A simple way to explain the importance of quality infrastructure is to refer to a specific product. For example, if we take any food product, such as a frozen pizza, we can clearly explain the requirements of food safety standards or the verification of the cold chain.
Quality infrastructure services can be applied to all products and many services. Since no single company usually manufactures a product in isolation, the entire value chain needs to be considered. Quality and safety checks are particularly in demand at the interfaces between different companies or value chains stages.
To analyse the quality infrastructure services needs for value chains, the Physikalisch-Technische Bundesanstalt (PTB) and Mesopartner have developed the Calidena method. Calidena combines the Spanish words for a chain, “cadena”, and quality, “calidad”, and demonstrates the roots of the methodology in cooperation projects with Latin America and the Caribbean. Initially, Calidena was implemented in agro-processing value chains, applied to domestic and export value chains. Since 2007, the method has been used in all world regions and for different products and services, from hot pepper sauce in the Caribbean to photovoltaic energy systems in Northern Africa and Asia.
The participatory Calidena approach aims to stimulate quality in value chains. QI projects use the method to strengthen the user orientation of the national QI ecosystem, whereas value chain initiatives use it to close quality-related gaps.
The process is structured into three phases: preparation, a participatory diagnosis workshop and follow-up activities. At the beginning of a Calidena process, value chain stakeholders identify quality requirements and services to access promising markets. Then, a jointly developed action plan aims to strengthen the supporting quality infrastructure and the value chain itself. Finally, the action plan is implemented by interested parties, facilitated by a host and a co-host organisation, and supported by PTB or another development organisation involved. The whole Calidena process should be limited to eighteen or a maximum of twenty-four months.
Calidena targets the following achievements:
Creation of quality culture among enterprises and consumers
Increase in demand for QI services by stakeholders from a given value chain, and improving existing QI services or creating new ones
Enabling access to new markets and clients by meeting higher quality standards
Upgrading national value creation and productivity through improved resource efficiency and product quality
Contribution to enhanced environmental protection, consumer protection and social welfare
A community of practice (CoP) managing the knowledge of the Calidena method has emerged. The CoP members from four continents are trained and experienced facilitators who share experience in quality infrastructure, business development, value chain promotion and participatory development work. A website serves as an information platform, https://www.calidena.ptb.de.
Currently, the Calidena CoP is working on reconciling the value chain logic with the circular economy concept. Initial experience has been gained with biodegradable cleaning agents and e-waste. In this respect, the method helps quality infrastructure institutions to align their services with the new needs of a sustainable and regenerative economy.
Quality infrastructure has its origins in the industrial revolution of the 19th century, first in England, then throughout Western Europe and the USA, and later spread to Japan and other parts of Europe and Asia during the transition from agrarian to industrial societies. For a long time, QI was mainly a matter of checking whether physical products met defined technical specifications. Testing served both the safety of products and their usability in value-added processes based on the division of labour. Thus, the measurement of physical units was at the centre of the entire quality system.
During the change of the industrial structure in the 20th century, the service sector became increasingly important. Today, economic sectors such as trade, transport, telecommunication services, banking, insurance, and tourism, which are key service sub-sectors, dominate value-addition in all leading industrialised and emerging countries. Services are also an essential source of value-addition in many developing countries. Even in the least developed countries, services account for at least one-third of total economic output.
At the beginning of the 21st century, trade in services has grown faster than trade in goods, averaging over 5 percent per year. [1] The contribution of developing countries to trade in services has increased by more than ten percentage points but is mainly concentrated in a few economies. The share of least developed countries has also increased but remains low. [1]
The impact of the COVID-19 pandemic has affected services trade more than merchandise trade. Trade in services fell by 30 percent in the second quarter of 2020, while trade in goods fell by 23 percent over the same period. [2] While the closures led to the cancellation of flights, foreign travel, restaurant visits and cultural and recreational activities, computer and financial services saw significant growth. The World Trade Organisation (WTO) expects trade in services to increase disproportionately as the economy recovers. [3]
Special features of quality management for the service sector
International standard organisations define “service” as “result of at least one activity, necessarily performed at the interface between the supplier and customer, that is generally intangible “[3]. In contrast to goods, production and consumption of services take place simultaneously and integrate the customer. As consequence, different to products, services cannot be transported or stored. At the end of a successful service process, the customer should be satisfied.
