April 2009
By Roy Rouget

Roy Rouget is the Quality System Team Lead with responsibility of managing ISO 9001:2008, OHSAS 18001, ISO 14001, SA 8000 and the internal quality improvement activities of TNT Document Services. He is also a certified Six Sigma Black Belt and a senior member of the American Society for Quality.

roy.rouget(at)tnt.co.uk
www.tnt.mu



Figure 1: Quality Expectations




Figure 2: The ISO 9001:2008 quality principles




Figure 3: ISO 9001/9002 requirements

Ensuring quality in outsourcing

Business Process Outsourcing has become a leading business model of our time. While the increasing pressure to cut cost is still among the primary drivers for this trend, today quality has become a major issue when it comes to choosing an outsourcing partner. Here is an overview of standards and models that help measure and improve the quality of outsourcing services.

Choosing the best out of the best

Toys, clothes, milk, toothpastes – in 2008 we have witnessed numerous widespread product recalls due to poor-quality outsourcing. Clearly, quality has become a critical success factor in outsourcing and is now just as important as cost. Providing poor quality in outsourcing – as in any other business – can have disastrous effects. From paying penalties to rework and opportunity costs, quality-related expenses can take a huge bite out of the supplier’s bottom line. In addition, reputations built over decades can be destroyed overnight.

From cost to quality issues

As established outsourcing providers are besieged by new entrants from other low-cost countries, new sources of service differentiation become crucial to maintain the loyalty of existing customers and attract new ones. There has been a shift from the low-cost factor to a focus on continual improvement. The cost factor alone has been a risky strategy. Customers are no longer looking for lowest cost but rather a combination of cost, quality, and long-term relationship.

This shift has urged outsourcing providers to adopt an uncompromising approach towards quality to earn customer loyalty by providing services that are of the highest quality and greatest value.

What is quality?

To sustain growth in the competitive environment – particularly in difficult times – organizations need to create and retain satisfied customers. To achieve this goal, organizations have to provide fitness for purpose products and services (products and services suiting the buyer’s purposes) and value for money, meet the customers’ requirements and service level agreements (SLR) as well as deliver on time. In short, each and every Business Process Outsourcing (BPO) organization needs to provide quality products and services.

Many BPO organizations develop their own management philosophies, beliefs and visions to help satisfy their customers. Choosing the best way for them, they can either go through a process of trial and error, select from the vast body of knowledge management, or utilize one or more management models available that combine proven principles and concepts. ISO 9000 represents one of these models. Others include Total Quality Management, Six Sigma, eSCM and Lean. Let’s have a look at some of these approaches towards quality management.

ISO 9000: Quality in outsourcing

In their strategy to embrace quality, most BPO organization have adopted the ISO 9000 standards as their stepping stone. Even today, the ISO 9000 remains de facto the most widely chosen route for new BPO organizations that want to embark on the quality journey.

The main reason for choosing the ISO 9000 set of standards is that it has been widely adopted as a standard facilitating international trade. The international set of standards has brought the consistency in terminology and content that were lacking before. These international standards have today been adopted as national standards by more than 130 countries. The set of standards deals with the management system used to design, produce, deliver and support products and services. Since its introduction in 1987, ISO 9000 standards have reached the maturity stage. In addition, the fact that the standards are generic in nature has facilitated their adoption by most BPO companies.

ISO 9001:2008, the latest revised version from November 2008, adopts a process approach, which emphasizes on measuring process performance and effectiveness as well as continually improving the process based on objective measurement. The ISO 9001 implementation involves establishing policy, setting objectives for quality, designing management systems, documenting procedure and the availability of skill resources.

ISO 9001 is made up of eight fundamental quality management principles. These principles provide the reasons for the requirements and are thus very important.

A quality management principle as defined by ISO/TC 176 is “a comprehensive and fundamental rule or belief, for leading and operating an organization, aimed at continually improving performance over the long term by focusing on customers while addressing the needs of all other interested parties.”

By making use of the principles, an organization can put into perspective the different processes. For example we can look at a process and ask:

  • Where is the customer focus in this process?
  • Is quality the concern of the whole organization or the role of the quality department?
  • Are we having guiding policies, measurable objectives and a conductive environment that motivates everyone to achieve these objectives?
  • Is there a systems approach to the management of a particular process, process optimization and removal of duplication in processes?
  • How are we using our resources to monitor, measure and improve performance?
  • Are we making change a constant in continually improving the process performance and efficiency?
  • Are we using facts to take decisions?
  • Is there a mutually beneficial relationship with the suppliers in the overall process?

Beyond compliance

Today, quality is more than just complying with the requirement of established standards. Quality, particularly in a highly competitive environment is more about cost-effectiveness, carefully reviewing failure modes at every state and more importantly, planning to prevent such failures. Quality is a journey without a finish line. Performance levels of most processes have the tendency to decrease over time unless forces are exerted to maintain them. This means that simply maintaining quality at its current state will require some efforts, but in the long run, this will not be enough to beat the competitor. If additionally we want to create continual improvement, we should look beyond compliance and have quality built into the DNA of the organization.

Clause 8.5.1 of IS0 9001:2008 provides continual improvement. It states, “The organization shall continually improve the effectiveness of the quality management system through the use of the quality policy, quality objectives, audit results, analysis of data, corrective and preventive actions and management review”.

Quality should be viewed as a partnership between the customer and the supplier to continually improve the businesses processes and sharing the benefits for a real win-win relationship.

Total Quality Management

As more and more BPO organization have started implementing ISO 9000 on their journey to quality, the quality advantage is fast eroding as BPO services become commoditized and the sector reaches maturity. This has encouraged organizations to work toward other quality methods.

