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HB90.2—2000

The Service Industry Handbook

Guide to ISO 9001:2000

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The Service Industry Handbook
Guide to ISO 9001:2000
The competency approach to implementing
management systems

Colin Foxwell

COPYRIGHT
© Standards Australia International
All rights are reserved. No part of this work may be reproduced or copied in any form or by
any means, electronic or mechanical, including photocopying, without the written
permission of the publisher.
Published by Standards Australia International Ltd
GPO Box 5420, Sydney, NSW 2001, Australia
ISBN 0 7337 3701 3

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HB 90.2—2000

2

Foreword
This handbook gives advice on how to develop and document a quality
management system for organizations in the service industry. It was
commissioned by Standards Australia and written by leading management
consultant and committee member Colin Foxwell.
Service organizations may find it hard to document all their processes in
detail, because they are constantly changing to adapt to each customer’s
requirements. Resorting to extensive quality plans and procedures to achieve
this necessary range and flexibility can result in over-documentation, and a
considerable overhead for doing business. This may also apply to
organizations manufacturing in small quantities or carrying out project work.
A common feature of such organizations is that the services they provide, in
one form or another, rely on the competence of the people who deliver that
service. Therefore much of this handbook is about people management; what
management must do to be sure that employees and contractors know what is
required of them, and what must be done to achieve customer satisfaction.
The handbook offers an approach which relies on people being trained and
competent to operate without the need for detailed documented procedures. It
gives advice on how to prepare a quality management system, and what
should be included in your documentation.
Services and products
ISO 9001:2000 is by nature generic. It applies the term ‘product’ in a
universal sense throughout the text, i.e. by definition it also means ‘service’.
This handbook uses the phrase ‘product and/or service’ to reinforce the idea
that it means goods, services, or both. The term ‘product’ is used when
referring to a physical item. Similarly ‘service’ is used when referring to the
concept of meeting a customer need that has an intangible component. This is
a wide definition, but is relevant to the approach that this handbook takes.
The competency approach
The approach that this handbook describes, and which it refers to as ‘the
competency approach’, broadly consists of —

examining your business and the expectations of your customers;

identifying the ‘building blocks’ (people, resources, services) that make up
your products and/or services and your business; and

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HB 90.2—2000

matching the competence of service providers and support systems to the
service levels needed to achieve customer satisfaction.

This focus on competence and performance should reduce the need for
detailed written procedures, work instructions and control points, and is
consistent with ISO 9001:2000. Examples of how ISO 9001:2000 may apply
to a variety of service organizations illustrate the expected level of detail.
This approach is explained further in Appendix A, and contrasted with the
alternative which is referred to as ‘the detailed procedure approach’.
Structure of this Handbook
This handbook takes a ‘walk-through’ your business, before looking into the
requirements of ISO 9001:2000 in detail. This approach is intended to focus
on the way service industries operate, and help you to identify options for
improvement. The main body of this handbook is divided into four parts:
PART ONE, Getting started, provides an introduction to quality
management systems, and explains how to use this handbook.
PART TWO, Customer contact, deals with your customers and your
interface with them (‘front of house’ activities)
PART THREE, Supporting management structure, studies the
organization’s management, starting at the top with management’s role and
what top management has to do in planning activities, providing resources
and developing the organization’s capability.
PART FOUR, Support processes, covers the ‘back of house’ activities that
are necessary to support the ‘front of house’ ones. In chapter 11 quality
control is discussed and we look at data collection and analysis.
Appendix A, How to document the competency approach,
describes ‘the competency approach’ which underlies the guidance given in
the main body of the Handbook, and offers an alternative to the more
traditional way of documenting procedures.
Appendix B, ISO 9001:2000, provides an overview of the main changes
between the 2000 and 1994 editions of ISO 9001. It also provides the full text
of ISO 9001:2000, Quality management systems—Requirements, (except for
Annex A) with cross-references back to the relevant guidance in the main
body of this handbook.
In making cross-references to other parts of this handbook the words ‘part’,
‘chapter’ or ‘section’ are used, as appropriate. In referring to ISO 9001 the
clause number is given, or ‘the standard’ used for more general references.

