In manufacturing, quality is the concept of making
products fit for a purpose and with the fewest defects. Many different
techniques and concepts have been tried to minimize defects in products,
including Zero Defects or Six Sigma.
The purchase of intermediate products highly impacts the
efficiency of the productive process and the value chain of the buying company.
That is the reason why quality of the parts bought, the design specifications
and the overall reliability of the selling company are crucial.
This is why direct purchases generally involve long-term
relationships and not the type of 'faceless' exchange that e-commerce is
supposed to make possible since most business transactions are not anonymous.
Some sort of face to face (F2F) exchange would then be involved here too, for
basically the same sort of reasons as mentioned earlier: if information and
communication technologies (ICTs) decrease the cost of conveying and treating
information, they do very little when it comes to decreasing information
asymmetries. This is why it is sometimes said that the Internet will be used to
deepen already existing business relationships between companies rather than to
create new ones.
1.1 The certification process: a quality communication
mean
Certification can be made by third parties or by contractors
themselves, in which case the implications for competition differ accordingly.
Whereas, for business to consumer (B2C), certification is
necessarily made by a third party because the individual consumer
cannot afford to pay the cost of certification, both possibilities exist for
B2B. Which option will be chosen depends on the market.
Certification by the contractors
Large contractors certify their own subcontractors: they
express minimum quality demands in order for the subcontractor to be allowed to
bid Firms and Suppliers for online tenders. This actually enables the
contractor to have more control on the subcontractor, in order to extract more
rent. This process also favors the establishment of long-term business
relationships through repeated contracts.
Certification by third parties
There also exist more public ways for quality certification.
The primary goal of certification is to give public information about a company
to other companies, which could consider doing business with the former. Third
parties may step in to certify that the company fulfils some previously
specified quality demands.
Concerning industrial norms, the International Standard
Organisation (ISO) proposes a set of industrial norms, such as the ISO9000
norm.6 This norm is meant to be applicable to all firms, irrespective of the
industry or the size. Of course, some industries have developed specific norms
in order to specify more precisely the quality requirements, but these norms
complement the ISO9000 norm rather than substitute it. Obtaining the ISO9000
certificate means fulfilling a set of quality requirements established by the
ISO. It is in general a lengthy (12-18 months) and somewhat expensive
process.
1.2 The ISO norms in the industry
The development of ISO9000 certification has been rapid in
most developed countries over the 1990s). The increasing trend is almost
universal, but one may notice some persistent international differences, which
are most probably related to industrial structures (average size of firms,
etc.) as well as differences in the pattern of information diffusion. The value
chain is ISO certified at each step.
The International Organization for
Standardization (ISO or Iso) is an
international standardsetting body made up of representatives from national
standards bodies. Founded in February 23, 1947, the organization produces
world-wide industrial and commercial standards.
While the ISO defines itself as a non-governmental organization,
its ability to set standards which often become law through treaties or
national standards makes it more powerful than most NGOs, and in practice it
acts as a consortium with strong links to governments. Participants include one
standards body from each member country and major corporations.
ISO documents are copyrighted and ISO charges for copies of
most. ISO does not, however, charge for most draft copies of documents in
electronic format. Although useful, care must be taken using these drafts as
there is the possibility of substantial change before it becomes finalized as a
standard.
An important facet of the ISO norms is that they seem to act
as an endogenous sunk cost. It means that it is not just one set up
cost that remains the same forever and that firms simply have to pay to enter
the game. It is in fact a cost that is rising endogenously, as more entrants
apply for entering the game. At a first stage, the principal tends to impose on
all its suppliers the obligation to gain certification. At a second stage, ISO
standards must be regularly improved by quality experts. These experts raise
the technical level of the norm (from ISO9000 to ISO9002) but they also extend
the normalization to all activities (from manufacturing to services).
1.3 Impiementation of ISO 9001:200
Implementing a Quality Management System (QMS) within an
organisation needs to be supported by the top management. The objective of the
QMS must be clearly defined so that the system can be effective.
The design and implementation of a quality management system
depends on the type, size and products of the organisation. Each company will
have its own objective, however most companies objective is to increase
profitability. The implementation of a Quality Management System produces four
main benefits. Firstly, it helps to manage costs and risks. Secondly, it
increases effectiveness and productivity. Thirdly, it allows the identification
of improvement opportunities. It helps to increase customer satisfaction.
In addition to all the benefits described above, a
well-managed quality system provides several competitive advantages. As a
matter of fact, it enhances operational efficiency through the control on all
processes and therefore cost reductions. It also allows more flexibility and
the ability to respond to market opportunities. A well-managed quality system
results in increasing customer loyalty and market share indeed.
