Unit III Leadership and Quality Costs

Sub: TOTAL QUALITY MANAGEMENT
UNIT - 3
(06ME758) VII SEM BE (MECH)
LEADERSHIP AND QUALITY COSTS:
UNIT - 3
Characteristics of quality leader, Quality statement, strategic planning, Introduction to quality costs, prevention costs, Appraisal costs, failure cost, Management of quality costs, economics total of quality costs and its reduction. NOTES By: S.B. MALLUR, Mechanical Engineering Dept, STJ Institute of Technology, Ranebennur- 581 115 E-Mail-sbmallur@rediffmail.com, sbmallur@gmail.com "A leader is a dealer in hope." - Napoleon Bonaparte It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership. - Nelson Mandela 1.0 INTRODUCTION
LEADERSHIP
Characteristics of quality leader
The process of influencing others towards the accomplishment of goals. He triggers tile will to do, shows the direction and guide the group members towards the accomplishment of goals. Concept of Leadership is very important in organizations because leaders are the ones who make things happen. Without leaders, an organization would find it difficult to get things done. Leaders mostly help others to learn just as a coach would help players play instead of playing himself. This lecture introduces students to the concept of leadership and leadership effectiveness by providing working definitions and by emphasizing the cultural limitations of the concepts. It presents several cultural models that are used throughout the text to explain cross-cultural difference in leadership. There is no universally agreeable definition of leadership. Just go and type leadership on Google and you can find more than 186,000,000 different pages of reference on web. It involves influencing attitudes, behaviors, beliefs and feelings of people and believes to be an important topic. Peter Drucker the guru of Management defines Leadership as The only definition of a leader is someone who has followers." While John C Maxwell defines "leadership is influence - nothing more, nothing less." According to John W. Gardner Leadership is the process of persuasion and example by which an individual (or leadership team) induces a group to take action that is in accord with the leaders purpose, or the shared purposes of all. Remember Leadership is a process and not a position. This important process has three important components/ingredients. 1) Leader, 2) Followers and 3) Situation. These three components play very important role on the process of leadership. Leaders are those persons who are able to influence others and who possess managerial authority.
Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 1
Leadership, then, is the ability to influence a group toward the achievement of goals. Trust is the foundation of leadership. Leaders develop an environment of trust where the organizational memberstend to establish a follower-ship with the leader. Who is a leader? A leader is defined as any person who influences individuals and groups/teams within an organization, helps them in the establishment of goals, and guides them toward achievement of those goals, thereby allowing them to be effective. Characteristics of Successful Leaders Effective and successful leaders have certain characteristics. They are good communicators, they motivate others (team members), they are good team builders, solve problems of others and of organizations, they are good listeners and resolve conflicts, anticipate change and mange it within team and organizations, they encourage risk taking by their team members and also to promote the creativities. If you study the life of successful leaders, you can find them a challenger of the process, they inspire a shared vision, enable others to act, they model the way by showing the path, encourage the followers, act as change agent and take followers to the destination. Similarly, we also discussed leaders of corporate sector who created impression in this world. 1. Bill Gates, co-founder of Microsoft 2. Sam Walton, former CEO of Wal-Mart 3. Jack Welch, former CEO of General Electric 4. Lee Iacocca, former CEO of Chrysler 5. Steve Jobs, CEO of Apple 6. Walter E. Disney Walt Disney 7. Henry Ford Ford Motor 8. William C. Procter Procter & Gamble 9. Asa G. Candler Coca-Cola 10. Michael Dell, founder of Dell Computer 11. Andy Grove, former CEO of Intel 12. Ted Turner, founder of CNN 13. Jeff Bezos, founder of Amazon.com 14. Phil Knight, CEO of Nike 15. Lou Gerstner, former CEO of IBM 16. Robert W. Johnson Jr. Johnson & Johnson
Think of someone in your life whom you would consider as Leader. What are the qualities of character that this person has? I try to enlist few important characters that person leader may have. Honest, trustworthy Good role model Caring Committed Good listener Treats people with respect Positive, enthusiastic Planner Decision Maker Consistent Open Accountable Transparent Responsible Connected to the Community Knowledge Wisdom Social Skills Sensitive Risk taker
Are we born with these qualities or are they learned behaviors? To some degree we have all of them -some more so than others. We must choose and work to strengthen these qualities in ourselves if weare to be effective leaders. Do we really need leaders? Consider how life would be different without leadership in e.g. Families, Education, Businesses, Service Associations, Teams, Countries and World. Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 2
Why Study Leadership? Understanding leadership helps organizations: To select the right people for leadership positions To train people in leadership positions to improve to improve their performance Who benefits? Leaders, followers, organizations and society as a whole. We will continue discussing the concepts of leadership. If you check dictionary for definition of Lead, Leader and Leadership you will find the following answers. Dictionary Definitions:Lead: To guide, steer, pilot, point, or show the way To cause someone to do something Leader: One who leads Person in control Leadership: The quality notable in leaders Set of characteristics that make a good leader Leaders are Effective When? Leaders effectiveness depends on the achievements of group/team goals, when internal processes are smooth and group/team is working as a cohesive team. Effectiveness can also be seen when team/group adapt to external forces. An organization achieves its goals when the leaders of an organization will be more effective. A leader is effective when team/group is effective and vice versa. Leader and followers are both important and depend on each other for effectiveness. Can a leader fail? Yes, some time we see leaders who are not effective or not-good do fail in achieving their goals. Leadership is not automatic it must be earned through trust, confidence, competence, consistency, integrity, and vision. Leadership Managerial Roles In this competitive environment the style of management has also changed. Now the organizations are working in more competitive environment, more flat structures, depends on more functional teams lead by a leader. Managerial Roles Leaders are managers too but not necessary that all managers are leaders. Leaders need to play managerial role too. Management roles refer to specific categories of managerial behavior.
Leadership and management are closely related but with distinguishable functions. As discussed earlier, leaders are managers but not necessary that all managers are leaders. There are distinct differences among them if we compare a leader from a manager. Leaders Vs Managers Leaders Managers Innovate Administer Develop Maintain Inspire Control Take the long-term view Have a short-term view Ask what and why Ask how and when Originate Imitate Challenge the status quo. Accept the status quo Do things right. Do the right things. MANAGERS VS LEADERS Continuing from previous lecture, we will continue focus on the important difference between mangers and Leaders. As said earlier, leaders are manger too but not necessary that all managers may be leaders. Difference between Leaders and Managers: Arguments about the difference between leadership and management are presented. Leaders are considered to be visionary and future-oriented, whereas managers focus on day-to-day routine activities. The section concludes that effective managers often perform many of the duties and activities ascribed to leaders thereby making the distinction between the two concepts somewhat unnecessary.
Leaders
Vision oriented: the leaders are vision oriented and think about future.
