Applying Quality Management Systems to the Ethanol Industry
June 5, 2007
BY Gary DeLong
As the ethanol industry continues to grow, so does the need for effective quality management systems (QMS) to provide a variety of financial, organizational and customer satisfaction benefits.
The International Organization for Standardization (ISO) defines quality management as what the organization does to enhance customer satisfaction by meeting customer and applicable regulatory requirements and continually improve its performance in this regard.
A QMS is critical to operational effectiveness and efficiency because it creates a culture of continual improvement and open communication, applies a "process-driven" approach to managing the organization and integrates improved processes into a cohesive system. The QMS operates by saying what one will do (documentation), doing it (implementation), proving it (records), and reviewing and improving what one does (continual improvement).
A comprehensive list of benefits provided by a QMS can be found in the ISO document 10014:2006, titled "Quality management—Guidelines for realizing financial and economic benefits." However, most benefits fall under three categories: financial, organizational and customer satisfaction. Financial benefits include increased profitability from revenue growth, cost reductions, cash flow improvement and enhanced budgetary performance. Organizational benefits include the accomplishment of operational efficiency and effectiveness goals through continual process improvement. Customer satisfaction benefits include improved customer retention and loyalty by consistently supplying superior quality products and service.
A common misconception is that implementing a QMS is costly, time-consuming and requires too much oversight. In an industry evolving as fast as fuel ethanol, one has to stay ahead of the game to win. AQMS provides the strategic advantage a business needs to differentiate itself from the competition. The advantage comes from streamlined processes that consistently results in leading-edge and high-quality products meeting customer needs.
ISO 9000, defines eight key quality management principles and identifies the benefits of each one:
› Maintain customer focus for increased revenues and market share.
› Implement effective leadership to promote employee understanding of—and motivation toward—achieving company goals and objectives.
› Obtain employee participation and input to foster buy-in for process improvements.
› Implement a "process approach" to lower costs and shorten cycle times.
› Keep efforts focused on key processes to ensure a steady progression toward goals.
› Continually improve organizational capabilities to maintain a performance advantage.
› Make decisions based on a factual approach to ensure a realistic outcome.
› Develop mutually beneficial relationships with suppliers to optimize the quality and cost of necessary resources.
There are several QMS programs on the market. This article refers to three internationally recognized standards that are applied in many industries.
ISO 9001:2000 is the world recognized standard for QMS, designated by the ISO, which is based in Geneva, Switzerland. ISO was organized by 25 countries shortly after World War II. More than 157 countries now participate in the ISO Federation Body, which has developed the hundreds of standards and guidelines the international market has adopted to facilitate trade. ISO is widely used in other industries for manufacturing standards between plants and suppliers. Most companies use the ISO 9001:2000 standard to reduce variability, improve processes and increase customer satisfaction while increasing profits.
The USDA Process Verification Program (PVP) was developed from the ISO 9001:2000 platform, but it adds "verification points" that allow a business to market its use of a value-added process. For example, the beef industry uses PVP for age and source verification to gain access to markets. Grain companies also use PVP to add value to their brand when marketing specialty products or grains.
Hazard Analysis and Critical Control Points (HACCP) is a QMS developed for the food industry. It's based on seven principles that involve identification of potential biological, chemical or physical hazards that can impact food quality and safety. Once potential hazards are identified, a company implements strict controls for measuring risk factors and establishes critical limits to determine when corrective action is necessary. These same principles can be applied in the ethanol industry to monitor outgoing shipments of distillers dried and wet grains.
To determine the appropriate QMS for your business, the following considerations are necessary:
Scope: The scope of the project must first be clearly defined. It may refer to just one aspect of the operation, such as distillers grains marketing, or include all internal and external operations performed by the ethanol plant.
Benefits: It's also important to identify the specific benefits one expects the QMS to provide for the business. Benefits could include increased sales, product diversification, expanded markets or improved operational efficiency. Place more emphasis on the potential to achieve these benefits rather than the challenges of implementing a QMS in the operation.
Cost: The cost of developing, implementing and maintaining a QMS will vary greatly based on the scope one has defined. Specific costs to consider are the registration audit, annual surveillance audits and employee time involved in implementation and maintenance. Most companies report a 2:1 return on their investment.
Summary
A QMS can provide many benefits to the ethanol industry. As the ethanol industry continues to grow and production of distillers grains increases, market access to domestic and international clients will be vital to an operation's profitability. Having an accredited QMS in place will be the key to opening the door to these markets. The entire ethanol operation will benefit from improved processes and procedures, more effective communication and teamwork, and better utilization of inputs and technology creating an improved bottom line. Customers benefit from a QMS by the consistent and ever-improving quality of products provided, as well as an ethanol producer's ability to understand and respond to their needs.
An effective QMS helps ensure that a business will be able to anticipate, respond to and meet the quality requirements of the customer, the regulatory requirements of the domestic and international markets, and the necessary adjustments required to stay competitive in the industry.
Gary DeLong is a project manager for Novecta, a joint venture company of the Illinois and Iowa Corn Growers Associations. Novecta was developed to work with identity preserved crops and help companies implement quality management systems in agriculture. Reach DeLong at garyd@novecta.com or (515) 334-7305.
For more information, visit: www.cfsan.fda.gov/~lrd/haccp.html, http://archive.gipsa.usda.gov/programsfgis/inspwgh/pvp/pvp.htm, www.iso.org/iso/en/ISOOnline.frontpage, www.novecta.com.
