In the February 2015 issue of Quality Progress, John West and Charles Cianfrani imply that ISO 9001:2015 will result in a change in the quality format. However, it will merely be an adjustment. The inference is that quality will still dominate. One might expect that approach in the American Society of Quality’s (ASQ) primary journal. However, this raises the question posed in the title. Is one approach going to dominate the other? There are partisans on each side. In an earlier article, I postulated that it is actually a symbiotic relationship. However, a closer examination of the foundation and difficulties associated with the Quality Improvement Process and Risk Analysis should put the issue in a better perspective.
GENERAL FOUNDATION PILLARS
A useful starting point is a comparison of the foundation pillars of Quality and Risk. Such a comparison reveals the quality profession has a well-developed and broad based Body of Knowledge (BoK). Further, there is little or no difference worldwide in the body of knowledge in disparate quality associations. For instance, the ASQ body of knowledge for the Certified Quality Engineer, a technical certification, includes such topics as: Management and Leadership, The Quality System, Product & Process Design, Product & Process Control, Continuous Improvement and Quantitative Methods & Tools. The BoK for the Chartered Quality Institute of the United Kingdom lists the following major elements: Concepts of Quality, Customers and Stake Holders, Interactions of Organizations and People, Technologies and techniques, Compliance and Organizations and Corporate Strategy.
The highlighted elements show the similarity between a specific technical area and a general body of knowledge from two different countries. A more thorough examination would show even greater consistency. Moreover, ASQ has an international presence. Thus, its body of knowledge provides a unifying presence.
If one reviews the Risk literature, it is clear that Risk has been focused in silos such as: Finance and Insurance, Technology, Engineering and Environmental. More recently, Enterprise Risk Management (ERM) has gained purchase. ERM is concerned with integrating the concepts of Risk into organizational or business wide strategy. The ERM concepts include Risk Management at the highest level of the organization, continuous risk management, and all business risks and opportunities are considered.
While ERM is becoming more prominent and ISO 9001:2015 takes an enterprise orientation, the silos still exist and the knowledge required for the specific fields vary widely. Wikipedia under Risk Management Tools lists the following tools. Capital Asset Pricing, Event Chain Methodology used manage risk and uncertainties affecting project schedules. Probabilistic Risk Assessment – used to determine event frequency and recovery success.
ERM is listed as having seven basic tools. These are process management, risk appetite management, root cause, uncovering risks, performance management and business resilience and sustainability.
The highlighted area indicates risk tools which are similar to those used in the quality field. Root cause analysis, performance management and probability analysis are used in both fields. Similarly, Monte Carlo simulations are used in each to determine the probability of an event.
While there are techniques held in common, there is a fundamental difference in focus. Risk is focused on a future event, while Quality focuses on the present. Further, the quality process attempts to reduce variation and thus risk. Risk Analysis attempts to identify the probability of an aberrant event and the willingness of the organization to sustain the consequences of that event.
The difficulty in both fields is implementation. In the quality field organization say they are adopting and implementing quality, but only give it lip service. Similarly, organizations say they are concerned about risk, but, as in the case of GM, fail to take corrective action until such action is forced upon them.
Several incidents from the Portland Oregon U.S. Postal Service highlight these problems. The U.S. Postal Service claims to use Lean Six Sigma. At one of the local stations managers from outside the state came in to create a “Lean Station”. They reorganize the work layout. However, they moved the work area away from the people who would need the final product and spread out the work area. Thus, the processing time of mail was increased by over thirty minutes. This is the opposite of Lean principles. Moreover, the layout ran afoul of OSHA. OSHA determined that if there was a fire, a number of carriers might die, because there were insufficient exits. While the OSHA issue was corrected, the increased processing time was not.
On December 21, 2014, there was a hazardous material spill at two processing plants, the main Portland Oregon plant and the one at the Airport. The spill was created by sulfuric acid, a chemical which is prohibited in the mail system. Both plants were shut down for about five hours. Portland Police and Fire Department Hazmat Crews responded, as did the U.S. Postal Inspectors. Several people were evacuated to the hospital for minor repertory problems.
Exact cost figures are unavailable. However, the rumor is the bill received from the City of Portland was in excess of $250,000. The effect to the entire postal system was negligible. The impact on the two plants was substantive. The cost to a multi- billion dollar corporation is also negligible. For a multi-billion dollar corporation, what is the Risk Appetite?
Which orientation will prevail? Given the implementation issues and the commonality of some tools, I do not see any dominance in the short term. ISO 9001.2015, however, will probably help ERM principles develop and mature. The IS0 9001.2015’s requirement that risk be managed at the highest level of the organization will also facilitate ERM and highlight risk at the corporate level. However, the entrenched silos will likely slow any overall integration. Quality with its broadly accepted body of knowledge will still thrive, although the failure of companies to use the principles instead of just the name will hinder its impact.
Bio:
James Kline PhD (abd) is an ASQ certified Six Sigma Green Belt and Manager of Quality/Organizational Excellence. He has consulted on quality and workforce development issues for the State of Oregon and the League of Oregon Cities. He currently works for the US Postal Service, while completing his dissertation.