Managers
Process oriented: managers always think about process that how the organization works in efficient manner Protects staff: leaders always protect their staff Protects self: Managers always protect himself. and motivate them towards achievement of organizational goals. Approaches decisions actively: the leaders are Approaches decisions cautiously: Managers decision makers and do not hesitate to take always depends on his superiors and others to decisions in any respect. take decisions. Staff oriented: leaders are staff oriented. Career oriented: managers always think about his career that how he/she moves up or develop his/her career. Listens actively: leaders always involve his staff in Listens selectively: managers always listen and decision making and listen every body and get the involve selective staff/employees during decision suggestions from employees seriously. making. Deals with conflict: leader always deal with Avoids conflict: Managers always avoids being conflict as they are critical analyst in the positive involved in conflicts. way. Trusted: leaders always trust on his Unclear regarding trust: he is unclear regarding employees/staff and vice versa. trust. These obvious differences between leaders and managers also affect the processes in the organizations Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 4
Difference between leadership and management: Leadership Set overall & future direction: they set the overall organization direction and givethe vision. Focuses on results: A leader always focuses on output. Management
Set day-day direction: Mangers sets day by day direction to organization as per circumstances. Focuses on processes: Managers always focuses on processes that how to gets the maximum output by utilization of minimum resources through reducing in processes of the organization. Mostly external: leaders mostly keep the close Mostly internal: Managers always keep the close eyes on external environment. eyes on internal environment. Concern=effectiveness: his concern on Concern=efficiency: his concern on efficiency effectiveness Stakeholder focused: Leaders focused on stake Personnel focused: Here the focus is personal and holders interest and strive for the satisfactions of not on the stakeholders. stakeholders. Customer needs/capacities: thinks about Worker needs/capacities: thinks about customers demand organization capacity for customers demand Embodies mission/vision: sets the mission and Embodies goals/objectives: sets the goals and vision objectives to achieve the mission. Gets more resources: gets more recourse to Manages resources: a manager always manages accomplish the mission. They always try to look the resources. for other opportunities. Secures technologies: they protect the Applies technologies: managers always apply technologies. Always keep their eyes open and try technologies available to them and will not strive to secure new technologies essential to create for change. competitive advantages. Seeks to create needed change: they always seek Seek stability/Manage change: management will to create the needed change and believe on try to manage the change and prefer to maintain Change as the environment change. the stability in the organization. Create teams esp. top teams: Leadership is Manage teamwork: Management focus is to get always focused on creating a team especially top things done from people/team and they will try performing team. Leader role is act as a coach and for this. convert individual working into teams. So, after the detail discussion on difference between leadership and management, we can conclude that in Management we have an authority relationship while leadership is a multidirectional influence relationship. Jack Welch (Former CEO of GE) says; dangerous to call someone a manager because.. A manager Controls rather than facilitates, Complicates rather than simplifies, Acts more like a governor than an accelerator. Leadership & Team management:
Today's effective leaders must have the capability and confidence to build and develop focused and motivated teams that deliver outstanding operational performance in line with the strategic goals of the organization. This course highlights the processes and techniques leaders have at their disposal to develop their effectiveness and maintain top team performance. Leadership and Team Management are two commonly used words in todays organizations. The course derives its roots from the basics of organizational management. In order to build a strong footing for learning of the concepts of leadership and team management, we need to understand the concepts of organization. What Leaders Can Influence? Leaders influence others behavior, attitude and actions. They influence mostly the work related attitudes and behaviors of followers. The Importance of a great leader is the development and growth of Followers. Same way Importance of a great follower is the growth of leaders. The Situation The element of the situation may be the most ambiguous aspect of the leadership framework because it can refer to anything from the specific task a group is engaged in all the way to broad situation Contexts: - Task; Environment; Stress;
2.0 A BRIEF HISTORY OF LEADERSHIP

Before the 20th century leadership was the exclusive domain of royals or military people. Following were the focus of leadership during different time frames. 1901-1914: Prosperity, Key role of government, Leadership emphasis on public officials. 1914-1945: Two world wars and great depression; Greater emphasis on coordination, consistency, strength and stability; Use of statutory authorities; New talent; Promotion by efficiency; Relationship with politicians is servant-oriented; Organizational context dominates follower relationships. 1945-1970s: More statutory authorities and greater international focus and role; Indigenous and environment policy; Equal opportunity; Concerted emphasis on training; Educated work force; Rotation and exchange began; Shift in gender in the Service. 1975-2000: Economic transition to cope with economic globalization; reform; Multiculturalism/Globalization. Privatization, efficiency and microeconomic
The Purpose of Leadership in the 21st Century is more economic empowerment and empowerments of followers. More freedoms to make decision and focus on creativity. Globalization, merging of businesses for sharing of resources, responsive to change and stake holders etc are the purposes of todays leadership.
3.0 CHARACTERISTICS OF QUALITY LEADER

A leader is one who leads, and by this definition, the personality traits and overall character of a leader play a very important role in his ability to lead. This article throws light on some essential personality and character traits of a leader. Good leaders are required in all fields. They lead, motivate and inspire others. Superior leadership is essential in todays high-pressure competitive world. Shakespeare once said "Some men are born great, some achieve greatness and some have greatness thrust upon them." This is applicable to leaders as well. Some are born leaders (well, that's debatable), some achieve leadership positions by their hard work and some have leadership positions thrust upon them. Whatever the case may be, there are some distinctive qualities of a good or great leader. Some are related to the personality traits, some to the character traits and some to the strategies employed by a leader. Leaders are required in every walk of life and almost every organization, institution, initiative, drive and group requires effective leadership to lead them. Good qualities of a leader is something that every person will give a different answer to, but the basic underlying fact that all of them will recognize is that a leader has to motivate others to do the right thing. By definition, a leader has the task of leading his followers to meet the requirements of certain objectives and goals. Any person who combines the authority and the responsibility that he has been entrusted with, in order to motivate people to work towards common goals, can be called a leader. The best qualities of a leader therefore are motivation and vision. He must motivate people so that they do not deter from the path of achievement. Leaders are not made, it is said, and they are born. This is true because not everyone can lead. Some people are docile and dormant by nature, and constantly require some person to overlook their activities and remind them about the ultimate goal, so they are not cut out for leadership. The best leaders are those who are born with the good qualities of a leader naturally. Competitiveness, well disciplined, honesty, etc are some leadership qualities which make the person stand out in the crowd. Just being a good visionary is a thing of yesteryear! Today effective leadership includes lot more than just being a good visionary or a good orator. Personality traits of a leader basically refer to his unique behavioral, temperamental and mental attributes. In short, his general disposition and the way he thinks, acts and feels. Like if he is a pessimist, optimist, idealist or realist, whether he is self-directed or needs encouragement, confident or lacks it, whether he likes to work alone or with people, whether he is short tempered or patient, whether impulsive or thoughtful, whether he takes decisions fast or dawdles, whether open to new ideas and people or psychologically closed, etc. all the little things that make up a person. Strategy refers to the plan of action of a leader... the road map that he takes to get where he wants to. While personality traits and strategy are important elements that make/mar a leader, Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 7
it is the character traits of a leader that determine how influential a leader he is or can become. Read more on leadership qualities. Leadership is nothing but the quality which makes a person stands out different from other ordinary employees. It is associated with such a person who has aggressiveness in speech and action, love for the employees, and who can handle pressure under different circumstances and a person who is always ready to fight for the rights of employee. A leader is useless without followers. It is the followers who make a person as a leader and if required overthrow him. Leaders play a critical role during change implementation, the period from the announcement of change through the installation of the change. During this middle period the organization is the most unstable, characterized by confusion, fear, loss of direction, reduced productivity, and lack of clarity about direction and mandate. It can be a period of emotionalism, with employees grieving for what is lost, and initially unable to look to the future. Following are the most important traits OR quality charaeristics to look for in a manager for success of business: 1. Vision: A leader is a visionary, as he can foresee the results and consequences of his current actions and always aims high. Most leaders are known to have never resorted to shortcuts in life. They always have a blueprint of their future plans ready in their mind, and it is very difficult to deviate them. They indulge in long term planning and wait patiently for positive results. A leader has to have some ideas about his/her organization, about how the future could be different. A leader requires strong sense of purpose and should be clear in concept of collective Vision (Organization) and recognizes what must be done and how to makes strategies for the accomplishment of their vision. Clear concepts about vision can make a leader more focused and effective. Vision about what is happening, what needs to be done and what is coming in future. Visionary: When asked the question, "What sets a leader apart from the rest?" my claim is that the most important trait of a leader is having a vision that can take a team and society further. A leader is a visionary who clearly knows what he wants and how the goal can be achieved. There may be a team of efficient members, but without an envisioned leader, all efforts of the team would go to waste. More on leadership traits. 2. Ability: Leaders must know about his or her Job and keep knowledge updated and have ability to understand information, formulate strategies, and make the decisions. If leader fails to do all these, employees do not respect him/her, and ultimately leader loses faith and trust. That will be failure of a leader. Followers always look toward leaders when making decision, when they are in problem, or stuck or when things are not working. They will look toward leaders. Even for technical issues, they will look toward leaders for solution. So a leader must have the ability to handle all such issues. 3. Enthusiasm: This is also an important trait of leaders. Leaders always create excitements, which causes others to become interested and willing to accept the challenges. Leaders always generate enthusiasm in followers so that this excitement can trigger the goal oriented actions and ultimately followers get motivated and involved in the achievement of the organizational goals. 4. Stability: Stability is another important quality of leaders. Leaders need to be emotionally stable in handling challenges, in decision making and during the time of pressures. During the process of leadership plus and minuses do come and leaders need to face them with courage and unless they Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 8
