Operations Management ISO 9000 Standards

Operations Management

ISO 9000 standards and certifications make a significant contribution to international business. These standards outline production processes and quality controls, and do so in a framework that translates across international borders.

Without ISO 9000 standards, businesses have less confidence doing business with other jurisdictions. This is because each jurisdiction has its own set of laws and regulations. Moreover, each company and facility will have its own sets of standards. For a company attempting to evaluate different suppliers in different parts of the world, this presents a problem. In some cases, the differences between methods, techniques and technologies can be so great that comparing different companies is like comparing apples and oranges.

What the ISO 9000 standards do is to level the playing field. Each company is held, or holds itself, to a set of guidelines that indicate the robustness of its procedures and quality controls. These standards provide a benchmark that can be used as a point of comparison across firms and borders. Two potential suppliers may operate in very different ways, and this may make proper evaluation difficult, but if they each have ISO 9000 certification, the comparison becomes much easier.

By allowing for such relatively easy comparison between firms, it allows companies seeking suppliers to stretch beyond their own boundaries with more comfort. This is critical to international business because it reduces or eliminates one of the major barriers to doing business internationally, the confusion that arises when faced with different standards or ways of doing things. When such risk is reduced, firms are able to find the suppliers that best suit their needs, no matter where they are situated.

7. Histograms are a type of bar graph that shows data variation. The intervals must be consistent in size and not overlap. The display shows data that comes in a continuous stream and can be measured. This data is divided into the intervals and the number of instances of each interval is then recorded. The resulting chart shows the number of instances occurring in each interval.

Pareto chart is a type of bar graph that shows the frequency of errors. The display always adds up to 100% and typically will be sorted in descending order. Pareto charts are used to identify where the most errors occur.

A fundamental difference between the two is that the data being measured is numeric in the histogram, but not necessarily so in a Pareto chart, which does not need to be numeric and often is not. This means that the two types of chart tend to be used to measure slightly different things.

Another key difference is that the histogram measures an entire set of data, but does not reflect judgment on what components of that data are errors. In a typical histogram, only the outlying bars would represent errors. For a Pareto chart, the usage reflects that only errors are identified. In other words, you are starting with a subset rather than the whole set. The objective isn't to find out how frequently errors occur on the whole, but to identify the frequency of specific types of errors.

Because of the differences in their structure, histograms and Pareto charts are used to find different types of errors. Histograms measure the degree to which something is erroneous, whereas Pareto charts only measure the instances of error, not the magnitude.

5. Cost accounting has a strong relationship with lean production. One of the key tenets of lean production is the elimination of waste. The theory identifies seven concepts to help a company eliminate waste but does not provide one key thing - a means to identify waste. Cost accounting focuses on just that - identifying the costs associated which each activity in the production process. By analyzing the data produced by a cost accounting program, management gains the means to identify waste.