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Benefits of Business Operating Systems

22 April 2021
Can you guess how many times as an auditor; I see documented systems with clauses telling the reader how it complies?

It makes me question… what’s driving their business? Is it the clauses of a standard OR the business using the standard alongside its own objectives?

Quality Objectives v Business Objectives - is there a difference?

The first thing to do is think about the main purpose of the business and work backwards from there. For example, an obvious purpose/objective would be ‘let’s make some money (profit)’, so how do we go about doing that?
Making money ultimately happens through a series of processes where there is a measured output. All businesses follow a similar path, whether they’re in a services industry or a manufacturing industry.
Think about it... to make profit is an effective measure, to get there all the processes must deliver/be successful, which realistically is efficiency. You can make profit this month but how do you know it’s sustainable, the simple answer is to measure the businesses processes, i.e. the efficiency of the business.
As an assessor, it makes me happy when I see clients embracing the process approach to their ISO management systems, it’s clear when the requirements are easily met that the client has a continual improvement approach within their organisation and strives to prioritise these key intentions at all times:

  • Good financial control (cost centres)

  • Everything is the business

  • People come first always

  • Measuring processes and improving on them.

When organisations have majority of the above at the heart of their core business, the rewards gained from new business and growth are immense. I’ve seen a client go from having 12 employees when they started out, to now having over 100 employees and winning customer service awards, annually. 

We often see clause-based systems within organizations, where the documentation usually states something quite different to that in practise. It can be seen regularly in management reviews, new product development plans and production processes – for example:
Objective: Increase sales by 15%
This is a great objective, but what does it mean? How will you achieve it?
Objective: 100% on time delivery
Another great objective. But no risk analysis of what other linked processes are involved has been described, for example if a part is required that you do not make in-house and the delivery of that part is late, what happens then? What cost would be incurred for a customer order not being met on time?   
In summary use the clauses within the standard for a structure and guidance, but the most important thing is to make your management system work for you/your organization.

Don’t just say what you’re going to do – say how you’re going to do it!

How can a Business Operating System benefit you?

Implementing a Business Operating System – ie a management system has multiple benefits.
These generally include:

  • reduced operating costs

  • customer satisfaction

  • improved stakeholder relationships

  • Proven business credentials

  • Improved risk management

Those organizations that are independently checked (i.e. third party audited by a UKAS accredited certification body) most commonly benefit from the above.
Key tips for working with your management system as a business operating system would be:

  • Specify the business processes

  • Assign process owners

  • Measure the processes and act on the outputs

  • Measure the costs of the processes

Adapting this approach encourages better ownership and understanding of the businesses processes and how they impact the bottom line.
Like with anything if you achieve your target it doesn’t mean everything stops. It’s crucial to maintain equipment, train staff so they constantly improve their knowledge, invest in resources/tools etc.
For example: If scrap achieves a 2% target - what is the cost of that 2%? It could be thousands of pounds, which in theory could be put towards more competitive pricing or new product development.
There is a link between financial reporting and operational reporting and the risks involved.
Quite simply my advice would be to keep it simple. There is more emphasis on a risk and process approach within the 2015 ISO standards, it’s your interpretation of how this is achieved.
Authored by: Charles Hunt, NQA Lead Assessor for IATF 16949, ISO 9001, ISO 14001, ISO 45001.