0.000340

0.000492

0.000706

0.001003

0.001411

0.001964

0.002707

0.003695

0.004993

0.006679

0.008846

0.011600

0.015060

0.019356

0.024631

0.031032

0.038707

0.07

0.000101

0.000151

0.000223

0.000327

0.000474

0.000681

0.000969

0.001364

0.001901

0.002623

0.003584

0.004847

0.006491

0.008605

0.011295

0.014678

0.018885

0.024056

0.030337

0.037878

0.08

0.000097

0.000145

0.000215

0.000315

0.000457

0.000657

0.000936

0.001319

0.001840

0.002541

0.003475

0.004705

0.006307

0.008370

0.010997

0.014305

0.018423

0.023491

0.029655

0.037063

0.09

0.000093

0.000139

0.000207

0.000303

0.000441

0.000634

0.000904

0.001275

0.001780

0.002461

0.003370

0.004567

0.006127

0.008140

0.010706

0.013940

0.017971

0.022937

0.028985

0.036262

776 9 Mathematical Methods and Statistical Tables

0.00

0.500000

0.539828

0.579260

0.617911

0.655422

0.691462

0.725747

0.758036

0.788145

0.815940

0.841345

0.864334

0.884930

0.903200

0.919243

0.933193

0.945201

0.955435

0.964070

0.971283

0.977250

z

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

0.977784

0.971933

0.964852

0.956367

0.946301

0.934478

0.920730

0.904902

0.886861

0.866500

0.843752

0.818589

0.791030

0.761148

0.729069

0.694974

0.659097

0.621720

0.583166

0.543795

0.503989

0.01

0.978308

0.972571

0.965620

0.957284

0.947384

0.935745

0.922196

0.906582

0.888768

0.868643

0.846136

0.821214

0.793892

0.764238

0.732371

0.698468

0.662757

0.625516

0.587064

0.547758

0.507978

0.02

0.978822

0.973197

0.966375

0.958185

0.948449

0.936992

0.923641

0.908241

0.890651

0.870762

0.848495

0.823814

0.796731

0.767305

0.735653

0.701944

0.666402

0.629300

0.590954

0.551717

0.511966

0.03

0.979325

0.973810

0.967116

0.959070

0.949497

0.938220

0.925066

0.909877

0.892512

0.872857

0.850830

0.826391

0.799546

0.770350

0.738914

0.705401

0.670031

0.633072

0.594835

0.555670

0.515953

0.04

Table 9.10 Selected values of the function (z) in the interval 0 ≤ z ≤ 4.09

0.979818

0.974412

0.967843

0.959941

0.950529

0.939429

0.926471

0.911492

0.894350

0.874928

0.853141

0.828944

0.802337

0.773373

0.742154

0.708840

0.673645

0.636831

0.598706

0.559618

0.519939

0.05

0.980301

0.975002

0.968557

0.960796

0.951543

0.940620

0.927855

0.913085

0.896165

0.876976

0.855428

0.831472

0.805105

0.776373

0.745373

0.712260

0.677242

0.640576

0.602568

0.563559

0.523922

0.06

0.980774

0.975581

0.969258

0.961636

0.952540

0.941792

0.929219

0.914657

0.897958

0.879000

0.857690

0.833977

0.807850

0.779350

0.748571

0.715661

0.680822

0.644309

0.606420

0.567495

0.527903

0.07

0.981237

0.976148

0.969946

0.962462

0.953521

0.942947

0.930563

0.916207

0.899727

0.881000

0.859929

0.836457

0.810570

0.782305

0.751748

0.719043

0.684386

0.648027

0.610261

0.571424

0.531881

0.08

(continued)

0.981691

0.976705

0.970621

0.963273

0.954486

0.944083

0.931888

0.917736

0.901475

0.882977

0.862143

0.838913

0.813267

0.785236

0.754903

0.722405

0.687933

0.651732

0.614092

0.575345

0.535856

0.09

9.7 Statistical Tables 777

0.00

0.982136

0.986097

0.989276

0.991802

0.993790

0.995339

0.996533

0.997445

0.998134

0.998650

0.999032

0.999313

0.999517

0.999663

0.999767

0.999841

0.999892

0.999928

0.999952

0.999968

z

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

4.0

Table 9.10 (continued)

0.01

0.999970

0.999954

0.999931

0.999896

0.999847

0.999776

0.999675

0.999534

0.999336

0.999065

0.998694

0.998193

0.997523

0.996636

0.995473

0.993963

0.992024

0.989556

0.986447

0.982571

0.02

0.999971

0.999956

0.999933

0.999900

0.999853

0.999784

0.999687

0.999550

0.999359

0.999096

0.998736

0.998250

0.997599

0.996736

0.995604

0.994132

0.992240

0.989830

0.986791

0.982997

0.03

0.999972

0.999958

0.999936

0.999904

0.999858

0.999792

0.999698

0.999566

0.999381

0.999126

0.998777

0.998305

0.997673

0.996833

0.995731

0.994297

0.992451

0.990097

0.987126

0.983414

0.04

0.999973

0.999959

0.999938

0.999908

0.999864

0.999800

0.999709

0.999581

0.999402

0.999155

0.998817

0.998359

0.997744

0.996928

0.995855

0.994457

0.992656

0.990358

0.987455

0.983823

0.05

0.999974

0.999961

0.999941

0.999912

0.999869

0.999807

0.999720

0.999596

0.999423

0.999184

0.998856

0.998411

0.997814

0.997020

0.995975

0.994614

0.992857

0.990613

0.987776

0.984222

0.06

0.999975

0.999963

0.999943

0.999915

0.999874

0.999815

0.999730

0.999610

0.999443

0.999211

0.998893

0.998462

0.997882

0.997110

0.996093

0.994766

0.993053

0.990863

0.988089

0.984614

0.07

0.999976

0.999964

0.999946

0.999918

0.999879

0.999822

0.999740

0.999624

0.999462

0.999238

0.998930

0.998511

0.997948

0.997197

0.996207

0.994915

0.993244

0.991106

0.988396

0.984997

0.08

0.999977

0.999966

0.999948

0.999922

0.999883

0.999828

0.999749

0.999638

0.999481

0.999264

0.998965

0.998559

0.998012

0.997282

0.996319

0.995060

0.993431

0.991344

0.988696

0.985371

0.09

0.999978

0.999967

0.999950

0.999925

0.999888

0.999835

0.999758

0.999651

0.999499

0.999289

0.998999

0.998605

0.998074

0.997365

0.996427

0.995201

0.993613

0.991576

0.988989

0.985738

778 9 Mathematical Methods and Statistical Tables

-1,64

-1,28

-1,04

-0,84

-0,67 -0,52 -0,39 -0,25 -0,13

0,52 0,00 0,13 0,25 0,39

0,67

0,84

1,04

1,28

1,64

1,96

2,05

2,17

2,33

2,58

3,09

3,29

3,48

3,72

Quantile

5,00% 15,00% 25,00% 35,00% 45,00% 55,00% 65,00% 75,00% 85,00% 95,00% 98,00% 99,00% 99,90% 99,98% 1,00% 10,00% 20,00% 30,00% 40,00% 50,00% 60,00% 70,00% 80,00% 90,00% 97,50% 98,50% 99,50% 99,95% 99,99%

