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EVALUATION OF THE APPLICATION OF ISO 9001 IN NAM DINH POWER COMPANY COMMITMENT I hereby commit that this thesis is my own study The data and results mentioned in the thesis are true and have never been published in any research Author Tran Manh Sy TABLE OF CONTENTS Preamble Chapter 1: Overview of Quality and the Quality Management System 1.1 Basic issues on the quality and quality management: 1.1.1 Quality of products 1.1.2 Quality control 1.2 Quality Management Models 1.2.1 ISO 9000 –Based Quality Management System 1.2.2 Other Quality Management Models Apart From ISO 9000 9 12 15 15 25 Chapter 2: Analysis of Reality of Application of ISO 9001:2008 in Nam Dinh Power Company 30 2.1 Special characteristics of power products: 30 2.1.1 Electricity products 30 2.1.2 Power supply stem and characteristics of power generation and consumption process: 30 2.2 Features of Nam Dinh Power Company 33 2.2.1 General introduction about the Company 33 2.2.2 Development history of the Company 33 2.2.3 Some basic features of the Company 35 2.2.4 Organizational Chart of the Company 36 2.3 ISO 9001:2008 Standard-Based Quality Management System of Nam Dinh Power Company 37 2.3.1 Overview on the ISO 9001:2008 related document system of the Company 37 2.3.2 Structure of ISO 9001:2008 related documents of the Company:39 2.4 Evaluation of application of ISO 9001 in Nam Dinh Power Company: 47 2.4.1 Evaluation of maintaining effectiveness of the system: 47 2.4.2 Evaluation of quality of products and services 51 2.4.3 Evaluation of compliance and improvement of professional procedures: 53 2.4.4 Evaluation of management work 53 2.4.5 Evaluation of the market and clients: 55 2.4.6 General remarks: 56 Chapter Recommendations of some solutions to improve the results of the Company’s quality management system application 58 3.1 Solutions to improving effectiveness of the Quality Management System 58 3.1.1 Training and re-training on quality 58 3.1.2 Intensifying internal evaluation work 60 3.1.3 Improvement of quality culture 60 3.2 Solutions to improve of quality of power products and services 61 3.2.1 Upgrading the medium-voltage from 10 kV to 22 KV 61 3.2.2 Minimizing power failures due to problem of power grids 61 3.2.3 Information technology application to recording power indices to minimize errors 62 3.3 Solutions to market expansion and development of customers 63 3.3.1 Minimizing power cut to increase power output: 63 3.3.2 Developing new power consumers: 63 3.4 Solutions to remaining and improvement of ISO procedures and process 64 3.4.1 Training and improvement of quality of compiled documents, procedures and process 64 3.4.2 Application of ISO documents, process and procedures to practical production and business 65 3.5 Improvement of effectiveness in ISO online – based management work 65 3.5.1 ISO online system 65 3.5.2 ISO Online implementation steps 66 3.6 Solutions to applying and supplementing 5S method in quality management 67 3.6.1 Necessity of application of 5S in Nam Dinh Power Company: 67 3.6.2 Recommendations on 5S plan implementation schedule in Nam Dinh Power Company 67 Conclusions 70 Appendixes 71 Reference documents 76 PREAMBLE In the context of the market economy and currently deeper integration into the world economy, Vietnam enterprises have to create products with high quality, competitive price and meeting varied demands, which is more important, to survive and develop Currently, many companies have chosen the ISO 9001-based quality management model If the companies seriously apply ISO standards to their business, the quality management system shall effectively to reduce cost, increase their competitiveness and other benefits The improvement of quality management systems would help to create the confidence in the market, build brands, and generate the key driving force for the enterprises to grow Nam Dinh Power Company is a power company directly under Northern Power Corporation – Vietnam Electricity It is the unique company managing the power transmission grid and selling power in Nam Dinh Province The specific feature of the electricity industry is that the State exclusively manages electrical products so there is no competition in the retail electricity market However, the power industry in general and Nam Dinh Power Company have to complete higher and higher economic – technical targets assigned by the State to improve their effectiveness in production and business In addition, a company is inclined to serve the society so satisfying customers’ needs is one of the most urgent requirements now Suitable application and operation of an effective quality management system help the Company solve the issue ISO 9001 standard-based quality management system has beeing applied by Nam Dinh Power Company since 2007 The system has been applied effectively for years, significantly contributing to construction of the working manner, improvement of effectiveness in production and business as well as better meeting varied demands However, operations of the electricity industry are not concentrated so the company’s units work in the fence like many other business models They often work in the system of power transmission line and stations throughout the province Most of the workers, employees regularly meet clients directly Therefore, there are shortcomings during the process of quality management system application to be corrected, completed to promote and improve