Standards and their importance for the Organizations

Standards and their importance for the Organizations

The modern and globalized world cannot exist without standards which are sup­porting cooperation, trade, health, safety, and economic growth etc. In fact, standards exist in almost all aspects of modern life. They range from standards in information and communication technology which ensure the interoperability of diverse components to standards for the quality of products or services, and underlie areas ranging from the harmonization of international accounting systems to the governance of the social and environmental performance of the organizations.

Stand­ards have a huge influence on everyday life. They play a key role in an environment where an organization is to be at its best for achieving success. They are open access documents with no charge or license fee for their use, apart from the cost of its purchase.

The development of standardization as an engineering activity was pioneered by Eli Whitney, who in 1793 invented the cotton gin, a machine for separating cotton fibres from their seeds. Whitney later introduced the production of interchangeable components for the manufacture of guns. Standardization of screw threads by Sir Joseph Whitworth dates back to 1841. Other instances of early standardization can be found in the dawning age of the railway industry, as the establishment of a standard width between the two rails on the railway track, the manufacture of railway couplings, air brakes and the signaling system called for increasing levels of standardized work.

But major impetus to the development of standards came around the turn of the 20th century, when a large number of national standardization organizations were founded, including organizations that are nowadays known as the British Standards Institution (BSI) and the American National Standards Institute (ANSI). Their purpose was to create sets of rules for the design of industrial products so that the organizations could produce goods which were comparable in their key aspects. The standardization of products and services increased considerably in the course of the 20th century and was intensified towards its end in newly deregulated industries such as telecommunications. In the second half of 20th century, great emphasis was put on international standards. The International Organization for Standardization (ISO), which was founded in 1947, operates a large portfolio of standards and has been particularly successful in standardizing processes of quality management (ISO 9001), environmental systems (ISO 14001), risk management (ISO 31000), and recently also social responsibility (ISO 26000). These highly successful initiatives by ISO had an impact on two key elements of organizations namely (i) organizational structures, and (ii) administrative procedures. Also a number of civil society organizations have more recently appeared as standardization organizations.

Standards play a critical, but frequently overlooked role in facilitating and regulating industry and commerce. The importance of standards to established markets for products and services and to product and market development cannot be overstated. Standards have played an important role in the development of the present technologically advanced societies. Despite providing a basis for all industrial and commercial activity, standards do not dictate how products are designed and manufactured, though they may dictate product safety requirements through their incorporation into regulation. Standards derive their legitimacy from the voluntary and consensual nature of their development process. Most of all, standards provide utility. If someone uses a standard it is because it provides a reliable, though not necessarily the only or best, solution to a problem.

There are the following three types of documentary standards.

  • Formal standards – These standards are published by the national standardization organizations, regional standardization organizations (e.g. CEN, CENELEC etc.), and international standardization organizations (e.g. ISO, IEC etc.). There are around 160 national standardization organizations which are members of ISO (the International Organization for Standardization).
  • Informal standards – These standards are by SDOs (standards development organizations) such as ASTM, ASME, IEEE, and SAE etc.
  • Private standards – These standards are those standards which are developed by an organization or a trade association.

A standard is a specification approved by an organization recognised at the national, regional or international level and made available to the public. The development of standards is based on voluntary work through a formal process of development, review and ratification. Development of the text of a standard proceeds by consensus of the parties involved and ratification is subject to voting at national and international levels. Development of a full standard takes at least 3 years, although useful results are often available well before the final ratification date.

Standards are a way of communicating – a kind of common language – in the form of a technical specification.  They are the products of cooperation amongst industry, users, consumers, public authorities and other interested parties, managed mostly by national standard organizations with the support and involvement of standardization stakeholders. Standards are expected to meet the expectations of both market players and public authorities in the context of a rapid changing world and society.

