Gap Analysis of Quality Management Principle between ISO 9001

and Non ISO SMEs

Darmawan Napitupulu

1,3

, Krisna Adiyarta

and Zulvia Khalid

Fakultas Teknologi Informasi, Universitas Budi Luhur, Petukangan, Jakarta, Indonesia

Fakultas Ekonomi dan Bisnis, Univesitas Budi Luhur, Petukangan, Jakarta, Indonesia

Indonesian Institute of Sciences, Tangerang Selatan, Banten, Indonesia

Keywords: Quality, Management, Principle, ISO 9001, Gap, SMEs

Abstract: To be able to survive Quality management systems especially ISO 9001 have been widely adopted as strategy

for organizations to ensure the quality of process, which in turn will increase the quality of product/services.

In fact, many organizations in SMEs level could not implemente the QMS because of their constraints. Even

worse, they do now know about the advantage of QMS and feel they no not need it. This research purpose is

to discuss how far the gap between SMEs that already have implemented QMS ISO 9001 and those that have

not, especially in term of quality management principle. The method of deep interview and survey used in

this research. The result show that there is a huge gap between two kinds organization especially SMEs with

ISO 9001 and those who do not, in some variables such as customer focus, leadership, process approach and

evidence based-decision. This research also explored what the benefits obtained by organization with

successfull ISO 9001 sertification, including better management, available data & information to trace until

customer satisfaction.

1 INTRODUCTION

The concept of small and medium enterprises (SMEs)

in Indonesia is very diverse. The criteria of SMEs are

also different depending on the perspective of the

institution. There are three institutions that define

SMEs differently, namely the Central Bureau of

Statistics (BPS), the Ministry of Trade, and Bank

Indonesia. In general, SMEs usually cover at least

two aspects, namely aspects of the initial investment

value (total assets) and aspects of the amount of labor.

According to BPS, for example, if the workforce is 5

to 19 people then it is a small business, whereas if the

workforce consists of 20 to 99 people, it is a medium-

sized business. According to Law No. 9 of 1995, the

criteria for a small business is to have a net worth of

a maximum of Rp 200 million (not including land and

building for business) or to have a sale of at most Rp

1 billion per year. For medium-sized businesses

divided into two, namely the industrial sector that has

assets of at most Rp. 5 billion and for the non-

industrial sector, has a net wealth of at most Rp. 600

million (not including land and building business

premises) or having a maximum sales of Rp. 3 billion

per year. In addition, Presidential Instruction No. 10

of 1999 defines medium-sized businesses as activity

units that have net assets between Rp. 200 million to

Rp. 10 billion, excluding land and business buildings.

These various points of view are complementary to

the concept or criteria of an SME (Setiawan, 2004)

UKM is one of the driving forces for economic

development in various countries including

Indonesia. Based on experience in developed

countries shows that SMEs are a source of production

and technology innovation, the growth of the number

of creative and innovative entrepreneurs and the

creation of skilled and flexible workforce in the

production process to deal with rapid changes in

market demand (Tambunan, 2002).

In Indonesia, it cannot be denied how important

the role of SMEs is in the creation of employment

opportunities and community income sources. Data

from the State Ministry of Cooperatives and SMEs

(2014) shows that SMEs in Indonesia amount to

56.54 million units spread throughout Indonesia,

where the number represents 99.99% of the number

of business units in Indonesia, with more and more

annual growth. SMEs have been able to prove their

existence in the economy in Indonesia. When the

storm of the monetary crisis hit Indonesia in 1998

small and medium-sized businesses that were

Napitupulu, D., Adiyarta, K. and Khalid, Z.

Gap Analysis of Quality Management Principle between ISO 9001 and Non ISO SMEs.

DOI: 10.5220/0009491600240028

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 24-28

ISBN: 978-989-758-432-9

relatively able to survive compared to large

companies. Because the majority of small-scale

businesses are not too dependent on large capital or

loans from outside in foreign currency. Thus, when

there is fluctuation in exchange rates, large-scale

companies that generally always deal with foreign

currencies are the most potential to experience crisis

impacts (Bank Indonesia, 2015). The MSME

business contributes around 60% of GDP (Gross

Domestic Product) and opens jobs for the community.

