James J. Kline, Ph.D., CERM, is the author of over one seventy articles on quality in government and risk analysis. He is a senior member of the American Society for Quality. A Manager of Quality/Organizational Excellence and a Six Sigma Green Belt. He has consulted for the private sector and local governments. His book, Enterprise Risk Management in Government: Implementing ISO 31000:2018, is available on Amazon.

1. What do you see as the current challenges to the Quality Profession?

My wheelhouse is government. Thus, I will reinforce my observations by referencing several quality professionals who have far more experience with the private sector than I. The quality profession faces at least three substantive challenges. These are technological innovation, geopolitical dynamics, and the International Organization for Standards’ (ISO) shift toward risk.

Technological Innovation

There is general recognition that technology has an important impact on all professions. ASQ, the dominant professional quality organization, stresses the relationship between Industry 4.0 and what they call Quality 4.0.

Industry 4.0 is the idea that the technological development will link the Internet of Things, Artificial Intelligence and Robotics to improve industrial processes and output. Quality 4.0 is its quality corollary. It is touted as the way ahead for the quality profession.

Ian Dalling of the United Kingdom (CERM Risk Insights #299) notes that innovation is not a linear process. In fact, any examination of general-purpose technology will see fits and starts. General-purpose technology is technology which can be used across multiple industrial sectors. For instance, steam power was used in transportation and manufacturing. The problem is that the adoption of steam power was not uniform or at the same time in any economic sector. The same can be said for computer chips and networks.  Consequently, the rate of new technological adoption will vary among economic sectors. This is important because the rate of adoption and the type of technology adopted will impact quality professionals in different ways and at different times.

This fact is a little different from the idea of ASQ’s Quality 4.0. ASQ promotes Quality 4.0 as the linear road map. However, given the uneven adoption and application of technology it is difficult to see how useful Quality 4.0 will be as a guide for professional development. Ian Dalling believes Quality 4.0 “is an ill-conceived notion.”

The uneven application of technology between sectors, means quality management activities will remain industry specific. This uneven application of technology will be further impacted by geopolitical dynamics.

Geopolitical Dynamics

Geopolitical Dynamics are like the dice on the monopoly board. It indicates the moves a player will make. The players are the business executives who decide what plants will be opened or closed and where. Over the past thirty years plants in the United States were close and reopened overseas. This was fundamentally a wage arbitrage play.

The importance of wage arbitrage can be seen in an example from the book “How We Compete” by Suzann Berger. The chief engineer of a lights out Japanese yarn manufacturing plant was worried that the plant would be closed and moved to China. The plant was a fully automated plant with just five technicians.  The labor cost of such a plant is miniscule compared to the capital costs. Thus, a move to China will only save a small amount. But that small amount is important to decision makers.

A counter to the labor arbitrage motivation is government action. The Trump administration used tax policy and government jaw boning to encourage companies not to close plants but bring manufacturing back. The Biden administration’s policies are unclear. However, reports indicate that corporate taxes will be raised.  If true, that will leave less money for investment in plant and equipment. It is also not clear that the Biden administration will jawbone companies to keep plants in the United States. Ford, for instance, has announced that it will be moving a plant in Ohio to Mexico. So far, the Biden administration has not publicly discouraged the move.

Even if more manufacturing comes back to the United States or as plants are constructed elsewhere, the impact of Industry 4.0 will be felt.  This is because firms will continue to seek to reduce labor costs by more fully integrating computer networks with robotics and artificial intelligence. Product will no longer be sampled. Instead, they will be one hundred percent scanned.  Any defective part will be automatically removed by a robotic arm. Quality experts will be replaced by computer programmers. This does not mean that quality management will be eliminated. It means the level of statistical sophistication (Black Belt level) will not be needed on a regular basis. The result is that the number of quality management position worldwide will likely continue to decrease.

Much of the above has focused on the private sector. The public sector has a split when it comes to quality management. That split is by level of government as well as geography.  In Canada and the United States, quality management at the local government level is well entrenched (1). In other Commonwealth Countries, quality management at the local level has a meniscal footprint. At the province, state, and national levels the footprint is likewise small.

Generally, what has happened since 2000, is local government have moved away from quality management and to risk management. Enterprise Risk Management is a requirement of local government in New South Wales Australia and South Africa. Risk reporting is a local government requirement in the United Kingdom.

This shift is important because it coincides with a similar shift in the private sector. That shift is being driven in part by the International Organization for Standardization (ISO).

International Organization for Standardization

ISO is the international organization which provides standards for certifications like quality management worldwide. In 2015, ISO added risk management to ISO 9001 its quality management standard. Milt Dentch in his book “Risk and Impending Demise of ISO 9001” (CERM Insight 3292), discusses the problems with ISO 9001.  It discusses the impact of this change to ISO 9001.

For several years, the trend for ISO 9001 certifications has been downward. The drop-off has been substantive and probably correlates with the decline in manufacturing plants.  However, some feel the decline can be attributed to two other reasons. One is ISO 9001 certifications are no long worth the cost. The second is the inclusion of risk management.

It is being report that the ISO 9001 update will expand risk management. If this is true, then it will likely have several impacts. The first is to reinforce the idea that ISO 9001 is no longer worth the cost. By expanding the risk management aspect, the quality management focus is diluted. A diluted focus raises the question as to whether the certification is worth the cost. The second will be to lessen the quality professions influence within the organization.

The more ISO 9001 emphasizes risk management the more the quality management system starts competing with an enterprise-wide approach to risk management. Enterprise Risk Management (ERM) is being promoted by the accounting, auditing, and financial professions. (2,3) These professions see quality management as just one of multiple risks an organization faces. When quality management is viewed as just one of numerous risks, the influence of the quality professional is reduced.

Summary

The quality profession has been experiencing disruption caused by offshoring for more than a decade. The impact of this disruption is being felt in several ways. First, technology associated with Industry 4.0 is be applied to manufacturing plants worldwide. While the impact is not uniform, it is significant enough to create a downward trend in quality management jobs. Second, this decline is being exacerbated by the decline in ISO 9001 certifications and the shift towards risk management. If this shift continues it will put the quality profession in direct competition with Accountants and Auditors.  Such conflict could diminish the influence of quality managers.

Endnotes

1. Kline, James J. Quality in Local Government: A reinvigoration, Quality Digest, September 8, 2020.
2. Kline, James J. Competition for Risk Assessment Increases, Quality Digest, January

13,2021.

2. Kline, James J., and Greg Hutchins, Auditors, Accountants and ERM, Journal of Government Financial Management, Winter 2019, pages 33-37.