This Presentation Focuses on section - PowerPoint Presentation

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This Presentation Focuses on section 4 of the ISO 9001:2015This ISO 2015 is a major revision and a departure from previous ISO versionsSeveral of the new concepts are introduced in this presentation The next 2 certificates show I have completed the Lead Auditor training for 1) ISO 9001:20152) AS 9100 Rev D

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This discussion is limited to Section 4 which Contains 4 elements4.1 Understanding the organization and its ContextContext means understanding the business environment in which the organization operates 4.2 Understanding the needs & expectations of interested parties4.3 Determine the scope of the QMS 4.4 Quality management System & its

Processes

4.4.1

Shall establish

, implement, maintain, and continually improve a

QMS

in accordance with ISO 9001:2015

Apply criteria to determine sequence including the inputs & outputs expected for these processesAssign Responsibilities and address risks 4.4.2 Maintain documented information to support the processes are carried out as planned

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5The competition KnowledgeFinancial Resources

Explain Context of the organization 4.1

Your Organization Slide6

Lets explain Context of the Organization4.1 “Understanding the organization and its context” “The organization shall determine its external & internal issues that are relevant to its purpose and its strategic direction and that affect its ability to achieve the intended result(s) of its quality management systemThe organization shall monitor and review information about these external and internal issues” 6Slide7

7The competition Shall Determine internal context issues relevant to its purpose & strategic direction: e.g. Ethics, (Values)

–

Culture, Integrity,

Honesty

,

Knowledge

Shall determine

the external issues relevant to its purpose these are the values, Culture, Honesty, Ethics, Technical knowledge, performance, With respect to its competition

Travel to technical conferences Slide8

4.1 Determine the Internal Issues4.1 The organization shall determine its internal issues that are relevant to its purpose & strategic directionHonestyRespect for all members of the organization Values of the organizationKnowledge of the personnel within the organizationTo help it compete in the market placeIt must also monitor and review these issues which are relevant to its purpose ands strategic directionAnd continually improve the QMS

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How do internal values affect an organization’s performance?Honesty helps prevent bribes (corruption) when purchasing from suppliersThere should be consequences when dishonest behavior is observed Respect for individuals preserves the proper respectful business environment 9Slide10

4.1 Determine the External Issues that are relevant to its purpose & strategic direction How these issues (Values) affect its ability to achieve its intended result(s) External factors include understanding Honesty / Fast changing technology, Technical knowledgeCompetitive environmentMarket and economical issues (including international issues) Legal and or regulatory issues (factors) in which the organization operatesOrganizations shall determine which of these external issues (factors) are important to its purpose

Then enter them into the

strategic plan

then enter

goals

for these external issues

Now the

external

issues & goals are determined in the strategic planThis is the first time the ISO mentions the explicit mention of a strategic plan 10Slide11

Transition to 4.2 Interested parties 11Slide12

4.2 “Understanding the needs and expectations of interested parties” Define Interested parties / Stakeholder (from ISO 9000:2015) Persons or Organizations that can affect, be affected by or perceived itself to be affected by a decision or activity4.2 Shall determine a. the interested parties that are relevant to the QMSb. the requirements of the interested parties

The organization shall

monitor and review information

about these interested parties & their relevant requirements

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Who are the interested parties / stakeholders ?Person or organization that can affect or be affected by or perceived to be affected by a decision or activity ExamplesCustomersOwners (CEO and top executives)Workers (What do they need?)Providers (suppliers)BankersRegulators (SEC chairman)Unions Partners Society CompetitorsOpposing pressure groupsThe ISO went beyond the customer to include

all

the interested parties

The organization shall

monitor

and

review

on a regular basis

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How well are corporations taking care of CEO?In the past (until the 1970’s) organizations shared productivity improvements with workersThat is, wage increases were connected to productivity improvement Today, not so much Lets look at the graph in the next page 14Slide15

15From 1948 to the mid 1970s , increases in Productivity & Wages went hand in hand Then a gap opened between the two. This coincides with the surge in stock repurchases primarily used to pay CEO’s Cumulative Annual Change in per Hour productivity

Cumulative annual change

In real per hour

wages

fell behind productivity

Ref:

HBR “Profits without Prosperity”

Sept. 2014, vol. 92 issue 9 p46

1980 is when theGap started to widen between CEO’s pay and workers paySlide16

In 2012 the top 500 S&P companies Paid CEO’S an Average of $30.3 Million How did they manage to pay that much?Stock based instruments make up the majority of the CEO pay42% of their compensation came from stock options41% from stock awards 1 Companies purchased their own stock to pay CEO’s Ref1: HBR “Profits without Prosperity” by William

Lazonick

, Sept 2014

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17Where did the money from increases in profitability go? It went to stock repurchases to primarily to reward CEO’s pay increases. Therefore there is not much money left for investment in R&D & wage increases Ref:HBR Sept. 2014 Vol. 92 issue 9 pgs 46-55

S&P 500 index

Mean Repurchases

Mean dividends

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Why is it important to balance all wage increases tied to productivity including CEO and workers? Economists Thomas Piketty & Emmanuel Saez saidIn 2007 The richest 0.1% of U.S. households collected a record 12.3% of all U.S. incomeThis surpassed 11.5% of share of income in 1928 on the eve of the great depressionWhat happened in 1928?18Slide19

19What happens when only a small portion (@12%) of the society receive most of the wealth ? Slide20