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
The International Organization for Standardization (ISO) defines quality management as what the organization does to enhance customer satisfaction by meeting customer and applicable regulatory requirements and continually improve its performance in this regard.
A QMS is critical to operational effectiveness and efficiency because it creates a culture of continual improvement and open communication, applies a "process-driven" approach to managing the organization and integrates improved processes into a cohesive system. The QMS operates by saying what one will do (documentation), doing it (implementation), proving it (records), and reviewing and improving what one does (continual improvement).
A comprehensive list of benefits provided by a QMS can be found in the ISO document 10014:2006, titled "Quality management—Guidelines for realizing financial and economic benefits." However, most benefits fall under three categories: financial, organizational and customer satisfaction. Financial benefits include increased profitability from revenue growth, cost reductions, cash flow improvement and enhanced budgetary performance. Organizational benefits include the accomplishment of operational efficiency and effectiveness goals through continual process improvement. Customer satisfaction benefits include improved customer retention and loyalty by consistently supplying superior quality products and service.
A common misconception is that implementing a QMS is costly, time-consuming and requires too much oversight. In an industry evolving as fast as fuel ethanol, one has to stay ahead of the game to win. AQMS provides the strategic advantage a business needs to differentiate itself from the competition. The advantage comes from streamlined processes that consistently results in leading-edge and high-quality products meeting customer needs.
ISO 9000, defines eight key quality management principles and identifies the benefits of each one:
› Maintain customer focus for increased revenues and market share.
› Implement effective leadership to promote employee understanding of—and motivation toward—achieving company goals and objectives.
› Obtain employee participation and input to foster buy-in for process improvements.
› Implement a "process approach" to lower costs and shorten cycle times.
› Keep efforts focused on key processes to ensure a steady progression toward goals.
› Continually improve organizational capabilities to maintain a performance advantage.
› Make decisions based on a factual approach to ensure a realistic outcome.
› Develop mutually beneficial relationships with suppliers to optimize the quality and cost of necessary resources.
There are several QMS programs on the market. This article refers to three internationally recognized standards that are applied in many industries.
ISO 9001:2000 is the world recognized standard for QMS, designated by the ISO, which is based in Geneva, Switzerland. ISO was organized by 25 countries shortly after World War II. More than 157 countries now participate in the ISO Federation Body, which has developed the hundreds of standards and guidelines the international market has adopted to facilitate trade. ISO is widely used in other industries for manufacturing standards between plants and suppliers. Most companies use the ISO 9001:2000 standard to reduce variability, improve processes and increase customer satisfaction while increasing profits.
The USDA Process Verification Program (PVP) was developed from the ISO 9001:2000 platform, but it adds "verification points" that allow a business to market its use of a value-added process. For example, the beef industry uses PVP for age and source verification to gain access to markets. Grain companies also use PVP to add value to their brand when marketing specialty products or grains.
Hazard Analysis and Critical Control Points (HACCP) is a QMS developed for the food industry. It's based on seven principles that involve identification of potential biological, chemical or physical hazards that can impact food quality and safety. Once potential hazards are identified, a company implements strict controls for measuring risk factors and establishes critical limits to determine when corrective action is necessary. These same principles can be applied in the ethanol industry to monitor outgoing shipments of distillers dried and wet grains.
To determine the appropriate QMS for your business, the following considerations are necessary:
Scope: The scope of the project must first be clearly defined. It may refer to just one aspect of the operation, such as distillers grains marketing, or include all internal and external operations performed by the ethanol plant.
Benefits: It's also important to identify the specific benefits one expects the QMS to provide for the business. Benefits could include increased sales, product diversification, expanded markets or improved operational efficiency. Place more emphasis on the potential to achieve these benefits rather than the challenges of implementing a QMS in the operation.
Cost: The cost of developing, implementing and maintaining a QMS will vary greatly based on the scope one has defined. Specific costs to consider are the registration audit, annual surveillance audits and employee time involved in implementation and maintenance. Most companies report a 2:1 return on their investment.
Summary
A QMS can provide many benefits to the ethanol industry. As the ethanol industry continues to grow and production of distillers grains increases, market access to domestic and international clients will be vital to an operation's profitability. Having an accredited QMS in place will be the key to opening the door to these markets. The entire ethanol operation will benefit from improved processes and procedures, more effective communication and teamwork, and better utilization of inputs and technology creating an improved bottom line. Customers benefit from a QMS by the consistent and ever-improving quality of products provided, as well as an ethanol producer's ability to understand and respond to their needs.
An effective QMS helps ensure that a business will be able to anticipate, respond to and meet the quality requirements of the customer, the regulatory requirements of the domestic and international markets, and the necessary adjustments required to stay competitive in the industry.
Gary DeLong is a project manager for Novecta, a joint venture company of the Illinois and Iowa Corn Growers Associations. Novecta was developed to work with identity preserved crops and help companies implement quality management systems in agriculture. Reach DeLong at garyd@novecta.com or (515) 334-7305.
For more information, visit: www.cfsan.fda.gov/~lrd/haccp.html, http://archive.gipsa.usda.gov/programsfgis/inspwgh/pvp/pvp.htm, www.iso.org/iso/en/ISOOnline.frontpage, www.novecta.com.
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
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