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ISO Certification and Your Bottom Line Part 1
Episode 9 Part 1
ISO Certification and Your Bottom Line – Part 1
In this podcast episode, Scott Dawson, President of Core Business Solutions, discusses the impact of ISO certification on an organization’s cost structure, product or service quality, customer satisfaction, and reputation in the market. He explains how ISO certification can streamline processes, reduce waste, and ultimately improve a company’s bottom line.
Core Business Solutions publishes ISO Certification podcast episodes weekly. You can find more episodes here.
Episode 9 Part 1 Key Content
Hello, everyone, and thanks for listening to the Quality Hub chatting with ISO experts. I’m your host, Xavier Francis, and I’m here with Scott Dawson, President of Core Business Solutions. I’m so glad you can be here with us today, Scott.
X, It is great to be here.
Awesome. Today’s podcast is part one of two in our series entitled ISO Certification in Your Bottom Line. This episode will talk about the cost of ISO certification, potential savings, customer satisfaction and retention, and more. But first, we’d love to learn a little bit more about our guest, Scott Dawson, and his experience and journey to becoming president of Core Business Solutions.
Scott, can you tell us a little bit about yourself and your journey?
Yeah, sure. Glad to. X one Fun fact people may not know. I started my career as a Baptist minister.
So I don’t know if it’s my job to change that much since then. And it’s still hearts and souls and minds in leadership.
But so you’re not just selling something.
Exactly right. Exactly. Yeah. And then the meetings get long when I start preaching.
Yes, yes, yes.
I’m sure. Yeah, but I started with a different career in mind, which led to that. I found myself working in a manufacturing environment, eventually working in quality assurance as the quality assurance manager. And what I learned in that first gig was to ask stupid questions. And it’s okay. And I think I’m still asking stupid questions.
Hey.
It’s finding the answer. That’s the fun part, right?
Exactly right. So have to ask the basics and get people to explain things. And, and that led us to Pennsylvania through a job transfer.
As you were originally in Colorado.
We were in Colorado, then in California. And now here in Pennsylvania. And after two and a half years of living in Pennsylvania, I found myself in business one day.
Okay.
Yeah. So the company went out of business, the instant entrepreneur.
Absolutely.
So just started to pursue opportunities and got involved in helping a couple of customers get ISO certified. And because we’re located in central Pennsylvania, meaning we have very few customers around us locally, we had to figure out how to work remotely and virtually.
And this would have been in the nineties, right?
Yeah, late nineties, early 2000. And so just started to figure out how to provide support to people in a new way. And it’s led to Core Business Solutions have been great.
It has been great. I’ve been here for over five years and I love it. In all my previous lives, I’ve never been able to say that after five years. So it’s a great place to work. And I’m glad you maybe went through some struggles but started your entrepreneurial spirit. We all get to be here.
So back to ISO certification and your bottom line. How does ISO certification impact the cost structure of your organization, both from an expense and a potential savings point of view?
Yeah, I think you do have to look at both sides and it’s often, you know, the cost of getting certified, getting prepared to get certified is kind of right in your face. But what’s the potential payback? I think people don’t ask that question enough.
They just see the initial cost.
And often it’s because you’ve got a customer asking you to get certified and you focus on all the effort to get certified and then what? You know, And where does that lead? So I have also often said that you get out of ISO what you put into it.
Okay.
So if your objective is to get certified and then stay certified and then stay certified again, then it will likely turn into an annual event that you’re just using that date on the calendar when the auditor is going to be in the building as a reason to, to get busy and get things cleaned up and fixed up and that type of thing.
So you’re just making sure you can keep that certification.
Exactly right. So it’s a very expensive piece of paper that is on the wall.
If that’s all you’re doing, then I am sure it is.
It is if that’s all you’re doing. So there are there are certainly costs to be recognized. There’s time, uh you certainly will have the cost of the audit, though, generally, you’ll pay, or you’ll sign a three-year agreement with your registrar and you’ll have that cost over three years.
You’re certified for three years, correct?
Yep.
And then you have two surveillance audits before your next certification audit.
But the contract is generally three years and then you may get help from a consulting firm like Core Business Solutions and might imagine many people who are listening today. Are customers of ours. So thank you all very much for that. So there are certainly dollars that you can add up to say this is what it costs, the cost savings or the benefit side of it often is focused on improvement.
If you’re aiming at using ISO to put structure in place that can help the business run more efficiently and drive improvement in the business, then you can leverage, the trouble of getting certified to bring about a change in the culture and the direction of the business and get more organized about improvement and hold people more accountable for improvement and looking for results.
