Proceedings of the 26th World Multi-Conference on Systemics, Cybernetics and Informatics (WMSCI 2022)
The Improvement of Company Performance Based on Integrated Quality and Risk
Management Approach
Agnese KAUŠKALE and Gaļina ROBERTSONE
Riga Technical University, Faculty of Engineering Economics and Management
Kalnciema iela 6, Riga, LV-1048, Latvia
ABSTRACT
Nowadays, Quality and Risk management plays an important role
in ensuring the high quality of products following the established
laws, requirements, or customer needs. Maintaining quality
management in a company is essential both for maintaining
process efficiency and product quality and reducing costs. The aim
of this paper is to analyze how improving quality and risk
management affects the overall performance of the selected
company, also focusing on integration opportunities and
improvement. The analysis is performed in a manufacturing
company with more than 1,000 employees. Qualitative research
methods are applied in the paper. Based on the theoretical research
and analysis of the organization, the authors identify the main
problems and propose possible improvement solutions.
Keywords: Quality management, Risk management, Integrated
Management System
1. INTRODUCTION
Product quality is one of the most critical characteristics from the
point of view of the producer and the consumer in the various
industries. Improving product quality is essential in today's global
competition [1]. Today, quality is also considered the most
important competitive advantage in the world [2]. Implementing
quality management in a company has its benefits - continuous
improvement, improvements in customer satisfaction, increased
productivity, greater employee involvement and teamwork, which
enable the company to be more profitable among competitors and
gain more customer trust. In terms of customer satisfaction,
employee satisfaction and involvement must also be considered as
nothing would be done without them. Modern approaches to
quality management, its elements, concepts and guidelines can be
found in various quality management models like EFQM Model,
Management system standards, MBNQA, Total Quality
Management, and other models. Each company can choose the
model that suits them the best or draw on guidelines from several
models.
Integration can be considered if the company works according to
several management standards. Integration is not an obligation but
an opportunity to take advantage of the benefits of integration. The
integration of management systems is not a mandatory
requirement for an organization when it has two or more standards
management systems in place, but rather the ability to use
synchronization in resources and skills, as recommended by the
standards themselves [3].
Customer demands are growing daily, leading to fierce
competition and frequent product development and project growth.
This results in a more significant number of product variants and
periodic changes. Risk management is a key factor in increasing
ISBN: 978-1-950492-65-7
ISSN: 2771-0947
production to reduce uncertainty and disruption in the production
process. Risk identification and mitigation can help developing
effective and appropriate transition strategies [4].
The scientific goal of this research is to analyze the theoretical
aspects of the performance in the company, as well as to offer
solutions to improve quality and risk management using quality
improvement methods.
The paper is organized as following: in the Section 2 a literature
overview on the benefits of integrated management systems, with
a focus on quality and risk management and the reduction of
customers' complaints, was performed, followed by a qualitative
content analysis of the selected literature on the benefits of an
integrated management system. In Section 3 the authors perform
quality and risk management system assessment in the
manufacturing company, while in Section 4 they describe the main
results of the analysis. The conclusions are given in Section 5.
2. INTEGRATED MANAGEMENT SYSTEM
The integrated management system (IMS) covers all areas of the
company's operations and processes. It’s traditionally considered
to be a partially or fully integrated management system that
includes quality and environmental, occupational health, safety,
and other areas of the company [5].
An integrated management system allows the integration of
different management areas to better manage and control them
with the knowledge of those responsible. Various authors have
mentioned the benefits of the implementation of an integrated
management system (see Table 1). As the study examines the
integrated management system and seeks the benefits of its
implementation, a content analysis of the selected literature is a
suitable method for collecting and summarizing qualitative
information from various authors and analyzing scientific articles
to the desired extent. Content analysis shows that most often, in
selected publications, the benefits of implementing an integrated
system are reduced costs and resource usage, as well as improved
performance and increased productivity. So, integration allows for
optimizing the use of various company resources, managing them
better, and reducing duplication. Optimization of the company's
operations and processes increases performance and productivity,
so not only will the company's overall performance be improved,
but the contribution to profits will also be visible. The general
improvements in the organizational culture can undoubtedly be
highlighted, which means that the company's structural units are
more connected. There is an improvement in communication
between them and an overall improvement in motivation.