In principle, all methods of quality management can be used almost without restriction in the service sector. Occasionally they require a particular adaptation. [4] An example is the tourism sector where the recently updated ISO 18513:2020 Tourism Management System Standard [5] can be easily integrated with the ISO 9001 Quality Management System. [6]
The new version of the ISO 9000:2015 standard explicitly considers the growing importance of services by expanding the definition of quality. According to this, quality is “the degree to which a set of inherent characteristics of an object meets requirements”, but also includes “the perceived value and benefit to the customer”. After the revision of the ISO 9000 family, the requirements for a quality management system no longer apply to manufacturing companies alone but also to all companies that offer services. [4]
The dichotomy between goods and services is a conceptual simplification. Economists, therefore, speak of a continuum with pure goods on one side and pure services on the other (see figure). Most products are located between these two extremes. This is because service provision often requires tangible aids, just as the delivery and provision of pure goods often also includes a service.
If a product has a high degree of tangibility, it is easier to evaluate. From this, three good characteristics categories can be derived:
Goods with search characteristics feature low pre-buying costs of quality detection. Hence, the buyer can learn by comparing and inspecting the goods’ attributes before buying. Examples of such goods are salt, clothes, and furniture.
Goods with experience characteristics feature high pre-buying costs of quality detection. Hence, the buyer learns the product’s attributes after buying and consuming. However, the post-buying costs of quality detection are low for such goods. Therefore, this information can be used for further consumption of the product. Examples are restaurant meals and haircuts.
Goods with credence characteristics feature high pre-buying costs and high post-buying costs of quality detection. The utility cannot be precisely determined even after consumption. Examples are legal advice and health services. [7]
In the case of service products, quality is often measured by soft factors. Central to this is customer and user feedback, which is measured systematically and regularly. At the same time, the necessary tools for the provision of services can be checked with the usual hard quality control procedures for goods. [8]
Fields of application of quality infrastructure in the service sector
Just as with goods, the typical functions of the quality infrastructure – standardisation, metrology, conformity assessment and accreditation – are also used for services. Let us take the provision of services in the hospitality sector as an example.
ISO has a set of standards that accompany user experience along the entire value chain. The figure visualises standards for different forms of accommodation, for wellness services up to beach operation. Increasingly important is also the consideration of the environmental friendliness of the activities.
Source: ISO [9]
Conformity with many of these standards can be verified through tests and audits. In addition, the professional competence and independence of these assessment bodies can be demonstrated through accreditation. Accreditation in this area refers to management systems and the certification of persons according to ISO/IEC 17024.
Metrology serves to guarantee the reliability of the auxiliary instruments and the properties of the tangible products used in the service process. For example, a doctor can only reliably diagnose a disease if the measuring instruments required for the examination are calibrated. The standards specify which tools are to be calibrated and at what intervals.
Conclusions
The growing service sector offers excellent growth potential for quality infrastructure institutions. Often, however, smaller service providers are not very familiar with the services provided by the quality infrastructure. Therefore, it is necessary for QI institutions to specifically address the service sector to take advantage of these opportunities.
For metrology, the trend towards services poses a particular challenge. On the one hand, metrology can contribute to transferring concepts such as measurement uncertainty to intangible products. At the same time, the service sector demands that the measurement instruments (i.e. sensors) be placed in a larger systemic context of the application. The interaction of man and machine must always be considered.
Since QI facilities are service providers, they can benefit from the service standards themselves. The perspective of customer benefit and satisfaction should also be given greater weight in providing technical services.
The still young certification of persons offers unique potential. Here, people with their skills and competencies are at the centre of conformity assessment. Overall, the engagement in the service sector provides the QI with the opportunity to underline its human character.
[4] Adam, T./ Baskaya, Sait/ Schmitt (2021) Qualitätsmanagement bei der Entwicklung von Dienstleistungen und Geschäftsmodellen [Quality management in the development of services and business models], in: Pfeifer, T./ Schmitt, R. (Ed.) Masing Handbuch Qualitätsmanagement, 7. Auflage, München, pp. 534-547
[5] ISO, ISO 18513:2021, Tourism services — Hotels and other types of tourism accommodation — Vocabulary
Accreditation is a valuable tool for building trust in international trade. Accreditation bodies assess and confirm the technical competence and independence of conformity assessment service providers, i.e. testing laboratories, inspection and certification bodies.
