The Stamp Of Disillusion

India ranks fifth in the world when it comes to the rate at which companies are being quality certified. Today, some 2,600 companies have ISO 9000 series certificates, the worlds first and only global quality certification system. And the country now has as many as 20-odd companies offering certification services. A decade ago, there were less than half that number.

Quality certification, in fact, is one of the few areas in which India has kept pace with global trends. Domestic firms stepped into the act in 1990, the year most global corporations started out. Of course, India still lags way behind the US, which clocked 10,000 companies or the UK at 44,107 between 1990 and March 1995. But from a base of just eight companies in 1990 and 585 in 1995, the growth has been rapid.

By rights, all this should have spawned a mini quality revolution in the country. A recent study by the Indian Statistical Institute shows otherwise. The ISI study, which covered 90 companies across a spectrum of industries between August 1996 and April 1997, showed that fewer companies are interested in getting their systems certified than they were in 1993-94, the height of the ISO euphoria. Also fewer companies are able to sustain any interest after they acquire a certificate.

The problem has as much to do with corporations attitude towards the exercise as with the certification process. A K Puri, principal surveyor to Lloyds Register and country coordinator for LRQA, list three kinds of companies looking for ISO.

The first category, he says, consists of international companies that want a quality management system recognised by others and will pass on the benefit of a professional, independent look at their systems. The second category comprises export-driven companies that want a certificate to qualify for export tenders. The third has companies that have no real need for ISO but want it because their competitors in the industry have it.

Today, the first category of companies is still the smallest segment. Companies understandably look for tangible rewards from the certification process. The much-publicised success of Sundram Fasteners, the first Indian company to acquire an ISO certification, for instance, has proved salutary.

Not surprisingly, the auto component and engineering sector accounts for 35 per cent share of certified companies in India (see chart The ISO cake).

Exports is another major engine of change. Suresh L Shah, associate director operations, KPMG, says, If some company wants to do business in Germany, for instance, the easiest way to convince his client of his credibility, is by acquiring an ISO 9000 certificate.

Indeed, the benefits can be dramatic. When Chennai-based TTK-LIG, the largest condom manufacturing company in India, wanted to tap the export market, it expanded and upgraded its manufacturing facilities and acquired an ISO 9002 certification. Exports have gone up from Rs 9 crore pre-certification to Rs 35 crore in 1996-97 and now account for 66 per cent of sales.

But by its nature, the quality certification process cannot always guarantee tangible business benefits. As Sarita Nagpal counsellor, TQM, with the Confederation of Indian Industry (CII), Industry has been disillusioned with the certification process because it assumed an improvement in standards would automatically bring in additional business, which did not happen.

Consultants say the change challenge has been far greater for older Indian companies where management systems are established than in newer companies. It is a very painful experience as every organisation has its own haphazard way of functioning, says R Gopinath, director, Consultancy Development Centre.

Adds Pankaj Bhartia of Isotech Consultants, Ninety per cent of companies are still languishing in the era of quality control while industries in the rest of the world has moved on to quality assurance and quality management.

Indian industry has also partly grown disillusioned with ISO because of what are increasingly being recognised as flaws in the nature of the certification process. The ISO 9000 series has a strong focus on documentation and the guidelines are generic rather than specific (see page 3). This makes auditing a difficult process.

Adds Puri, A limitation in the certification process is that it is based on audits, which is a sampling exercise. So despite ones best efforts, one cant always make sure that the company is consistently applying the quality management system as documented.

Not unexpectedly, the cancellation rate has been low. In the existing system there is no compulsion for improvement so everything is done just to satisfy the auditor and the clean-up act stays only till the audits are going on, says Venkataram A, station manager (Delhi) of the Norwegian agency Det Norske Veritas.

ISOs designers are growing increasingly aware of this problem. So at the Geneva headquarters the ISO 9000 standards are being revised. The 1999 edition of the ISO series is expected to be far more stringent. It is expected to focus on on continuous improvement with companies stating definite objectives and outlining action plans to achieve those objectives in a specific time span. This gives auditors the scope to haul up companies for non compliance.

If the process of certification has become less effective, it is also partly because most certification agencies tend to be less stringent. Many of them set base in India to ride the early boom in demand for certification. Today, few of them can claim to have the support systems needed for a thorough audit.

Under ISO guidelines the certificate body is to carry out regular post certification audits. But the rate at which these bodies, which rarely extend beyond 20-man outfits, are granting certificates makes it physically impossible to do so.

Also, competition between agencies to gain in numbers has meant that companies could get certification the easier way. Agencies have been undercutting each other mainly by compromising on mandays spent on auditing or overlooking non-conformance and deviations. Rival agencies have been known to quote differences of between 4 to 40 mandays for an auditing operation.

Consultants partially expect this to be remedied with the setting up of the Quality Council of India as the national accredition body (see Guarding the guards on page 3). The body is also expected to ensure that certifying bodies follow set standards and be a watchdog of the quality movement in the country. The checks and balances on certifying agencies could become crucial now as ISO gains in global importance. Despite a general disillusionment, CII reckons the number of companies with ISO certifications is expected to double by 2000.

This is not surprising. The costs of not being certified can be prohibitive. Take the case of the European Community ban on Indian seafood exports for failure to meet EC hygiene standards. Indian units exports marine food worth around Rs 800 crore to the EC countries. If companies want to export they have little choice but to conform to the stringent hygiene and product quality standards.

What has happened with marine products could happen to any other products or services from the country. But as important is Indian industrys need to understand the spirit of quality certification. Otherwise, the move could backfire --- as an auto component manufacturer with a quality certificate discovered when it was blacklisted by a car manufacturer because the product failed to match the standard the company needed.