The term ‘standard’ can be referred to many different things. This reflects the fact that standards apply to a wide variety of domains, ranging from paper size to interface technologies in tele-communication networks. The varied use of the term ‘standard’ leads to the following three defining characteristics of standards.

  • First, a standard can be defined as a specific type of rule. Characteristically, ISO defines a standard as a “document, established by consensus, and approved by a recognised body, that provides for common and repeated use, rules, guidelines, or characteristics for activities or their results, aimed at the achievement of the optimum degree of order in a given context”. The rule-based character of standards makes them important tools for regulating individual as well as collective behaviour and achieving social order.
  • Second, standards are formally voluntary for potential users. Standardization organizations do not have access or any authority to enforce the adoption of a standard. The decision to comply or not is left to the potential users. The regulative capacity of standards rests with the state authorities. Since standards are voluntary in nature, their non-compliance does not carry legal sanctions. However, non-compliance can carry market-based sanctions and market forces may force the organizations to comply with specific standards.
  • Third, the rules expressed by standards are meant for common use. Standards provide rules which can be adopted by users of diverse nature. Although groups of organizations, such as industry associations, occasionally set standards exclusively for their own activities, most standards are mainly intended for broader use, outside the standardization organizations. In this sense, standards define normative rules.

Based upon the three characteristics, a standard can be defined as a rule for common and voluntary use, decided by one or several people or organizations. It is a document approved by a recognized body which provides, for common and repeated use, rules, guidelines or char­acteristics for products or related processes and produc­tion methods.

As the general rule, standards are voluntary to use, however, standards are sometimes referred to by national or regional legislation, which in practice makes them mandatory. Standards can also become mandatory if they form part of a contract between parties or if an organization announces that its product fulfills the requirements of a voluntary standard.

Standards help organization to communicate better and reduce the potential for confusion throughout the supply chain in its area of operation. Working to standards helps raise the confidence for investors, customers and partners.

Standards are used every day by organizations, manufacturers, public bodies and other users as a tool for managing vital issues such as trade, regulation, quality, health and safety, new technologies, energy efficiency, environmental impact, as well as connectivity and interoperability etc.

Standards are global language for the products as well as technology. They deliver recognized solutions and for commercial transactions since they contribute to (i) building trust between customers and suppliers, (ii) assuring compatibility and quality, and (iii) reduce barriers to trade, (iv) promote interoperability of products, systems and services, (v) promote common technical understanding, and (vi) support technical integration and protection of the consumer.

Standards are documents drafted by consensus and approved by an acknowledged institution. They specify rules, guidelines or properties for general or recurrent use, pertaining to activities or products thereof. Their ultimate goal is to achieve the highest possible degree of order in a specific context.

The characteristics of a standard can give a good understanding of the nature of a standard. The characteristics which provide standards their value are given below.

  • They are voluntary and market driven which means that every interest­ed party can participate in the making of a standard and provide comments when a standard is submitted to public consultation. The decision to develop new standards is driven by market needs/ requests.
  • They are consensus based which means that all standards are subject to dialogue in order to establish general agreement characterized by the absence of sustained opposition to substantial issues by any important part of the concerned interests and by a process that involves seeking to take into account the views of all parties con­cerned and to reconcile any conflicting arguments. Afterward the standard goes through a formal voting procedure to get it approved.
  • They are approved by a recognized organization which means that a rec­ognized standards organization, which can be an international or a national standardization organization, has approved the document and that the document has gone through the necessary procedures, and public consultations etc.

Standards create clarity with regard to product properties and thus contribute to containing controversies about the quality of products. They define the state of the art prevailing at the time of their publication. They include features such as suggested properties, testing procedures, safety requirements or dimensions. They are unequivocal and recognized technical rules, which is why reference to them in agreements provides legal sanctity. Also, since standards define interfaces and compatibility requirements, they become aid in the marketing of the products. Organizations which choose to disregard standards can quickly fall behind their competitors.

Standards can perform any of the following four tasks (Fig 1).