-2,33

Fig. 9.27 Quantiles and z-values for the standard normal distribution

Z Value

Quantiles and Z Values of the Standard Normal Distribution

9.7 Statistical Tables 779

0.005

0.000

0.010

0.072

0.207

0.412

0.676

0.989

1.344

1.735

2.156

2.603

3.074

3.565

4.075

4.601

5.142

5.697

6.265

6.844

7.434

n

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

q

8.260

7.633

7.015

6.408

5.812

5.229

4.660

4.107

3.571

3.053

2.558

2.088

1.646

1.239

0.872

0.554

0.297

0.115

0.020

0.000

0.010

9.591

8.907

8.231

7.564

6.908

6.262

5.629

5.009

4.404

3.816

3.247

2.700

2.180

1.690

1.237

0.831

0.484

0.216

0.051

0.001

0.025

10.851

10.117

9.390

8.672

7.962

7.261

6.571

5.892

5.226

4.575

3.940

3.325

2.733

2.167

1.635

1.145

0.711

0.352

0.103

0.004

0.050

12.443

11.651

10.865

10.085

9.312

8.547

7.790

7.042

6.304

5.578

4.865

4.168

3.490

2.833

2.204

1.610

1.064

0.584

0.211

0.016

0.100

Table 9.11 Selected quantiles of the Chi-square distribution

15.452

14.562

13.675

12.792

11.912

11.037

10.165

9.299

8.438

7.584

6.737

5.899

5.071

4.255

3.455

2.675

1.923

1.213

0.575

0.102

0.250

19.337

18.338

17.338

16.338

15.338

14.339

13.339

12.340

11.340

10.341

9.342

8.343

7.344

6.346

5.348

4.351

3.357

2.366

1.386

0.455

0.500

23.828

22.718

21.605

20.489

19.369

18.245

17.117

15.984

14.845

13.701

12.549

11.389

10.219

9.037

7.841

6.626

5.385

4.108

2.773

1.323

0.750

28.412

27.204

25.989

24.769

23.542

22.307

21.064

19.812

18.549

17.275

15.987

14.684

13.362

12.017

10.645

9.236

7.779

6.251

4.605

2.706

0.900

31.410

30.144

28.869

27.587

26.296

24.996

23.685

22.362

21.026

19.675

18.307

16.919

15.507

14.067

12.592

11.070

9.488

7.815

5.991

3.841

0.950

34.170

32.852

31.526

30.191

28.845

27.488

26.119

24.736

23.337

21.920

20.483

19.023

17.535

16.013

14.449

12.833

11.143

9.348

7.378

5.024

0.975

37.566

36.191

34.805

33.409

32.000

30.578

29.141

27.688

26.217

24.725

23.209

21.666

20.090

18.475

16.812

15.086

13.277

11.345

9.210

6.635

0.990

(continued)

39.997

38.582

37.156

35.718

34.267

32.801

31.319

29.819

28.300

26.757

25.188

23.589

21.955

20.278

18.548

16.750

14.860

12.838

10.597

7.879

0.995

780 9 Mathematical Methods and Statistical Tables

0.005

8.034

8.643

9.260

9.886

10.520

11.160

11.808

12.461

13.121

13.787

17.192

20.707

24.311

27.991

28.735

29.481

30.230

30.981

31.735

n

21

22

23

24

25

26

27

28

29

30

35

40

45

50

51

52

53

54

55

q

33.570

32.793

32.018

31.246

30.475

29.707

25.901

22.164

18.509

14.953

14.256

13.565

12.879

12.198

11.524

10.856

10.196

9.542

8.897

0.010

Table 9.11 (continued)

36.398

35.586

34.776

33.968

33.162

32.357

28.366

24.433

20.569

16.791

16.047

15.308

14.573

13.844

13.120

12.401

11.689

10.982

10.283

0.025

38.958

38.116

37.276

36.437

35.600

34.764

30.612

26.509

22.465

18.493

17.708

16.928

16.151

15.379

14.611

13.848

13.091

12.338

11.591

0.050

42.060

41.183

40.308

39.433

38.560

37.689

33.350

29.051

24.797

20.599

19.768

18.939

18.114

17.292

16.473

15.659

14.848

14.041

13.240

0.100

47.610

46.676

45.741

44.808

43.874

42.942

38.291

33.660

29.054

24.478

23.567

22.657

21.749

20.843

19.939

19.037

18.137

17.240

16.344

0.250

54.335

53.335

52.335

51.335

50.335

49.335

44.335

39.335

34.336

29.336

28.336

27.336

26.336

25.336

24.337

23.337

22.337

21.337

20.337

0.500

61.665

60.600

59.534

58.468

57.401

56.334

50.985

45.616

40.223

34.800

33.711

32.620

31.528

30.435

29.339

28.241

27.141

26.039

24.935

0.750

68.796

67.673

66.548

65.422

64.295

63.167

57.505

51.805

46.059

40.256

39.087

37.916

36.741

35.563

34.382

33.196

32.007

30.813

29.615

0.900

73.311

72.153

70.993

69.832

68.669

67.505

61.656

55.758

49.802

43.773

42.557

41.337

40.113

38.885

37.652

36.415

35.172

33.924

32.671

0.950

77.380

76.192

75.002

73.810

72.616

71.420

65.410

59.342

53.203

46.979

45.722

44.461

43.195

41.923

40.646

39.364

38.076

36.781

35.479

0.975

82.292

81.069

79.843

78.616

77.386

76.154

69.957

63.691

57.342

50.892

49.588

48.278

46.963

45.642

44.314

42.980

41.638

40.289

38.932

0.990

(continued)

85.749

84.502

83.253

82.001

80.747

79.490

73.166

66.766

60.275

53.672

52.336

50.993

49.645

48.290

46.928

45.559

44.181

42.796

41.401

0.995

9.7 Statistical Tables 781

0.005

32.490

33.248

34.008

34.770

35.534

36.301

37.068

37.838

38.610

39.383

40.158

40.935

41.713

42.494

43.275

44.058

44.843

45.629

46.417

47.206

n

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

q

49.475

48.666

47.858

47.051

46.246

45.442

44.639

43.838

43.038

42.240

41.444

40.649

39.855

39.063

38.273

37.485

36.698

35.913

35.131

34.350

0.010

Table 9.11 (continued)

