raising standards worldwide™Using standards to tackle the recessionFaster,smarter,better
Standards have a proven history of supporting and contributing to businessgrowth in the UK and around the world. But they are only as effective as theorganization putting them into action. Choosing the standards that fit yourbusiness needs is an essential part of the equation.What are your biggest challenges? And what are you hoping to achieve?Review this quick checklist to find out which standards could be helpingyour business survive and thrive in the recession.1 Act early to decrease cost and inefficiency:ISO 9001 Quality management; ISO 14001 Environmental management2 Keep trading continuously:BS 25999 Business continuity3 Hold on to your best customers:ISO 9001 Quality management; BS 10001 Customer satisfaction4 Hold on to your best staff:ISO 14001 Environmental management; SA8000 Social accountability;BS OHSAS 18001 Occupational Health and Safety5 Diversify and innovate:Kitemark; ISO 9001 Quality management; ISO 14001 Environmentalmanagement; all product standards6 Keep control of inventory:ISO 9001 Quality management7 Increase market presence:Management Systems certifications and Kitemark8 Work on improving your business:ISO 9001 Quality management9 Avoid unnecessary risk and debt:BS 31100 Risk management; ISO IEC 27001 Information securitymanagement; ComplytoSupply™10 Work to create and maintain competitive advantage:ISO 9001 Quality management; Kitemark; all product standardsTo find out more about how these standards and quality marks can helpyour business beat the recession, visit www.bsigroup.comChecklistWhich standards can help you beat the recession?
Standardization has existed for over 100 years, and the numbersof standards continues to grow. Currently around 27,000national and international standards are in the BSI portfolio andused daily by millions of enterprises worldwide. In the UK alone,standards users range from large organizations to small- andmedium-sized companies, from public and private sector alike.Based on the prevalence of standards, it’s safe to assume thatthey offer considerable value – to economies, to businesses andto people. And indeed research has quantified those benefitseconomically – in the UK, standardization accounts for an annualcontribution to GDP of £2.5bn per year.However, in an economic downturn, do the benefits thatstandards bring still apply? The answer is an emphatic yes.In difficult economic times, standards can provide extracost saving, new customers, product innovation, marketdifferentiation and lower risks, all of which makes thedifference – enabling organizations to survive, grow andultimately thrive even in the toughest economic conditions.This paper is an exploration of how that actually works inpractice – first by looking at the issues we face, then evaluatingthe contribution of standards, and finally by setting out the waysin which standards are of actual, practical help.A provenhistory, withmeasurableresultsFaster, Smarter, Better | Using standards to tackle the recession
The right tools for the jobThe economic impact of standardizationis far from negligible. In recent years, arange of studies from the UK, Australia,Canada and Germany discovered thehard macro-economic benefits ofstandards. In the UK1this has beenquantified at an annual contribution toGDP of £2.5 billion per year. The samestudy found that 13 per cent of growthin labour productivity between 1948 and2002 is attributable to standards.Moreover, for individual businesses,research2of 4,000 companies acrossGermany, Austria and Switzerlandconcluded the following:• Companies actively involved instandards work more frequently reapshort- and long-term cost-savings andcompetitive benefits than those thatdo not participate.• The businesses surveyed rate theeffects of standardization ontransaction costs as positive, indicatingthat transaction costs dropconsiderably as a result of standards,since they make information availableand they are accessible to allinterested parties.• Companies have increased confidencein the quality and reliability ofsuppliers who use standards.The question becomes: how do thesebenefits translate in a recession? Forindividual businesses standards makeCASE STUDY: Garlands Call CentresStandards that attract customersGarlands Call Centres, a leading outsourced contact centre operator, uses certification toISO 9001 to differentiate the quality of their offer in a crowded marketplace.Garlands competes against a diverse range of international organizations from“basic” contact centre operators in low wage countries to sophisticated WesternEuropean competitors. Quality means offering a competitive price and addingvalue through things like high levels of first call resolution, call eliminationstrategies and sophisticated data analysis.Quality compliance manager, Martin Stevens explains: “In this tough marketplace,we’ve built a strong reputation as a company that delivers high quality – and amajor contributing factor to our success has been our investment in quality systems,technologies and processes. Ever since our initial certification in March 2005, ISO9001 has played a significant part in this success.”In addition, the quality standard adds value because it helps create a positiveworking environment. Says Stevens: “We work to create an environment thatpeople want to work in, one in which we can get the best out of our people.They’re motivated, skilled and knowledgeable about what they’re doing.Certifications underline and help build the right environment for us.”Stevens feels that even in a recession, the investment in standards continuesto make sense.