have stability in their personality, this will become very difficult. Leaders should possess objectivity, should not bring personal problems to work and be emotionally stable. 5. Concern for Others: Leaders must be concerned always for their followers, with their welfares and dont treat them as machines. It is always the responsibility of the leaders to think about the welfare of the employees. A leader must have a humble and caring attitude towards employee/followers. So that if he/she always puts the interest of others first, the loyalty will be built, and ultimately the employees will work with more devotion and commitment. 6. Self-Confidence: Self confidence is very important quality one should have. For leaders this will become even more important. All we discussed different leaders qualities above, these are all linked with the self concept. With self confidence, leaders can manage and handle even difficult situations. That is the trait/quality which is appreciated by all concerns. Successful leaders stay calm and confident and show confidence in their actions. Confidence in Yourself and the Ones Whom You Work With: 'Team work' and 'leadership' cannot go without each other. So, a leader shouldn't only be confident on himself but also show the same amount of confidence when it comes to the people he works with. This is what team leadership is all about. This will give an idea to the team members that the leader believes in them and wants them to be successful. Also this will boost their individual confidence which will definitely improve the team performance. Confidence and Decision Making Abilities: Just as having a vision is important, so is the confidence to act on it. Confidence in ones vision and ability to fulfill it is an important characteristic of a good leader. Unless an individual has confidence in his own abilities, how can he take decisions and lead a group? More on decision making.Confidence and belief are essential for effective leadership. The nature of the human mind is to doubt and expect the worst. Unless a leader can maintain a clear vision of where he wishes to go, others will not follow. If a leader has an iron will and tremendous self belief, he can can inspire others very powerfully to pursue the ideal. 7. Persistence: Determination of a leader is also very important for business success. So, a leader should have the devotion and commitment for business and continuously motivate the employees for achieving the organizational goals. The outgoing approach and persistence approach is always paying and pushing the followers for the accomplishment of goals. 8. Vitality: Leaders need strength/energy and stamina. Effective leaders are electric, vigorous, active, and full of life, regardless of age or disability. These qualities energize followers too. To achieve goals, leaders need stamina, energy, health, and vigor. Same is true for followers. 9. Charisma: A Personality Trait. A quality that generates others interest and creates followers. To influence others, charisma plays very important role. 10. Integrity: The most important quality of leader is honesty, strength of character, and courage. Leaders need to have strong integrity. So leader must have loyal, honest with his/her work and also with his/her team too. It will also lead to trust and respect. Honesty, strength of character, and courage will always lead to trust building, creating loyalty. Integrity and Trustworthiness. You want to hire a manager who is going to be someone that you think that you can trust. Of course, it's hard to tell this off the bat at an interview but asking the right questions can give you a general sense of the individual's basic integrity. By hiring someone that you believe is trustworthy, you will reduce the stress of placing the growth of your business in the hands of someone else. Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 9
11. Self-Motivation. The person that you hire for the job has to be capable of doing the job without needing you to look over her shoulder all of the time. This individual needs to be capable of understanding the basic goals of the business and developing her own strategies for achieving those goals. She needs to be committed to putting her all into the job every day without the close supervision of a boss. 12. Great Customer Service Skills. No matter what type of business you are in, you can benefit from having a manager who is excellent in dealing with customers and clients. Ultimately this may not be a large percentage of the manager's job since the daily tasks of customer service will fall to other employees. However, when problems arise with customers, the manager is the one who has the potential to diffuse the situation or to exacerbate it. You want to hire a manager who is going to be capable of making even the most difficult customers happy so that you can retain customers and the business can grow. 13. Being a Team Player. The manager has to be someone who is committed to working with a team of people for the improvement of the whole business. This means that the manager isn't in the business solely for the selfish reasons of "getting ahead". Instead, he is interested in growing the business because it is going to be to his benefit as well as to the benefit of the other people working with him in the company. A manager is a middle-man who has to work with both the upper-level bosses and the lower-level employees so it's highly important that this person is really a team player. 14. Good communication skills: Communication is the key to be a great leader. It is observed that most of the world leaders had good oratory skills. They used to talk and communicate with passion and commitment. They always made their points clear, and gave the right message at the right time. In today's world too, strategic leadership with good communication and propaganda methods is necessary to spread one's thoughts across the target groups. What he can do is communicate with others in the organization about what IT can do to move the company forward. In other words, good communication is the key for developing good business relationships. If he cant establish a good business working relationship, he is not going to be that leader, that team player. He will not be able to communicate how IT can add long-term value to the company. The modern leaders must therefore be equipped with good communication skill and use new ways to do effective communication. A leader may know what to do, but he must also be able to communicate his plan of action to his team members. For this, good communication skills are important. Besides being able to give a clear picture of what is wanted of his team members, a leader with good communication skills can also motivate people around him effectively, and this is an important requirement of effective leadership. 15. Honesty. The most valuable asset of a leader is honesty. He must be honest with both his employees and the management committee. Another part of his features is integrity. Once a leader compromises his or her integrity, it is lost. That is perhaps the reason integrity is considered the most admirable trait. The leaders therefore must keep it "above all else." 16. Visionary outlook. Leadership qualities are different for different position. For a CIO he must be thinking for stabilizing the current business and always looking for future scope of expansion. He has to be able to look beyond where we are today, know where the business is going, and be able to use that vision to move the company forward. Being able to do this is a rare skill indeed.
17. Ability to motivate people around. A good leader must always keep motivating his team mates for good work and should maintain healthy environment. He must give first priority to safety of workers and see that they are not exploited by superiors. 18. Consistency. Leadership effectiveness is impossible without consistency. Every leader has an approach that is unique to them. Don't change your personal style radically after all; it got you in a leadership position. Modify the rough spots but take care not to confound your staff by displaying inconsistency. Your expectations, though subject to modification based on ever-changing business needs, should remain as constant as possible. The business world is confusing enough without you adding unwelcome surprises into the mix. Keep things simple and consistent. 19. Ability to stand against critics. As the success rate increases your critics multiply and become louder. Come to peace with the fact that you will always have a camp of people who critique every decision you make. They are generally the ones who are excellent problem-identifiers rather than problem-solvers. Develop your skills of repelling such critics so that they do not diminish your confidence or enthusiasm. 20. Competency. A person thriving to become a good leader should be competent enough to take on any odds. Decision making matters, and decisions should be purely based on rational thinking instead of emotions. Giving up is a sign of weak leadership, which doesn't just affect the individual but also tends to hamper the morale of the team. 21. Honesty: One of the most important qualities in the leadership qualities list is honesty. The person has to be honest to himself, his team as well as his goals. Deceit will only call for ire from the team, and this will in turn affect the output of the team. A person can learn and improve only when he accepts his shortcomings. A leader is well aware of his own strengths and limitations, and he constantly tries to improve and polish his skills. He is honest to himself and to his followers as well. This honesty builds up the confidence and openness, and makes him trust worthy. 22. Intelligence. Intelligence is bound to reflect on the performance of the individual as well as the team he is leading. Being well updated about the ongoing trends can turn out to be an added advantage, especially when it comes to opportunities of climbing the hierarchy ladder. 23. Discipline. Laid back attitude is meant for losers, not leaders. Discipline in both professional as well as personal life is one of the best leadership qualities a person can inculcate within himself. It is also one of the simplest measures to achieve success in various walks of life. A leader has a team of individuals to lead and he might have more than one area to look into. In such a scenario, it becomes very important for a leader to be disciplined. He needs to be having a clear picture of what he wants to do and needs to have an organized approach. 24. Courageous. A successful person is the one who takes a calculated risk where others back off. The leader should be courageous enough to identify opportunities and strike gold whenever possible. At the same time, he has to raise the bar and always thrive for better. 25. Goal Oriented. A good leader needs to be a good visionary. He should be able to set long term goals and more importantly implement all the measures required to achieve these goals. In leadership, achievements do matter, and the bigger they are the better.