52.942

52.103

51.265

50.428

49.592

48.758

47.924

47.092

46.261

45.431

44.603

43.776

42.950

42.126

41.303

40.482

39.662

38.844

38.027

37.212

0.025

56.054

55.189

54.325

53.462

52.600

51.739

50.879

50.020

49.162

48.305

47.450

46.595

45.741

44.889

44.038

43.188

42.339

41.492

40.646

39.801

0.050

59.795

58.900

58.006

57.113

56.221

55.329

54.438

53.548

52.659

51.770

50.883

49.996

49.111

48.226

47.342

46.459

45.577

44.696

43.816

42.937

0.100

66.417

65.472

64.528

63.585

62.641

61.698

60.756

59.814

58.872

57.931

56.990

56.050

55.110

54.171

53.232

52.294

51.356

50.419

49.482

48.546

0.250

74.334

73.334

72.334

71.334

70.334

69.334

68.334

67.335

66.335

65.335

64.335

63.335

62.335

61.335

60.335

59.335

58.335

57.335

56.335

55.335

0.500

82.858

81.803

80.747

79.690

78.634

77.577

76.519

75.461

74.403

73.344

72.285

71.225

70.165

69.104

68.043

66.981

65.919

64.857

63.793

62.729

0.750

91.061

89.956

88.850

87.743

86.635

85.527

84.418

83.308

82.197

81.085

79.973

78.860

77.745

76.630

75.514

74.397

73.279

72.160

71.040

69.919

0.900

96.217

95.081

93.945

92.808

91.670

90.531

89.391

88.250

87.108

85.965

84.821

83.675

82.529

81.381

80.232

79.082

77.931

76.778

75.624

74.468

0.950

100.839

99.678

98.516

97.353

96.189

95.023

93.856

92.689

91.519

90.349

89.177

88.004

86.830

85.654

84.476

83.298

82.117

80.936

79.752

78.567

0.975

106.393

105.202

104.010

102.816

101.621

100.425

99.228

98.028

96.828

95.626

94.422

93.217

92.010

90.802

89.591

88.379

87.166

85.950

84.733

83.513

0.990

110.286

109.074

107.862

106.648

105.432

104.215

102.996

101.776

100.554

99.330

98.105

96.878

95.649

94.419

93.186

91.952

90.715

89.477

88.236

86.994

0.995

782 9 Mathematical Methods and Statistical Tables

1.356

1.350

1.345

1.341

1.337

1.333

1.330

1.328

1.325

14

15

16

17

18

19

20

1.397

8

13

1.415

7

12

1.440

6

1.363

1.476

5

11

1.533

4

1.383

1.638

3

1.372

1.886

2

10

3.078

1

9

0.9000

n

q

1.725

1.729

1.734

1.740

1.746

1.753

1.761

1.771

1.782

1.796

1.812

1.833

1.860

1.895

1.943

2.015

2.132

2.353

2.920

6.314

0.9500

2.086

2.093

2.101

2.110

2.120

2.131

2.145

2.160

2.179

2.201

2.228

2.262

2.306

2.365

2.447

2.571

2.776

3.182

4.303

12.706

0.9750

Table 9.12 Selected quantiles of the Student t-distribution

2.197

2.205

2.214

2.224

2.235

2.249

2.264

2.282

2.303

2.328

2.359

2.398

2.449

2.517

2.612

2.757

2.999

3.482

4.849

15.895

0.9800

2.336

2.346

2.356

2.368

2.382

2.397

2.415

2.436

2.461

2.491

2.527

2.574

2.634

2.715

2.829

3.003

3.298

3.896

5.643

21.205

0.9850

2.528

2.539

2.552

2.567

2.583

2.602

2.624

2.650

2.681

2.718

2.764

2.821

2.896

2.998

3.143

3.365

3.747

4.541

6.965

31.821

0.9900

2.845

2.861

2.878

2.898

2.921

2.947

2.977

3.012

3.055

3.106

3.169

3.250

3.355

3.499

3.707

4.032

4.604

5.841

9.925

63.657

0.9950

3.552

3.579

3.610

3.646

3.686

3.733

3.787

3.852

3.930

4.025

4.144

4.297

4.501

4.785

5.208

5.893

7.173

10.215

22.327

318.309

0.9990

(continued)

3.850

3.883

3.922

3.965

4.015

4.073

4.140

4.221

4.318

4.437

4.587

4.781

5.041

5.408

5.959

6.869

8.610

12.924

31.599

636.619

0.9995

9.7 Statistical Tables 783

1.323

1.321

1.319

1.318

1.316

1.315

1.314

1.313

1.311

1.310

1.303

1.299

1.296

1.294

1.292

1.291

1.290

1.286

1.284

1.284

1.283

21

22

23

24

25

26

27

28

29

30

40

50

60

70

80

90

100

200

300

400

500

q

Table 9.12 (continued)

1.648

1.649

1.650

1.653

1.660

1.662

1.664

1.667

1.671

1.676

1.684

1.697

1.699

1.701

1.703

1.706

1.708

1.711

1.714

1.717

1.721

1.965

1.966

1.968

1.972

1.984

1.987

1.990

1.994

2.000

2.009

2.021

2.042

2.045

2.048

2.052

2.056

2.060

2.064

2.069

2.074

2.080

2.059

2.060

2.063

2.067

2.081

2.084

2.088

2.093

2.099

2.109

2.123

2.147

2.150

2.154

2.158

2.162

2.167

2.172

2.177

2.183

2.189

2.176

2.178

2.180

2.186

2.201

2.205

2.209

2.215

2.223

2.234

2.250

2.278

2.282

2.286

2.291

2.296

2.301

2.307

2.313

2.320

2.328

2.334

2.336

2.339

2.345

2.364

2.368

2.374

2.381

2.390

2.403

2.423

2.457

2.462

2.467

2.473

2.479

2.485

2.492

2.500

2.508

2.518

2.586

2.588

2.592

2.601

2.626

2.632

2.639

2.648

2.660

2.678

2.704

2.750

2.756

2.763

2.771

2.779

2.787

2.797

2.807

2.819

2.831

3.107

3.111

3.118

3.131

3.174

3.183

3.195

3.211

3.232

3.261

3.307

3.385

3.396

3.408

3.421

3.435

3.450

3.467

3.485

3.505

3.527

(continued)

3.310

3.315

3.323

3.340

3.390

3.402

3.416

3.435

3.460

3.496

3.551

3.646

3.659

3.674

3.690

3.707

3.725

3.745

3.768

3.792

3.819

784 9 Mathematical Methods and Statistical Tables

1.283

1.283

1.283

1.282

1.282

1.282

600

700

800

900

1000

10000

q

Table 9.12 (continued)

1.645

1.646

1.647

1.647

1.647

1.647

1.960

1.962

1.963

1.963

1.963

1.964

2.054

2.056

2.057

2.057

2.058

2.058

2.170

2.173

2.174

2.174

2.175

2.175

2.327

2.330

2.330

2.331

2.332

2.333

2.576

2.581

2.581

2.582

2.583

2.584

3.091

3.098

3.099

3.100

3.102

3.104

3.291

3.300

3.301

3.303

3.304

3.307

9.7 Statistical Tables 785

4.667

4.600

4.543

4.494

4.451

4.414

4.381

4.351

13

14

15

16

17

18

19

20

8

4.747

7

4.844

5.318

6

12

5.591

5

11

5.987

4

5.117

6.608

3

4.965

7.709

2

10

10.128

1

9

161.448

18.513

1

n2

n1

3.493

3.522

3.555

3.592

3.634

3.682

3.739

3.806

3.885

3.982

4.103

4.256

4.459

4.737

5.143

5.786

6.944

9.552

19.000

199.500

2

3.098

3.127

3.160

3.197

3.239

3.287

3.344

3.411

3.490

3.587

3.708

3.863

4.066

4.347

4.757

5.409

6.591

9.277

19.164

215.707

3

2.866

2.895

2.928

2.965

3.007

3.056

3.112

3.179

3.259

3.357

3.478

3.633

3.838

4.120

4.534

5.192

6.388

9.117

19.247

224.583

4

2.711

2.740

2.773

2.810

2.852

2.901

2.958

3.025

3.106

3.204

3.326

3.482

3.687

3.972

4.387

5.050

6.256

9.013

19.296

230.162

5

2.599

2.628

2.661

2.699

2.741

2.790

2.848

2.915

2.996

3.095

3.217

3.374

3.581

3.866

4.284

4.950

6.163

8.941

19.330

233.986

6

Table 9.13 Selected quantiles of Fisher’s F-distribution (q = 0.95)