By multilateral agreements, accreditation bodies recognise the equivalence of their services. Mutual recognition prevents tests or certifications from being issued more than once and reduces transaction costs for companies.
In Europe, the principle of “one accreditation body per economy” applies, while in other countries such as the USA, India or Korea, several accreditation bodies are active and sometimes compete.
Accreditation bodies operate cross-frontier
In a recent study, we have looked for the first time into the phenomenon of cross-frontier accreditation activity. This activity refers to an accreditation body that offers its services in another country. The reasons for this are manifold, e.g., the receiving country does not have its own accreditation body, or the national accreditation body lacks competence in a specific accreditation scope.
Global network of cross-frontier accreditation
From the perspective of developing and emerging countries, cross-frontier accreditation is a form of know-how transfer. As a result, accreditation bodies from more developed countries often work closely with accreditation bodies or national accreditation focal points in less developed countries. Also, noteworthy is regional cooperation through regional accreditation bodies offering their services in several countries simultaneously. In individual cases, however, cross-frontier accreditation is also seen critically as competition.
Study visualises the international networking of accreditation
Our study uses the data of the Global Quality Infrastructure Index, GQII and visualises the international networking of accreditation for the first time. With this, Mesopartner provides an empirical basis for a debate on the practice of cross-border accreditation and possibilities for improvement within the framework of international accreditation cooperation. For this purpose, Mesopartner is organising a webinar on 1 September with internationally leading representatives of the accreditation and conformity assessment community. Registration for participating in this event is now open at https://gqii.org/online-event/
Soon after the Covid-19 pandemic started raging around the globe in spring 2020, the German Metrology Institute PTB founded a Task Force Covid-19 to discuss the specific requirements during the crisis, potential longer-term effects and the extent to which PTB needs to adapt its development work to new conditions. A key question discussed was the decision on topical areas relevant for QI response to the Covid-19 pandemic. After a few meetings, some topical areas emerged that addressed health-related services, sustainable economic development, capacity development online, strengthening digital infrastructure in partner countries, public relations and new challenges for project assistance. For each topic, subgroups were formed that jointly worked on papers, online tools and other outputs. Each subgroup included a combination of PTB colleagues and external experts regularly working with PTB.
Mesopartner consultants joined the subgroups of sustainable economic development and capacity development online. This blog post looks at the subgroup sustainable economic development (SED) and, particularly, its main output paper.
How could QI activities help overcome the crisis’s economic consequences?
The SED group decided to work on ideas of QI support to promote sustainable economic development in PTB partner countries. The critical question to address was how QI activities could help overcome the crisis’s economic consequences. From the start, the intention was to prepare a position paper with recommended actions to be shared with the German Federal Ministry of Cooperation and Development (BMZ), other development organizations and partners in project countries.
The subgroup, consisting of nine members, started its work in June 2020, prepared a draft paper until autumn 2020 and a final draft until early 2021. The discussion paper was finally published on the PTB website in spring 2021 and presented in a PTB blog post on 11 May 2021.
What are Covid-19 response activities in sustainable economic development?
From the onset, the challenge was addressing a broad and complex topic in a brief, easily understandable paper, not exceeding ten pages. Given this premise, what aspects to discuss and what issues to ignore? What are examples of Covid-19 response activities in SED in and outside PTB projects? How to collect a good overview of such measures? What else, beyond real-life examples, could we recommend?
After a series of group meetings, some focus areas and a paper structure emerged. The group understood that a well-functioning and agile QI is essential for cross-border trade, social and sustainability standards, rural development and agricultural value chains, innovation activities, and sustainability and resilience of companies and value chains. This especially holds in times of crisis, such as a global pandemic. The QI of individual countries and their international associations needed to react swiftly to the challenges of the situation and adapt and innovate quickly to continue offering existing and new services with reliable quality. Different group members took on the task of drafting topic-specific chapters, which were then discussed jointly and weaved together during the bi-weekly group meetings.