26. Inspiring. A good leader motivates his followers and team to achieve the next best thing. He should be inspiring, in fact a person worth idolizing for his team. His words as well as his actions have to motivate the people around him. Read more on leadership roles. 27. Broad Minded. Being broad minded can help the leader to keep calm even in rough times. He should be open for ideas and suggestions, even if they come from his juniors. Unnecessary hassles and ego problems should be strictly avoided. 28. Consistent. Consistency is yet another important leadership trait which makes the person stand out in the crowd. Once in a while profits don't matter to an organization as much as long term gains do. Consistency for a significant period can ensure these long term gains. Read more on what makes a good leader. 29. Passion and Dedication: It is amongst the most important leadership characteristics. A leader is always passionate about his goal or aim in life. A leader is always ready to sacrifice on certain things to achieve his goal. He always stands by for what he believes in and has the ability to steer public opinion. A leader sternly follows his ethics and principles in all odd situations and never gives up. Consistency and perfection are two main leadership traits. A good leader is always dedicated to his team as well as his work. He demarcates a proper difference between his professional and personal life. The aim should always be to perform better than the last time, whilst staying focused on the very goal. 30. Humor. Although not one of the popular leadership characteristics, humor is perhaps by far the best way to relive stress as well as to counter hostility. A good leader should know how to use humor to boost the morale of his team and solve conflicts within the team. Read more on character traits of a good leader. You may not have seen the photograph of any world leader with angry face. A leader must have presentable and approachable personality. Accommodating and relaxed body language makes a person look more dependable and reliable. Good leader must have sporting spirit, humility and good sense of humor. These leadership characteristics help you deal with your critics and opponents effectively. 31. Balanced Persona: Extremes of anything is bad. A leader is someone that everyone looks upon as their guide. Getting way too aggressive or being too laid-back is both harmful for the team as well as the effective leadership qualities of a leader. One must possess qualities like tolerance, patience, calmness and maintain a balance between friendliness and professionalism. Therefore, it is very important for a leader to have a balanced personality. 32. Team Oriented: A good leader is like the head of the family whose job is to not only look after himself but the entire family as one. One among the many characteristics of a good leader, is the ability to work in a team and lead the team by coordinating all the efforts of the team members in one direction which fulfills the organizational goals. A good leader always mentions 'we' instead of mentioning 'I'. This creates a sense of belonging towards the leader, towards the team, towards the organization. 33. Just and Impartial: A person can never be considered as an effective leader if he/she is biased towards a certain belief or a person. It is very important for a leader to be just and fair minded. Only then can he build the trust and the respect within the minds of the people who follow him.
34. Good Listener: Good listening skills will not only earn you respect but will also be the door of trust and belief in you. This leadership quality enables you to win hearts. Imagine how you would feel as a team member, if your leader has no time to listen to your ideas or problems. Instead of listening to you he/she is more busy in criticizing you for wasting the time. Listening to your subordinates is NEVER a waste of time. In fact, if you, as a leader is able to generate the comfort level and the belief of always being there with them when they need you, you might just be surprised of the results and growth. 35. Be a Role Model and Not the Boss: A leader is someone who leads others. How can one lead others if he himself as not walked the path himself. What I am trying to say is that a leader has to meet the standards and be an example to others who follow him. The traits of a good leader includes to always guide and help the followers as one of them and not be bossy and commanding. Try to be a part of the team rather than just giving orders and targets. 36. Focus: Focus is very important when it comes to achieving your goals. An unfocused leader would never be able to lead the team towards their goals, be it the goal of the organization or the goals of the individual team members. A leader is like the captain of the ship, if the captain is not focused and clear in where he needs to go, the whole ship will end up being lost! 37. Taking Responsibility and Ownership: A person who is scared to take responsibility and ownership for not only his work but also for his team members can never prove to be a successful leader. So one of the most important traits of a good leader is the ability to take responsibility for him and those who work with him. 38. Approachable: If you are approachable, it becomes easy for the team members to come to you and discuss their issues, if they have any, and if they do, things can be sorted out at the very beginning and not when things go out of proportion, which happens in case the leader is not approachable and not easy to talk with. 39. Believes in Follow Up: Most of the leaders, due to their busy schedule, skip this portion of their job. What they forget is that if there is effective follow up, there will be effective results. Projects that are commenced without a proper follow up always has mistakes and lacks perfections, and hence the achievement of targets and goals are delayed. It's important to walk the talk. 40. Quick Thinking: This attribute becomes all the more important in the context of business. In today's world of stiff economic competition, markets change unpredictably and so do opportunities and challenges. A leader who is able to think quickly is in a position to make the most of the given situation and this is an important trait for effective business leadership. 41. Knowledge: Quick thinking is important but without the right knowledge of the area, many times decisions that are taken promptly may be wrong. It is true that we learn from our mistakes, failures and disappointments. But knowledge of the area of one's work and being aware of all the developments taking place in it, is one of the important qualities of a leader. 42. Risk Taking: The ability to take risks is another good characteristic of a leader. Every opportunity comes with some amount of risk and a good leader is one who has the courage to take risks. Had man not dared to sail out when it was believed that the Earth is flat, just think, how different the world would have been today!