ISO 9001:2000 requires a quality system to be documented,
tested, measured and assessed. Management commitment is essential for the
implementation and ongoing success of the Quality Management System. To that
purpose, QMS must be able to be managed properly and adequate resources
allocated. Practical and accessible to all employees, QMS must be measurable
and reflect the overall company objectives. In order to be as efficient as
possible, it should be reviewed regularly and
measured for effectiveness, adjustments must be made to reflect
major changes to the organisation and business practices.
It is not essential to gain accreditation for a Quality
Management System to work effectively. It depends on the organisation if they
wish to gain accreditation. However, if the organisation gains accreditation,
it will be recognised as an organisation that is committed to providing quality
products, improvement and customer satisfaction. In addition, the organization
will gain respect through the industry as a fully accredited quality
company.
Quality Management System Implementation, the main
steps
1.4 Certification, a prerequisite for B2B
e-commerce?
For complex quality-sensitive goods, the efficient
functioning of B2B will necessitate certification of subcontractors by the
buying firm. Certification allows alleviation of problems related to
information asymmetry. It is all the more important that the
subcontractor is not well known by the contractor, is small, does not have a
well-established situation in the industry, etc. This, incidentally, is the
profile of a firm that would most benefit from having B2B e-commerce, in order
to find new contractors and expand its activity towards new areas.
With regard to the development of B2B exchanges,
Certification seems to be crucial. Certification being a prerequisite for the
development of B2B, countries where ISO certification is more common should be
countries where B2B e-commerce has the best opportunities to develop.
Therefore, countries where ISO norms were diffused widely are also countries
where B2B is more frequent.
As demonstrated in this paper, the Internet has completely
transformed the way businesses are conducted (e. g relationships between buyers
and sellers, supply chain management). On the Internet, customers and suppliers
engaging in e-commerce transactions must face two major issues, which are trust
and authenticity. Firstly, it is quite difficult to trust a supplier who may be
located on a different continent. Secondly, it is quite tricky to verify the
supplier's conformity to management system standards. These issues are critical
when the customer expects its suppliers to have management systems that conform
to recognized standards. In addition, checking supplier conformity to the
relevant standards becomes critical when the customer itself is required by its
customers to verify the conformity of subcontractor processes to quality
management system (QMS) such as ISO 9001 :2000 or ISO 14001:1996.
E-commerce supply chain management and integrated
e-assurance
· Conformity assessment and assurance in
e-commerce
An efficient corporate e-commerce strategy integrates a
number of core business functions (see the scheme above). Some of these core
functions have an obvious role to play within Internet e-commerce. First and
foremost amongst these is the notion of assurance, whereby a supplier
in an e-commerce transaction can satisfy a customer's need for confidence about
the supplier's credentials and capabilities. The concept of assurance is how a
customer validates a supplier's claims of conformity to a given standard. This
can be done through e-assurance, meaning that the supplier is enabled to convey
the relevant conformity assessment documents such as ISO 9000 in a secure
manner, which supports validation and authentication by the customer.
The ISO/IEC Guide 2 defines conformity assessment as
standardization and related activities. It defines standardization as, "any
activity concerned with determining directly or indirectly that relevant
requirements are fulfilled".
In addition, conformity assessment procedures provide a means of
ensuring that the products, services, or systems produced or operated have the
required characteristics, and that these characteristics
are consistent from product to product, service to service, or
system to system. Conformity assessment includes product sampling and testing,
inspection, and certification, and quality and environmental system assessment
and registration. It also includes accreditation, assurance of the competence
of third parties.
As conformity assessments convey information between
suppliers and customers, we can say that it is a major mean of marketplace
communication. From the customers and suppliers perspective, understanding of
the conformity assessment process is essential. It allows to evaluate the real
value of the assessment scheme and therefore to take accurate business
decisions. Three main criterions must be considered:
- impartiality and competence of the assessment body;
- scope of the registration (certification);
- adequacy and appropriateness of the standard against which the
organization is evaluated, and the security with which the information is
transmitted.
The customer may be misled if the above criterions are poorly
or not met or at all. On the Internet, this is likely to happen and that is the
very reason why accreditors to customers must be highly involved. Consequently,
they have ensure the integrity and credibility of the scheme during the
information dissemination process.
· ISO 9000 certification and Internet
e-commerce
A formal QMS helps a supplier to ensure the production of
products that consistently meet customer specifications. However, we must
underline that QMS standards such as ISO 9001:2000 only deal with the processes
an organization uses to manage production or service provision
As certification to ISO 9000 and other sector-specific
requirements helps the customer to identify and select its supplier,
certification is becoming a major differentiator. By communicating on their QMS
registration and certification, suppliers may remain competitive at a global
level.
