ISO 9001:2015 - Clause 4.1 Understanding the organization and its context (Part 2)

 

In this post we will continue with the applying of a detailed analysis method for each of the clauses, sub-clauses and requirements included in the ISO 9001: 2015 standard, and continuing with the topic  Understanding the organization and its context, according to the requirements established in subclause 4.1 of the standard.

In the previous post, I presented the text of the aforementioned subclause 4.1, and we were applying an exercise of an exhaustive breakdown of the requirements contained in it.

When carrying out this exercise of exhaustive breakdown of the requirements of this sub-clause, we should read carefully each word and sentence and detect the orientation of each one of them. In the particular case of this sub clause, in its two paragraphs and the two times the word "shall" is found in its wording, we can detect the following requirements:

 

As we can see, from a sub-clause in which the term "shall" appears twice, we can break this down into up to eight requirements, which although it would seem they are the same, actually they are not. If they would have the same meaning, the standard would have established just a single term.

If you have experience in standardization activities, you should know that, as a matter of principle, it is intended to use the simplest and most objective wording in the standards, without duplicating nor contradict the information and without additional explanations, with the exception of the explanatory notes included in them, which allows the standards be explicit, but not necessarily easy to understand.

I consider it is important to do this exercise of exhaustive breakdown of requirements, in order to be able to visualize each of them, without creating confusion by the way they are written and without mixing them.

In this way we can identify the necessary elements in our quality management system, which will allow us to meet each of these requirements.

The better you identify the requirements to be met, the easier will be their inclusion in the system, in terms of their documenting, implementing, monitoring, following-up, reviewing, auditing and improving.

 

Step 2.- Carefully analyse the terms that may cause confusion in each requirement.

 

If we take, as an example, the first four requirements of our list, at first sight it might seem that they say the same thing, each one of them, but in fact they are not necessarily the same external issues that are pertinent to the purpose of the organization, as those that are pertinent to its strategic direction, although in some cases they effectively could be the same.

In the same way, external issues are not the same as internal issues for the organization.

In this aspect, basic knowledge about strategic planning, management systems and elements of management systems would be very useful.

 

What is the difference between “purpose” and “strategic direction” in an organization?

To clarify this difference, it is convenient to consider that the purpose of an organization is identified from two key strategic elements for any organization, which are the mission and the vision. These elements should be established by the owners (shareholders) of the organization, and would mean what for the organization was created (fundamental goal), and what would be the expectations of its performance in a certain period of time.

The fact that an organization has a mission and a vision identified are not specific requirements of the ISO 9001:2015 standard, since it is considered that every organization should have these elements identified and documented, previously at the establishment of a quality management system, and that they should be available to all the organization's personnel. However, since they are elements that can be modified, either to redefine, improve, or redirect them, applying this requirement of the standard provides the necessary information to the owners of the organization to make these adjustments.

It would be expected that this purpose would establish the reason that justifies the existence of an organization based on three elements: its profits, its impact on society and its impact on the people that comprise it.

Strategic management, in the other way, is the set of strategic elements that are generated by the top management, such as values, general objectives, policies and specific objectives, based on that purpose (mission and vision).

The strategic direction formulates and implements the strategy, mobilizing the resources of the organization and attending to the complexity of the organization and its environment. It should be a mixture of knowledge of its environment, a planned, organized, clear and responsible management with its resources, and at the same time as being assertive regarding what the organization must improve to increase its competitive capacity in the market and achieve excellent results.

Generally, when organizations establish their strategies in terms of quality management, they usually consider the issues that are within their common focus, such as their customers, their markets, their level of performance or their internal processes.

Now, the ISO 9001: 2015 standard, as well as management system standards that use the "high level structure" (HLS), promotes through including this requirement, the organizations are more sensitive to other factors, which are generally not under their radar, both internally within the organization, and those that are outside of the organization.

With regard to the analysis of these issues, it is important to consider the clarifying NOTES that derive from sub clause 4.1, and which are the following:

NOTE 1 Issues can include positive and negative factors or conditions for consideration.

NOTE 2 Understanding the external context can be facilitated by considering issues arising from legal, technological, competitive, markets, social and economic environments, whether international, national, regional or local.

NOTE 3 Understanding the internal context can be facilitated by considering issues related to values, culture, knowledge and performance of the organization.

From there, you should describe the following items:

 

What might be the external issues relevant to the purpose and affecting the ability to achieve the intended results of the quality management system in an organization?

As it was mentioned previously, external issues relevant to the purpose of the organization are those that may affect the mission or vision of the organization, from the perspective of its owners (shareholders). Among these possible external issues we could consider political stability or instability, local development public policies, or the lack of them, international trade agreements, monetary stability, legal or regulatory restrictions, among others.

 

What might be the external issues relevant to strategic direction and affecting the ability to achieve the intended results of the quality management system in an organization?

As was also previously mentioned, the external issues relevant to the strategic direction of the organization are those that can affect either the strategic analysis, the formulation of strategies, or the implementation of such strategies, from the perspective of its top management. Among these possible external issues we could consider technological changes, changes in the competitiveness of markets, loss of key suppliers, legal and regulatory restrictions, or shortage of raw materials, among others.

 

What might be the internal issues relevant to the purpose and affecting its ability to achieve the intended results of the quality management system in an organization?

Among these possible internal issues we could consider corporate governance, organizational performance, relocation of facilities, reputation of the organization, organization's brands worth.

 

What might be the internal issues relevant to strategic direction and affecting its ability to achieve the intended results of the quality management system in an organization?

Among these possible internal issues, we could consider the performance of the organization, the level of satisfaction of its customers, poor or ineffective processes, qualified workforce availability, among many others.

In order to help us to define these issues, both external and internal, in relation to the purpose or strategic direction of the organization, analytical methods such as PESTLE to identify external issues, or the McKinsey 7 “S” to identify internal issues.

Once the organization has identified those external and internal issues, relevant to both the purpose and the strategic direction, the strengths and weaknesses, as well as threats and opportunities, have to be identified, using a method such as SWOT.

The breakdown of requirements in the second part of subclause 4.1 shows us the following result:

 

Now, with respect to the next four requirements of this sub clause 4.1, in addition to the difference in terms of external and internal issues, we find two terms, monitoring and review, which we should also separate as to their meaning, since they refer to different activities, and therefore correspond to different requirements.

The organization shall monitor these external issues, as well as shall monitor the internal issues identified, through some method that allows it to observe over a period of time and check whether these issues are still relevant, either for the purpose or for the strategic direction of the organization.

The organization shall review information on external issues as well as review information on internal issues. This review must be through a formal evaluation of each of the external issues, as well as of each of the internal issues, to ensure whether they remain valid in terms of the relevance identified by the organization, or, where appropriate, carry out the necessary adjustments.

It will continue in the post: ISO 9001:2015 - Understanding the organization and its context (Part 3).

 

Author:

Ernesto Palomares Hilton