Figure 1 below illustrates the growth of SMEs

compared to large businesses, as follows:

Figure 1: Growth of SMEs 2011-2012

(Bank Indonesia, 2015)

Based on Figure 1, during 2011 to 2012 there was a

growth in MSMEs and a decline in large businesses.

If in 2011, large businesses reached 41.95% the

following year only 40.92%, down around 1.03%. In

MSMEs the opposite occurs. If the medium-sized

business in 2011 was only 13.46%, in 2012 it reached

13.59%. There was an increase of 0.13%. Unlike

small businesses, there was a slight decline from

2011. In that year it reached 9.94% but in 2012 it only

reached 9.68%, meaning that it decreased by around

0.26%. A significant increase occurred in micro-

enterprises, if in 2011 it only reached 34.64%, in 2012

succeeded in reaching 38.81% an increase of 4.17%

(Bank Indonesia, 2015).

In addition, the role of SMEs in employment is

also very large, namely accommodating 99.44

percent of the entire workforce. In addition to the

formation of Gross Domestic Product (GDP), the

contribution of SMEs to National GDP reached 59.08

percent (Bank Indonesia, 2015). The development of

SMEs in Indonesia cannot be separated from various

problems. There are some common problems faced

by small and medium entrepreneurs such as limited

working capital and/or investment capital, difficulties

in obtaining raw materials with good quality and

affordable prices, limited technology, good quality

human resources (management and production

techniques), market information, and difficulties in

marketing. The level of intensity and nature of these

problems can differ not only according to the type of

product or market that is served, but also different

between regions, between countries, between sectors

or types of activities, and between business units in

the same sector (Tambunan, 2002).

Amidst these limitations, SMEs must have a

strategy to be able to compete with other products

both from within and outside the country. Improving

the quality of products / services is the main key so

that SMEs can meet customers' increasingly high

needs. One strategy that is widely used by SMEs is to

implement a quality management system, especially

ISO 9001, with the aim of ensuring the quality of

internal processes. A good process will in turn

produce good quality products/services

(Purwaningsih & Kusuma, 2015). But there are still

many UKM who have not been able to implement a

quality management system due to the limitations

mentioned above. This study aims to find out the

comparison between existing SMEs and SMEs that

have not implemented ISO 9001 from their quality

management aspects. Besides that, it was also

explored, the benefits that have been obtained

significantly by SMEs that have implemented and

obtained ISO 9001 certification.

2 METHODS

The research method used is a combination of

quantitative and qualitative approaches (mix-

method). The survey and interview techniques are

used to analyze gaps between SMEs that have

implemented an ISO 9001 quality management

system and SMEs that have not implemented

especially in terms of the quality management

principles adopted. There are 3 SMEs that have

successfully implemented ISO 9001, used as samples

in this study, with the consideration that the three

SMEs have obtained international recognition in the

form of ISO 9001 (best practice) certification. All of

these SMEs are guided by one of the government

work units that managed to improve its performance

because it has implemented ISO 9001. In total there

are 6 respondents from these 3 SMEs who are

themselves from the owners and managers who

understand the application of ISO 9001 in their

organizations. The survey results of the 3 SMEs

above will be compared with the results of the

previous survey to several SMEs that have not

implemented a quality management system

especially ISO 9001 (Napitupulu, 2018). In the

Gap Analysis of Quality Management Principle between ISO 9001 and Non ISO SMEs

previous survey activity, there were 5 SMEs in the

food sector. The total respondents in the survey were

5 people as business owners. Although the business

sectors of SMEs that are compared in this study are

not homogeneous, but in the application of ISO 9001

are general in nature so they do not depend on the type

of business of the UKM (Hafsah, 2004; Kurniawan,

2009). Gap analysis between SMEs with one another

is done from the aspect of quality management

principles. Based on ISO / TC 176, there are 7

principles of quality management at ISO 9001: 2015

which include the factors of customer focus,

leadership, people involvement, process approach,

continuous improvement, evidence-based decision

making and supplier-relationship management

(Sugian, 2015). This study adapts some literature

(Goetsch & Davis, 2010; Karimi & Kadir, 2012; Esa

& Syukri, 2011) to obtain measurement indicators

from these 7 principles, which can be presented in

Table 1 below:

Table 1: Measurement Instrument

Customer

Focus

I know and do not stop looking for

information about customer needs and

expectations (CF1)

I am always open and friendly in

accepting customer complaint (CF2)

Management performs monitoring and

measuring customer satisfaction

periodically (CF3)

Leadership I am able to adjust my personal goals

with business goals (LD1)

I always make the values in the vision

and mission of the business as a guide

in doing the work (LD2)

I am always obedient to the prevailing

laws and regulations (LD3)

People

Involvement

I always share information with

employees about what is being done

(PI1)

I always involve employees in making

business strategies (PI2)

I always encourage and facilitate

employees to improve their

competence (PI3)

Process

Approach

I can always control the entire work

process well (PA1)

Every mistake I make is always an

input for better process improvement

(PA2)

In carrying out the principal activities,

I always refer to the standard criteria

that are always evaluated periodically

(PA3)

Continues

Improveme

I show high concern for teamwork

training and ongoing improvement

processes (CI1)

I always create innovations related to

product quality improvement (CI2)

Evidence

Based-

Decision

I use information technology to access

the data to improve business

performance (ED1)

I use data and information in making

decisions (ED2)

Business performance is always

regularly evaluated (ED3)

Supplier

Relationship

I do not stop looking for information

on qualified suppliers that can meet

business needs (SR1)

I believe that the supplier is a very

important partner in improving

product quality (SR2)

Based on table 1, the measurement instrument have

19 indicators/item of total 7 factors (variables). They

are customer focus (3 items), leadership (3 items),

persons involvement (3 items), processing approach

(3 items), continuous improvement (2 items), factual

approach (2 items) and supplier relationship

management (2 items). Four likert scale was used in

this instrument to measure the agreement of

respondents from 1=strongly disagree untl 4=strongly

agree.

3 RESULT & DISCUSSIONS

Based on the results of the survey, it was obtained an

overview of the quality management principles that

have been applied by SMEs that have not

implemented ISO 9001 and SMEs that have applied

to obtain ISO 9001 certification.

Table 2: Non ISO 9001 SMEs Result (Napitupulu, 2018)

Items Mean Mean of

Factors

CF1 2.20

2.20

CF2 2.40

CF3 2.00

LD1 2.20

2.67

LD2 2.40

LD3 3.40

PI1 1.60

1.73

PI2 1.40

PI3 2.20

PA1 1.60

1.80

PA2 1.60

PA3 2.20

CI1 2.40 2.10

CI2 1.80

ED1 1.40

1.93

ED2 2.20

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

ED3 2.20

SR1 2.40 2.60

SR2 2.80

Total Mean 2.15

Based on Table 2, the average value obtained by each

item / indicator is below 3 (<3.00). This means that

the principles of quality management have not been

applied to the five SMEs, except for LD 3 items that

have a score of 3.40. LD 3 is related to the fulfillment

of legal aspects or government regulations including

business licenses. In general, SME owners are aware

of the obligations that exist so that all SMEs have

business licenses (PIRT) and some have adopted halal

certificates (MUI). However, from the principles of

quality management others are still relatively low,

especially for PI2 and ED1 items that get the lowest

score. PI2 items related to employee involvement in

planning business strategies can also be said to be still

low. Likewise, ED1 is related to the use of data and

information to improve performance not yet done by

the majority of SMEs. Most SMEs do not record in

the workflow process that runs in the organization.