Total Quality Management (TQM) can be defined as a systematic management approach centered on quality to meet the competitive challenges with emphasis on top management commitment and involvement, customer satisfaction, supplier relationship, benchmarking, quality-oriented training, employee focus, zero defects, process improvement, and quality measurement. TQM does not replace the ISO 9000 standards. ISO 9000 is a Quality System Management Standard. TQM, on the other hand, is a philosophy of continual improvement. The ISO Quality Standard sets in place a system to deploy policy and verifiable objectives.

An ISO implementation is a basis for a Total Quality Management implementation. Many organizations jump onto TQM once their ISO system reaches maturity – that is, after around three years. Where there is an ISO system, about 80 percent of the steps are in place for TQM. The requirements for TQM can be considered ISO plus.

Six Sigma

Six Sigma is a rigorous and disciplined improvement methodology that uses customer requirements, statistical analysis and team work to achieve breakthrough and continuous improvements in processes across the organization. Six Sigma forces systematic changes. Organizations, which adopt Six Sigma, will proactively embrace change by explicitly incorporating it into their management system. It is all about helping the organization make more money by improving customer value and efficiency.

Through the use of a simple performance improvement model known as the DMAIC (define, measure, analyze, improve, control), Six Sigma focuses on improving quality by reducing variation. This helps organizations produce products and services better, faster and cheaper.

Define the goals of the improvement activity
Measure the existing system
Analyze the system to find ways to eliminate the gap between current performance and the desired goal
Improve the system
Control the system

The performance improvement technique is used to identify and resolve problems that are preventing the organization from achieving defined targets, largely because most processes are not designed to be capable.
The steps in a typical Six Sigma program would be:

  • Identify the organization’s biggest problems
  • Assign the best people to fix these problems
  • Provide the necessary resources and management support
  • Grant uninterrupted time to work on the problems
  • Undertake the necessary changes that will eliminate the problems

eSourcing Capability Model

The eSourcing Capability Model for Service Providers (eSCM-SP) is a “best practices” capability model developed by ITSqc at Carnegie Mellon University. It serves three purposes:

1. Give IT-enabled service providers guidance that will help them improve their capability across the sourcing life cycle

2. Provide clients with the necessary guidance to evaluate the capability of service providers

3. Differentiate a provider from its competitors

eSCM-SP’s critical success factors are classified into 84 best practice categories in six capability areas:

1. Relationship Management
Maintaining good relationships with clients, end users, suppliers, and all stakeholders.
2. People Management
Selecting, hiring, and retaining a motivated workforce.
3. Knowledge Management
Establishing well-defined and delivered services that satisfy commitments and meet client needs.
4. Technology Management
Managing service transitions well at both engagement initiation and completion.
5. Performance Management
Providing world-class services that are always improving.
6. Threat Management
Dealing successfully with business threats, such as security issues, risk management, disaster recovery, and statutory and regulatory requirements.

For each of these practices there is a list of activities and clarifying information. The critical capabilities for eSourcing Service providers are associated with successful sourcing relationships. Most practices refer to establishing a policy, procedure, guide, program or plan.

The sourcing life cycle is divided into Ongoing, Initiation, Delivery and Completion. Ongoing Practices span the entire Sourcing life cycle, while Initiation, Delivery and Completion occur in specific phases of that life cycle.

Future trends

The success of the ISO 9000 set of standard, Six Sigma and Total Quality Management lies in their capacity to be applied to any type and size of organization. This generic approach has been a boaster for BPO organization to move toward quality.

Though there is no “one size fits all” standard, the optimum solution is to have a blend of them all. However, do not just jump from one methodology to the other just for the sake of keeping up to date with what the competitors are doing. Quality should not be a buzzword. It should be carefully planned, nurtured, embedded in the organization’s culture and be part of its mission. The best approach for BPO companies is to choose one methodology, grow it and sustain the benefits. After this first round, which takes about two or three years, organizations can start building on this solid foundation and take the best from other quality standards and methodologies.

All these standards and methodologies are in fact different in their approach and concept. However, there is a lot more to gain in consolidating the similarities rather than trying to look for differences.

References

  • Business process improvement toolbox – BjØrn Andersen
  • Givindarajan Ramu – “ In the Know – A BoK dedicated to quality in outsourcing” – Quality Progress – August 2008
  • Thomas N. Duening / Rick L. Click - “Essentials of Business Process Outsourcing”
  • EN ISO 9001 – Quality management systems – Requirements (ISO 9001:2008)
  • Juran’s Quality Handbook
  • Comparing_eSCM-SP_v2_and_ISO_9001 – ITSqc Carnegie Mellon
  • The eSourcing Capability Model for Service Providers (eSCM-SP) v2.o1 - ITSqc Carnegie Mellon
  • High Quality in the Indian Outsourcing Industry - http://www.outsource2india.com
  • Beyond merely asserting 'Quality is Key' - If you can't quantify the benefits of quality, you are only paying lip service to it - Arijit Sengupta &  George A Logemann
  • American society for quality – www.asq.org
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#9 Jeff wrote at Mon, Aug 07 answer homepage

great article

#6 rozy wrote at Tue, Jul 26 answer

For an online video editing service you might want to check the following homepage: https://www.viddedit.com/ . This is a company that specializes in online video editing for everyday users. They have all sorts of product flavors like wedding, go-pro etc. Prices seem to be affordable as well.

#5 andersonnancy wrote at Mon, May 09 answer homepage

Quality control is one of the main functionality of outsourcing. You will gain future relationships by maintaining this so please take this into account.