“At the moment it’s more important than ever to get into the marketplace with adifferentiator and a quality offering.”Faster, Smarter, Better | Using standards to tackle the recessionHow the numbers stack upIn the fourth quarter of 2008 the UKeconomy shrank by 1.5 per cent and thecountry technically entered a recession.Manufacturing industry saw outputdecrease by 4.6 per cent and the servicessector, which accounts for about 75 percent of the economy, fell by one per centin its worst performance since the thirdquarter of 1979. Total output fell to a 28year low, comparable to the 1.8 per centplunge in the second quarter of 1980. Fornow, the UK economy is expected tocontinue shrinking for at least the firsthalf of 2009, with some experts“In this tough marketplace... a majorcontributing factor to our success hasbeen our investment in quality systems,technologies and processes”forecasting a three per centcontraction this year – the biggestdecline since the Second World War.In the wake of these stark statistics, theimpact on organizations is considerableand generally adverse. Markets shrinkalong with revenue: customers contract ordisappear, money becomes elusive, ordersand investment evaporate, and continuityof employment dissolves. In the privatesector more businesses chase less money.In the public sector, service provision ismore and more stretched as need growsand resources don’t.
product development andinnovation easier, market entrysimpler and efficiencies moreeasily achieved. In a recession theywill help keep customers and find newones, trim costs and keep businesses inbusiness for longer.Keeping customersStandards help retain customers. First,because when money is tight customerswant to spend wisely. Standards help toreassure them that products andservices maintain a high level of quality,reliability and consistency.Standards also embed a customerfocus in all the activity of theorganization, leading to highercustomer satisfaction, retention andadvocacy. The customer satisfactionseries of standards (ISO 10002, 10003and 10004) also specifically addressprocedures such as complaintshandling and dispute resolution.Finally, and perhaps most important,standards also help demonstrate thatproducts or services meet regulatory, andsometimes contractual, requirements –though standards themselves are voluntary.In sectors where the penalties, costs anddelays of non-compliance are crippling,continued compliance through the use ofstandards will be a key reason whycustomers stay with suppliers whouse standards.Winning new customersGenerating new business becomes evenmore important in a recession. As marketsshrink, new customers are needed tomaintain revenue. The more customers abusiness has, the less vulnerable it is if oneof them should go to the wall.Standards demonstrably give companiesa competitive advantage. Research hasshown that 100 per cent of FTSE250company decision-makers believe thatconsumers view businesses that applystandards more favourably than theyview those that don’t3. Some standards,such as ISO 14001 and SA 8000 alsodemonstrate, sometimes importantly,CASE STUDY: FloPlastStandards for market differentiationand cost controlFloPlast, a leading manufacturer and supplier of plastic buildingand plumbing systems in the UK, has made a significant investmentin standards.The company already has two Kitemark licences and a further twoare planned. Managing director Stewart Norris explains: “We use theKitemark and other quality marks in the marketplace to distinguish us.”It’s FloPlast experience that the Kitemark is recognized as an importantdifferentiator in the UK and abroad. According to Norris, recent work ondeveloping its European distribution demonstrated that “Fifty per cent ofthe time … they recognize [the Kitemark] as a benchmark and theconfidence is there. It’s very much accepted.”FloPlast also uses registration to ISO 9001 to help with cost control. Thecompany has invested heavily in automation to streamline its manufacturingand warehousing operations. It employs state-of-the-art material handlingand conveying systems, and robotics in its injection moulding plant. Inaddition a computerised warehouse management system enables thebusiness to stock and pick finished products accurately and efficiently.Underlying all of this activity sits certification to ISO 9001. Explains NeilHarrison, FloPlast’s quality control manager: “This enables us to manage ourprocesses in the business to be accurate and consistent. We also show ouremployees the way to work and maintain consistent standards – whichmakes us more cost effective and efficient when we repeat processes.”FloPlast aims to beat the recession by not being complacent: in 2009FloPlast plans to launch five new product ranges and 10 new products, atotal of 110 new items. In addition to the new Kitemarks, work is ongoingto achieve certification to ISO 14001 with BSI. “We’re open-minded andpositive,” says Stewart Norris, “because our competitors are generallydown and we’re still growing our market share to compensate for shrinkingmarkets. And we’re passionate and enthusiastic about what we do.”that a potential partner shares thecustomer’s values in areas such ascommitment to sustainable working andethical labour practices.In addition, standards signal to potentialcustomers that an organization will beeasier to do business with. This isbecause standard-compliant productswill be interoperable and compatiblewith other components; the supplierworks to standard specifications andproven methodologies, eliminating thedelays and errors inherent in some non-standard outputs.Also, tendering and contract procedurescould be faster and more straightforwardfor users of standards. For example, third-party certification to BS 25999 Businesscontinuity management can help toreduce due diligence when a largeorganization takes on a new supplier. Thesame is true of ISO 14001 Environmentalmanagement and BS OHSAS 18001Health & Safety Management.
