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									Standards and Standardization
for SMEs and Subcontractors
Jose Edgar S. Mutuc
     Business Management

 What does an owner/manager
 How does he know what is right or
  what is wrong with what he is
 Does everybody in the organization
  know what is right and what is wrong?
    Supply chain management

 Management as applied to suppliers
  and subcontractors
 Management requires a basis
What are standards?
      What are standards?

Standards are preferred output and/or
 To make a stand and make operational
  a philosophy, principle or value
 To maintain and improve
   Internal organizational processes
   Customer satisfaction processes
   Attainment of other external requirements
       Types of standards

 Conceptual and concrete standards
 Product and process standards
 Internal standards and external
 International, national and industry
 Quantitative and qualitative standards
       Product standards

 Letter size bond paper = 8.5‖ x 11‖
 ATM and credit cards = 5.4cm x 8.5cm
 A, AA and AAA batteries
 Films 110, 135
 Big Macs and quarter pounders
          Domestic & Commercial, Sports
              & Leisure Equipment
   Automatic controls for household use     • Other equipment for entertainment
   Body care equipment                      • Playgrounds
   Cleaning appliances                      • Theatre, stage and studio equipment
   Domestic commercial and industrial       and work stations
    heating appliances                       • Toys
   Electric heaters                         • Furniture
   Gas heaters
                                             • Home economics in general
   Heaters in general                       • Home textiles. Linen
   Heaters using other sources of energy    • Items of art and handicrafts
   Liquid fuel heaters                      • Kitchen equipment
   Solid fuel heaters                       • Cooking ranges, working tables,
   Domestic electrical appliances in
    general                                  ovens and similar appliances
   Equipment for children                   • Cookware, cutlery and flatware
   Equipment for entertainment              • Dishwashers
                                             • Domestic refrigerating appliances
   Camping equipment and camp-sites
   Equipment for entertainment in general   • Trolleys for supermarket use
                                             • Sports equipment and facilities
                                              Musical instruments
                DEPARTMENT OF LABOR
               DEPARTMENT ORDER NO. 4
Pursuant to Section 2 of Republic Act No. 679, as further amended
   by Presidential Decree No. 148, commonly known as the
   Woman and Child Labor Law, the following occupations are
   hereby declared hazardous to young workers, without prejudice
   to other occupations that may subsequently be declared as


A. Farming, Fishing, Hunting, Logging, and Related Occupations
      fishermen (deep sea and offshore)
      divers of (sponge, pearl and shell)
      logging (as cutter, sawyer, stripper, cable installer, feller)
      charcoal burner (big scale)
             DEPARTMENT ORDER NO. 4
D. Craftsman, Production, Process and Related Occupations
 spinners and winders (textile)
 fiber and plastic preparers
 bleacher, dyer and finisher of textiles using chemicals
 tool maker, machinist, plumber, welder, flame cutter and plater
 electrical and electronic fitter
 sawyer and woodworking machine setter and operator
 furnace and oven workers in brick making
 furnace man and kilnman in the manufacture of glass and
 distiller of alcoholic beverages
 tanner
 blacksmith, hammersmiths, forgeman
 slaughtering and killing large cattle (carabao, cow, horses)
 extraction of lard and oil
              International Organization
              for Standardization
The ISO 9000 family is primarily concerned
  with "quality management". This means
  what the organization does to fulfill:
 the customer's quality requirements, and
 applicable regulatory requirements, while
  aiming to
     enhance customer satisfaction, and
     achieve continual improvement of its performance
      in pursuit of these objectives.
             International Organization
                 for Standardization
The ISO 14000 family is primarily
 concerned with "environmental
 management". This means what the
 organization does to:
   minimize harmful effects on the
    environment caused by its activities, and
   to achieve continual improvement of its
    environmental performance.
McDonald’s Standards of
   Business Conduct
         The promise of the Golden Arches
         ―The basis for our entire business is
            that we are ethical, truthful and
            It takes time to build a reputation.
            We are not promoters. We are
            business people with a solid,
            permanent, constructive ethical
            program that will be in style
             ...years from now even more
            than it is today.‖
            —Ra yKroc ,1957
      McDonald’s Standards of
         Business Conduct
Personal Accountability
We accept personal accountability
We communicate openly/Business Integrity Line
We act in the best interest of the System
Our Commitment to Employees
Human rights and the law
Respect and dignity
Health and safety
Our Commitment to Customers
Cleanliness and safety
Fair competition and antitrust

