Wednesday, November 26, 2008

Significant Changes cited in 2008 Revised ISO 9001

Changes Cited in 2008 Revised issue of ISO 9001 is been summed up as below

Clause 0.2 (Process approach):
• Text added to emphasize the importance of processes being capable of achieving desired outputs
Clause 1.1 (Scope)
• Clarification that 'product' also includes intermediate product
• Explanation regarding statutory, regulatory and legal requirements
Clause 4.1 (General requirements)
• Notes added to explain more about outsourcing
• Types of control that may be applied to outsourced processes
Relationship to clause 7.4 (Purchasing)
• Clarification that outsourced processes are still responsibility of the organization and must be included in the quality management system
Clause 4.2.1 (Documentation)
• Clarification that QMS documentation also includes records
• Documents required by the standard may be combined
• ISO 9001 requirements may be covered by more than one documented procedure
Clause 4.2.3 (Document control)
• Clarification that only external documents relevant to the QMS need to be controlled
Clause 4.2.4 (Records control):
• Editorial changes only (better alignment with ISO 14001)
Clause 5.5.2 (Management representative)
• Clarifies that this must be a member of the organization's own management
Clause 6.2.1 (Human resources)
• Clarification that competence requirements are relevant for any personnel who are involved in the operation of the quality management system
Clause 6.3 (Infrastructure):
• Includes information systems as example
Clause 6.4 (Work environment)
• Clarifies that this includes conditions under which work is performed and includes, for example physical, environmental and other factors such as noise, temperature, humidity, lighting, or weather
Clause 7.2.1 (Customer related processes)
• Clarifies that post-delivery activities may include:
• Actions under warranty provisions
• Contractual obligations such as maintenance services
• Supplementary services such as recycling or final disposal
Clause 7.3.1 (Design & development planning)
• Clarifies that design and development review, verification and validation have distinct purposes
• These may be conducted and recorded separately or in any combination as suitable for the product and the organization
Clause 7.3.3(Design & development outputs):
• Clarifies that information needed for production and service provision includes preservation of the product
Clause 7.5.4 (Customer property):
• Explains that both intellectual property and personal data should be considered as customer property
Clause 7.6 (Now called Control of Monitoring and Measuring equipment )
• Explanatory notes added regarding the use of computer software: 'Confirmation of the ability of computer software to satisfy the intended application would typically include its verification and configuration management to maintain its suitability for use.'
Clause 8.2.1 (Customer satisfaction)
• Note added to explain that monitoring of customer perception may include input from sources such as customer satisfaction surveys, customer data on delivered product quality, user opinion surveys, lost business analysis, compliments, and dealer reports
Clause 8.2.3 (Monitoring / Measurement of process)
• Note added to clarify that when deciding on appropriate methods, the organization should consider impact on the conformity to product requirements and on the effectiveness of the quality management system.

What will the ISO 9001:2008 amendment mean to you?
If you already have your ISO 9001 registration in place, or are in the process of building it, the changes will have minimal impact on your system. The amendment has focused on clarification of, not the addition or removal of, any requirements. If you are complying now, you will still be meeting requirements when the new amendment is published. What it may mean to you is less confusion in interpretation of requirements.

As you read the standard, notice how much meaning each word actually has. Teams of experts have carefully crafted the wording of each paragraph, each sentence and each bullet with the goal of registrars, auditors and users of the standard worldwide reading the same meaning into the standard as the committees intended. It is a challenging goal, and not always met. When there are questions on interpretation, a request can be made to the committee for an official interpretation. You can see these requests and the official interpretations at www.tc176.org.

The 2008 amendment addresses some of these interpretation issues, as well as compatibility with other standards, and clarification of requirements. For example, the requirement on appointing a management representative has been reworded to clarify that it must be a member of the organization's management. The word "organization" has been added as a clarification. It has not changed the requirement, which was stated as "member of management". Another example is the change to address confusion between the use of the terms monitoring equipment and measuring devices. The word "devices" has been replaced with "equipment". Clause 7.6 is now "Control of monitoring and measuring equipment".

Other changes include the rewording of requirements for records and documents in several places to make it clearer where these are required. In clause 4.2 Documentation Requirements "including records" has been added to the requirement for "documents, including records, determined by the organization to be necessary...". This clarifies that not only must the records specifically required by the standard be maintained, but records that you identify as necessary to ensure effective planning, operation and control are also required.

