DUBIOUS VALUE: Certification is a guarantee of quality that increases business cost
CERTIFYING something as genuine is not new. It may have started during the gold rush when buyers requested experts to certify the authenticity of the metal.
Initially, the process of certification would involve the expert simply biting on the metal to declare whether the gold was genuine. Later came the more sophisticated chemical analysis method to certify the purity of the gold. There was also the practice of certifiying a letter or an examination certificate.
I still remember the days when we wanted to apply for a scholarship, our school certificate had to be certified by the village head or a senior government officer. It was all free then.
All such practices became necessary because people have the tendency to cheat. That tendency is still with us. Therefore, there comes a need for some process, legal or otherwise, to impose trust and minimise cheating.
What started as an instrument to ensure trust has developed into a major global business. With globalisation, the business of certification is a flourishing one.
It has, in a way, developed into an instrument of exerting control over business. How can you trust a parts supplier coming from a country thousands of miles away to deliver according to your agreed specifications without some means of assurance on quality?
In fact, how can you be assured that the products you have just purchased from that company arrive according to the agreed terms? And now with online businesses, the mechanism of assurance has become even more challenging.
In recent years, certification has even gone beyond products and services. Now, there is a growing business in certifying even the production and management systems of organisations.
Companies looking for suppliers of automotive parts, for example, would insist on the suppliers being certified to some quality management system, such as ISO 9000.
And with growing consumer preference for safe and environmentally-friendly products, such companies are enlisting new certified management systems. These include variations of ISO 14000 for the environment and ISO 18000 for health and safety.
As expected, some companies use certification as an instrument to compete in the marketplace. They have even developed their own, more stringent in-house standards, which are normally improvements over the minimum set by the ISO family of standards.
Japanese companies are especially active in devising such improved versions, as seen in the famous Toyota Production System and others, such as Six Sigma and Lean Management.
Now, with sustainable development very much on the global agenda, the business of certifying sustainability is on the rise.
Apparently, consumers in developed economies prefer products that demonstrate better sustainability performance. Years ago, the attention was on timber products.
The argument was that logging for timber was reaching worrying proportions in terms of deforestation and other environmental consequences. It was decided by certain groups, especially non-governmental organisations, purportedly in cohort with Western timber users, that timber production has to be certified as conforming to sustainability criteria.
The criteria are normally concocted by environmental groups. Those certified were also guaranteed higher prices for their certified timber.
Not all timber producers subscribed to the programme and they still continue to find ready buyers for their timber. Those certified have not benefited from premium prices either.
Now, exactly the same scheme is being promoted to the palm oil industry. Many predict palm oil will eventually face the same end result as timber. Disillusioned!
Lately, the certification business has begun encroaching into education. Many believe the recent spate of interest in university rankings is the beginning of a new certification scheme.
Certification brings with it a host of other businesses, such as consultants who provide advice to companies planning to be certified to whatever scheme.
Then there are trainers who train the company's staff on how to effectively implement the scheme. Auditors to regularly ensure the documented procedures and processors are closely followed. Otherwise the company may be judged non-complying.
There is no doubt that such requirements will add to the costs of business. In the case of the palm oil industry, small farmers may have difficulty complying with the criteria.
Certification is definitely a growing business. But at whose expense? And at what cost?
Dr. Ahmad Ibrahim New Straits Times NST Opinion Columnist 10/02/2014