2.514

2.544

2.577

2.614

2.657

2.707

2.764

2.832

2.913

3.012

3.135

3.293

3.500

3.787

4.207

4.876

6.094

8.887

19.353

236.768

7

2.447

2.477

2.510

2.548

2.591

2.641

2.699

2.767

2.849

2.948

3.072

3.230

3.438

3.726

4.147

4.818

6.041

8.845

19.371

238.883

8

2.393

2.423

2.456

2.494

2.538

2.588

2.646

2.714

2.796

2.896

3.020

3.179

3.388

3.677

4.099

4.772

5.999

8.812

19.385

240.543

9

2.348

2.378

2.412

2.450

2.494

2.544

2.602

2.671

2.753

2.854

2.978

3.137

3.347

3.637

4.060

4.735

5.964

8.786

19.396

241.882

10

2.310

2.340

2.374

2.413

2.456

2.507

2.565

2.635

2.717

2.818

2.943

3.102

3.313

3.603

4.027

4.704

5.936

8.763

19.405

242.983

11

2.278

2.308

2.342

2.381

2.425

2.475

2.534

2.604

2.687

2.788

2.913

3.073

3.284

3.575

4.000

4.678

5.912

8.745

19.413

243.906

12

2.250

2.280

2.314

2.353

2.397

2.448

2.507

2.577

2.660

2.761

2.887

3.048

3.259

3.550

3.976

4.655

5.891

8.729

19.419

244.690

13

(continued)

2.225

2.256

2.290

2.329

2.373

2.424

2.484

2.554

2.637

2.739

2.865

3.025

3.237

3.529

3.956

4.636

5.873

8.715

19.424

245.364

14

786 9 Mathematical Methods and Statistical Tables

n1

4.034

4.001

3.978

3.960

3.947

3.936

50

60

70

80

90

100

245.950

19.429

8.703

5.858

4.619

3.938

3.511

3.218

3.006

1

2

3

4

5

6

7

8

9

15

n1

4.085

n2

4.171

40

1

30

n2

16

3.087

3.098

3.111

3.128

3.150

3.183

3.232

3.316

2.989

3.202

3.494

3.922

4.604

5.844

8.692

19.433

246.464

2

Table 9.13 (continued)

17

2.696

2.706

2.719

2.736

2.758

2.790

2.839

2.922

2.974

3.187

3.480

3.908

4.590

5.832

8.683

19.437

246.918

3

18

2.463

2.473

2.486

2.503

2.525

2.557

2.606

2.690

2.960

3.173

3.467

3.896

4.579

5.821

8.675

19.440

247.323

4

19

2.305

2.316

2.329

2.346

2.368

2.400

2.449

2.534

2.948

3.161

3.455

3.884

4.568

5.811

8.667

19.443

247.686

5

2.191

2.201

2.214

2.231

2.254

2.286

2.336

2.421

2.936

3.150

3.445

3.874

4.558

5.803

8.660

19.446

248.013

20

6

30

2.103

2.113

2.126

2.143

2.167

2.199

2.249

2.334

2.864

3.079

3.376

3.808

4.496

5.746

8.617

19.462

250.095

7

40

2.032

2.043

2.056

2.074

2.097

2.130

2.180

2.266

2.826

3.043

3.340

3.774

4.464

5.717

8.594

19.471

251.143

8

50

1.975

1.986

1.999

2.017

2.040

2.073

2.124

2.211

2.803

3.020

3.319

3.754

4.444

5.699

8.581

19.476

251.774

9

2.787

3.005

3.304

3.740

4.431

5.688

8.572

19.479

252.196

60

1.927

1.938

1.951

1.969

1.993

2.026

2.077

2.165

10

2.776

2.994

3.294

3.730

4.422

5.679

8.566

19.481

252.497

70

1.886

1.897

1.910

1.928

1.952

1.986

2.038

2.126

11

2.768

2.986

3.286

3.722

4.415

5.673

8.561

19.483

252.724

80

1.850

1.861

1.875

1.893

1.917

1.952

2.003

2.092

12

2.761

2.980

3.280

3.716

4.409

5.668

8.557

19.485

252.900

90

1.819

1.830

1.845

1.863

1.887

1.921

1.974

2.063

13

(continued)

2.756

2.975

3.275

3.712

4.405

5.664

8.554

19.486

253.041

100

1.792

1.803

1.817

1.836

1.860

1.895

1.948

2.037

14

9.7 Statistical Tables 787

n1

2.845

2.719

2.617

2.533

2.463

2.403

2.352

2.308

2.269

2.234

2.203

2.015

1.924

1.871

1.836

1.812

1.793

1.779

1.768

11

12

13

14

15

16

17

18

19

20

30

40

50

60

70

80

90

100

1

10

n2

2

1.746

1.757

1.772

1.790

1.815

1.850

1.904

1.995

2.184

2.215

2.250

2.289

2.333

2.385

2.445

2.515

2.599

2.701

2.828

Table 9.13 (continued)

