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ISO9000 certification brings benefits to SMEs

New Delhi, June 20, 2000

Small and medium enterprises can derive considerable advantage in marketing their products and services if they seek ISO9000 certification, according to an expert.

'For small and medium scale companies, which normally do not enjoy much of a brand image, ISO9000 certification helps to build confidence in the minds of customer organisations,' says Soma Ray of the Calcutta-based Sirwill
Software Pvt. Ltd. 'This is particularly true in case of tenders and other contractual situations involving institutional buyers.'

ISO9000 is a series of standards for quality management and quality assurance. While ISO9001, ISO9002 and ISO9003 are meant for certification purposes, ISO9000 and ISO9004 provide guidelines.

With the government a prominent buyer in India, many public sector organisations have already started insisting on ISO9000 registration for vendor enlistment. In the private sector the situation won't be different in course of time, says Ray.

In case of global markets, it is widely believed that the World Trade Organisation will include ISO9000 certification as a pre-requisite for exports.

Benefits from ISO9000 registration include clarity in definition of authorities and responsibilities, increased corporate image and market positioning, better records and documentation in case of litigation, use of a recognised mark on stationery and advertisements, better traceability of the root cause of quality problems, early rectification of errors and no repetition of errors.

There are several steps involved in getting ISO9000 certification. These are:

  • Gap analysis: Assessment of existing quality management practices vis-a-vis ISO9001 requirements
  • Orientation training: Top and senior management orientation on ISO9000 requirements and action plans.
  • System documentation: Preparation of quality manuals and design of quality record formats.
  • System implementation: Implementation of quality system according to quality manuals.
  • Company wide training: Training on ISO9000 clauses, statistical quality control techniques, and quality audit.
  • Internal quality audits: Periodic assessment of quality system, implementation and corrective actions.
  • Pre assessment: Initial audit by certifying agency and implementation of corrective actions.
  • Final assessment: Certification audit by the certifying agency and recommendation for certification.
 There are three major cost elements in any ISO9000 project. These are :
 1. Cost of  purchase/calibration of  measuring instruments.
 2. Fees to be paid to external consultants.
 3. Fees to be paid to certifying agency.

These costs depend on the size and complexity of  operations of the company. In Calcutta, for a small company with a staff of 20, with factory and office located in one place, the total cost would be in the range of Rs 1 lakh to Rs 1.5 lakh, says Ray.

Ray advises companies to be careful in choosing an ISO9000 consultant. Companies should look carefully at the consultant's qualifications. At the minimum, a graduate engineer with degree/diploma in quality assurance and
management may be acceptable. Apart from knowledge of ISO9000, the consultant should have adequate knowledge of statistical techniques.

Second, the consultant should have at least three years experience in handling two to three ISO9000 projects independently or as the principal consultant.

Third, the consultant should be willing to help in documentation. The consultant should prepare a first draft of at least the apex quality manual and quality system procedures. This would help in quick implementation of the system.

Fourth, get a firm commitment from the consultant that he shall provide support till the company gets certified.

Choosing a certifying agency is no less important, according to Ray. Usually, the ISO9000 consultant will suggest an agency. Do check and independently verify the credibility of the certifying agency, advises Ray.

In case your buyers are from overseas, it would be better to select an auditing agency recognised in that country.
 
The central government and some banks provide assistance to SSIs for acquiring a ISO9000 certificate. The central government launched a scheme in 1994 to give incentives to small scale / ancillary units acquiring a ISO9000 certificate. According to the present norms, the scheme provides for re-imbursement of Rs 75,000 or
75% of the cost (whichever is less). The scheme for re-imbursement will remain in operation up to March 31, 2002.

The costs that are admissible for re-imbursement are application fee, assessment / audit fee, annual fee / license fee, training expenses, calibration expenses and technical consultancy fees.

The Small Industries Development Bank of India (SIDBI) also provides direct finance to SSIs in the form of loans (at an interest rate of 13% per annum) if the ISO9000 project cost is more than Rs 10 lakhs. In case the ISO9000
project cost is less than Rs 10 lakhs, the company can approach a bank for a loan, which in turn shall be re-financed by the SIDBI.


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