QMS and EMS registrars (certification bodies), the
accreditation bodies that verify the competence of registrars and the certified
suppliers themselves must now confront the issues surrounding the security and
authenticity of ISO 9000 and ISO 14000 certificates reported on the Internet to
support e-commerce transactions.
The certification bodies which register QMS which are
verifying the competence of registrars and certified suppliers have to face the
internet challenge. As a matter of fact, they must deal with the security and
authenticity of ISO 9000 certificates which are reported on the Internet in
order to support e-commerce transaction. Ensuring the security and authenticity
of ISO 9000 and ISO14000 certificates of registration on the Internet is
therefore critical to upholding the integrity and credibility of the conformity
assessment system as a whole.
· Ensuring online security and
authenticity
The certificate of registration, signifying verified
conformity by a registrar, is the de facto informational instrument through
which a registered (certified) supplier communicates its quality assurance
credentials to the outside world.
The certificate of registration stands as a proof. It means
that conformity was verified by a registrar. Thus, this document allows the
registered supplier to communicate on its quality assurance credentials toward
its customers. Ownership, use and display of certificates of registration have
traditionally been controlled and governed by guidelines published by the
registrars, which issue such certificates. In the past, paper-based
certificates or registration were efficient. However, they seem inadequate when
it comes to the trust, security and authenticity required by the use and
display on the Internet.
The security and integrity of certificate of registration
information is highly challenged by the Internet as it is necessary to resist
to the corruption, alteration or falsification means available. As a matter of
fact, scanned certificates displayed on supplier Web sites are subjected to
downloading alteration and redistribution by external agents. This might lead
to the circulation of falsified certificates and unsupported claims of
registration.
If we consider ISO 9000 registration, suppliers often adopt
three methods of certificate display on their Web sites:
- A statement of claim (e.g., "ISO
9002-registered") displayed on a supplier's Web site
The statement does not provide details. It means that the
customer must contact the supplier or its registrar to verify that the
registration is in good standing. In addition, the customer must make sure that
the registrar is qualified to audit the supplier and that the scope of
registration covers the product or the service. These Web - based statements of
claim cannot be immediately validated and authenticated without additional
work.
- A statement of claim accompanied by registrar
and accreditation body marks
In comparison with a plain statement of claim, a statement of
claim accompanied by registrar and accreditation body marks seems to be more
credible. However, the customer is still required to contact the registrar in
order to make sure that the statement of claim is valid.
- Display of certificate of registration
A scanned image of the certificate of registration is displayed
upon the supplier Web site. As these scanned images can be easily downloaded,
they cannot be considered as valid and secure. Once again, the customer has to
validate.
Both the lack of security and authentication surrounding the
use of certificates of registration on the Internet is a real exposure point
for the conformity assessment industry and presents a definite threat to the
integrity and trust which underpins the system. That is the reason why all
registered companies should consider how to integrate the e-assurance aspect of
their business within their overall corporate e-commerce strategy.
- Recommendations for registered suppliers
According to the above demonstration, suppliers who claim
conformity to recognized standards have to consider how they can provide
customers with this required confidence and trust by providing their
credentials in a secure manner that supports online verification and
authentication.
When developing their e-commerce strategy, suppliers should
consider the following six points: - Make sure that the e-assurance is a key to
the overall corporate ecommerce strategy
- Consider how to meet Internet buyers' need for trust and
authentication. To that purpose, suppliers must show evidence of their
certification validity and ownership.
- Ensure that the certificates display on the Internet resist
to download and other mean or falsification or corruption. To that purpose,
they can use digital certificates of registration which are encrypted, signed
and secured under a public key cryptosystem.
- Ensure that certificates of registration and associated claims
of conformity are served from a secure server whose identity and authenticity
can be verified. Using trust services provided by a recognized Internet
certificate authority such as Verisign or Entrust is one way to built in this
level of assurance.
- Develop an e-assurance strategy for "going beyond the
certificate". Buyers faced with choosing among suppliers who all hold valid
certificates of registration will be looking for other objective evidence in
support of superior performance. This will require providing quality or
environmental system and other objective data, which supports the level of
quality, reliability and environmental care being claimed.
- Seek your registrar's input when developing and deploying an
Internet strategy for giving visibility, security and authenticity to your
registration that ownership of the certificate of registration rests with the
registrar and any e-assurance strategy you develop should be aligned with terms
of use for the certificate specified by the registrar. Registrars are only now
becoming aware of the need for digital certificates of registration, but most
will be willing to offer guidance as to how conformity to management system
standards can best be conveyed over the Internet.