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CONTENTS
Page
PART ONE: GETTING STARTED ........................................................... 8
1 INTRODUCTION—GETTING STARTED....................................................... 8
1.1 CHARACTERISTICS OF THE SERVICE INDUSTRY ............................ 8
1.2 WHAT IS COMPETENCE? .............................................................. 8
1.3 COMPETENCY BASED APPROACH TO QUALITY MANAGEMENT
SYSTEMS .................................................................................... 9
1.4 IMPLEMENTING A COMPETENCY APPROACH .............................. 12
1.5 A MODEL TO HELP EXPLAIN THE STANDARD.............................. 12
1.6 RELATIONSHIP WITH ISO 9004 ................................................. 14
1.7 COMPATIBILITY WITH OTHER MANAGEMENT SYSTEMS .............. 14
1.8 GENERAL DOCUMENTATION REQUIREMENTS ............................. 15
1.9 SUMMARY................................................................................. 18
PART TWO: CUSTOMER CONTACT ................................................... 19
2 ‘FRONT OF HOUSE’ CUSTOMER CONTACT ACTIVITIES ............................ 19
2.1 UNDERSTANDING YOUR CUSTOMERS ........................................ 19
2.2 CUSTOMER REQUIREMENTS....................................................... 19
2.3 FOCUSING ON CUSTOMER SATISFACTION ................................... 21
2.4 SUMMARY................................................................................. 23
3 COMMUNICATING WITH YOUR CUSTOMERS ........................................... 25
3.1 THE WAY YOU COMMUNICATE WITH YOUR CUSTOMERS ............ 25
3.2 DEALING WITH CUSTOMER COMPLAINTS ................................... 26
3.3 TYPES OF SERVICE DELIVERY .................................................... 27
3.4 SUMMARY................................................................................. 31
4 FULFILMENT OF ORDERS ....................................................................... 34
4.1 HOW DO YOU CAPTURE WHAT EACH CUSTOMER REQUIRES? ...... 34
4.2 CHECKING THAT YOU CAN MEET CUSTOMER NEEDS AND
EXPECTATIONS ......................................................................... 35
4.3 TRANSFERRING REQUIREMENTS TO BACK OF HOUSE ................. 36
4.4 SERVICE DELIVERY ................................................................... 37
4.5 POST-DELIVERY SERVICES ........................................................ 38

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HB 90.2—2000

4.6 MOMENTS OF TRUTH ................................................................ 38
4.7 SERVICE RECORDS .................................................................... 39
4.8 SUMMARY ................................................................................ 40
PART THREE: SUPPORTING MANAGEMENT STRUCTURE ........... 42
5 MANAGEMENT RESPONSIBILITY AND SUPPORT ...................................... 42
5.1 WHAT MANAGEMENT HAS TO DO .............................................. 42
5.2 MANAGEMENT COMMITMENT ................................................... 42
5.3 MISSION, VISION AND VALUES .................................................. 44
5.4 THE NEED FOR A QUALITY POLICY ............................................ 45
5.5 CODE OF ETHICS ....................................................................... 46
5.6 OBJECTIVES .............................................................................. 47
5.7 ESTABLISHING A QUALITY MANAGEMENT SYSTEM TO MEET THE
OBJECTIVES ............................................................................. 49
5.8 QUALITY MANUAL ................................................................... 50
5.9 DOCUMENTING THE REST OF YOUR QUALITY MANAGEMENT
SYSTEM .................................................................................... 51
5.10 DOCUMENT CONTROL ............................................................ 52
5.11 GOOD RECORD KEEPING.......................................................... 53
5.12 SUMMARY .............................................................................. 55
6 PLANNING AND RESOURCES .................................................................. 57
6.1 PLANNING ................................................................................ 57
6.2 RESOURCES .............................................................................. 62
6.3 PEOPLE, TRAINING AND COMPETENCE ...................................... 64
6.4 ORGANIZATION AND INTERRELATIONSHIPS............................... 65
6.5 RESPONSIBILITIES AND AUTHORITIES ........................................ 67
6.6 SUMMARY ................................................................................ 71
7 PROCESS MONITORING, VALIDATION AND CONTROL ............................. 74
7.1 UNDERSTANDING YOUR PROCESSES .......................................... 74
7.2 CONTROL OF YOUR PROCESSES ................................................. 75
7.3 VALIDATION OF PROCESSES ...................................................... 78
7.4 SUMMARY ................................................................................ 79