43. Humility: A leader has qualities that raise him above the rest and every individual is aware of this. But apart from these qualities, it is humility that makes a good leader more approachable. This facilitates better communication between a leader and a team which enables a leader to know of the problems that his team is facing. It also, places a leader in a position where his team member people provide him suggestions which may be valuable. 44. Democratic: Some amount of control is required. However, leading one's group in an autocratic style is the characteristic of a bad leader. Where there is democracy, there is innovation, as people are free to think and come up with new ideas. This surely increases the probability of success for a team. 45. Good Character: People look up to a leader for motivation and the best way, that a leader can motivate his people, is by setting an example through his character. It is one of the most important qualities of a good leader that he himself follows the rules that he had set for others. In fact, one of the most important qualities of a leader is that he leads by example. 46. Effective Human Resource Management: As someone rightly said, good leaders don't just lead, they bring out the best in everybody else too. A good leader knows how to handle and use his human resource rightly. He must know who is good at what and which task should be allotted to whom. Recognizing the capacities and talents among other people and having complete understanding about masses are some of the important leadership qualities. 47. Creativity: It is said that leaders never do different things, they do things differently. It is important for a leader to be very innovative, creative, and think of new leadership strategies. Initially, the new thoughts may not be readily accepted by people, but slowly a leader convinces people that what he believes is just, and is of larger public interests. A leader knows that the society is always hungry for change and new thoughts. 48. Energy and Zeal: Lots of it! A leader should be optimistic and not get weighed down by obstacles. At the same time, he should be a realist. In fact, he should be the one to find ways and means to get around obstacles but at the same time he should be open to ideas. He should be fast thinking, optimistic and good at analyzing things. This includes an abundance of courage, confidence and positive thinking. The best example of such a leader is JRD Tata, who built an empire with his vast reservoir of energy and enthusiasm, and not only generated employment for millions, but facilitated the emergence of many new leaders within his empire. 49. Ability to Innovate: Of all the character traits of a leader, this particular one sees the followers through tough times. A good leader is a winner, not a quitter. He has resilience, imagination and clear vision. He is above petty things and puts all his energy into the larger picture, the nobler cause. He embraces change and teaches people not to fear change but learn from it. In fact, openness to learning is one of the main characteristics of a good leader. 50. Be a Role Model: A leader is one that people look up to, for answers, guidance and inspiration. Thus a leader has to watch himself constantly, keep a cool head, practice what he preaches and lead by example. 51. Sacrifice. Only one man in a thousand is a leader of men the other 999 follow women. Groucho Marx To be a real leader, at times, we need to sacrifice our personal comforts and desires. A leader needs to be able and willing to put the interests of his people first. If we are primarily concerned with our own affairs, it is not possible to be a true and powerful leader. Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 14
52. Inspire not Command. A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves. Lao Tsu. The best leader will inspire his followers. He will lead, yet people will not feel that they are being led. If you direct people through issuing proclamations and directives, you will come up against opposition and resistance. The most effective leadership is to help others feel they are working from their own initiative. To inspire your fellow workers in this way, it is necessary to lead by example and offer encouragement where appropriate. 53. Goal Setting: Goal setting in indeed an underrated quality these days. People harp a lot about goal setting, but not too many seem to really take it seriously. But then again, it is the job of a leader to instill these qualities in his team. But for this, the leader himself ought to possess this characteristic! Hence being able to fix and follow goals is one of the most vital characteristics of a leader. 54. Be All Ears: One of the most important responsibilities of a good leader is to listen to and understand the problems and issues of others. Whether or not you are able to solve them or suggest a solution, it is a great comfort for a troubled person to have someone understanding to talk to about his/her problems. Be the shoulder to cry if necessary - nothing builds confidence in inter personal relationships better than patient listening and empathy. 55. Walk the Talk: The best way to inspire desired action from one's followers is to set examples. If you wish to instill discipline, integrity and high moral standards in your followers, it is better to practice yourself what you preach. This reinforces the idea that you truly believe in your ideals and this makes it all the more easier and pleasant for others to adopt those ideals when they see you walking the talk. From the above discussion, we can see that the character traits of a leader refer to traits that are almost divine in nature. Perhaps for this reason, the kings and leaders of the past who are still remembered and revered today, were given a god like status. They were the caretakers and guides of humanity. They were beacons of light, who showed the way to the masses. As for those who lacked the character traits of a good leader, they are either forgotten or remembered because of the bad things they did and the bad end they met. It takes focus and confidence not to be adversely affected by criticism. Strong leaders learn the art of listening to critics, but ultimately making decisions for the good of the department, not to simply please the critics. The following quote sums it up nicely: "Some of the most talented people are terrible leaders because they have a crippling need to be loved by everyone." As rightly stated by James Schorr. To conclude, I would just say that if you try to imbibe the above mentioned traits of a good leader in yourself, it will not only prove successful in your professional life, but also improve you as a person. After all, there are many leadership roles that we play in our personal life as well. Not all qualities come naturally, but we can always develop them. Right? The above quote highlights the importance of the character traits of a leader. What is character? It is nothing but the unique attributes, qualities or inner strength of a person, often referring to the moral and ethical fiber of the individual. Following are some character traits of a good leader. Before you proceed, you might like to take a look at the leadership traits.
LEADERSHIP ROLES
BAD LEADERSHIP DEFINED Bad leadership falls into two categories: bad as in ineffective and bad as in unethical. Ineffective leadership fails to produce the desired change while unethical leadership fails to distinguish between right and wrong. - Barbara Kellerman Ineffective leadership is the inability to build and maintain a group that performs well relative to its competition. - Robert Hogan
WHY LEADERS FAIL?

Insensitive, abrasive, bullying style Cold, aloof, arrogant Betrayal of personal trust Overly ambitious Specific performance problems Micro-managingdoes not build a team Unable to select good subordinates
2.0 QUALITY STATEMENT

Quality statements are part of strategic planning process and once developed, are occasionally reviewed and updated. There are three types of quality statements: 1. Vision statement 2. Mission statement 3. Quality policy statement The utilization of these statements varies from organization to organization. Small organization may use only the quality policy statement 1. Vision Statement: The vision statement is a short declaration what an organization aspires to be tomorrow. A vision statement, on the other hand, describes how the future will look if the organization achieves its mission. It is a short declaration of what an organization aspires to be tomorrow. It is an ideal state which may never be achieved. Example: To continuously enrich knowledge base of practioners in mobility industry and institutions in the service of humanity Successful visions are timeless, inspirational, and become deeply shared within the organization, such as: IBMs Service Apples Computing for the masses Disney theme parks the happiest place on the earth, and Polaroids instant photography 2. Mission Statement: A mission statement concerns what an organization is all about. The statement answers the questions such as: who we are, who are our customers, what do we do and how do we do it. This statement is usually one paragraph or less in length, easy to understand, and describes the function of the organization. It provides clear statement of purpose for employees, customers, and suppliers. Describes the function of the organization. It provides the clear statement of purpose for the employees, customers and suppliers. An example of mission statement is: -Ford Motor Company is a worldwide leader in automatic and automotive related products and services as well as the newer industries such as aerospace, communications, and financial services. Our mission is to improve continually our products and services to meet our customers needs, allowing us to prosper as a business and to provide a reasonable return on to our shareholders, the owners of our business. -Facilitating world class technical education through high quality institutions, academic excellence and innovative research and development programmes, technology forecasting and global manpower planning, promoting industry institute interaction, inculcating entrepreneurship 3. Quality Policy Statement: The quality policy is a guide for everyone in the organization as to how they should provide products and services to the customers. It should be written by the CEO with feedback from the workforce and be approved by the quality council. A quality policy is a requirement of ISO 9000. It is a guide for everyone in the organization as to how they provide products and services to the customer. Written by the CEO feedback from workforce and approved by quality council. Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 17
A simple quality policy is: Xerox is a quality company. Quality is the basic business principle for Xerox. Quality means providing our external and internal customers with innovative products and services that fully satisfy their requirements. Quality is the job of every employee.
3.0 STRATEGIC PLANNING

It sets the long term direction of the organization in which it wants to proceed in future. Can be defined "As the process of deciding on objectives of the organization, on changes on this objective, on the resource used to obtain these objectives and on the policies that are to govern the acquisition use and disposition of these resources" How an organization can do strategic quality planning? The process starts with the principles that quality and customer satisfaction are the center of an organizations future. It brings together all the key stakeholders. The strategic planning can be performed by any organization. It can be highly effective, allowing the organizations to do the right thing at the right time, every time. There are seven steps to strategic Quality Planning: 1. Discover customer needs 2. Customer positioning 3. Predict the future 4. Gap analysis 5. Closing the gap 6. Alignment 7. Implementation 1. Customer Needs: The first step is to discover the future needs of the customers. Who will they be? Will your customer base change? What will they want? How will they want? How will the organization meet and exceed expectations? 2. Customer Positioning: Next, the planners determine where organization wants to be in relation to the customers. Do they want to retain, reduce, or expand the customer base? Product or services with poor quality performance should be targeted for breakthrough or eliminated. The organizations needs to concentrate its efforts on areas of excellence.
3. Predict the future: Next planners must look into their crystal balls to predict the future conditions that will affect their product or service. Demographics, economics forecasts, and technical assessments or projections are tools that help predict the future. 4. Gap Analysis : This step requires the planner to identify the gaps between the current state and the future state of the organization. An analysis of the core values and concepts is an excellent technique for pinpointing gaps. 5. Closing the Gap: The plan can now be developed to close the gap by establishing goals and responsibilities. All stakeholders should be included in the development of the plan. 6. Alignment: As the plan is developed, it must be aligned with the mission, vision, and core values and concepts of the organization. Without this alignment, the plan will have little chance of success. 7. Implementation: This last step is frequently the most difficult. Resources must be allocated to collecting data, designing changes, and overcoming resistance to change. Also part of this step is the monitoring activity to ensure that progress is being made. The planning group should meet at least once a year to assess progress and take any corrective action.