effectiveness of the quality management system Due to above mentioned reality, I, as a leader of Nam Dinh Power Company, select the topic “Evaluation of application of ISO 9001 in Nam Dinh Power Company” for my study and apply directly in my Company The objectives of the this study is to investigate ISO 9001:2008 Standard-based Quality Management System of Nam Dinh Power Company The specific objectives of the study are: - To review the theoretical basis of quality and quality management systems, - To analyze the application reality of ISO 9001 Standard-based Quality Management System in Nam Dinh Power Company - To propose some solutions to improve and complete the outcomes of the Company’s application of ISO 9001:2008 The main methodologies in this study are: observation, data collection via interviews, questionnaires, statistics, comparisons, analysis, generalizations The data analysis will be based on the data collected during past years, from 2008 to 2012 Thesis structure: Apart from the preamble, conclusion, appendixes, list of references, this thesis consists of 03 chapters: Chapter 1: Overview of Quality and the Quality Management System This Chapter review the basic issues on quality and quality management, summary of current quality management models, then focus on the ISO 9000 Standard – based Quality Management System Chapter 2: Analysis of reality of application of ISO 9001 in Nam Dinh Power Company This Chapter presents some special features of power products and Nam Dinh Power Company, descriptions of ISO 9001 Standard-based Quality Management System which have been applied in the Company, evaluation of ISO application in the Company Chapter 3: Recommendations of some solutions to improving the ISO 9001 Standard-based Quality Management System in Nam Dinh Power Company As countermeasures for shortcomings in application of the ISO in the Company, this chapter proposes the recommendation on some solutions to complete and improve the Company’s ISO 9001:2008 Standard-based Quality Management System Although my study is limited and incomplete, I believe that the thesis has reached basic targets by my efforts and enthusiastic assistance of the Teacher, Dr Phan Chi Anh Tran Manh Sy Chapter OVERVIEW OF QUALITY AND THE QUALITY MANAGEMENT SYSTEM 1.1Basic issues on the quality and quality management: 1.1.1Quality of products: 1.1.1.1 Concepts of the quality: Quality is a relatively broad and complicated concept, reflecting the combination of technical contents, economic and social factors Quality is defined by varied authors in different aspects with different concepts For producers, quality is the achieved assurance and remaining collection of standards, specifications or requirements which have been pointed out before The created products have suitable criteria and measurer to the standard system for high quality products For customers, quality is the appropriateness of the products to their intended use or in other words, quality is the satisfaction of customers' needs “Quality is to meet requirements” defined Philip Crosby, or according to Dr Eward Deming “Quality is consistent with the purpose or use of customer satisfaction” [ 10 , p.37 ] In the aspect of the value, quality is measured by the relationship between the benefits from product consumption and the cost to reach such benefits According to Kaoru Ishikawa “Quality is satisfaction to the needs of the market with the lowest cost” [ 10 , p 37 ] The above mentioned concepts show the fact that quality is always considered in relationship and closely dependent on market factors The definitions of quality of products and services are toward customers’ satisfaction in certain specific conditions International Organization for Standardization (ISO) provides a definition of quality in its set of ISO 9000 standards as follows: "Quality is the degree to which a set of characteristics of an entity is able to satisfy the raised or potential demands” Due to its practical impacts, this definition is widely accepted in the international business today This definition ensures consistency between meeting external demands and actual internal capacity of each company in the certain socio-economic conditions In fact, this concept of product quality reflects the combination of the above definitions and quality generalization in higher level 1.1.1.2 Factors reflecting product quality: Functions of products, which is the ability of these products to perform their functions and activities to meet the desired purpose of use of the products This group characterizes the specifications to determine effects of primary functions of the products Safety of products The safety norms in the use and operation of products, safety for the consumers’ health and the environment are essential elements for the products in current consumption conditions Durability of products This is the characteristic element for the products to keep them to work normally under the design standards in a certain time Durability is an important factor in deciding to buy goods of consumers Reliability of products This is the characteristic element of the products, constantly maintaining the ability to work without error or malfunctions in a certain time period Aesthetics of products This is the characteristic element for inspiration, the reasonableness in term of formality, appearance, texture, perfect sizes, balance, color, decoration, and fashionableness Brand of products has become an important part