Our Commitment to Business Partners
and Competitors
Owner/operator relationships
Supplier relationships
Sharing information
Competitor relationships
Gifts, favors & business entertainment
      McDonald’s Standards of
         Business Conduct
Our Commitment to Shareholders
Corporate governance and internal controls
Protecting company assets
Confidential information
Inside information and securities trading
Business records and communications
Our Commitment to Communities
The letter and spirit of the law
Political activities
Government inquiries
Communicating with the public
        Wal-Mart’s ES Program

Wal-Mart’s ES program has four fundamental
1. Ensure compliance with legal requirements, as well
   as the additional requirements embodied in the
  Wal-Mart Standards for Suppliers.
2. Verify that suppliers and factory management
   practices are in accordance with the Standards for
3. Ensure that the audit teams are executing the
   Ethical Standards program consistently.
4. Encourage adoption of changes through education of
   suppliers and factories that will result in an
  improved quality of life for the workers who make
   the merchandise we
                Work standard
  GTE Directories customer-complaint resolution process

Determine             If complaint,           Receive &
customer’s               request               analyze
   need                customer’s             customer’s
                         records                record

                                       Not accept
     Update            Customer                Provide
   customer’s           accepts                 info &
     record            resolution              propose
         Workplace standards
   Furniture standards are guidelines, which
    serve as tools for developing the physical
    components of a work environment.
   They also enable organizations to link their
    strategic goals with effective workplace
   Ultimately, standards serve as guidelines to
    maintain a consistent approach to cost,
    quality, design, and health and safety issue.
      Workplace standards

From: Cornell University Ergonomics web
            Workplace standards

Workers maintain awkward
  shoulder, elbow, and wrist
  postures while sewing because
  of improper table height causing
  fatigue and health risks.
        What are standards for?

   ―Create order out of chaos‖
     Ensure desirability
     Uniformity and consistency
     Interoperability and interchangeability
     Anticipate and minimize problems
     Predictability

   Improve organizational measures such
    as efficiency, effectiveness, productivity
    and eventually profitability
    Characteristics of standards

 Anticipated or required performance
 Involves an need and objective
 Involves an agreement
 Involves a set of conditions and/or
 Involves a period of time
    What is standardization?
 Process of producing technical
  specifications or precise criteria to be
  used as rules, guidelines or definitions
 Adapting and implementing these
  specifications to ensure that the
  materials, products, services, processes
  and systems are interconnected
 the activity consists of the processes of
  formulating, issuing and implementing
What and where to standardize
     Standards for SMEs and
 Product
 Process
 Skill and training
 Tools and equipment
 Work place
 Work environment
 Government
      Setting up standards
 Identify the need, the area and
 Determine quantitative and/or
  qualitative standard
 Set up the standard and its conditions
 Present and clarify the standard
 Train
 Implement conditions and standards
 Monitor and revise accordingly
        Standards at McDonald’s
 Burger fat content is 17 – 22.5% (83%
  lean chuck and 17% choice plates)
 French Fries scoop
 Bag-in-box packaging for milk
 750 page franchisees operations
     32 slices of 1 lb cheese
     French fries to be cut 9/32 of an inch thick
     Everyday windows have to be cleaned
         Setting Fries Standards
              at McDonald’s
   Was not determined by temperature of oil in
    the vat
   Variety of potato
   Curing of potatoes
   Solid contents
   Storage facilities at the farms
   Potatoes were perfectly cooked when the oil
    in the vat recovered by 3 degrees from its
    low point => automated potato frying
          Wal-Mart Ethical Standards
             Program Milestones
1992         Wal-Mart’s Factory Certification program
              was established, including Standards
             for Suppliers. Efforts were focused on
             Bangladesh and China.
1993-96      First Factory Certification program
             manual was developed, and began
             auditing factories directly manufacturing
             for Wal-Mart.
1997-2001    Factories in Egypt, Pakistan, India, and
             Nicaragua were added.
 Wal-Mart Ethical Standards
    Program Milestones
2003   Wal-Mart began training its buyers,
       suppliers and factory managers on Wal-
       Mart Supplier Standards. More than 4,600
       representatives of suppliers and
       factories were trained globally.
       A product quality assurance program was
       also established, including reviews by
       internal audit.
2004   Trained more than 7,900 suppliers and
       factory managers, including officials
       associated with the 1,100 new factories
       added to our program.
  ―While other food retailers were
  spending 90 percent of their time
   on the supply side of business,
  its suppliers allowed McDonald’s
to spend more time on operations.‖

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