4.0 COST OF QUALITY

The cost of quality isnt the price of creating a quality product or service. Its the cost of NOT creating a quality product or service. A quality cost is considered to be any cost that the company would not have incurred if the quality of the product or service were perfect. Every time work is redone, the cost of quality increases. Obvious examples include: The reworking of a manufactured item. The retesting of an assembly. The rebuilding of a tool. The correction of a bank statement. The reworking of a service, such as the reprocessing of a loan operation or the replacement of a food order in a restaurant. In short, any cost that would not have been expended if quality were perfect contributes to the cost of quality. As defined by Philip B. Crosby in his book Quality Is Free, the cost of quality has two main components: the cost of good quality (or the cost of conformance) and the cost of poor quality (or the cost of nonconformance). Converting the language of quality into something that management is familiar with, such as dollars, gives everyone a common language and also facilitates measuring, tracking and analyzing. Dr. Juran first proposed the concept in the Quality Control Handbook published in 1951 and it has been greatly refined since. The Cost of Quality is a measure of what an organization is spending for its overall quality. It can be viewed as the difference between the actual cost of making and selling products and services and the cost if there were no failures of the products and services during manufacture or use. Unfortunately, the term "Cost of Quality" can leave a negative impression that reflects the thinking of the 1960s when it was believed that better quality products cost more to produce. But Cost of Quality can provide a very useful tool to change the way the enterprise thinks about errors. The reason quality has gained such prominence is that organizations have gained an understanding of the high cost of poor quality. Quality affects all aspects of the organization and has dramatic cost implications. The most obvious consequence occurs when poor quality creates dissatisfied customers and eventually leads to loss of business. However, quality has many other costs, which can be divided into two categories. The first category consists of costs necessary for achieving high quality, which are called quality control costs. These are of two types: prevention costs and appraisal costs. The second category consists of the cost consequences of poor quality, which are called quality failure costs. These include external failure costs and internal failure costs. These costs of quality are shown in Figure 1. The first two costs are incurred in the hope of preventing the second two. Prevention costs. Costs of preparing and implementing a quality plan. Appraisal costs. Costs of testing, evaluating, and inspecting quality. Internal failure costs. Costs of scrap, rework, and material losses. External failure costs. Costs of failure at customer site, including returns, repairs, and recalls
Fig. 1 Costs of quality DEFINITION AND EXPLANATION OF QUALITY COSTS: (The Meaning of "Quality Costs ")
The term quality costs has different meanings to different people. Some equate quality costs with the costs of poor quality due to finding and correcting defective work. Others equate the term with the costs to attain good quality. Others use the term to mean the costs of running the quality department. In my site, the term "quality costs" means the cost of poor quality. A product that meets or exceeds its design specifications and is free of defects that mar its appearance or degrade its performance is said to have high quality of conformance. Note that if an economy car is free of defects, it can have a quality of conformance that is just as high as defect-free luxury car. The purchasers of economy cars cannot expect their cars to be as opulently as luxury cars, but they can and do expect to be free of defects. Preventing, detecting and dealing with defects cause costs that are called quality costs or costs of quality. The use of the term "quality cost" is confusing to some people. It does not refer to costs such as using a higher grade leather to make a wallet or using 14K gold instead of gold plating in jewelry. Instead the term quality cost refers to all of the costs that are incurred to prevent defects or that result from defects in products. The quality costs do not just relate to just manufacturing; rather, they relate to all the activities in a company from initial research and development (R & D) through customer service. Total quality cost can be quite high unless management gives this area special attention.
Quality-linked activities are those activities performed because poor quality may or does exist. The costs of performing these activities are referred to as costs of quality. Thus, the costs of quality are the costs that exist because poor quality may or does exist. This definition implies that quality costs are associated with two subcategories of quality-related activities: control activities and failure activities. Control activities are performed by an organization to prevent or detect poor quality (because poor quality may exist). Thus, control activities are made up of prevention and appraisal activities. Control costs are the costs of performing control activities. Failure activities are performed by an organization or its customers in response to poor quality (poor quality does exist). If the response to poor quality occurs before delivery of a bad
(nonconforming, unreliable, not durable, and so on) product to a customer, the activities are classified as internal failure activities; otherwise, they are classified as external failure activities. Failure costs are the costs incurred by an organization because failure activities are performed. Notice that the definitions of failure activities and failure costs imply that customer response to poor quality can impose costs on an organization. Quality costs can be broken down into four broad groups. These four groups are also termed as four (4) types of quality costs. Two of these groups are known as prevention costs and appraisal costs. These are incurred in an effort to keep defective products from falling into the hands of customers. The other two groups of costs are known as internal failure costs and external failure costs. Internal and external failure costs are incurred because defects are produced despite efforts to prevent them therefore these costs are also known as costs of poor quality. The cost of poor quality affects: o Internal and external costs resulting from failing to meet requirements. The cost of good quality affects: o Costs for investing in the prevention of non-conformance to requirements. o Costs for appraising a product or service for conformance to requirements. o Costs for investing in the prevention of non-conformance to requirements. When it comes to making decisions, most managers speak money. The Cost of Quality theory provides the vocabulary to communicate between the quality professionals and their managers.
Four types of quality cost are briefly explained below: 1. Prevention Costs: These are the costs of activities aimed at preventing defects occurring during the development, production, storage and transport of a product. They relate to quality before a single unit of product is made. They usually represent up-front costs that should minimize overall costs by performing the task properly and hopefully at the first attempt. Prevention costs are all costs incurred in the process of preventing poor quality from occurring. They include quality planning costs, such as the costs of developing and implementing a quality plan. Also included are the costs of product and process design, from collecting customer information to designing processes that achieve conformance to specifications. Employee training in quality measurement is included as part of this cost, as well as the costs of maintaining records of information and data related to quality. Generally the most effective way to manage quality costs is to avoid having defects in the first place. It is much less costly to prevent a problem from ever happening than it is to find and correct the problem after it has occurred. Prevention costs support activities whose purpose is to reduce the number of defects. Companies employ many techniques to prevent defects for example statistical process control, quality engineering, training, and a variety of tools from total quality management (TQM). Prevention costs include activities relating to quality circles and statistical process control. Quality circles consist of small groups of employees that meet on a regular basis to discuss ways to improve quality. Both management and workers are included in these circles. Statistical process control is a technique that is used to detect whether a process is in or out of control. An out of control process results in defective units and may be caused by a miscalibrated machine or some other factor. In statistical process control, workers use charts to monitor the quality of units that pass through their workstations. With these charts, workers can quickly spot processes that are out of control and that are creating defects. Problems can be immediately corrected and further defects prevented rather than waiting for an inspector to catch the defect later. Some companies provide technical support to their suppliers as a way of preventing defects. Particularly in just in time (JIT) systems, such support to suppliers is vital. In a JIT system, parts are delivered from suppliers just in time and in just the correct quantity to fill customer orders. There are no stockpiles of parts. If a defective part is received from a supplier, the part cannot be used and the order for the ultimate customer cannot be filled in time. Hence every part received from suppliers must be free from defects. Consequently, companies that use just in time (JIT) often require that their supplier use sophisticated quality control programs such as statistical process control and that their suppliers certify that they will deliver parts and materials that are free of defects. The costs incurred to keep failure and appraisal costs to a minimum. For example product design or Poke Yoke costs are prevention costs. Prevention costs are one of the four elements of cost of quality. When implement and tracking a cost of quality system within a company, management typically focuses on internal and external failure costs. Management studies the costs due to defects and not the cost to prevent the defects. Costs of Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 23
prevention focus on the actions taken to prevent the creation of defects. Companies that pursue operation excellence track these costs and purposely allocate money to this element. These companies spend more on prevention methods than the other quality cost elements. Here are examples of these costs:
The costs of all activities specifically designed to prevent poor quality in products or services.