3

1.726

1.737

1.752

1.771

1.796

1.831

1.885

1.976

2.167

2.198

2.233

2.272

2.317

2.368

2.428

2.499

2.583

2.685

2.812

4

1.708

1.720

1.734

1.753

1.778

1.814

1.868

1.960

2.151

2.182

2.217

2.257

2.302

2.353

2.413

2.484

2.568

2.671

2.798

5

1.691

1.703

1.718

1.737

1.763

1.798

1.853

1.945

2.137

2.168

2.203

2.243

2.288

2.340

2.400

2.471

2.555

2.658

2.785

6

1.676

1.688

1.703

1.722

1.748

1.784

1.839

1.932

2.124

2.155

2.191

2.230

2.276

2.328

2.388

2.459

2.544

2.646

2.774

7

1.573

1.586

1.602

1.622

1.649

1.687

1.744

1.841

2.039

2.071

2.107

2.148

2.194

2.247

2.308

2.380

2.466

2.570

2.700

8

1.515

1.528

1.545

1.566

1.594

1.634

1.693

1.792

1.994

2.026

2.063

2.104

2.151

2.204

2.266

2.339

2.426

2.531

2.661

9

1.477

1.491

1.508

1.530

1.559

1.599

1.660

1.761

1.966

1.999

2.035

2.077

2.124

2.178

2.241

2.314

2.401

2.507

2.637

1.450

1.465

1.482

1.505

1.534

1.576

1.637

1.740

1.946

1.980

2.017

2.058

2.106

2.160

2.223

2.297

2.384

2.490

2.621

10

1.430

1.445

1.463

1.486

1.516

1.558

1.621

1.724

1.932

1.966

2.003

2.045

2.093

2.147

2.210

2.284

2.372

2.478

2.610

11

1.415

1.429

1.448

1.471

1.502

1.544

1.608

1.712

1.922

1.955

1.993

2.035

2.083

2.137

2.201

2.275

2.363

2.469

2.601

12

1.402

1.417

1.436

1.459

1.491

1.534

1.597

1.703

1.913

1.947

1.985

2.027

2.075

2.130

2.193

2.267

2.356

2.462

2.594

13

1.392

1.407

1.426

1.450

1.481

1.525

1.589

1.695

1.907

1.940

1.978

2.020

2.068

2.123

2.187

2.261

2.350

2.457

2.588

14

788 9 Mathematical Methods and Statistical Tables

4052.181

98.503

34.116

21.198

16.258

13.745

12.246

11.259

10.561

10.044

9.646

9.330

9.074

8.862

8.683

8.531

8.400

8.285

8.185

8.096

1

n2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

n1

5.849

5.926

6.013

6.112

6.226

6.359

6.515

6.701

6.927

7.206

7.559

8.022

8.649

9.547

10.925

13.274

18.000

30.817

99.000

4999.500

2

4.938

5.010

5.092

5.185

5.292

5.417

5.564

5.739

5.953

6.217

6.552

6.992

7.591

8.451

9.780

12.060

16.694

29.457

99.166

5403.352

3

4.431

4.500

4.579

4.669

4.773

4.893

5.035

5.205

5.412

5.668

5.994

6.422

7.006

7.847

9.148

11.392

15.977

28.710

99.249

5624.583

4

4.103

4.171

4.248

4.336

4.437

4.556

4.695

4.862

5.064

5.316

5.636

6.057

6.632

7.460

8.746

10.967

15.522

28.237

99.299

5763.650

5

3.871

3.939

4.015

4.102

4.202

4.318

4.456

4.620

4.821

5.069

5.386

5.802

6.371

7.191

8.466

10.672

15.207

27.911

99.333

5858.986

6

Table 9.14 Selected quantiles of Fisher’s F-distribution (q = 0.99) 7

3.699

3.765

3.841

3.927

4.026

4.142

4.278

4.441

4.640

4.886

5.200

5.613

6.178

6.993

8.260

10.456

14.976

27.672

99.356

5928.356

8

3.564

3.631

3.705

3.791

3.890

4.004

4.140

4.302

4.499

4.744

5.057

5.467

6.029

6.840

8.102

10.289

14.799

27.489

99.374

5981.070

9

3.457

3.523

3.597

3.682

3.780

3.895

4.030

4.191

4.388

4.632

4.942

5.351

5.911

6.719

7.976

10.158

14.659

27.345

99.388

6022.473

10

3.368

3.434

3.508

3.593

3.691

3.805

3.939

4.100

4.296

4.539

4.849

5.257

5.814

6.620

7.874

10.051

14.546

27.229

99.399

6055.847

11

3.294

3.360

3.434

3.519

3.616

3.730

3.864

4.025

4.220

4.462

4.772

5.178

5.734

6.538

7.790

9.963

14.452

27.133

99.408

6083.317

12

3.231

3.297

3.371

3.455

3.553

3.666

3.800

3.960

4.155

4.397

4.706

5.111

5.667

6.469

7.718

9.888

14.374

27.052

99.416

6106.321

13

3.177

3.242

3.316

3.401

3.498

3.612

3.745

3.905

4.100

4.342

4.650

5.055

5.609

6.410

7.657

9.825

14.307

26.983

99.422

6125.865

14

(continued)

3.130

3.195

3.269

3.353

3.451

3.564

3.698

3.857

4.052

4.293

4.601

5.005

5.559

6.359

7.605

9.770

14.249

26.924

99.428

6142.674

9.7 Statistical Tables 789

99.433

26.872

14.198

9.722

7.559

6.314

5.515

4.962

4.558

4.251

4

5

6

7

8

9

10

11

6.895

100

3

6.925

90

2

6.963

80

15

7.011

70

6157.285

7.077

60

1

7.171

50

n1

7.314

40

n2

7.562

30

n1

4.213

4.520

4.924

5.477

6.275

7.519

9.680

14.154

26.827

99.437

6170.101

16

4.824

4.849

4.881

4.922

4.977

5.057

5.179

5.390

Table 9.14 (continued)

4.180

4.487

4.890

5.442

6.240

7.483

9.643

14.115

26.787

99.440

6181.435

17

3.984

4.007

4.036

4.074

4.126

4.199

4.313

4.510

4.150

4.457

4.860

5.412

6.209

7.451

9.610

14.080

26.751

99.444

6191.529

18

3.513

3.535

3.563

3.600

3.649

3.720

3.828

4.018

4.123

4.430

4.833

5.384

6.181

7.422

9.580

14.048

26.719

99.447

6200.576

19

3.206

3.228

3.255

3.291

3.339

3.408

3.514

3.699

4.099

4.405

4.808

5.359

6.155

7.396

9.553

14.020

26.690

99.449

6208.730

20

2.988

3.009

3.036

3.071

3.119

3.186

3.291

3.473

3.941

4.247

4.649

5.198

5.992

7.229

9.379

13.838

26.505

99.466

6260.649

30

2.823

2.845

2.871

2.906

2.953

3.020

3.124

3.304

3.860

4.165

4.567

5.116

5.908

7.143

9.291

13.745

26.411

99.474

6286.782

40

2.694

2.715

2.742

2.777

2.823

2.890

2.993

3.173

3.810

4.115

4.517

5.065

5.858

7.091

9.238

13.690

26.354

99.479

6302.517

50

2.590

2.611

2.637

2.672

2.718

2.785

2.888

3.067

3.776

4.082

4.483

5.032

5.824

7.057

9.202

13.652

26.316

99.482

6313.030

60

2.503

2.524

2.551

2.585

2.632

2.698

2.801

2.979

3.752

4.058

4.459

5.007

5.799

7.032

9.176

13.625

26.289

99.485

6320.550

70

2.430

2.451

2.478

2.512

2.559

2.625

2.727

2.906

3.734

4.039

4.441

4.989

5.781

7.013

9.157

13.605

26.269

99.487

6326.197

80

2.368

2.389

2.415

2.450

2.496

2.562

2.665

2.843

3.719

4.025

4.426

4.975

5.766

6.998

9.142

13.590

26.253

99.488

6330.592

90

2.313

2.334

2.361

2.395

2.442

2.508

2.611

2.789

(continued)

3.708

4.014

4.415

4.963

5.755

6.987

9.130

13.577

26.240

99.489

6334.110

100

2.265

2.286

2.313

2.348

2.394

2.461

2.563

2.742

790 9 Mathematical Methods and Statistical Tables

4.010

3.815

3.656

3.522

3.409

3.312

3.227

3.153

3.088

2.700

2.522

2.419

2.352

2.306

2.271

2.244

2.223

12

13

14

15

16

17

18

19

20

30

40

50

60

70

80

90

100

n1

2.185

2.206

2.233

2.268

2.315

2.382

2.484

2.663

3.051

3.116

3.190

3.275

3.372

3.485

3.619

3.778

3.972

Table 9.14 (continued)

2.151

2.172

2.199

2.234

2.281

2.348

2.451

2.630

3.018

3.084

3.158

3.242

3.339

3.452

3.586

3.745

3.939

2.120

2.142

2.169

2.204

2.251

2.318

2.421

2.600

2.989

3.054

3.128

3.212

3.310

3.423

3.556

3.716

3.909

2.092

2.114

2.141

2.176

2.223

2.290

2.394

2.573

2.962

3.027

3.101

3.186

3.283

3.396

3.529

3.689

3.883

2.067

2.088

2.115

2.150

2.198

2.265

2.369

2.549

2.938

3.003

3.077

3.162

3.259

3.372

3.505

3.665

3.858

1.893

1.916

1.944

1.980

2.028

2.098

2.203

2.386

2.778

2.844

2.919

3.003

3.101

3.214

3.348

3.507

3.701

1.797

1.820

1.849

1.886

1.936

2.007

2.114

2.299

2.695

2.761

2.835

2.920

3.018

3.132

3.266

3.425

3.619

1.735

1.759

1.788

1.826

1.877

1.949

2.058

2.245

2.643

2.709

2.784

2.869

2.967

3.081

3.215

3.375

3.569

1.692

1.716

1.746

1.785

1.836

1.909

2.019

2.208

2.608

2.674

2.749

2.835

2.933

3.047

3.181

3.341

3.535

1.659

1.684

1.714

1.754

1.806

1.880

1.991

2.181

2.582

2.649

2.724

2.810

2.908

3.022

3.157

3.317

3.511

1.634

1.659

1.690

1.730

1.783

1.857

1.969

2.160

2.563

2.630

2.705

2.791

2.889

3.004

3.138

3.298

3.493

1.614

1.639

1.671

1.711

1.764

1.839

1.952

2.144

2.548

2.614

2.690

2.776

2.875

2.989

3.124

3.284

3.478

1.598

1.623

1.655

1.695

1.749

1.825

1.938

2.131

2.535

2.602

2.678

2.764

2.863

2.977

3.112

3.272

3.467

9.7 Statistical Tables 791

792

9 Mathematical Methods and Statistical Tables

Table 9.15 Two-digit pseudorandom numbers 50 31 18 03 59 38 43 38 35 82 24 36 88 82 98 43 10 84 83 86 09 38 87 64 52 93 83 64 95 00 04 24 65 19 83 55 83 51 09 51 87 98 72 48 15 35 52 24 59 73