That can be a payback. But you have to purposely aim at that goal because an auditor is not going to force you to improve. What they’re going to do is evaluate whether you comply with the standard, but they’re not going to look at the results and say, okay, your results are good or your results are bad.
That’s not even what they certified.
No, they just certify you to make sure you are compliant with the standard. The benefits are yours to or not to gain.
Yeah, exactly right. Exactly right. So I like to say that ISO is an excuse to get a lot of things done that you probably wanted to do, especially as a business grows and you have a lot of new people and new processes and new customers and new products and you aren’t quite as organized as you’d like to be.
That’s typical in any business and the problems crop up and delays crop up and customer complaints crop up and you wish you could put your finger on what’s causing it all. So you have to kind of peel back those problems, you know, in an organized fashion and put structure in place about problem-solving and root cause analysis and process improvement and even internal auditing can be a way to get at that.
What might be costing you money in terms of your performance? I don’t know that any of this reduces the out-of-pocket costs to get certified because I’m not sure you can’t reduce the cost of the audit. For example, you know.
Well, it’s the stuff that happens when you’re doing it properly. You’re looking at a reduced cost. If you’re manufacturing, when it’s stuff on the floor you’re reducing waste. If you’re retaining employees, you don’t have to do training and bringing somebody else in and finding somebody else if you’re able to retain them because you’re engaging them right where they want to stay, that’s the cost savings trade.
And, great example. And, and companies can select their priorities and determine where they’re going to put their focus and where improvement is needed. And there is no cookie-cutter solution or approach. It’s up, to management and the organization to determine where to focus and where to put the time and effort. What the ISO auditor is going to look for is do you have a process for improvement in place?
Where, where do you improve, and what do you focus on that’s up to you. They aren’t going to tell you.
So much of this is based on what you see as a business that you want to change. So how does ISO certification impact the quality of your products and services? We touched on it a little bit there. And what’s the effect on customer satisfaction or retention?
So quality improvement, if you think about what it is you sell to customers. So if you’re in the service business, you’re selling services. If you’re in a product business, you’re selling products. Some customer companies sell both, but that delivery to the customer either meets their needs or doesn’t meet their needs. So that’s the definition of quality.
And you can utilize the quality of your product or service as the litmus test or the measurement of progress and improvement. You can assign several projects, you can derive a lot of process improvement, can put good KPIs in place derived around the quality of your product or quality of your service. And that’s certainly an area that can be improved in many organizations.
That’s where the aim is to improve the quality of products and services, which leads to customer satisfaction. Because if the customer is getting what they need the inherent quality of the unit is not what we mean by quality. It’s the entire customer experience with your organization. So it could be the quality of the quotes that get sent back when a quote request is sent the timeliness of a response when they have an inquiry or certainly the shipment of product on time to meet certain delivery needs.
So any interaction you may have with a customer, whether it’s getting them information, whether it’s getting them the product on time, whether it’s the product itself, or any time you have an interaction with that customer is a potential place to have customer satisfaction.
Yeah, it is going to generate either greater pleasure or greater displeasure with your organization. It stacks up on itself. So over time, a customer gets more and more satisfied like, “Oh my gosh, I can’t believe these guys are as good as they are,” or “Oh my gosh, I can’t believe these guys are as bad as they are.”
Is there somebody else?
Is there anybody else? Yeah. Yeah. So customer satisfaction is sort of an outcome of great quality service and products. Also, customer quality satisfaction can be a metric, and customer satisfaction can be improved and you can measure it and you can drill into problems through corrective action, and things like that.
Well, since it’s multifaceted, asking customers, “How is your experience?” might reveal things that you are not aware of.
Yeah, asking the customers is radical. But it’s oftentimes people don’t want to ask because they’re afraid of the answer, afraid of getting the truth handed back to them.
When they probably know something internally. You’re hoping that marginal quality doesn’t affect customer satisfaction, but it does. This leads to the third element here, which is customer retention. If you’re meeting their needs and they’re satisfied with the delivery of your products or services, you’re likely to keep that customer over the years.
And potentially gain more because word of mouth is such a huge thing. No business stands as an island. They’re talking to other people they work with or know, and they’re like, “Hey, X, Y, Z company does a great job. You might want to look into them.”
That’s the mark of a satisfied customer right there. If they’re bragging about you and then telling their close friends or close business associates about you and your business, they’re putting their reputation on the line by making the recommendation. But they wouldn’t do that if they weren’t satisfied. So customer satisfaction leads to customer retention, which is why we’re all in business.