Defining internal and external issues per AS9100 – ISO 9001 (SWOT/PEST)

With the latest revision of ISO 9001 in 2015 and AS9100 in 2018, there have been strong emphasis to understand and define the context of the organization in the Quality Management System (QMS) which encompass interested parties as well as internal & external issues and scope of the QMS.

This article will support you define the internal and external issues related to your organization as part of your QMS and the way to record these information, the priority order and actions taken to address related risks.

First of all, internal and external issues are mentioned in the section 4.1 of the AS9100 which specify that the organization shall determine external and internal issues that are relevant to its purpose and its strategic direction. Please note the keyword « relevant » which means that once the analysis is done, prioritization is required to focus on most important items.

The standard also mentions that external context can include issues arising from legal, technological, competitive, market, cultural, social, and economic environments, whether international, national, regional, or local. The internal context can include issues related to values, culture, knowledge, and performance of the organization. These notes are interesting in the sense that while the standard does not force the use of any specific tool it does hint towards the PEST tool (or its derivatives such as PESTEL).

Regarding the format to use, there is nothing specifically mentioned in the standard. Most organizations would capture this analysis as a documented information which can be referenced in the quality manual.

How to GRASP INTERNAL/EXTERNAL ISSUES ?

There are different ways and methods to grasp internal and external issues but first of all it is important to mention that the analysis should focus on issues that may impact the quality of products or services provided by the organization. This will prevent the working group going too far in the analysis or loosing focus.

To ease this activity, we recommend combination of SWOT and PESTEL.

While SWOT is a known tool, auditors are picky about the internal factors (strengths and weaknesses) being mixed with external ones (opportunities and threats). Those two categories shall be respected otherwise it would give the impression that the tool is not well understood :

      • Internal factors: the strengths and weaknesses internal to the organization
      • External factors: the opportunities and threats presented by the environment external to the organization

For external factors, the PESTEL tool can be used as it gives an overview of the different macro-environmental factors to be taken into consideration. Practically, the working group may review one by one every PESTEL category and define what could be considered as an opportunity or threat.

    • Political factors relate to how the government intervenes in the economy. Specifically, political factors have areas including tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability.
    • Economic factors include economic growth, exchange rates, inflation rate, and interest rates. These factors greatly affect how businesses operate and make decisions.
    • Social factors include the cultural aspects and health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. High trends in social factors affect the demand for a company’s products and how that company operates.
    • Technological factors include technological aspects like R&D activity, automation, technology incentives and the rate of technological change. These can determine barriers to entry, minimum efficient production level and influence the outsourcing decisions. Furthermore, technological shifts would affect costs, quality, and lead to innovation.
    • Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.
    • Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones.

For internal factors, the working group can cover values, culture, knowledge, and performance of the organization.

THIS IS TOO COMPLEX …

Having introduced SWOT, PESTEL and details about internal & external issues, it is worth to mention that the working group in charge of grasping internal & external issues should remain pragmatic and rely on common sense. Actually the AS9100 or ISO9001 asks no more than formalizing what have been considered for several decades as tribal knowledge of the organization.

To illustrate my purpose, if you work for a company like Coca Cola, no one gave you a documented information which mentions that your strength is having the world largest distribution network (virtually any point in the world), that new sugar-related regulation are a threat and that an opportunity is the increasing customer demand for healthy drinks.

These tools will then help you formalizing existing information known to everyone, to the board of directors or eventually known so far only by the CEO.

DECIDE ACTIONS TO ADDRESS RISKS AND OPPORTUNITIES

Once the SWOT analysis is conducted, it is very important to not stop here. The standard asks to record the actions taken/to take to address risks and opportunities from this analysis.

I usually recommend that the working group select few most relevant items and work on them during the year than trying to cover everything. As example, I have seen companies that decide to focus on improving their internal systems and technologies and not prioritizing benchmark activities to address the threat of « Aggressive competition ». The auditor will have no issue with that if this in-line with the strategic direction of the company and it is providing the expected output.

link with self-awareness

To conclude this post, I would like to make the link between understanding the organization context and the process of developing self-awareness for individual. If you read the below benefits from such individual process, I hope you can recognize the benefits for an organization to have a similar approach:

      • Deliberately become the person you want to be
      • Act consciously instead of reacting to people or events
      • Create self-esteem, confidence and self-worth
      • Be authentic and make active choices
      • Having greater depth of experience and enjoyment of life
      • Understand oneself and exercise self-care and compassion
      • Reduce internal conflict and perform assertively
      • Identify and come to peace with who you are and who you are not

how to record these information ?

As mentioned, these information can be incorporated directly in the quality manual or preferably as a separate appendix (do not forget to have this appendix official in your QMS and the document number reflected as reference in the quality manual). Below are internal & external issues templates that you can download:

    • Free Template with all columns and one example per SWOT category. This template is complying with AS9100 Rev D and ISO 9001:2015 requirements.
    • Premium Template with a list of most common internal & external issues and a table to capture the actions to address risks an opportunities. The template can be further customized to fit your organization QMS. Download premium version on Sellfy.

RELATED POSTS

For further resources related to AS9100 Rev D or ISO9001:2015 implementation, refer to the below posts:

Defining internal and external issues per AS9100 – ISO 9001 (SWOT/PEST)

Defining interested parties per AS9100 – ISO 9001

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