Examples are the costs of: New product review Quality planning Supplier capability surveys Process capability evaluations Quality improvement team meetings Quality improvement projects Quality education and training 2. APPRAISAL COSTS: Appraisal costs are incurred in the process of uncovering defects. They include the cost of quality inspections, product testing, and performing audits to make sure that quality standards are being met. Also included in this category are the costs of worker time spent measuring quality and the cost of equipment used for quality appraisal. These are the costs of inspecting and testing to ensure that the products, parts and raw materials conform to quality requirements. These are generally the easiest type of quality costs to measure and include: Any defective parts and products should be caught as early as possible in the production process. Appraisal costs, which are sometimes called inspection costs, are incurred to identify defective products before the products are shipped to customers. Unfortunately performing appraisal activates doesn't keep defects from happening again and most managers realize now that maintaining an army of inspectors is a costly and ineffective approach to quality control. Employees are increasingly being asked to be responsible for their own quality control. This approach along with designing products to be easy to manufacture properly, allows quality to be built into products rather than relying on inspections to get the defects out. Appraisal Costs are quality cost that determes the quality of a product. These costs are normally associated with inspection. This includes inspection on receipt, inspection at the source, or by surveillance: The costs associated with measuring, evaluating or auditing products or services to assure conformance to quality standards and performance requirements. These include the costs of: Incoming and source inspection/test of purchased material In-process and final inspection/test Product, process or service audits Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 24
Calibration of measuring and test equipment Associated supplies and materials Examples include -Incoming inspection and test: -In-process inspection and test: -In-process evaluation of conformance to requirements. -Final inspection and test: -Evaluation of conformance to requirements for product acceptance. -Document review -Examination of paperwork to be sent to customer. -Balancing -Examination of various accounts to assure internal consistency. -Product quality audits -Performing quality audits on in-process or finished products. -Maintaining accuracy of test equipment: -Keeping measuring instruments and equipment in calibration. -Inspection and test materials and services -Materials and supplies in inspection and test work (e.g., x-ray film) and services (e.g., electric power) where significant. -Evaluation of stock inventory -Testing products in field storage or in stock to evaluate degradation. When collecting these costs, decide upon the kind of work done and not the department name (the work may be done by chemists in the laboratory, by sorters in Operations, by testers in Inspection, or by an external firm engaged for the purpose of testing). Also note that industries use a variety of terms for appraisal, e.g., checking, balancing, reconciliation, review.
FAILURE COSTS
The costs resulting from products or services not conforming to requirements or customer/user needs. Failure costs are divided into internal and external failure categories. 3. INTERNAL FAILURE COSTS: Internal failure costs are associated with discovering poor product quality before the product reaches the customer site. One type of internal failure cost is rework, which is the cost of correcting the defective item. Sometimes the item is so defective that it cannot be corrected and must be thrown away. This is called scrap, and its costs include all the material, labor, and machine cost spent in producing the defective product. Other types of internal failure costs include the cost of machine downtime due to failures in the process and the costs of discounting defective items for salvage value. Failure costs occurring prior to delivery or shipment of the product, or the furnishing of a service, to the customer. Failure costs are incurred when a product fails to conform to its design specifications. Failure costs can be either internal or external. Internal failure costs result from identification of defects before they are shipped to customers. These costs include scrap, rejected products, reworking of defective units, and Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 25
downtime caused by quality problem. The more effective a company's appraisal activities the greater the chance of catching defects internally and the greater the level of internal failure costs. This is the price that is paid to avoid incurring external failure costs, which can be devastating. The costs of deficiencies discovered before delivery. We associate deficiencies or nonconformities with the failure to meet explicit requirements or implicit needs of external or internal customers. Internal failure costs come from deficiencies discovered before delivery. These include all the costs associated with the failure (nonconformities) to meet the needs of your external and internal customers. This failure cost is one of the 4 key components of Examples of Internal Failure Costs : Scrap: The labor, material, and (usually) overhead that created the defective product. The item cannot be economically repaired. The titles are numerousscrap, spoilage, defectives, etc. Rework: The cost to correct the defective material or errors in service products. Lost or missing information: The cost to retrieve this expected information. Failure analysis: The cost analyzing nonconforming goods or services to determine the root causes. Supplier scrap and rework: Scrap and rework costs due to nonconforming product received from suppliers. This includes the costs to the buyer of resolving the supplier quality problems. 100% sorting inspection: The cost of completing 100% inspection to sort defective units from good units. Retest: The cost to retest products after rework or other revision. Changing processes: The cost of modifying the manufacturing or service processes to correct the deficiencies. Redesign of hardware: The cost to change designs of hardware to correct the issues. Redesign of software: The internal cost to changing software designs. Scrapping of obsolete product: The cost of disposing scrap. Scrap in support operations: Costs from defective items in indirect operations. Rework in internal support operations: Costs from correcting defective items in indirect operations. Downgrading: The cost difference between the normal selling price and the reduced price due to quality reasons. Variability of product characteristics: Rework losses that occur with conforming product (e.g.,overfill of packages due to variability of filling and measuring equipment). Unplanned downtime of equipment: Loss of capacity of equipment due to failures. Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 26
Inventory shrinkage: Loss costs due to the difference between actual and recorded inventory quantity. Non-value-added activities: Cost due to redundant operations, sorting inspections, and other nonvalue added activities. A value-added activity increases the usefulness of a product to the customer; a non-value-added activity does not. 4. EXTERNAL FAILURE COSTS: External failure costs are associated with quality problems that occur at the customer site. These costs can be particularly damaging because customer faith and loyalty can be difficult to regain. They include everything from customer complaints, product returns, and repairs, to warranty claims, recalls, and even litigation costs resulting from product liability issues. A final component of this cost is lost sales and lost customers. For example, manufacturers of lunch meats and hot dogs whose products have been recalled due to bacterial contamination have had to struggle to regain consumer con?dence. Other examples include auto manufacturers whose products have been recalled due to major malfunctions such as problematic braking systems and airlines that have experienced a crash with many fatalities. External failure can sometimes put a company out of business almost overnight. Failure costs occurring after delivery or shipment of the product -- and during or after furnishing of a service -- to the customer. When a defective product is delivered to customer, external failure cost is the result. External failure costs include warranty, repairs and replacements, product recalls, liability arising from legal actions against a company, and lost sales arising from a reputation for poor quality. Such costs can decimate profits. In the past, some managers have taken the attitude, "Let's go ahead and ship everything to customers, and we'll take care of any problems under the warranty." This attitude generally results in high external failure costs, customer ill will, and declining market share and profits. External failure costs usually give rise to another intangible cost. These intangible costs are hidden costs that involve the company's image. They can be three or four times greater than tangible costs. Missing a deadline or other quality problems can be intangible costs of quality. Internal failure costs, external failure costs and intangible costs that impair the goodwill of the company occur due to a poor quality so these costs are also known as costs of poor quality by some persons. The costs associated with deficiencies found after product is received by the customer. These also include lost opportunities for sales revenue. External Failure Costs come from costs associated with defects that are found after the customer receives the product or service. These costs included lost opportunities for sales revenue. Lost sales revenue costs would disappear if there were no deficiencies. External Costs Classifications Warranty charges: The costs involved in replacing or making repairs to products that are still within the warranty period. Complaint adjustment: The costs of investigation and adjustment of justified complaints from the defective product or installation. Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 27
Returned material: The dollars associated with the receipt and replacement of defective product received from the field. Allowances: The costs of concessions made to customers due to substandard products accepted by the customer. Customer chose to use the product as is. Penalties due to poor quality: This can apply to goods or services delivered late or too early. Rework on support operations: Correcting errors on billing and other external processes. Revenue losses in support operations: An example is the failure to collect receivables from some customers. Lost Opportunities for sales revenue: Profit margin on current revenue lost due to customers who switch for reasons of quality. This includes canceled contracts due to poor quality. Also includes lost of new customers: The costs incurred to determine the degree of conformance to quality requirements. For example inspection costs are an appraisal cost. Examples of four types of quality cost are given below:
Prevention Costs Systems development Quality engineering Quality training Quality circles statistical process control Supervision of prevention activities Quality data gathering, analysis, and reporting Quality improvement projects Technical support provided to suppliers Audits of the effectiveness of the quality system Appraisal Costs Test and inspection of incoming materials Test and inspection of in-process goods Final product testing and inspection Supplies used in testing and inspection Supervision of testing and inspection activities Depreciation of test equipment Maintenance of test equipment Plant utilities in the inspection area Field testing and appraisal at customer site
Internal Failure Costs Net cost of scrap Net cost of spoilage Rework labor and overhead Re-inspection of reworked products Retesting of reworked products Downtime caused by quality problems Disposal of defective products Analysis of the cause of defects in production Re-entering data because of keying errors Debugging software errors External Failure Costs Cost of field servicing and handling complaints Warranty repairs and replacements Repairs and replacements beyond the warranty period Product recalls Liability arising from defective products Returns and allowances arising from quality problems Lost sales arising from a reputation for poor quality.