of product quality today Convenience reflects the demands of availability, easier transportation, storage and user- friendliness of the products 1.1.1.3 Features of quality: Product quality is both objective and subjective The subjectivity of products is shown through customer awareness and depending on the design solutions, tests, employees, etc and the entire system The objectivity of products is expressed through the intrinsic characteristics of each product shown in the process of forming and using the product Product quality is relative A product can be rated as high quality in a period but it is not at another time 10 1.1.1.4 Factors impacting quality * Quality is impacted by external factors - Market situation: the quality has to be improved consecutively to timely meet more diversified, quicker changing demands - Scientific- technological advances: Scientific- technological advances are unlimited to constantly improve product quality Thanks to scientific advances, new better and cheaper resources are created Quality of the created products is suitable to the more and more improved economic – engineering targets to better meet the needs of consumers - The State’s mechanism and policies: The appropriate policies and mechanisms will stimulate companies to promote investments and create an environment of healthy competition to improve quality of their products and services - Cultural - social factors of localities: cultural, moral, social factors and those related to traditional practices, consumer habits, etc have a direct impact on the quality attributes of a product, requiring each product to match them and product quality to depend on them * Quality is impacted by internal factors: - Quality of human resources of the companies: People are the direct factors to create and make decisions on product quality The quality depends on the expertise, skills, experience, sense of responsibility, the cooperation between the members and departments in a company - Technology-based production lines: modern level of machinery, equipment, and technology-based production lines affects product quality greatly - Input materials: They are the factor forming attributes of the product quality - Corporate management capacity: proper combination in exploitation of the available resources to create products depends on awareness, understanding of quality and quality management, construction capacity and instructions to follow quality policies and quality targets of the managerial officers 1.1.1.5 Importance in improvement of product quality Improvement of product - service quality is an important solution consistently combining benefits to create incentives for the development of each company 11 Creation, remaining and improvement of quality bring practical benefits to companies, consumers, workers and entire society In particular, companies improve their competitiveness, the market is more expanded, production is more enhanced; workers have employment and their income is improved, the consumers’ demands are met with affordable cost; the State increases the budget and handles the social issues 1.1.2 Quality management: 1.1.2.1 Concept of quality management: Currently, there are many different definitions of quality management According to GOST 15,467-70, quality management is to build, ensure and maintain the essential quality of products in design, manufacture, circulation and consumption [ 10 ] According to AG Robertson, quality management is a management system to build programs and to combine efforts of varied units to maintain and enhance quality of design organizations and producers to secure to approach the most efficient production and to fully satisfy the requirements of consumers.[10] According to Prof Dr Kaoru Isikawa, a Japanese expert, quality management is the process of research and development, design of production and maintenance of some high quality products with the most economic cost and most benefits to provide to the customers and constantly meet their needs [10] According to the JIS (Japanese Industrial Standards), quality management is the system of production methods to create products with the highest quality or to offer the best services in order to satisfy increasing demands of consumers [10] In the ISO 9000’s definition of quality management, quality management is the general managerial operation to set quality objectives, quality policies and it is implemented by such methods as quality planning, quality control, quality assurance and quality improvement in the formwork of a certain quality management system This definition ensures almost all of the required contents The above definitions show that the quality management is combination of managerial operations to identify targets, quality standards, contents, methods and responsibilities to carry out norms and standards which are determined by the 12 ... quality The quality depends on the expertise, skills, experience, sense of responsibility, the cooperation between the members and departments in a company - Technology-based production lines:... 2008, the benefits can be categorized into internal and external benefits External benefits are related to improvement of advertising and marketing meanwhile internal benefits are related to organizational... management system help the Company solve the issue ISO 9001 standard-based quality management system has beeing applied by Nam Dinh Power Company since 2007 The system has been applied effectively