It can be concluded that these benefits are accompanied by
continuous improvement, as the company needs to monitor the
current situation in both the industry and the market in order to be
able to maintain the highest possible level of performance.
92 https://doi.org/10.54808/WMSCI2022.02.92
 Proceedings of the 26th World Multi-Conference on Systemics, Cybernetics and Informatics (WMSCI 2022)
Table 1. Benefits obtained in the content analysis [created by authors]
Benefit
Reduction of costs and usage of resources [12;14;16;17;18;19;20;21;22;23;25;26;27;28;29;30;34;37]
A common policy, strategy, and objectives
Improvements in organizational culture
Increasing competitiveness
Improving efficiency
Improved performance / increased [16;17;18;19;20;22;24;25;27;28;29;30;37;31;32;33;34;35]
productivity
Improvement of overall results
Better risk control
.
3. QUALITY AND RISK MANAGEMENT ANALYSIS
Quality throughout the company's day-to-day operations is fully
embedded in goals and values. For the company to operate
efficiently and produce the highest possible quality products, the
company applies and acts in accordance with the ISO 9001: 2015
as well as ISO 50001: 2018 and ISO 14001:2015 standards
requirements. ISO standards are designed to be applicable to all
sectors of the economy, organizations of all types and sizes, and
different geographical, cultural, and social contexts. Many ISO
standards have the same structure, terms, definitions, and
requirements. Management system standards are based on the
same type of management principles and institutional
arrangements [7]. The benefits of using the ISO 9000 family of
standards include creating, maintaining, and improving efficient
business processes, reducing losses, increasing productivity, better
marketing, and most importantly, increasing and maintaining
customer satisfaction. Certification is also often seen as a
prerequisite and an advantage over other companies. Certification
expands business opportunities, increasing market share and
overall competitiveness [11]. The company has developed and
maintains a Quality manual based on this standard. Top
management defines and approves the organization's quality
policy, which is in line with the organization's context and strategic
direction; it includes a commitment to comply with applicable
requirements and continuously improve the quality management
system. An essential part of quality management is the
involvement of all employees in the organization. For this purpose,
a regular exchange of information between the company's
managers, employees, work groups, and departments is ensured.
Internal audits are planned and carried out at regular intervals to
assess the adequacy of the quality management system. Internal
audit is essential in evaluating the company's overall performance
to determine the efficiency of operations and make all necessary
improvements to increase efficiency even more [6]. An audit
program is developed every year, its criteria and scope are defined
for each audit, and competent auditors are appointed. The audit
results are reported to the manager responsible for the department.
In cases of non-compliances identified during the audits, their
causes are identified, and the necessary corrective actions to
Key References Frequency
18
[12;20;22] 3
[14;15;16;17;18;20;21;27;28;32;35] 11
[15;20;26;27;28;31;32;33;35;36] 10
[16;17;27;28;29;30;37;33;36] 9
18
[16;19;26] 3
[20;22;28;35;36] 5
eliminate them are determined. The audits also cover various
documentation - the quality manual itself, the ISO 9015: 2015 and
ISO 50001: 2018 standard requirements, last year's internal audit
report, documents related to the management of products and
processes, process monitoring, and work instructions. Quality
management primarily ensures trust in the produced products,
services, and company.
When planning and implementing a quality management system,
the company considers the external and internal conditions binding
on the organization, the interests of stakeholders, and identified
risks.