Eleven new notes have been added to provide more clarification, and common points of confusion being better defined. Outsourcing is one area where significant clarification has been added, with three additional notes to help the user with interpretation. In several places the term "product quality" has been replaced with "conformity to product requirements", putting the emphasis on conformity.

The proposed changes are numerous, but the message for most users is to review the new amendment for a better understanding of the requirements, but do not anticipate making major changes to your quality management system.

Monday, November 24, 2008

Understanding Supplier's Goal

If you are a purchaser, it's utmost important to understand Suppliers Goal to built a better relationship and winning the relationship. So let's look at four common supplier goals and how you can help your suppliers achieve them…

Supplier Goal #1: Reduce Payment Cycle - All suppliers want better cash flow (i.e., getting paid more quickly). So, in a supplier partnership, you should try to improve the speed at which your organization pays the supplier. Like any purchasing improvement initiative, understand your baseline, implement improvements, and measure the change against the baseline.

Supplier Goal #2: Increase Sales - To increase sales, suppliers need to have a marketing edge over their competition. You can help a supplier partner in this regard by offering a testimonial that they can use in their marketing material and/or serving as a reference.

Supplier Goal #3: Reduce Cost & Complexity - Many buying organizations request special treatment from their suppliers. Whether that special treatment comes in the form of customized reports, unique packaging requirements, or something else, "special treatment" has a cost associated with it. If you can eliminate unnecessary services that your supplier performs for you, you'll help your supplier achieve cost reductions that can be shared with your organization.

Supplier Goal #4: Increase Reliability of Sales Forecasts - One thing that scares executives is having long-term revenue targets without reliable data to support them. By committing to a multi-year deal, you can increase your supplier's confidence in its future revenue targets.

By knowing your suppliers' goals and helping them to achieve those goals, you will be in a great position to get your supplier partners' wholehearted commitment to helping your organization achieve its goals.

Controlling inventory is the Key

Slowing down of economy has prompted in breaking the brain of many masterminds! Yes, there seem to have hardly any option left to stop the negative impact of this catastrophe of economy. Almost all the establishments have tried all short of possible options to check the damages but the worsening situation has widen the possibility of mending the damages.

In this situation, efficient practice would be taking the right decision instantly and implement the same within no time lapse. When I say the right decision, you may ask - what could be the right decision at this point of time?... Well, I would suggest few points which may be helpful to you to take right decision. But, keep in mind that to be greedy at this juncture will further stop you from implementing the policy which will help you to keep going unaffected even in this economic condition.

1. Do not stress the production to the maximum but keep at the optimum level where you feel comfortable in terms of meeting the demand of the market. For this, you have see to it that correct assessment is been made by reviewing the trend as well as projection.

2. By optimising production you can also plan plant working cycle in such a way that limited people can be deployed by assessing the importance of the personnel engaged in the shop floor so that the work is not been disturbed by laying off excess workforce. At the same time you will get better production as a result of optimising.

3. Once you plan the plant working cycle to the optimum, you will get time for maintenance to avoid the breakdown caused due to human error. This is actually the time for strengthening the internal maintenance with the resources available. Everybody should realise the importance of time, money and assets available.

4. Inventory of any kind should be planned in such a way that you stop procuring anything which are for tomorrow, at least till the situation is improved. At the same time, never stop looking out for most economical way to procure efficiently.

5. You should work at optimum profitability rather than looking at the premium earning. This is the time for selling the goods in response to meet the demand and not forgetting the basics of vendor relationship and exposing minimum credit. So, you might have to sacrifice the premium what you are earning by reducing the credit term.

Change is inevitable.. The faster you implement the change you stand strong more firm. We should keep in mind the saying Noting is constant in this universe except change. For change you have to zero yourselves and allow change to come in you.

Friday, November 21, 2008

Renew Commitment to beat the HEAT

The economic slowdown has prompted a fear factor towards vendor relationship in such a way that no entity can be fully trusted to the commitment they make. At the present scenario, nobody is sure about the others credential; hence it's essential to have a renewed contract with stringent clauses protecting the contract.

If you have pending contracts, where the contract is not been protected and monetary involvement is there in the component of advances; than it's essential to carry out physical verification at the site and try to renegotiate to protect the contract in the form of minutes of meeting; so that the contract is safe to carryout.

