When the latest version of the International Standard for Quality Management Systems, ISO 9001, was released in 2015, it included requirements for businesses to consider their external factors. The requirement of understanding the organisation context has created a bit of confusion, particularly for businesses that were upgrading their Quality Management System from ISO 9001:2008 to ISO 9001:2015.
These new requirements are predominantly grouped in Clause 4: Context of the Organisation of the ISO 9001:2015 Standard.
The objective of this blog is to explain why the requirements of this clause are the critical foundations for your business. We’ll check the details of each sub-clause and discuss why it’s important that you understand these requirements.
Clause 4.1 Understanding the organisation and its context
Why do we need to understand the context of the organisation and what does it mean?
This section is simply asking:
- Do you know what’s happening outside your business?
- Do you understand that the external environment shapes your business behaviour?
For instance, consider that you have a logistics company and the price of fuel suddenly increases by 25%. What will you do? Have you actually considered that this could happen?
If we’re not aware of external factors and the way they can impact our business, we’re not able to understand what needs to be done in order to protect the organisation from the outside world.
Consider another example: You run a small online business focused on home decorations. You’ve just developed a website and set up discounted prices to attract customers and drive revenue. What if your competitors have already approached the customers via Instagram and developed an application where the customers can proceed with the shopping directly from Instagram without
logging in to an actual website?
Do you think that this might impact your business?
There are numerous situations that can actually happen and we need to be aware of the related factors and understand the consequences. Only then can we determine if we can prevent these situations and how.
Clause 4.2 Understanding the needs and expectations of interested parties
I don’t even remember how many times I’ve been asked: “Why do we need to do THIS? It really seems like a waste of time.”
The requirement to understand the needs and expectations of interested parties comes from Stakeholders Theory (1) which has been in use since 1965.
We all know that the key focus of any business is its customers. However, apart from our customers, we also have to interact with a lot of other people, such as suppliers, our own employees, government agencies and many others.
Let me ask you… Do you know what your customers want from you and what their reasons are to interact with you? What if the person you are just about to meet with will become your future most important client or partner? So how important is this relationship for you and what do you need to know to make the relationship work? What if the relationship with a customer or a significant supplier turns sour and it costs you a great business or, even worse, results in bankruptcy?
I hope you understand where I’m coming from and how important it is to understand who the people you interact with are and what they expect from you. Exactly for this reason, the Standard requires that organisations are aware of different types of stakeholders, whether they’re internal (e.g. employees) or external (e.g. suppliers, government agencies, pressure groups, neighbours, etc.) and understand that the relationship could represent a risk for your business or can create an opportunity. Therefore, you need to understand how to manage these relationships.
Clause 4.3 Determining the Scope of the Quality Management System
I understand that it’s difficult to define a scope of something intangible and abstract. The requirement to determine the scope of the Quality Management System actually asks you to think about external and internal factors, your interested parties (internal and external stakeholders) and the scope of your business (what the organisation actually does) to ensure that your Management System considers all these aspects.
It’s the scope of your Management System that draws the boundary and clearly states what is in the scope of the Management System and what is not.
Imagine a map of your country which is clearly defined through its borders and if your country wants to add another country, it will plan to expand the borders. It’s the same with the defined scope of your Management System – if you create a new service or activity or add an additional physical location, you’ll need to consider them as an expansion to the scope, as you’ll need to address new procedures, different stakeholders and other factors.
Clause 4.4 Quality Management System and its processes
Most of our clients understand that identification of processes is an important planning task. However, sometimes they forget that it’s critical to determine their mutual interactions and sequence.
Why is it important? Put simply, in a small organisation where everyone knows everything due to cross functional roles, the flow of information is straight forward. However, when the organisation grows, and the number of people increases, the complexity of the organisation and the structure expands.
If you don’t believe me, draw five dots (which represent your five employees) – connect these dots and count the combinations of interactions. Then do the same with seven dots and you’ll see how the number of interactions dramatically increases. Imagine if you have 90 employees working in different departments.
Then you might ask your Marketing Manager what’s going on in the manufacturing department and very often people have no idea. Not only that, but the discontinuity often occurs in the critical areas where one department passes their output to another department (which is logically their input).
Imagine an example where a design for a building is completed, and then the investor wants to change something, so requests a change. The change is completed by the engineering department, but no one has passed the new design to the construction team and they carry on with their work following the old design!
By developing process interactions and sequences we can understand how processes link together and where the information must be transferred from one process to another and where the critical areas are, which must be monitored to prevent issues.
I hope this helps you perceive the Clause 4: Context of the Organisation from a different perspective.
If you conduct your business planning activities and define your interested parties, the internal and external factors , and develop process maps, I promise that this will give you a great insight and your planning will reach another level.
If you need assistance to develop your management system in line with the requirements of ISO 9001:2015, or any other Standards, please contact us on 1300 614 007.
(1) Roberts, R. W. 1992, ‘Determinants of corporate social responsibility disclosure: An application of stakeholder theory’, Accounting, Organizations and Society, vol. 17, no. 6, pp. 595-612.