53 63 94 28 32 88 84 27 30 45 46 12 31 31 44 20 56 12 79 27 52 71 36 01 26 29 21 07 88 94 83 57 12 35 03 31 91 34 17 44 91 44 45 27 04 16 93 95 69 26

04 60 22 03 52 87 40 54 77 84 53 13 78 13 78 97 89 76 58 73 94 76 41 94 44 35 56 68 70 50 25 09 49 69 69 02 80 99 72 42 47 90 96 16 90 18 73 58 06 80

65 73 38 88 88 79 47 83 84 06 14 15 65 26 89 20 96 75 26 74 98 09 80 90 12 73 49 75 54 70 51 30 60 51 03 39 29 64 25 87 68 53 99 09 10 36 92 73 71 81

06 76 60 94 40 54 39 58 01 33 98 73 71 05 86 42 69 89 71 14 51 58 26 58 31 77 02 15 41 00 60 55 62 72 88 96 70 55 13 66 86 16 70 24 21 98 44 96 05 36

61 73 86 14 37 51 49 26 13 73 47 93 66 49 86 84 65 13 55 73 24 43 41 75 69 99 64 29 59 32 02 13 78 55 18 29 80 56 02 32 54 24 27 42 45 47 88 23 54 19

33 53 59 22 48 02 50 96 05 12 57 16 41 33 84 95 40 08 44 20 29 69 63 57 07 96 04 54 75 07 87 43 54 76 89 37 62 93 50 67 64 31 85 01 05 60 36 47 29 14

44 76 50 50 97 48 51 80 75 39 29 05 40 99 34 89 03 40 46 17 80 29 54 94 60 96 25 90 07 60 66 37 75 41 02 98 71 57 70 59 20 60 08 36 86 64 45 39 89 77

65 41 00 67 77 30 49 27 90 30 60 07 15 80 82 60 02 29 29 12 56 88 75 92 62 03 98 32 20 35 99 17 29 33 78 16 49 46 85 02 57 45 36 52 47 41 08 48 49 58

03 02 82 71 88 83 46 54 00 84 22 67 40 60 08 58 35 51 02 16 27 39 30 17 98 20 58 56 36 13 95 14 76 61 60 94 31 78 36 15 43 55 24 28 50 14 04 32 88 39

79 77 39 95 11 68 69 16 55 98 52 18 41 57 11 17 47 98 27 38 58 11 01 65 43 47 74 76 57 67 97 65 39 46 34 02 55 85 09 70 67 02 63 22 22 10 30 47 14 32

40 39 91 72 01 47 82 64 75 71 03 01 65 09 09 26 37 93 89 85 13 97 76 82 25 79 60 00 61 06 53 34 70 47 08 07 95 81 40 11 40 75 58 57 39 60 74 23 50 13

96 90 93 86 34 58 18 71 96 95 57 52 87 28 61 77 22 50 78 57 81 59 57 32 90 76 47 40 47 89 88 91 38 30 39 80 89 49 83 53 07 11 50 69 29 88 18 06 90 08

74 46 90 97 25 32 35 45 96 22 72 39 88 83 33 61 53 48 21 91 71 59 19 21 53 69 55 30 83 25 59 48 92 04 24 98 11 73 37 79 30 93 77 02 79 23 77 01 65 81

57 35 36 12 23 52 51 64 50 58 83 81 59 55 76 98 49 33 56 85 86 86 35 16 01 67 06 07 04 42 25 39 96 80 15 43 90 84 58 50 01 28 95 77 57 61 98 46 53 81

14 57 01 93 74 83 72 84 87 11 18 58 89 55 01 42 60 72 06 54 75 76 60 88 48 03 32 28 85 58 61 59 05 51 85 93 67 98 16 50 46 32 91 26 68 23 00 18 68 03

05 01 45 34 69 99 58 67 48 29 53 05 69 58 78 54 66 41 36 32 13 13 99 87 47 91 48 11 55 21 68 42 08 67 56 21 39 96 00 66 67 64 08 78 15 72 66 61 41 05

03 66 75 80 02 90 40 24 30 95 08 69 04 73 13 02 87 13 10 60 45 34 34 81 06 27 42 07 18 03 19 90 99 94 34 80 61 48 91 22 96 67 11 77 22 01 54 29 33 62

13 34 24 41 72 55 40 81 25 29 94 32 32 42 78 21 09 75 88 78 77 07 06 69 30 90 91 65 13 43 23 78 97 63 79 33 34 84 25 59 61 77 86 85 33 57 02 44 41 22

91 09 80 00 93 06 90 58 59 89 51 12 49 36 65 09 30 05 63 43 66 77 28 11 32 60 30 65 20 61 03 82 06 17 45 34 20 40 36 38 70 14 59 10 85 15 35 56 07 63

92 95 63 81 95 52 92 71 33 48 15 61 28 59 61 78 57 92 10 85 96 03 36 73 63 74 14 95 45 14 95 93 52 78 78 04 98 78 92 30 90 66 56 23 72 30 04 78 97 97

07 58 69 50 46 46 58 94 54 75 12 72 03 13 26 19 57 45 29 98 80 32 74 69 44 52 01 88 21 95 11 62 02 06 66 50 77 92 75 73 95 77 49 37 66 46 78 66 11 07

22 77 56 11 02 60 48 87 28 57 98 67 26 13 63 80 38 47 40 03 00 16 85 97 49 66 14 53 71 81 10 39 67 30 02 24 07 52 16 60 19 97 38 73 49 69 26 33 68 79

30 72 26 91 87 21 27 68 76 63 20 33 26 31 13 92 07 24 94 73 66 89 00 68 13 94 63 65 62 89 45 58 21 41 03 89 49 34 19 14 66 37 54 30 32 68 02 77 20 62

67 94 54 63 76 84 11 95 71 46 33 63 70 42 33 51 29 00 88 85 93 73 38 45 87 80 66 85 34 00 37 09 93 14 56 11 39 94 17 52 19 83 50 76 54 29 91 36 80 14

Suggested Further Reading

APEC—Asia Pacific Economic Forum. (2013). Guidebook on SME (Small and Medium Enterprises) business continuity planning, August 2013. Cramér, H. (1999). Mathematical methods of statistics. Princeton University Press. George, M. L., et. al. (2005). Lean Six Sigma pocket tool book. McGraw Hill. Hastings, N. A. J. (2015). Physical asset management (With an introduction to ISO 55000). Berlin: Springer. Hoyland, A., & Rausand, M. (1994). System reliability theory. New York: Wiley. Kreyszig, E. (2011). Advanced engineering mathematics. Wiley. Montgomery, D. C. (2009). Introduction to statistical quality control. New York: Wiley. OECD. (2011). OECD guidelines for multinational enterprises. OECD. Rawlings, J. O., Pantula, S. G., Dickey, D. A. (1998). Applied regression analysis: A research tool. Berlin: Springer. Rohatgi, V. K. (2003). Statistical inference. Dover Publications. Ross, S. M. (2000). Introduction to probability models. Academic Press. Wasserman, L. (2003). All of statistics—A concise course of statistical inference. Berlin: Springer. Zwillinger, D., & Kokoska. S. (2000). CRC standard probability and statistics tables and formulae. Chapman&Hall/CRC.

© Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7

793

Index

2 2k -design, 462

5 5S-Method, 384 5 Whys, 387 5 Whys and 2 Hows (5W2H), 388

8 8D Reports, 389

A Acceptance sampling, 392 Accreditation, 669 Admission of learners, 133 Aerospace industry, 259 Affinity diagrams, 399 Algebra, 713 Alternative hypothesis, 617 Aluminum stewardship initiative (ASI), 363 Amfori BSCI, 363 Analysis, 698 Analysis of variance (ANOVA), 402 Anti-bribery, 335 Anti-bribery management system (ABMS), 352 AS9100, 260 AS9110, 260 AS91120, 260 As low as is reasonably practicable (ALARP), 401 Asset management system (AMS), 233 Auditors: General requirements, 660 Audits, 654

Automotive industry, 252 Average residual life, 578 Awareness ISO 9001, 42

B Balanced scorecard, 409 Bayesian analysis, 411 Bayes’ theorem, 726 Bernoulli distribution, 744 Beta-distribution, 745 Beta-function, 747 Binomial distribution, 746 Bivariate normal distribution, 444 Boolean algebra, 720 Bow-Tie analysis, 412 Brainstorming, 413 Brainwriting - 6-3-5 Method, 414 BRC, 288 Business continuity management system (BCMS), 141 Business continuity procedures, 149

C Cauchy-Schwartz inequality, 736 Causal diagram, 416 Causal mapping, 416 Cause and Effect matrix (C&E matrix), 421 C-chart, 435 Central limit theorem, 740 Certification, 669 Certification of management systems, 670 Certification of personnel, 670 Certification of products, 670 Chain of custody, 290 Characteristic functions, 737

© Springer Nature Switzerland AG 2020 H. Kohl, Standards for Management Systems, Management for Professionals, https://doi.org/10.1007/978-3-030-35832-7

795

796 Chebyshev inequality, 734 Checklist, 419 Check sheet, 420 Chi-square (χ 2 ) distribution, 750 Cluster sampling, 598 CoC scheme ISO 38200, 294 Codex Alimentarius, 268 Coherent system, 585 Collaborative business relationship management system (CBRMS), 188 Collaborative business relationships, 188 Communication ISO 9001, 42 Competence ISO 9001, 42 Compliance, 335 Compliance commitment, 337 Compliance culture, 337 Compliance function, 341 Compliance management system, 336 Compliance obligations, 337 Compliance policy, 340 Compliance requirements, 337 Compliance risks, 337 Components, 579 Confidence intervals, 465 Confidentiality of laboratory, 103 Context of the organization ISO 14001, 81 Context of the organization ISO 19600, 337 Context of the organization ISO 20121, 306 Context of the organization ISO 21001, 117 Context of the organization ISO 37001, 353 Context of the organization ISO 44001, 189 Context of the organization ISO 45001, 205 Context of the organization ISO 50001, 221 Context of the organization ISO 55001, 235 Context of the organization ISO 9001, 27 Control chart (mean value), 427 Control charts, 424 Control chart (standard deviation), 431 Convenience sampling, 599 Corporate social responsibility (CSR), 335, 362 Correlation analysis, 442 Cost benefit analysis, 418 Critical to quality, 449 Cross functional process maps, 556 Cross impact analysis, 422 Cryptography, 163 CTQ tree, 450 Cumulative probability (Binomial), 747 Curve fitting, 564 Customer property ISO 9001, 53 Customer value assessment matrix (CVAM), 453

Index D Data collection and presentation, 454 Decision tree analysis, 457 Defects per million opportunities (DPMO), 439 Defects per opportunities (DPO), 439 Defects per unit (DPU), 439 Define-Measure-Analyze-Improve-Control (DMAIC), 375 Delphi technique, 460 Demand organization ISO 44001, 320 Deming Prize, 369 Design and development ISO 9001, 49 Design of experiments (DOE), 461 Determinants, 718 Differential calculus, 704 DMAIC ANALYZE, 379 DMAIC CONTROL, 381 DMAIC DEFINE, 377 DMAIC IMPROVE, 380 DMAIC MEASURE, 378 Documented information ISO 9001, 43 E Efficient estimator, 487 Emergency preparedness and control ISO 45001, 215 EN 15224, 295 EN 9100, 260 EN 9110, 260 EN 9120, 260 Energy baseline (EnB), 222 Energy consumption, 222 Energy efficiency, 222 Energy management system (EnMS), 220 Energy performance, 222 Energy performance indicators (EnPI), 222 Energy review, 225 Energy target, 222 Energy use, 222 Entropy, 529 Environmental management system (EMS), 79 EOMS operation requirements, 122 EOMS—scope of the organization, 118 Estimation of parameters, 465 European Foundation for Quality Management (EFQM), 370 Events—their likelihood and impacts, 183 Event tree analysis, 490 Exit strategy activation, 201 Exponential distribution, 751 Externally provided processes ISO 9001, 51

Index F Facility management system (FMS), 319 Failure intensity, 578 Failure modes and effects analysis (FMEA), 494 Failure rate, 577 Fair Stone, 363 Fault tree analysis, 500 F-distribution, 754 Fisher’s F-distribution, 753 Five Max method, 493 Flowchart coupled with RACI matrix, 558 Flowcharts, 554 Food safety management system (FSMS), 273, 285 Force field analysis, 499 Forestry, 290 Forest Stewardship Council (FSC), 291 FSSC 22000, 286 Full factorial design, 462 Functions, 702

G Gamma distribution, 755 Gamma-function, 766 Genuine MS standards, 21 Geometric distribution, 756 Global Food Safety Initiative (GFSI), 270 GMP+, 289

H Hazard analysis and critical control points (HACCP), 268, 505 Hazard and operability studies (HAZOP), 507 Hazard control ISO 22000, 280 Hazard level matrix, 506 Hazards and risk assessment ISO 45001, 210 Health and safety committees, 206 Healthcare, 294 History ISO 14001, 79 History of ISO 9001, 22 Human reliability analysis, 511 Human resource information security, 161 Hypergeometric distribution, 758

I IAF MD 1:2018, 665 IAF MD 2:2017, 665 IAF MD 3:2008, 665 IAF MD 4:2018, 665

797 IAF MD 5:2015, 665, 685 IAF MD 11:2019, 665 IAQG, 259 IATF 16949, 253 ICTI, 363 Identification of OH&S hazards, 208 IFS, 287 Impartiality of laboratory, 103 Improvement QMS, 57 Incomplete Beta-function, 747 Incomplete -function, 766 Information and communication technology (ICT), 262 Information entropy, 529 Information security—access control, 162 Information security—asset management, 162 Information security—compliance, 166 Information security—incident management, 166 Information security management system (ISMS), 156 Information security—organization, 161 Information security policies, 161 Integral calculus, 708 Interested parties, 29 Interested parties—selection criteria, 514 International Accreditation Forum (IAF), 665 Inter-rater agreement, 521 Interval estimation, 473 Interviews, 514 Involvement matrix, 512 IRIS, 260 Irrelevant component, 585 Ishikawa diagrams, 516 ISO 100xx-Series, 77 ISO 14000-Series, 89 ISO 14001, 79 ISO 17021-1, 674 ISO 19600, 336 ISO 20121, 305 ISO 21001, 116 ISO 22000, 273 ISO 22000—Operational requirements, 278 ISO 22000-Series, 273 ISO 22301, 141 ISO 22316, 243 ISO 26000, 347 ISO 27000-series, 157 ISO 27001, 156 ISO 28000, 313 ISO 31000, 173

