With the release of the new ISO 9001 quality management system in September 2015, other ISO standards have also been revised. With the exception of ISO 13485, which has slightly different requirements for medical device quality management systems, most standards share common elements such as "organizational context analysis," "ISO 9001:2015 integration," "adoption of the High-Level Scale (HLS) framework," "introduction of risk-based thinking and risk management," and "strengthening the responsibilities of organizational leaders." The "organizational context analysis" section specifically emphasizes "4.1 Understanding the organization and its context" and "4.2 Understanding stakeholder needs and expectations," requiring that internal and external issues affecting the organization be the starting point for establishing, implementing, and maintaining a quality management system, emphasizing the connection between the quality management system and the organization's internal and external environment. Therefore, in the operation of the new version of ISO management system, the focus is no longer just on the implementation results of the project scope corresponding to each standard, but is more closely integrated with the overall operation management and even performance of the enterprise. Just like through the application of SWOT analysis tools, when planning the enterprise operation strategy, the opportunities, threats, strengths, weaknesses and other issues faced by the corresponding projects of each standard are included. Then, risk assessment and response measures are carried out to "leverage strengths" or "prevent problems before they occur"; so that the enterprise operation can obtain appropriate risk control and effectively improve performance, so as to achieve the result of sustainable profit and operation.
However, can simply understanding the organizational context, conducting a SWOT analysis, and conducting risk management ensure business sustainability? Both the ISO/TS 16949 (newer version: IATF 16949), an automotive quality management system used in automotive supply chain validation, and the AS 9100 aerospace quality management system used in the aerospace and defense industries, have added provisions for product safety and corporate social responsibility. These requirements require organizations to establish processes to manage product safety and manufacturing processes, and to formulate and implement corporate responsibility policies (which may include anti-bribery policies, employee codes of conduct, and ethics promotion policies (whistleblowing policies)). These requirements serve as a reminder that even when a company effectively implements quality management, aligns it with its business context and strategic direction, and integrates it with operational processes, it may not guarantee sustainable operations. Only a moderate and responsible commitment to corporate social responsibility can ensure sustainable operations.
These requirements may be old thinking, but they present new challenges. Some may not yet understand the rationale, and some may find it difficult to accept. Perhaps the following cases will provide some reflection. Toyota Motor Corporation of Japan was accused of a sudden overshoot in 2009-2010, resulting in dozens of deaths. Following a four-year investigation, the US Department of Justice filed charges. US Attorney General Holder denounced Toyota's "shameful conduct" for deceiving the public and government investigators about the cause of the sudden overshoot. He said Toyota had "masked a public safety emergency into a simple public relations issue" and warned other automakers not to repeat the same mistake. "A single recall can damage a company's reputation, but deceiving customers can lead to deeper and more lasting damage." Toyota had known about the accelerator pedal defect as early as 2007, but to conceal it, it canceled the recall in the US and instructed employees and parts suppliers not to publicly disclose the design changes to prevent the leak of evidence. This action severely damaged the company's once-trusted reputation. (Reference: March 21, 2014, Apple Daily e-paper and U-car forum reprinted materials)
In 2015, Volkswagen was fined $4.3 billion (approximately NT$135.6 billion) by the US Department of Justice for falsifying diesel vehicle emissions to create the illusion that the vehicles met environmental standards. Oliver Schmidt, a German-born senior executive at Volkswagen USA and a key figure in the fraud, pleaded guilty in July of this year to conspiracy to defraud the US government, violations of the Clean Air Act, and making false statements. He faces a possible seven-year prison sentence. (Source: Apple Daily, August 5, 2017)
Mitsubishi Motors, embroiled in a fuel economy test fraud scandal in April 2016, admitted at a press conference in May that the fraud may have affected all models sold in Japan over the past 25 years, not just the four models previously reported. Mitsubishi Motors President Tetsuro Aikawa defended the company's management's knowledge of the fraud. He said the fraud likely stemmed from executives demanding improvements despite knowing the difficulty of further improving fuel efficiency, leaving employees helpless and forced to submit false data. In fact, Mitsubishi was also implicated in a 2000 scandal involving the concealment of a vehicle defect that resulted in a wheel falling off a truck, causing injuries and serious damage to its image. (Reference: Apple Daily e-newsletter, May 12, 2016)
In 2008, Takata Corporation of Japan was involved in an airbag recall incident. Encouraged by Honda, Takata entered the airbag industry in 1990, using cheap but unstable ammonium nitrate as an initiator, despite knowing the potential risks. The first incident occurred in 2004. Takata's internal testing had already detected the potential for airbag explosions, but the company failed to inform customers or relevant departments, nor did it address the issue. Instead, it issued an internal gag order to destroy the evidence. Takata previously held a 22% market share, but the market share gained by cheaply selling defective products would ultimately be lost. Due to the risk of explosion, the defective airbags have been linked to at least 17 deaths worldwide, leading to a global recall of 100 million airbags, affecting 42 million vehicles, the largest product recall in automotive history. Due to the immense financial pressures wrought by the airbag scandal, Takata filed for bankruptcy protection with the Tokyo District Court in June of this year. Takata's US subsidiary, TK Holdings, also filed for bankruptcy in Delaware. Tokyo Shoko Research Institute estimates that, including unpaid recall costs, Takata's total liabilities reached 1.7 trillion yen (approximately NT$466.99 billion), making it the largest bankruptcy in the Japanese manufacturing industry since World War II. (Reference: Apple Daily, June 27, 2017)
The above cases clearly resonate with the concept that "quality is the lifeblood of a company." While a single quality incident may result in a loss of orders, profits, or reputation, it doesn't necessarily shake a company's foundation or end its operations. Many of these cases demonstrate that if companies can confront quality issues squarely, learn from their mistakes, and implement reforms, they still have a chance to regain recognition. However, these cases also demonstrate that if companies fail to shoulder their "corporate social responsibility" when facing product defects and addressing issues with a courageous attitude, and instead attempt to minimize or mitigate their reputation or profit losses through whitewashing and concealment, the truth, like Pandora's box, may be revealed, potentially leading to even greater damage and, as in the case of Takata, bankruptcy.
The aforementioned cases demonstrate not only issues of product quality but also concerns concerning the safety of users. Furthermore, in terms of corporate governance and problem-solving, the issues are not simply questions of well-planned management systems and adequately trained personnel. These cases demonstrate a loss of moral composure among grassroots employees, professional managers, and even business operators. It's no wonder that the new quality management system regulations explicitly mandate and require companies to implement social responsibility, including anti-bribery policies, employee codes of conduct, and ethical improvement policies. The hope is that these clear regulations will allow companies to appropriately and responsibly incorporate corporate social responsibility into their quality management systems, ensuring the provision of safe and reliable products to users and the long-term sustainability of their operations. Therefore, the new quality management system mandates the establishment of "Product Safety Management Measures," "Employee Code of Ethics," and "Employee Reporting Policies and Procedures" to effectively manage product safety, educate, and discipline employee behavior. These will serve as fundamental principles for addressing these requirements.