Faster, Smarter, Better | Using standards to tackle the recessionGaining entry into new marketsStandards can open doors when compa-nies are looking for new customers innew markets. New customers will knowin advance what to expect, both in termsof what is delivered and how, simplifyingmarket entry. Adherence to productstandards means that products will becompatible with other componentsanywhere else the standard is being used.Additionally, standards are well-recog-nized, understood and respected bothnationally and internationally: beingable to claim adherence to standardstranslates well in any language. ISO 9001for instance has been adopted in morethan 170 countries worldwide.Controlling costsIn recessionary conditions, when money istight, controlling costs can become crucialto competitiveness and survival. Standardsact to reduce costs in several ways. Forone thing, manufacturing to a standardautomatically eliminates waste and over-engineering. Standards also reduceprocess errors and the cost of errors.At the same time, effective risk manage-ment can help a business exploit potentialopportunities.It is an essential part of goodmanagement. BS 311000 Risk manage-ment offers guidance for organizationslooking to develop, implement andmaintain effective risk management.Keeping peopleStaying in business and positioning tothrive when the recession has passed maydepend upon retaining and motivatingthe people who are essential to thebusiness’s success. Standards let staffknow that the organization is committedto quality and best practice and theycontribute to maintaining morale.Certification to BS OHSAS 18001demonstrates concern for people’shealth and safety at work. Adoptionof environmental and sustainabilitystandards shows a commitment toissues which staff may deeply care about.Management systems standards toucheveryone in the organization and cangive a greater sense of ownershipand involvement.Boosting innovationInnovation is very often the foundationstone of growth, and so remains asimportant in a recession as at any othertime. Standards provide the platform ofknown and proven knowledge, whichenables and accelerates innovation.Standards also support innovationthrough the early codification ofterminology in emerging technologiessuch as nanotechnology.On a macro-economic level the existenceof these standards helps to buildconfidence in new concepts among keystakeholders. This acts to crystallize newopportunities at a micro level, as well asmitigating against risk for early adoptersand establishing a creative edge for anysuch business.Importantly, standards can also reduceR&D costs by giving companies triedand tested platforms for innovation.In this and other ways, standardsreduce the time to market – a consider-able cost saving. Standards also minimizethe costs of working out how to comply,and eliminate the costs of non-compli-ance. Finally, management systemsstandards strip out the costs of opera-tional inefficiencies. ISO 14001, inparticular, can yield significant materials,energy and landfill savings. ISO 9001 canhelp manage inventory more efficientlywhile retaining a strong focus oncustomer satisfaction.Keeping the wheels turningSome of the adverse events which cande-rail productivity become more likely ina recession: cash-flow falters, maintenanceschedules are stretched, experiencedpersonnel are no longer on hand, andsuddenly their absence makes a crucialdifference. And as margins narrow,downtime can become fatal.Standards limit risk and ensure efficient,secure operations. Some standardsspecifically manage risk and alsoembed business continuity planningto make sure an organization isrobust. For example, BS 25999helps the organizationidentify the key vulnerabilitiesit faces so that itcan act appropriatelyand spend in atargeted way toincrease overallresilience.This standardalso deepensthe relationshipbetweencustomersand suppliers,making suppliersharder to replace.In recessionary conditions, when money is tight, controlling costscan become crucial to competitiveness and survival. Standards actto reduce costs in several ways
CASE STUDY: Scottish Borders CouncilKeeping things movingStandards and recessionin the public sectorThe recession presents different but justas real challenges in the public sector,where the task becomes doing morewith less. Rising unemployment willonly continue to increase the pressureon benefits provision, training, adulteducation and social and health services.Demand for social housing will rise.Meanwhile the public sector is likely toexperience a fall in private sectorinvestment, and income will decrease inareas like planning fees. What role canstandards play in making ends meet?Cost controlAs in any other organization, manage-ment systems standards can reduce costsThe public sector is thelargest procurer of productsand services in the UK.The use of standards inthe procurement processdelivers efficiencies bothfor procurers and suppliersby stripping out