798 ISO 31000—principles, 174 ISO 37001, 352 ISO 37301, 337 ISO 38200, 292 ISO 39001, 331 ISO 41001, 319 ISO 44001, 188 ISO 45001, 203 ISO 50000-series, 220 ISO 50001, 220 ISO 50001 implementation, 231 ISO 50003, 684 ISO 55000-series, 233 ISO 55001, 233 ISO 9001, 21, 22 ISO 9004, 21 ISO/DTS 26030, 351 ISO/IEC 17021-2, 683 ISO/IEC 17021-3, 683 ISO/IEC 17025, 92 ISO/IEC 27006, 684 ISO/IEC TS 17021-10, 683 ISO/IEC TS 17021-11, 683 ISO/IEC TS 17021-4, 683 ISO/IEC TS 17021-5, 683 ISO/IEC TS 17021-6, 683 ISO/IEC TS 17021-7, 683 ISO/IEC TS 17021-8, 683 ISO/IEC TS 17021-9, 683 ISO/IEC TS 17023, 664 ISO/NP TS 22003, 683 ISO/TS 22163, 261 ISO/TS 9002, 21

J JCI accreditation, 303 Jensen inequality, 735 Joint business relationship management plan, 193 Joint commission international, 299 Judgement sampling, 599

K Kaizen, 519 Kano model, 452 Kappa index, 521, 643 Kolmogorov axioms, 722

L Laboratory management, 92 Laboratory MS options, 106

Index Laboratory processes, 106 Laboratory reports, 110 Laboratory resources, 103 Laboratory sampling procedures, 111 Law of large numbers, 736 Limits, 701 Linear regression, 564 Lognormal distribution, 760 Long-term sigma, 441

M Malcolm Baldridge National Quality Award (MBNQA), 369 Management review ISO 9001, 57 Management systems for educational organizations (EOMS), 116 Maps, 702 Markov analysis, 524 Markov inequality, 734 Matrices, 713 Maximum entropy principle, 528 Maximum likelihood method, 470 Mean remaining lifetime, 578 Mean time to failure (MTTF), 577 Median, 773 Meeting, 613 Mind-mapping, 531 Minimal cut set, 593 Minimal path set, 593 Moment generating functions, 737 Monte Carlo simulation, 533 Multiple linear regression analysis, 567 Multivariate analysis of variance (MANOVA), 408 Multivariate normal distribution, 763

N Negative Binomial distribution, 761 Nominal group technique, 540 Nonconforming products ISO 9001, 55 Nonlinear regression analysis, 569 Non-random sampling, 599 Normal distribution, 762 Null hypothesis, 617 Numbers, 698

O Occupational health and safety management system (OH&SMS), 203 OH&S culture, 204 One-way ANOVA, 408

Index Operating characteristic, 396 Operational planning QMS, 46 Operation characteristics (Poisson), 766 Order statistics, 542 Organizational knowledge, 41 Organizational resilience, 243 Organization and its processes, 10 P Parallel structure, 580 Pareto analysis, 544 Pareto charts, 544 Path set, 593 P-chart, 432 Pearson correlation, 443 Percentiles, 773 Performance evaluation ISO 9001, 55 PESTLE analysis, 547 Pharmaceutical supply chain initiative (PSCI), 363 Plan-Do-Check-Act (PDCA), 547 Planning actions ISO 45001, 211 Planning changes, 38 Planning for the EnMS, 224 Planning the EMS, 83 Planning the EOMS, 120 Plus, minus, interesting (PMI), 550 Point estimation, 468 Poisson distribution, 764 Poka-Yoke, 551 Post-delivery activities ISO 9001, 54 Preliminary hazard analysis (PHA), 548 Prerequisite programs, 271 Principles of ISO 21001, 117 Principles of ISO 9001, 24 Principles organizational resilience, 244 Prioritization matrix, 552 Process capability indices, 436 Processes, 10 Process failure rates, 12 Process flow tools, 553 Procurement ISO 45001, 215 Program for the Endorsement of Forest Certification (PEFC), 291 PRPs ISO 22000, 278 Pseudo random numbers, 774 Q QM procedures, 46 Quality awards, 368 Quality excellence for suppliers of telecommunication (QuEST), 262

799 Quality management system (QMS), 22 Quality manual, 45 Quantiles, 772 Quota sampling, 599 R RACI matrix, 562 RACI(Q)-matrix, 34 Railway industry, 260 Random sampling, 597 Random variables, 728 Redundancy at component level, 588 Redundancy at system level, 588 Regression analysis, 564 Relationship diagrams, 416 Relevant component, 585 Reliability block diagrams, 579 Reliability function, 576 Reliability theory, 575 Resources ISO 9001, 39 Risk assessment and evaluation process, 185 Risk assessments, 180 Risk-based thinking, 15 Risk evaluation, 181 Risk identification, 181 Risk management integration, 184 Risk management process, 178 Risk management system (RMS), 173 Risk priority matrix, 36 Risk treatment, 180 Road traffic safety management system (RTSMS), 331 Root cause analysis, 516 S SA8000, 363 Sampling of data, 596 SCC-model, 219 Scenario analysis, 600 Sedex members ethical trade audit (SMETA), 363 Self-selected sampling, 599 Sequences, 701 Series structure, 580 Sets, 693 Short-term sigma, 441 Sigma level, 442 Significant energy use (SEU), 222 Sign test, 633 Simple design of experiment, 462 Simple linear regression analysis, 565 Simple random sampling, 597

800 SIPOC diagrams, 602 Snowball sampling, 599 Social responsibility, 347 So far as is reasonably practicable (SFAIRP), 402 Solution selection matrix, 603 Spearman correlation, 446 Special purpose audits, 365 Stages of a business relationship, 196 Stakeholder profile matrix, 606 Static factor, 222 Statistical tables, 772 Strategic asset management plan (SAMP), 236, 243 Strategy alignment matrix, 607 Stratified random sampling, 598 Structured What-IF technique (SWIFT), 608 Structure functions, 579 Student’s t-distribution, 767 Supply chain security management system (SCSMS), 313 Support elements ISO 9001, 39 Support of the EOMS, 122 Swim-lane flowcharts, 556 SWOT analysis, 610 Systematic random sampling, 598 T Taguchi loss function, 612 Taylor series, 707 T-distribution, 767 Teams, 613 Telecommunication industry association, 262 Test for correlation, 444

Index Testing of hypotheses, 616 Test report recognition, 115 Time dependent system reliability, 584 Time to failure, 575 TL 9000, 262 To-Do-list, 643 Traceability ISO 9001, 53 Tree diagrams, 644 Triangular distribution, 768 Truth table, 691 Turtle diagrams, 13, 559 Two-way ANOVA, 408

U Unbiased estimator, 486 Uniform distribution, 770

V Value stream mapping, 649 Visual management, 646 Voice of the customer (VOC), 647

W Weibull distribution, 771 Work instructions, 46 Worldwide responsible accredited production (WRAP), 363

Y Y = F(x), 651 Yield, 440