Risk management is critical for decision-makers to minimize or
mitigate the effects of risks, assess the potential impact of risks on
company performance, to ensure actual measurement of risk
throughout the organization. Risks are identified and evaluated
both for processes and, where relevant, for products. Identifying
risks and how to deal with them is integrated into the processes and
included in the process descriptions. The process description sets
out how to deal with the identified risks to reduce the negative
impact of the risks, increase the benefits of the realized
opportunities, facilitate the achievement of the objectives of the
quality management system and promote improvements. The
extent of the planned actions in relation to the risks is proportional
to their potential impact on the process or product. The business
process specialist and business process coordinator are responsible
for the development of process risk assessment methodologies,
maintaining and monitoring the risk register, and coordinating risk
assessment. The process owner is responsible for:
1. Identification of risks to significant processes;
2. Risk assessment;
3. Development of risk reduction measures;
4. Control over the implementation of risk reduction measures,
informing the persons responsible for risk reduction measures
(including in other structural units);
5. Evaluating the effectiveness of the actions taken.
Risk assessment of significant environmental aspects is a
requirement of the international standard ISO 14001:2015. On this
basis, in cooperation with the environmental risk analyst, the
environmental specialist performs a risk assessment of all
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 Proceedings of the 26th World Multi-Conference on Systemics, Cybernetics and Informatics (WMSCI 2022)
identified significant aspects, determining the degree of
environmental risk.
Risk management is a set of technical, organizational, and legal
measures aimed at reducing the probability of the occurrence of an
adverse event and the magnitude of possible consequences [13].
The initial step in the risk management process is to identify the
risks to which the company is exposed in its operating
environment. These could be legal, environmental, market,
regulatory, and other risks. It is essential to identify as many of
these risks as possible. Being aware of the root cause of adverse
outcomes helps organizations anticipate and manage events that
might affect their reputation [8]. Once the risk has been identified,
it needs to be analyzed. The impact of risk needs to be identified,
considering its relationship with various organizational factors. To
determine the severity and significance of a risk, it is necessary to
understand the magnitude of the impact and the risk to the business
function as a whole. There are risks that, in case of occurrence,
could halt or considerably affect the organization's operations.
Still, there are also risks that could cause only minor
inconvenience, as the risk analysis shows. In the risk identification
phase, the risks affecting the company objectives should be
prioritized [9].
Investing time and effort in managing risks is a worthwhile
investment and makes good business sense. Ultimately effective
risk management could make a difference between the survival and
failure of the business [10].
In this company, the risk assessment in production is particularly
important for environmental protection due to the usage of
different chemical components.
4. MAIN RESULTS OF ANALYSIS
The main risk of quality loss is the non-compliance of the
production requirements with the customer's requirements.
Customer complaints are reviewed, and cause groups are
determined (see Figure 1).
Customer claims
Production
13%
Transport
25%
62%
Administrative
Figure 1. Distribution of received complaints into categories
[created by authors]
Many customer complaints are related to damage to the goods
during transportation; packaging quality is also mentioned in the
complaints. Administrative complaints mostly are related to the
finance department, and most of the causes are assignable to the
employee’s mistakes. Most complaints in production are
connected to a lack of product quality. For the root-cause analysis
of the customer complaints the authors created an Ishikawa
diagram. The causes were grouped into five categories - machines,
method, people, defects, and material. The largest number of
complaints is directly related to the defects due to lack of quality
(see Table 2).
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There are seven different defect types:
1. Printing errors - the main causes are equipment that is either
not adequately maintained or incorrectly set up. All equipment
maintenance schedules should be checked to see if they meet
all needs, and staff should be reminded how to set up the
equipment correctly and where to look how to do it right;
2. Waviness - indicates that the rollers are not working
synchronously, it also indicates a lack of maintenance or
incorrect use of compressive force. Equipment's maintenance
schedules must be checked and a visible material showing all
the compressive forces for the range must be created;
3. Broken mesh - it is concluded that the footage or circulation is
exceeded, mostly due to the employees' negligence. The
timeliness of the data sheet must be monitored;
4. Edge defects - firstly due to inaccurate setting of the machine
- depending on the competence of the employee or the
topicality of the data sheet, secondly, inadequate quality of the
scissors, which shows that the scissors wear and must be
monitored and replaced regularly in a controlled manner;
5. Skewness - it is necessary to monitor the wear of the
equipment, or to detect deviations, so the process must be
followed and updated accordingly;
6. Textile defects - raw material of an inadequate quality, which
means that there were non-compliances in quality control that
were not observed. Sometimes there is a shortage of staff and
inspectors have wider trajectories to check. Sometimes too few
quality checks are performed directly in the laboratories. The
sampling size is specified in the test plans, but when these are
updated, the relevant laboratory staff is not always informed
about it;
7. Unclean mesh - the overall maintenance of the equipment must
be controlled, or action plans must be established to prevent
defects.