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8 CONTINUAL IMPROVEMENT ................................................................... 81
8.1 CORRECTIVE AND PREVENTIVE ACTION..................................... 81
8.2 AUDITING ................................................................................. 84
8.3 MANAGEMENT REVIEW ............................................................. 85
8.4 THE IMPORTANCE OF BECOMING BETTER .................................. 86
8.5 SUMMARY................................................................................. 87
PART FOUR: SUPPORT PROCESSES................................................... 88
9 ‘BACK OF HOUSE’ SUPPORT ACTIVITIES ................................................. 88
9.1 DESIGN AND DEVELOPMENT...................................................... 88
9.2 PLANNING ................................................................................. 89
9.3 INPUTS ...................................................................................... 91
9.4 DESIGN ..................................................................................... 92
9.5 OUTPUTS .................................................................................. 92
9.6 REVIEWS ................................................................................... 92
9.7 MANAGING CHANGES ............................................................... 94
9.8 SUMMARY................................................................................. 95
10 PRODUCT REALIZATION ....................................................................... 96
10.1 RESEARCH AND DEVELOPMENT ............................................... 96
10.2 PURCHASING ........................................................................... 96
10.3 PREPARATION ......................................................................... 99
10.4 PROCESSING............................................................................ 99
10.5 CLEARING UP ........................................................................ 101
10.6 SUMMARY ............................................................................. 102
11 QUALITY CONTROL ........................................................................... 103
11.1 CHECKING/TESTING/VERIFICATION/VALIDATION ................. 103
11.2 WHEN THINGS GO WRONG ..................................................... 105
11.3 DATA ANALYSIS PLANNING ................................................... 107
11.4 MONITORING AND MEASURING DEVICES ............................... 109
11.5 MONITORING AND MEASUREMENT OF PROCESSES ................. 112
11.6 MONITORING AND MEASUREMENT OF PRODUCT
AND/OR SERVICE ................................................................... 113
11.7 GATHERING AND EVALUATING DATA .................................... 116
11.8 ANALYSIS OF DATA ............................................................... 117
11.9 SUMMARY ............................................................................. 118

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FURTHER READING ........................................................................... 120
APPENDIX A HOW TO DOCUMENT THE COMPETENCY
APPROACH................................................................. 122
A.1 TWO APPROACHES TO QUALITY MANAGEMENT SYSTEMS ............... 122
A.2 CHOOSING A PROCEDURE STYLE .................................................... 131
A.3 USE OF WORK INSTRUCTIONS ......................................................... 131
A.4 THE COMPETENCY APPROACH ........................................................ 131
A.5 SERVICE INDUSTRIES...................................................................... 133
A.6 COMPETENCY BASED MANUFACTURING ......................................... 134
A.7 WHAT IS NEEDED TO ACHIEVE COMPETENT STAFF? ........................ 135
APPENDIX B AS/NZS ISO 9001:2000 ............................................... 137
WHAT HAS CHANGED? ............................................................................ 137
AS/NZS ISO 9001:2000 QUALITY MANAGEMENT SYSTEMS—
REQUIREMENTS ...................................................................................... 139
FOREWORD ................................................................................... 139
INTRODUCTION ............................................................................. 140
1 SCOPE....................................................................................... 144
2 NORMATIVE REFERENCE........................................................... 145
3 TERMS AND DEFINITIONS .......................................................... 145
4 QUALITY MANAGEMENT SYSTEM .............................................. 146
5 MANAGEMENT RESPONSIBILITY................................................ 149
6 RESOURCE MANAGEMENT ........................................................ 152
7 PRODUCT REALIZATION ............................................................ 153
8 MEASUREMENT, ANALYSIS AND IMPROVEMENT ....................... 161
BIBLIOGRAPHY ............................................................................. 165
ANNEX B CORRESPONDENCE BETWEEN ISO 9001:2000 AND
ISO 9001:1994 ........................................................... 166

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8

PART ONE:
GETTING STARTED
1 Introduction—Getting started
1.1 Characteristics of the service industry
Welcome to this handbook. It has been written to help people in the service
industry understand how to establish a management system that will assure
quality, and give you the necessary information to enable you to build such a
system.
Such a system, if well planned and written, will underpin any service
business. You should not need to restructure all your processes to meet the
new edition of the standard. You will find that most of it makes good business
sense and should lead to improvements. If at first a requirement seems to be
at odds with your commercial practice, look to find ways of applying the
standard to fit what you do, not the other way round.
Service customers can be fussy. They may also be less forgiving than
purchasers of mass-produced products. Often there is no ‘middleman’, and
the resulting close customer/supplier relationship depends on adapting the
products and/or services the organization supplies to meet the expectations of
individual customers.
Service organizations have to build a management system that assures that
things do not go wrong. And if problems arise, they must have systems in
place to address them as they occur and put things right as quickly as
possible.
To operate in this way you will need competent people who can adapt to
customers’ demands and expectations.

1.2 What is competence?
Competence is a person’s demonstrated ability to apply the necessary
knowledge and skills to perform an assigned task satisfactorily.
The key to this definition is ‘demonstration’, because it then becomes
relatively easy to test for competence (a driving test is a common example of
assessing competence).
© Standards Australia

www.standards.com.au

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Handbook - Guide to ISO 9001:2000

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