The revision of the ISO 2015 standards will help in business improvement and bridge the gap between business strategy and management systems, say RD SHAHA and Mukund BELSARE.
India is the second largest cement producing country in the world with installed capacity at around 370 million tonnes per annum (MTA). The Indian cement industry is dominated at the national level by 11 or 12 companies among the more than 100 companies which corner around 70 per cent of the domestic market for the commodity.
The cement industry can be divided into five different regions, north, west, central, east, and south, due to the nature of cement production and use of limestone as raw material. These factors mean that the commodity is hard to transport over long distances. Traversing these distances also come with their attendant share of high freight costs involved in transportation of these commodities.
Hence, cement plants are generally located near limestone deposits, and cement produced in a particular area is consumed in the same region. The industry also suffers from some lacunae unique to the Indian scenario (see box below).
Sustainability
Sustainable development includes socioeconomic development and environmental protection. By its very nature, the cement manufacturing operation has a major impact on Earth systems, like destruction of biophysical resources, which harm ecosystems. In particular, careful resource management needs to be applied in order to balance the demand of the cement industry. To maintain sustainability, benchmarks, audits, sustainability standards and certification systems need to be qualitatively measured.
ISO 9001:2015 standards
The standard ISO 9001 quality management system (QMS) was revised and released in the last quarter of 2015. The standard is pertinent to the cement industry also, and will have a tremendous impact on organisations if established, implemented, maintained and continually improved. Let us examine the implications of how these changes can help cement industries.
The revised ISO 9001:2015 standard has two major changes – the context and need of interested parties have been added, and risk management has been formally introduced.
A few other changes are a better focus on improvements, flexibility on documentation, and common requirement standards.
Requirements related to context
The ISO 9001:2015 standard has graduated from conventional quality control to quality assurance and quality management. All these years, the emphasis was more on understanding and improving processes and documentation. The standard earlier was clause-based, and the Plan-Do-Check-Act (PDCA) concept was adopted later. Now the standard is moving towards sustenance. The concept is derived from business excellence requirements. External issues – legal, political, regulatory, financial, technological, economical and natural, coupled with internal issues like product, strategic direction and organisational capabilities can affect the ability to achieve the intended outcomes of a quality management system. Though there is no clear requirement regarding the extent of documentation, the standard will help in documenting factors affecting various issues.
These issues would include economic factors (availability of fuel, water, infrastructure, etc.), financial issues, the competitive scenario, supply chain management, social factors (ethnic values, gender issues, corruption, availability and education of the workforce, education and medical facilities) cultural, market and public demand (current and future market trends), technological (availability and access to technology relevant to the organisation), legislative (statutory, regulatory and other forms of legal requirements), natural (climatic and other conditions, ecosystems, resource availability and energy).
Technology is an external issue. The organisation needs to define tech parameters in brief, without giving out any details about conventional or state-of-the-art technology for processes like mining, crushing, grinding, homogenising and calcinations, etc., for manufacturing cement.
Similarly, all the identified internal and external issues related to organisations should be addressed. In this manner, it is expected that an organisation can introduce an overall conducive business environment.
In the same clause, another requirement is ?understanding the needs and expectations of interested parties?. The standard expects to identify interested parties and subsequently their needs pertaining to the management system. This consideration gives a clear picture to the management and helps to set processes accordingly.
For example, interested parties can be management, employees, customers, suppliers (clear specifications, consistent schedule and payment), contractors, neighbours, citizens, NGOs dealers and financial institutes, etc.
Though documentation is not mandatory under the standard, the exercise can prove to be beneficial to top managements.
Risk management
The risk management concept was implicit in the ISO 9001:2008 and ISO 14001:2004 versions. The same was part of preventive action, but was limited to the processes and was not very effectively utilised by organisations. In the revised QMS 2015 versions, the risk and opportunities requirements have been introduced.
Apart from this, risks and opportunities can also be identified from understanding the needs and expectations of interested parties. It is expected that a list of the possible risks arising out of the objectives should be compiled. The consideration is with reference to context, and the needs of interested parties. A simple example can be the objective to achieve customer satisfaction, which is related to internal process variations, or delay in supplies. It is essential to identify and monitor actions to reduce uncertainties.
The standard calls for actions to be taken on the identified risks. The actions and results are required to be monitored, reviewed and honed by the senior management. The benefits of risk management are the systematic action on weak areas, awareness of business opportunities for greater clarity, and flexibility in the approach. Further, the strategy can be deployed to obtain planned results.
These changes are also aimed towards ease of alignment, reduction in documentation, and more focus on improvements. The effective actions will lead to trustworthy and consistent quality of cement through application of modern technology. This customer-centric approach will usher in customer excellence. To summarise, the new standard brings in overall business focus and does away with the perception that ISO just leads to increase in paperwork. The standard is aimed at business improvement, sustenance in the current scenario and bridging the gap between business strategy and management systems.
Benefits can be obtained during business reviews, implementing the improvement programs and preparing for stiff competition.
About the authors:
R D Shaha, a chemistry professional, has extensive experience in the cement industry. He provides consultancy in the field of ISO 9001 QMS, 14001 EMS, 18001 OHSAS, Integrated Management Systems, ISO 17025, 17020, and GMP, for the past 16 years.
Mukund Belsare is an engineer by qualification, worked with Godrej & Boyce in the quality and project domains, spent a decade with TUV SUD SA and six years with TUV India Pvt Ltd as a Head-Quality System Auditor.
Here are the factors unique to the Indian cement industry:
- The cost of setting up new plants and the operational costs of existing units are high, effectively restricting the introduction – and closure – of cement plants.
- The production cost for cement manufacturers in a particular market is almost similar.
- Since cement has no substitute, the cement industry is traditionally a supplier-driven market.
- The majority of cement manufacturers are members of the Cement Manufacturers? Association (CMA).
- Changes in demand-supply dynamics in a particular region significantly impact prices across other regions.
- Cement companies are not utilising their available capacity, impacting their ability to reduce supplies and dictate prices.
- There has been little co-relation between demand and prices in different regions due to some unscrupulous practices being followed by a few players.
- Prices have collapsed in the past when demand has been high, due to massive market over-supply.
Benefits of the system
- The identification brings in clarity in thinking and brings about a wider perspective.
- The consideration of context in the review process adds value. The changes in business environment are also part of the review. Often, though processes within an organisation are stable, the external business environment can have a major impact. Hence the management can review the business and understand the changes, and take appropriate decisions.
- The system also helps managements to identify areas that will have an impact on business opportunities.
All Systems Go!
- A few examples of risks and opportunities in the revised QMS 2015 version:
- Mining lease renewal
- Cement consumption growth rate
- Areas of availability and sourcing of raw materials
- Availability of good quality coal
- Government policies and strategies
- Utilisation of industrial waste
- Use of mineralizers
- Alternate fuels, including use of pet coke
Low carbon emission technology
- Energy efficiency and energy conservation
- Best practices in cement manufacturing
- Product development and innovative R & D
- Logistics