The result is a discussion paper that proposes measures that international QI donors – such as PTB – can take during a pandemic to mitigate the consequences of the crisis and sustainably strengthen the economies in developing and emerging countries. The focus is on measures at the intersection of QI, sustainable economic development and Covid-19 relevance.
The global health crisis expanded the meaning of quality by health, hygiene, safety and resilience
Against the conceptual background outlined in each sub-chapter, Annex 1 of the paper presents recommended actions currently implemented or at the stage of concrete ideas. Apart from financial support, there are many technical measures in the QI area that can help companies and other actors in economic life assure the quality of products, services, and processes. During the global health crisis, the very meaning of quality expanded with a stronger focus on health, hygiene, safety and resilience.
Among the relevant topics discussed in the paper, innovation is particularly inspiring. Changing framework conditions force innovation in companies and other organizations. During a crisis of the magnitude of the corona pandemic, the pressure to innovate is exceptionally high and acute. Alternatives to the usual processes, products and services must be found quickly to work and react to new needs of customers, partners, and regulators. This often leads to radical innovations condensed into a relatively short period. Particularly in times of crisis, various actors in an innovation system innovate independently or in mutual interaction. These actors are primarily QI institutions, companies and regulatory institutions that set the framework conditions. Innovation here means introducing new QI services (e.g. developing hygiene standards for non-food sectors; online training on ISO 22301 Business Continuity) and adjusting how QI services are delivered to clients (e.g. free access to selected standards; remote services for certification and accreditation). In finding alternative ways of doing things, innovation is a cross-cutting topic concerning promoting SED during health crises and addressing other relevant matters, such as the healthcare system, the digital infrastructure, and digital learning formats.
What could QIcontribute to mitigating the economic impacts of the current and future pandemics and crises?
Ultimately, this PTB paper intends to encourage a discussion on what QI could contribute to mitigating the negative economic impacts of the current crisis and any future pandemics coming along. It tries to support the Build Back Better discussion aiming at the global economic system to change for the better sustainably after the crisis. Enjoy reading!
In the 1980s, the US-American quality guru, Philip B. Crosby, said, quality is free. [1,2] Crosby meant that the price not doing quality assurance is very high and always justifies the investment in quality.
One central goal of any quality management system is to reduce quality costs to the lowest practical level.
The figure shows that the cost of defects decreases as the quality of conformity increases towards perfection, during assessment and prevention increase. Theoretically, an “optimal” target quality was the sum of prevention, assessment, and error costs at a minimum. Efforts to increase quality above the optimum would increase total quality costs and would be inefficient. [3]
Source: Juran’s Quality Control Handbook [3]
In that sense, quality is a cost-benefit trade-off. On the one hand, there is the cost of good quality, which breaks down into appraisal and prevention costs. Appraisal costs are associated with measuring and monitoring activities related to quality. On the other hand, prevention costs are incurred to prevent or avoid quality problems. These costs are associated with the design, implementation, and maintenance of the quality management system.[4]
On the other hand, there are the costs of poor quality, which are divided into internal and external failure costs. Internal defect costs are incurred to correct defects before the goods reach the customer. These include waste, scrap, rework or rectification, and the cost of the internal product or service failure reasons. External error costs arise from customer feedback and complaints (repairs, reclamations, returns) and the associated administrative and communication costs.[4]
The metaphor of an iceberg is used to differentiate the costs of missing quality.[5] Thus, a minor part of quality costs such as complaints, rejection, rework, scrap or inspection and testing are easily visible. In contrast, the more significant part of quality costs is less visible. These include late delivery costs, inventory costs, premium shipping costs or loss of customer loyalty. The problem with these hidden costs is that they are difficult to quantify.
Figure: Costs of Poor Quality [5]
In principle, Crosby assumes that cost savings always justify investment in quality. Thus, if Crosby’s thesis were generally accurate, all companies would have to invest in quality management systems.
However, it is mainly large, internationally active corporations that certify and update their quality management systems regularly. In contrast, many SMEs have no formalised quality management in place. Moreover, in geographical terms, systems like ISO 9001 are less present in the Global South than in the North.