In the category of machinery, it was concluded that a lot of
equipment had been around since the company was founded,
which means that it is worn out, and for some equipment it is
already difficult to find parts. The second main reason is related to
the maintenance schedules: they have been established, but they
should be revised more often to refer more to the equipment's wear
and tear. In the category of method, it was concluded that there are
two main groups - quality certificates and processes. Some
customers need certificates confirming the requirements set by the
customer. Certificates are written manually, which means that the
employee can make mistakes, enter incorrect data, or do not check
the timeliness of the sample certificate, resulting in an invalid
certificate being sent to the customer. Processes often do not
correspond to the current situation, which means that the
department head should communicate with his employees and then
make the necessary changes to the process descriptions with
business process specialists so that they are appropriate and that
employees, especially new employees, can perform their duties. In
the category of people, two main reasons are detected: there are
times when there is a shortage of staff, which can lead to fewer
quality checks and lead to defects, and lack of training when the
established training period is set too short. Of course, there may be
a shortage of qualified personnel in the labor market; however, the
actions shall be planned and performed to provide all the necessary
staff. When the training period is too short, the deadlines are also
extended, but not always, so the line manager should keep a close
eye on whether the new employee has received sufficient training.
The last category is materials. The causes are related to the
inadequate quality of incoming raw material that comes to the
production. It means that the incoming material quality controls
are insufficient. The second reason is that packaging materials are
not of the best quality. Engineers should determine the criteria
 Proceedings of the 26th World Multi-Conference on Systemics, Cybernetics and Informatics (WMSCI 2022)
Figure 2. Ishikawa diagram causes of external complaints for defects [created by authors]
required for quality packaging materials so that the product would
not be damaged when delivered to the customer.
In general, it can be concluded that it is very important that all
equipment is in the best possible technical condition, that repairs
are carried out on time, and that maintenance is carried out in the
same way. The company should review the technical condition of
all equipment and carry out targeted refurbishment or replacement
of equipment. The second most common cause is competence and
shortage of staff.
Depending on the production department, the company must
communicate directly with the line managers so that all relevant
information is provided promptly and employees are reminded of
the importance of quality in the production of products. Managers
need to create informative visual material, Standard Operating
Procedures, as an example to prevent the presence of a human
factor causing the appearance of defects and noncompliances and
to ensure that all equipment, depending on the range on the
production line, is set up accurately. Train staff in quality control
so that all inspections are carried out in a timely manner, and in the
event of a defect being detected as soon as possible. It is also
recommended to consider and finance the purchase of new
packaging materials of a higher quality.
Because quality and risk management are closely linked,
integration into common areas will help employees manage their
work more efficiently. The company could start by developing a
common integrated policy that can give an idea of the factors for
all areas of the standards, how much each area affects the
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company's overall performance, and focus on why it is important
to be aware of and meet all the necessary requirements. The
establishment of a integrated risk register, setting out all the
required criteria to ensure a better understanding of the risks to
employees, both with regard to process or product risks and risks
with hazardous chemicals or environmental risks, as well as other
risks identified in the company, would improve company’s
performance.
5. CONCLUSIONS
The main objective of quality and risk management is to ensure the
company's success by improving its performance. The
involvement of senior management is required to provide all the
necessary resources. The integrated approach to identifying and
meeting customer requirements, dealing with complaints and
noncompliances, will significantly improve the quality of products
and increase customer satisfaction. The identification and
prevention of risks also has a significant positive impact on
protecting workers and environment.
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