  • Interoperability/Compatibility – Examples are nuts and bolts, screw threads, railway gauges, electrical plugs and outlets etc.
  • Quality – These standards ensure fitness for purpose or safety. Other examples of standards for quality include management standards such as ‘quality management system’.
  • Variety reduction/optimization – Such standards lead to mass production and price reductions since these standards define the sizes of the products.
  • Information/measurement – Such standards describe test and measurement methods for describing, quantifying and evaluating product attributes such as materials, processes and functions.

Fig 1 Four tasks of standards

Standards typically contain both normative and informative elements. Normative elements are those parts of the standard which are to be complied with, in order to demonstrate compliance with the standard. Normative elements are indicated by the use of the word ‘shall’. Informative elements in standards provide clarification or additional information and are normally contained in ‘Notes and Appendices. Informative elements may not contain requirements (i.e. the word ‘shall’).

Standards play a critical role in (i) ensuring the safety, quality and reliability of products, processes and services, (ii) efficient production, (iii) cost reduction through competition, and (iv) supporting regulation. By providing a bridge which connects research to industry, standards are equally valuable as a tool for promoting innovation and commercialization through (i) the dissemination of new ideas and good practice, (ii) validation of new measurement tools and methods, and (iii) the implementation of new processes and procedures.

Application of standards provides competitive advantages to the organization.  The advantages result in (i) higher efficiency and lower costs during production because of ease in engineering, procurement, manufacturing, quality and technology deployment, (ii) enhanced product safety as well as safety at workplace, (iii) lower product-liability risk, (iv) easier market access, (v) more trust from customers due to compliance with quality and minimum standards, and (vi) less complicated contract negotiations.

Successful organizations make use of standardization as a strategic tool to ensure the marketability of their products.

Standards can become obsolete for many reasons, mostly due to tech­nological advancement. Often new technologies and research leads to the development of new standards to replace old standards. However, there are standards which have become outdated but still are being used extensively in society and by the organizations.

Organizations use standards for a number of purposes and different types of standards meet different needs. Standards are about creating a trade language and agreeing which requirements a product, service or process must fulfill. They are a business tool for communication between supplier and provider and are indispensable in the global value chains of modern times. They also help to ensure that products, materials and constructions are safe so that users can be sure that houses, bridges, machinery, electrical appliances etc. are safe to use.

Standards are usually being classified on the basis of several methods. One of the methods categorizes standards as (i) technical standards, and (ii) non-technical standards. Technical standards, also known as ‘compatibility’ or ‘interface’ standards generally aim to ensure compatibility and interoperability among the components of a technological system. Technical standards affect technological developments by reducing variety or diversity (e.g. of products) and thus limiting the choices available to consumers. By contrast, non-technical standards have the fragmented nature of standard-setting, which results in the co-existence of multiple standards. Non-technical standards are encountered in a variety of different domains, such as quality control, social and environmental management, financial and non-financial reporting, and securities regulation.

Another classification of standards classifies them as (i) process standards, and (ii) outcome standards. Some standards regulate processes within and between organizations (e.g. safety processes) without predetermining any specific outcomes. As an example, ISO 9001 does not measure directly the quality of products or services, but specifies management processes that are supposed to ensure superior quality. These standards are process standards. The requirements of outcome standards stipulate that users have to deliver a specific outcome. These standards require the existence of clearly identifiable and measurable outcomes. Outcome standards are sometimes seen as preferable since they cope with the increasing complexity and dynamic nature of organizations and their environments. They provide sufficient scope to the users to decide what measures are necessary for achieving the specified outcomes.

There are a large number of international and national standards published by international and national standardization organizations throughout the world. Standards cover a wide range of subjects. There are different types of standards for different types of tasks. These standards serve different purpose. These standards can be categorized in the following ways.

