For many years standardization bodies have ignored service organizations.  For the past 20 years or so, the primary focus has been on providing guidance to manufacturing companies.  For instance the language of ISO 9001:2008 Quality Management System Requirements uses the word “product” and includes such requirements on equipment calibration and design and development of products.  ISO 9001:2008, does have the statement, “the word product can also mean service”, in the standard.

It’s clear that service is not its primary focus in the standard.  Service organizations want and must also provide a high level of conformance to the quality requirements of their customers as well.  In the Houston Chapter of The American Society for Quality (ASQ), forty-one percent (41%) of its members are service organizations, compared to thirty-four percent (34%) manufacturing.

It seems there would be more of a focus on quality management for service organizations.  Well, The American Petroleum Institute (API) has developed API Specification Q2, Quality Management System for Service Supply Organizations for the Petroleum and Natural Gas Industries.  The American Petroleum Institute (API)  is the sole trade association that represents all aspects of the oil and natural gas industry within the United States for over 75 years.

While API’s primary focus is national, the organization is recognized globally.  Similar to the International Organization for Standardization (ISO), API develops standards that are specific to the oil and gas industry.  I will provide you with some highlights of the API Spec Q2.  Although API Spec Q2 is for the oil and gas industry, service organizations that are outside of this industry can also gain from the insight of the specification.

Purpose and Overview

One of the main purposes of API Spec Q2 is to assist in preventing another Deepwater Horizon Oil Spill (also referred to as the BP oil spill) from happening again.  We all know about the lives that were lost, the environmental damages caused, the economic impact and billions spent when the blow out sparked an oil spill on April 20, 2010, which continued until July 15, 2010.  The result, was the loss of life and the largest environmental disaster in United States’ history.

API Spec Q2 was published in December 2011, so as of this article its literally only been published for about five (5) months.  The specification although newly published is founded on many fundamental and popular risk (ISO 3100), quality (ISO 9001), health and safety (OHSAS 18001) and API Spec Q1 management system principles.  It does however specify a couple of new principles that definitely will add value for service organizations.

The specification was designed specifically for service organizations supplying services for the upstream petroleum and natural gas industries.  Several key principles that the specification focuses on are:

Unlike many other standards, such as ISO 9001, API Spec Q2 has more stipulations regarding claiming exclusions to certain requirements.

Exclusion Rules

Often organizations claim an exclusion to ISO 9001 clause 7.3 Design and Development.  I’m not sure why organizations are allowed to do this, but if an organization is involved with designing and developing (directly or indirectly) products that they sale to their customers they should have to maintain responsibility for these processes.  This may simply mean ensuring that the party performing design and development has the necessary controls in place.  There are many organizations that are ISO 9001 certified today that have claimed exclusions to clause 7.3 and are certified by some of the top and reputable certifying bodies in the world.  One of the big changes introduced by API Spec Q2 is not allowing exclusion for activities specifically addressed by the API Spec Q2 standard.  For example, if a company sales products, someone is controlling the design and development processes for the product.  Maybe the organization does not do it directly, but they surely are involved indirectly.  API Spec Q2 also mandates that any claimed exclusion does not affect the organization’s ability or responsibility to meet customer and applicable regulatory requirements.  In fact it limits the potential exclusions to equipment-related type requirements, such as calibration and maintenance of equipment  service organizations may use.  This type of language in a QMS standard goes a long way in closing a major loop hole in many quality management systems today.

Shall Requirements and Mandatory Procedures

API definitely provides a bit more guidance to service organizations, which is meant to assist them in better managing their risk and improving their business operations. For instance, ISO 9001:2008 has over 136 shall requirements, which means an organization must meet these requirements. In comparison API Spec Q2 has 186 shall requirements. In addition to more shall requirements, API Spec Q2 requires organizations to have more documented procedures. Mature companies will see these additions as adding more value, rather than more work. If your initial thought was, “great more procedures”, I would encourage you to look at it as adding more value. When you go to your favorite store and get two (2) for the price of one(1), would you tell the salesperson that they are causing you more work by giving you (2) for the same prices, when you really just want one (1)? Organizations should look at these additional requirements as more value to assist them in managing their business risks and improve their operations. ISO 9001:2008 requires the following six (6) mandatory procedures:

These (6) required documented procedures were a great start and are included in almost every standard, including API Spec Q2. API Spec Q2 provides organizations with another nineteen(19) value added procedures for the same price. These procedures include:

One of the most important things in any organization is good communication, this is especially true in service organizations. API Spec Q2 has several communication requirements that are sure to assist your service organization.

Organizational Communication

One of the most important topics that should communicated to employees is the company’s quality policy. The quality policy is the foundation of the quality management system, so it should be continually communicated in staff meetings, posted in public areas and integrated into day-to-day communications with the staff. Organizations should also communicate about the effectiveness of the QMS. Employees should be made aware of the effectiveness of the respective parts of the QMS they are involved with. Other things that are required to be communicated by API Spec Q2 are:

Effectively communicating these items, would have gone a long way in preventing the blow out that caused the loss of life and oil spill and would have provided for better management upon it occurring.

Conclusion

API Specification Q2, published in December 2011 will definitely change the game for service organizations and the creation of standards in the future. Although API Spec Q2 is designed for the oil and gas industry, all service organizations can benefit from it. There is no doubt that the next revision to ISO 9001 and other standards will involve some of the controls that are specified by API Spec Q2. I would really like to see ISO create a standard specific for the service industry. We simply can’t afford to have another disaster like we had with the BP Oil Spill and API has taken a good step in the right direction.