The reason behind all this renegotiation and renewing the contract may be summed up as follows -
  1. You never know the internal strength of the vendor to honor the commitment.
  2. Liquidity Crunch is there at all segment of business at this moment, so the demand from the vendor may not be in the line of your contract but to cope the liquidity crunch what they are facing.
  3. There may be cases of overcommitment as the vendor is not sure about your commitment so that they want to be safe with the execution of the contract/order and collect the payments, etc. well in advance.
So, authenticate the commitments, review all the contracts and plan the line of action and be safe to cope the slowdown. In this scenario, it's wise to minimise the inventory, plan contracts which are utmost essential, function at the optimum level, give focus on in house maintenance and most importantly keep going. Also one should not look at very high profit but at an optimum level at this pont of time!..

Friday, November 14, 2008

Global Meltdown - It's impact on Steel Industry

I would be focusing mainly on secondary steel producer on the direct impact of the present scenario of GLOBAL MELTDOWN. It's very shocking as the impact has gone so far that survival is an threat to this specific sector. The reason being that, it's dependent on sourcing of Raw Material from overseas and the availability of the domestic supply of Raw Material on the other side and at the other end decreased demand due to the slowdown of Real State Development and Projects.

Impact on Sponge Iron Producing Unit

Recently, National Mineral Development Corporation (NMDC) and Private Mine Owners has raised the Iron Ore prices. This has further worsen the situation for the Sponge Iron (DRI) producers who does not have their captive mines. As all must be aware that Imported Non-coking Coal of South African Origin is the most suitable Coal to produce quality DRI as compared to the Indonesian Origin and Indian Coal; beacuse of Low VM, High FC, Low Sulphur Content and Less Moisture. But availabity at this present scenario at reasonable price is the big question mark.

The costing factor of DRI production may be described as below -

To Produce 1 Ton of DRI you require apprx. 1.7 Ton of Iron Ore (considering FeM 60-64 with less contamination) and 1.1 Ton of Non-Coking Coal (Considering FeT 50), plus Rs.5-6 overhead and operational cost. At present, prevailing rate of Selling price is below the Production Cost if the Iron Ore is brought out Raw Material. This resulted in closing down of many Sponge Iron Producing units across India.

In the case of Induction Melting Unit the situation is no difference. Supply & availability of Domestic HMS I & II is not up to the mark in terms pricing; so these units have to rely on DRI and Imported Scrap supply. At the present scenario of unpredictability no unit want to import as Rupee's exchange rate against Doller/Euro/Pound is weak enough. Other allied consumable cost has not come down viz., CPC, Pig Iron, Silico Manganese, Ferro Silicon, etc. which add up to the cost of production. So, most of the units are not working in full capacity to cope the meltdown.

Finally, in the case of Rolling and Section Mills, where long products are produced, mainly the demand factor has hit the industry in such a way that no unit want to hold the inventory of the goods produced. As we have seen the scenario of DRI and Steel melting units; this has direct impact on this sector. In this scenario whoever is market sensitive will survive.

In simple terms this Global Meltdown has directly or inderectly hit the Steel industry in such a way that the smartest of the smart or Giants are in a fix that they are not sure what would be next. But, in my opinion, decision in panic of any kind such as Closing Down, etc. is not the solution but if you manage to short out short term hurdles by optimising inventory and controlling expenses, it would produce better result.

Sunday, November 2, 2008

What you require to be Procurement Professional

Every job/work has different professional profile. If you have all required qualification and also required skills; you have to acquire set of attitude to handle the given job/work. Right attitude to perform right kind of work is very important. It's all about developing "The Love of the JOB". Until and unless you fail to develop the liking you can't give justice to the given job.

The following are the personal traits which may be termed to be key professional requirement to be a successful Procurement Professional.
  • Good interpersonal relationship.
  • Transparency in dealing with the Vendors and Internal Departments as well.
  • Ability to gain trust with the vendors.
  • Wide relationship with the prospective suppliers in different geographical locations.
  • Good analytical aptitude.
  • Learning ability and good listener.
Procurement is not just paying and getting the goods. It's much more than that. You have to ensure procuring the best at most economical way. It's the backbone of the company. All the factors like indirect cost, durability, etc. shall add up to the cost of the production. You need to understand the type of need and cost involvement; and analyse the situation and take the decision.