  • Terminology standards – These standards are used to create a common language and are especially utilized in new innovative areas, where the need to establish clarity about terms and definitions is a necessity. Standards for dimension systems and symbols are examples.
  • Compatibility standards – These are used to ensure that different parts or prod­ucts fit together e.g. a plug fitting into a socket, nuts and bolts matching the thread etc. These are typically standards specifying requirements for size and design. An example from everyday life is the A4 paper size that makes it possible to develop a variety of products such as ring binders, folders, printers and so on, without having to make an endless number of sizes. Consequently, variation is reduced by this type of standards. This means that consumers can be more confident that things fit together despite the fact that they are produced by different organizations, and for organizations it means that they can limit the number of models and thereby reduce their costs.
  • Performance standards – These standards specify requirements for operation, quality, safety or other parameters such as breaking strength, energy performance, safety, ergonomics, or noise etc. This means that the standards secure a minimum level of performance. They contribute to building the level of confidence in the users since the users are assured that the product conforms to the required safety or quality level and hence provides the expected performance when it is put to use. Producers of the product also get benefitted since by conforming to the requirements of the well-defined standards, it is possible for them to qualify for market access for the products. Standards thus create a level play­ing field, which makes it easier also for small and medium enterprises to gain a market foothold. As the standards do not only describe performance require­ments but include guidance on how to achieve performance, they serve as a tool for sharing best practices and provide a shortcut for product development.
  • Measurement and test standards – These standards provide standardized measuring methods and hence make it possible to test products in a uniform manner and to establish confidence in the product. Measure­ment and test standards allow producers to demonstrate and document the quality of a product or a service and they can help provide the suf­ficient level of information for the purchasers. In this way measurement and test standards are used to reduce risks and transaction costs. Furthermore, measurement standards allow comparison of meas­urements. Measurement and test standards ensure that products provide the consistent test results when tested in different testing equipment at different places.
  • Management standards – These standards constitute a tool for organizations to effectively manage their efforts for improvement with respect to diverse parame­ters such as quality, environmental aspects, energy consumption, work­ing environment, information security, and occupational health and safety etc. Management standards provide a means to systematic planning and follow-up action and consequently serve to improve efficiency and quality, and reduce costs etc. Organizations also use certification against these standards for marketing purposes and to boost organizational image. A number of major organizations have adopted this approach to quality management throughout their entire value chain by systematically requiring that all suppliers/subcontractors implement quality management standards. The result is input of a much more uni­form quality and a potential for considerable cost reductions.
  • Product standards – These standards provide specifications of the products along with the applicable tolerances. These standards also provide sampling procedures, the method of testing of the products and the test equipments to be used for the testing of the products.
  • Basic standards – These are basic standards which are used uniformly in every standard such as SI units (international system of units) etc.

Benefits of standards

By the very definition, standards aim to achieve overall economy. They provide benefits to different sectors of society. Some of the benefits of standardization are given below.

  • For manufacturing organizations, standards rationalize the manufacturing process. They eliminate or reduce wasteful material or labour. They contribute towards reduction in inventories of both raw material and finished products. Standards also contribute to the reduction in the cost of manufacture.
  • For customers, standards assure the quality of goods purchased and services received. They contribute to providing of better value for money. They are also convenient for settling disputes, if any, with suppliers.
  • For commercial organizations, standards provide a workable basis for acceptance or rejection of goods or consequential disputes, if any. They help in minimization of delays, correspondence, etc., resulting from inaccurate or incomplete specification of materials or products.
  • For technologists, standards provide starting points for research and development for further improvement of goods and services.

Since standards provide knowledge and best practices, organizations experience that following of the standards result into improved products and services, enhancement in performance level of the organization, and more efficient and effective processes. Standards thereby have a positive impact on the productivity of the organizations.

Further standards have a number of positive effects in terms of quality, interoperability, safety, the environment etc. Solely by contrib­uting to safer products, standards play a role in preventing a substantial number of accidents and thereby save the society a considerable sum of money.