To better understand why many companies in the Global South do not use certified quality management systems, my Ecuadorian colleague, Mauro Rivadeneira (Corporación Q), and I conducted a non-representative survey with the support of ISO Tools. [6]
Between April and June 2021, 152 companies from twelve Latin American and Spain countries completed our questionnaire.
Country
Total
%
Spain
1
0,66%
Paraguay
1
0,66%
Costa Rica
2
1,32%
Bolivia
3
1,97%
Panama
4
2,63%
Venezuela
5
3,29%
Chile
7
4,61%
Argentina
13
8,55%
Other Central American countries
13
8,55%
Peru
14
9,21%
Ecuador
18
11,84%
Colombia
25
16,45%
Mexico
46
30,26%
152
100,00%
Source: Survey of Mesopartner and Corporación Q
More than half of the companies have been active for more than ten years. The remaining companies existed for 5 to 10 years (6.6%), 3 to 5 years (11.9%), 1 to 3 years 24.5%) and less than one year (4%). In terms of sectoral affiliation, the service sector (34.5%), manufacturing industry (24.7%) and the public sector (12.7%) dominated.
Operation time
Total
%
1. less than one year
6
3,97%
2. between 1 and 3 years
37
24,50%
3. between 3 and 5 years
18
11,92%
4. between 5 and 10
10
6,62%
5. more than ten years
80
52,98%
151
100,00%
Source: Survey of Mesopartner and Corporación Q
Source: Survey of Mesopartner and Corporación Q
Only about 40% of the companies surveyed stated that they have or had a certified or accredited quality management system. Among the systems, ISO 9001 dominates, followed closely by ISO 14001 (environmental management), ISO 45001 (occupational safety) and accreditations of the ISO 17000 series for conformity assessment bodies.
The management systems of 30% of the companies have been in place for ten years or more. Another 30% have been certified for five to ten years and the rest of the certified companies for less than five years.
It raises concerns that 27% of the once certified companies have not renewed their management system certification. The reasons for this were manifold: the companies mentioned that customers did not demand certificates or that the cost of certification was too high. Other companies switched from the general ISO 9001 to more specific certification schemes.
We assumed that in companies without certification, the investment in quality exceeded the cost of tangible quality improvements. In the case of companies with certification, the result was the opposite.
In the case of the companies with certification, the costs of obtaining the certificate exceeded the adaptation of the production processes and personnel training. The companies without management system certification also invested in quality. Surprisingly, the non-certified companies also report high expenses for conformity assessment. These costs may be explained by the fact that these companies were previously certified or by a simple mistake in filling out the questionnaire. The transformation of production processes, staff training and consulting costs are also high. In both cases, costs for acquiring standards, payment for overtime or other representative costs were less relevant.
Source: Survey of Mesopartner and Corporación Q
The costs of non-quality are similar in both groups. Overall, the costs of correcting defects, losses due to poor quality and the costs of complaints and warranty services dominate. The costs of inspection and other representative costs, on the other hand, were less critical.
Source: Survey of Mesopartner and Corporación Q
Regarding the monetary costs of quality and non-quality, the survey did not generate any apparent results. In general, companies find it difficult to qualify the expenses of non-quality precisely. Therefore, we assume that the hidden costs of quality are generally underestimated. Overall, there is a need for further training among SMEs in Latin America and indeed in other world regions to assess the costs of quality.
On the other hand, it is noticeable that the offers of the certification bodies and quality consultants still seem expensive, especially for SMEs. In this respect, the certification bodies should make more effort to explain the benefits of their services and adapt the prices to the financial capacities of SMEs. At the same time, larger companies and the state are called upon to create incentives for investment in quality management systems by introducing quality requirements into procurement processes.
References
[1] Crosby, P. B. (1980). Quality is free: The art of making quality certain, Signet Book.
[2] Crosby, P. B. (1996). Quality is still free: making quality certain in uncertain times, McGraw-Hill Companies.
[3] Juran, J.M. and Gryna, F.M. (1988) Juran’s Quality Control Handbook. 4th Edition, McGraw-Hill, New York.
[4] ASQ, COST OF QUALITY (COQ); in: Quality Glossary Definition: Cost of quality, retrieved 16/07/21
Quality Infrastructure for Development 