inefficiencies. In thepublic sector, savings from ISO 14001are particularly applicable.The launch of BS EN 16001 Energymanagement will also help organizationsestablish the systems and processesnecessary to improve energy efficiency,through an effective energy managementsystem. Energy efficiency measures suchas these should lead to reductions in costand greenhouse gas emissions throughsystematic management of energy.Continuity of servicesFor local authorities, planned resilience todisruption from adverse events is a legalobligation under the Civil ContingenciesAct. Certification to BS 25999 Businesscontinuity management will demonstrateCCA compliance. Everywhere elsethe standard it is a sensible responseto anticipate and minimise serviceinterruption from unplannedadverse events.ProcurementThe public sector is the largestprocurer of products and servicesin the UK. The use of standards in theprocurement process delivers efficienciesboth for procurers and suppliers, andprovides the opportunity to deliver asustainable framework.They clarify specifications so as toeliminate ambiguity and incompatibility.They also supply a clear measurementtool which ensures conformity tospecification during supply.Scottish Borders Council takes its responsibilities extremelyseriously. In the last two years it has identified threats,critical services and the associated timelines, then developedplans around incidents. The council is responsible for a largegeographical area, as much as 20 per cent of the whole ofScotland, Kinsella estimates, despite only having around120,000 customers.The region has encountered fire, floods, even planes falling outof the sky, which had all helped to create an extensive knowl-edge base in terms of business continuity management, albeiton an informal basis.Now the council is intent on putting things on a more structuredfooting. Scottish Borders Council has plans in place for 300locations, including schools and libraries, and has alreadycompleted stage one of BS 25999 certification.“We’re now much more systematic,” says Hugh Kinsella, seniorrisk management adviser for Scottish Borders Council. He usesan incident at a school in Coldstream by way of example. “A gasincident meant that we had to evacuate the children and staff.An automatic text system notified parents, and we had plans toaccommodate children whose parents would not be able tocome. The problem was repaired on day one, and on day twothe school was back up and running. In all likelihood, before wehad our plans, the staff and children would have been senthome, and on day two we would have had a managementmeeting, saying ‘What are we going to do?’”Throughout the public sector, there are examples of organizationsbenefiting from the structured business continuity planning BS 25999brings, and increasingly it is becoming a matter of not “why?” but“how?”. For those looking to convince any last doubters, it might beworth considering a slightly more hard-edged approach.*Excerpt from “Public sector: business as usual?” which first appeared in Business Standards, October 2008.
raising standards worldwide™BSI Group Headquarters389 Chiswick High Road London W4 4AL UKTel +44 (0)20 8996 9000Fax +44 (0)20 8996 7400www.bsigroup.comBSI Group: Standards • Information • Training • Inspection • Testing • Assessment • CertificationReferences1DTI Economic Paper No. 12. The Empirical Economics of Standards. June 20052“The Economic Benefits of Standardization”. Published by DIN German Institute forStandardization e. V. 19973The research by Populus was commissioned for the BSI Business Barometer publishedon World Standards Day 14 October 2005.Standards matter. They contribute at least £2.5bn each year to the UK economy and playa key role in enabling innovation, improving competitiveness, increasing reliability, ensuringsafety, improving accessibility, controlling quality, managing risk and improving businessperformance.As the world’s first national standards body, BSI British Standards has a globally recognizedreputation for independence, integrity and innovation. Part of the BSI Group operating in86 markets worldwide, BSI British Standards serves the interests of a wide range of industrysectors, as well as government, consumers, employees and society overall, to make surenot just British but European and international standards are useful, relevant andauthoritative.BSI champions UK interests at home and abroad and is an incubator of many of the world’sleading standards. It is the national gateway to all the European and worldwide standardsbodies promoting fair trade, technology transfer, economic prosperity and security.Several publications describe the benefits of using standardization to achieve broaderorganizational and national strategic objectives. Information about these is available fromBSI British Standards.To find out more about how BSI can help you, visit the websiteat www.bsigroup.com or email email@example.com.How BSI can help