In 2008 The US Govt. distributed $23 Trillion to the biggest banks to prevent another Great depression Since the late 1980’s the largest component of income to CEO’s (the top 0.1%) became compensation driven by stock based pay 20Slide21

In Brief The ResearchThese buybacks may increase stock prices in the short term but in the long term they may undermine the economic growth of the company and affect job stabilityThe buybacks mostly serve the interests of CEO’s, much of whose compensation is in the form of stock Is this stock repurchasing:Value creation or Value extraction from these corporations? 21Slide22

Are companies abiding by the needs and expectations of all interested parties? As stated in 4.2?Laurence Fink – CEO of Black Rock – the world’s largest asset manager wrote “ Too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks”Warren Buffett wrote in his 1999 letter to Birkshire Hathaway shareholders“Buying dollar bills for $1.10 is not good business for those that stick around”

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Top 10 Stock Repurchasing Companies from 2003 to 2012 23Corp NameNet Income In $ Billion Stock Repurchasing in $B

Dividends

In $B

% of

NI to Stock

Repurch

.Exxon Mobil$347$207$8083%Microsoft

$148

$114

$71

125%

IBM

$117

$107

$23

111%

Cisco Sys

$64

$75

$2

121%

Proctor & Gamble

$93

$66

$42

116%

Hewlett Pac.

$41

$64

$9

177%

WALMART

$134

$62

$35

62%

Intel

$79

$60

$27

109%

Pfizer

$84

$59

$63

146%

G.E.

$165

$45

$87

81%

Ref1: HBR “Profits without

Prosperity”

by William

Lazonick

Sept 2014 Slide24

In brief Corporate profitability is not translating into economic prosperity for the USAInstead of investing profits on innovation and productive capacity, U.S. Executives are spending them on gigantic stock repurchasesStock buybacks are primarily being used to pay CEO’s 24Slide25

25Why has money for reinvesting in the future technologies dried up?Because corporations are using profits mostly for stock repurchases to pay CEO’s Dividends % of N.IRepurchases % of N.I

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Warning investing in Research and Manufacturing is recommended if the US to stay competitive Gary P Pisano & Willy C. Shih of Harvard Business school in their 2009 HBR article “Restoring American Competitiveness” and their book “Producing Prosperity” have warned thatIf US companies don’t start investing much more in Research and Manufacturing capabilities, they cannot expect to remain competitive in a range of advanced technology industries 26Slide27

US GDP Growth Rate 27Slide28

Not all companies are failing to invest in the futureGoogle has 16 “bets” that include the following: investments This is an investment of over $27BDriverless cars graduated from a “Bet” to the company named “Waymo” Those working on this project can buy Waymo stockRobots (pick and place) –

are still

a bet

Drones (deliver packages

)

Amazon

is also creating value instead of extraction value

Their recent acquisition is to buy Whole Foods and create additional value for customers

These are only 2 large corporations that are investing to create value 28Slide29

Possible audit question on section 4.1May I see your documented strategic plan?Does it define how your organization will compete within the context of its external issues (i.e. its industry) For example does it state it wants to be the highest quality provider?Or does it state it want to be the low cost provider?What are the measurements to monitor progress against these goals?Does it define how your internal personnel are trained (aligned) to understand the external environmentMay I see evidence of measurements against the external industrial environment That is may I see the written goal within the industryMay I see the how the internal personnel are aligned to this external strategic plan

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Transition to 4.3 of the ISO 9001:201530Slide31

4.3 Determining the scope of the QMS The organization shall determine the boundaries and applicability to establish its scopeWhen determining its scope the organization shall consider A) the internal and external issues (Values) of 4.1 B) The requirements of the relevant interested parties referred to in 4.2C) The products and services of the organizationThe organization shall apply all the requirements of this standard if they are applicable within the scope of its QMSThe scope of the organization QMS shall be available and maintained as documented information The scope shall state the types of products and services covered31Slide32

New Terminology ISO 9001:2008ISO 9001:2015Documentation / Records

Documented Information

Top management shall

ensure quality Policy objectives are established

Quality policy and objectives are established

and compatible with the business strategy

Promoting the use of

process approach

(4.4) & risk (4.4.1.e) based thinking The process approach is now an explicit requirement

Preventive action is

out

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No explicit Exclusion as long as the exclusion does not affect the organization’s ability to satisfy customer satisfactionSlide33

4.3 Determine the (Boundaries) Scope of the QMSThe scope of the QMS shall be available as documented informationThe old version of ISO had a requirement for A quality manual6 required procedures andRecords to show proof the procedures were being followed The new ISO 2015 only statesThe scope of the QMS shall be available and be maintained as documented informationDocumented Information required to be controlled & maintained by an organization and the medium on which it is contained

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4.4 QMS and its processes 4.4.1 Establish, Implement, maintain & continually improve a QMS including its processes needed & their interaction A) determine the inputs required and the outputs expected from these processesB) determine the sequence and interaction of these processesC) Determine and apply criteria & Methods (including monitoring, measurements and related performance indicators) needed to ensure effective operation of these processesD) determine the resources needed for these processes and ensure their

availability

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Continued- 4.4 QMS and its processes E) assign responsibilities & Authorities F) address risks and opportunities G) Evaluate these processes and implemented changes neededH) Improve the processes and quality management system 35Slide36

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4.4.2 a. Maintain documented information to support the operation of its processesb. retain documented information to have confidence that the processes are being carried out as planned 37