The average total score of the adoption of quality

management principles in SMEs that have not

implemented ISO 9001 is also low, namely 2.15. In

other words, it can be said that SMEs do not have a

culture of quality in organizations. The focus on sales

is still a priority for SMEs so that their products can

generate transactions and profits, without heeding the

improvement of the quality of their products. In

addition, SMEs do not have a good management

system that can plan, implement, monitor and

evaluate the existing workflow processes so that

continuous improvement is not carried out. The

following table 3 shows the results of a survey of

SMEs that have implemented an ISO 9001 quality

management system specifically from the quality

management portrait.

Table 3: ISO 9001 SMEs Result

Items Mean Mean of

Factors

CF1 3.90

3.83

CF2 3.80

CF3 3.80

LD1 3.80

3.76

LD2 3.70

LD3 3.80

PI1 3.70

3.73

PI2 3.80

PI3 3.70

PA1 3.80

PA2 3.90 3.86

PA3 3.90

CI1 3.50 3.65

CI2 3.80

ED1 3.70

3.73

ED2 3.70

ED3 3.80

SR1 3.70 3.70

SR2 3.70

Total Mean 3.75

Based on Table 3 it can be seen that the average value

of each item / indicator exceeds number 3 (> 3.00).

This means that all SMEs have implemented the

principles of quality management well. The average

value obtained for each factor (> 3.00) also shows that

each quality management principle has been applied

in the organizational workflow process. For the

quality management principle factor that gets the

highest score (3.86) is the process approach principle.

This means that SMEs conduct their business

activities always referring to the process approach.

The process is monitored, measured and improved in

quality continuously so as to optimize business

performance. The average total score also obtained a

value of 3.75 which indicates that all three SMEs

have successfully applied the principle of quality

management. This is in line with the ISO 9001

certification they have obtained. In other words, with

the implementation of ISO 9001 encourages SMEs to

develop the principles of quality management and in

turn quality culture can be built. Improving the

quality of Products / services into a culture and values

instilled in the organization. There is one

measurement item that gets the lowest score is CI1

related to teamwork in implementing ISO 9001 is a

challenge for SMEs. At first there was a high

resistance from internal, especially employees. But

over time and coupled with training support,

employees can gradually receive ISO 9001 as one

part of the organization's strategy.

In addition, from the results of interviews with

SMEs that have implemented ISO 9001 mentioned

various benefits and changes that are felt by the

organization. As an example of conditions prior to the

adoption of ISO 9001, one of the SMEs often suffered

losses but did not know the causes because SMEs did

not have traceable data. SMEs also do not have clear

business planning and standard operating procedures.

After implementing ISO 9001, several perceived

changes are the availability of data and information,

clear work procedures so that employees can do a

good job. Other SMEs also benefit from

implementing ISO 9001, which is better management

Gap Analysis of Quality Management Principle between ISO 9001 and Non ISO SMEs

because it uses a process approach so that it is easy to

manage the process. Besides that the level of

defective products decreased from 15% to 0.6% so

that losses can be reduced. One of the SMEs also

mentioned that the perceived benefits of ISO 9001

were a decrease in customer complaints. Previously

there were 10-20 customer complaints every day but

decreased to 1-2 customers each month. The level of

trust from customers and partners also increases. This

was marked by the existence of several new

collaborative projects with other parties which

required ISO 9001 certification.

4 CONCLUSIONS

Based on the research that has been done, it can be

concluded that there is a gap between SMEs that have

implemented ISO 9001 and that have not been based

on quality management principles where SMEs with

ISO 9001 have a quality culture in the organization

while SMEs without ISO 9001 still do not have

awareness of the importance of product

quality/services offered. Product sales are still a

priority of SMEs without ISO 9001 without being

accompanied by continuous improvement in product

quality. The advantage gained after implementing

ISO 9001 is better management, data is available for

analysis, defective product levels and customer

complaints are reduced, thus customer satisfaction

could be improved.

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UNICEES 2018 - Unimed International Conference on Economics Education and Social Science