COST OF QUALITY ASSURANCE

It is the cost in ensuring and assuring quality as well as loss incurred when quality is not achieved. Various components of cost of quality assurance may be classified into four categories of prevention cost, appraisal cost, internal failure cost and external failure cost. Costs of quality assurance (Compiled from Gavett 1968, Adam and Evertt-1998)
Prevention Costs Quality planning QC administration and systems planning Quality related training Inspection of incoming in process and final product Processes planning Design review Quality data analysis Procurement planning Market research Vendor surveys Reliability studies System development Quality measurement and control equipment Product Qualification Qualification of material
Appraisal Costs Incoming Inspection Testing Inspection in process Quality audits Incoming test and laboratory tests Checking labor Laboratory or other measurement service Setup for test and inspection Test and inspection material Outside endorsements for certification Maintenance and calibration work Product reengineering review and shipping release Field testing
Internal Failure Costs Rejections Scrap at full shop cost Failure analysis Scrap and rework, fault of vendor Material procurement Factory contact engineering Machine down QC investigations of failures Material review activity Repair and troubleshooting Excess inventory
External Failure Costs Recall Complaints handling Goodwill loss Warranty costs Bad publicity Field maintenance and product service Returned material processing and repair Fall in market share Replacement inventories Low employees morale Strained distributor relations
Quality costs increase over time

Liability costs
Failure Costs
Failure found by customer Field repair costs Failure found at installation
Failure found at final inspection

Failure found at onset of manufacture Failure found during design phase Prevention Costs
Time when failure found
Cost of Quality
Hidden Costs of Poor Quality

Reprocessing Customer returns Rejects Warranty expenses Lost sales Loss of goodwill
Overtime to correct errors

Extra inventory Premium freight costs
Process downtime
Delays Extra process capacity
Extra inventory
Cost of Quality
MANAGEMENT OF QUALITY COST Management of quality-cost is useful in improving the performance of a TQM system. This is achieved by planned effort to eliminate these costs. Figures show the variation of prevention cost, appraisal cost and failure cost at different levels of targeted quality. When these costs are combined in a system, the pattern of total costs of quality at different quality level is U-shaped. It is important to note that a particular level of quality gives minimum total cost of quality. Around the optimal quality level, the total quality curve is flatter. Therefore, it is not necessary to find-out the exact level of quality for minimum total cost. Through, experience and iterations, the shop-floor may determine this level and operate around this level. Exact quantitative estimate of different quality costs are practically difficult to obtain. This is due to many subjective components of cost. Industry therefore learns to operate at the desired level of quality through experience only. Figure shows a cost and value curve with respect to different level of quality. As quality target is improved, the cost to produce increases. Value of product for customer also increases. These two curves cross each other at two points. The quality level, at which the margin between value Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 31
and cost is maximum, is the desired level of quality target. Same as figure, around this target, the margin is quite stabilized. Hence exact estimate of quality level is not very important. Intuitive or guess, which is based on experience works well in many real life situations. Through gradual modifications during
practice, industries can arrive at the target quality level.

Prevention Costs Failure Costs Improving performance through quality costs Appraisal Costs Total Quality Costs
Costs and values of Qualities
Email Based Homework Assignment Help in Management of Quality Cost Transtutors is the best place to get answers to all your doubts regarding the management of quality cost, prevention costs, appraisal costs, failure costs and total quality costs with examples. You can submit your school, college or university level homework or assignment to us and we will make sure that you get the answers you need which are timely and also cost effective. Our tutors are available round the clock to help you out in any way with industrial management. Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 32
QUESTION AND ANSWERS 1. What is needed for a leader to be effective? To be effective, a leader needs to know and understand the following: People, paradoxically, need security and independence at the same time. People are sensitive to external rewards and punishments and yet are also strongly self- motivated. People like to hear a kind word of praise People can process only a few facts at a time; thus, a leader needs to keep things simple. People trust their gut reaction more than statistical data People distrust a leaders rhetoric if the words are inconsistent with the leaders actions. What are the various quality statements? Vision Statement Mission Statement Quality Policy Statement Give the basic steps to strategic quality planning? I. Customer needs II. Customer positioning III. Predict the future IV. Gap analysis V. Closing the gap VI. Alignment VII. Implementation What is a quality policy? The Quality Policy is a guide for everyone in the organization as to how they should provide products and service to the customers. The common characteristics are Quality is first among equals. Meet the needs of the internal and external customers. Equal or exceed the competition. Continually improve the quality. Include business and production practices. Utilize the entire work force. What is a mission statement? The mission statement answers the following questions: who we are, who are the customers, what we do, and how we do it. What is a vision statement? The vision statement is a declaration of what an organization should look like five to ten years in a future. Define the term strategy? In order to understand the concept of strategic management, first we need to understand the literal meaning of the word strategy. The definition is mentioned below: 1. The science and art of using all the forces of a nation to execute approved plans as effectively as possible during peace or war. The science and art of military command as applied to the overall planning and conduct of large-scale combat operations. 2. A plan of action resulting from strategy or intended to accomplish a specific goal. 3. The art or skill of using stratagems in endeavors such as politics and business
What is the relation of Strategic Planning and Total Quality Management? When an organizations chooses to make quality a major competitive edge (differentiation), it becomes the central issue in strategic planning. This is especially reflected in vision, mission and policy guidelines of an organization. An essential idea behind strategic quality planning is that the product is customer value rather than a physical product or service. This feat cannot be achieved unless an organization creates a culture of quality and no strategy and plan can be worthwhile unless it is carefully implemented. Creating an Initial Quality Cost Study 1. Review the literature on quality costs. Consult with others in similar industries who have had experience with applying quality cost concepts. 2. Select one organizational unit of the company to serve as a pilot site. This unit may be one plant, one large department, one product line, etc. 3. Discuss the objectives of the study with the key people in the organization, particularly those in the accounting function. Two objectives are paramount...Determine the size of the quality problem and identify specific projects for improvement. 4. Collect whatever cost data are conveniently available from the accounting system . Use this information to gain management support to make a full cost of quality study. 5. The proposal should provide for a task force of all concerned parties. The task force will identify the work activities that contribute to the cost of poor quality. Use work records, job descriptions, flowcharts, interviews, and brainstorming to identify these activities. 6. Publish a draft of the categories defining the cost of quality. Secure comments and revise. 7. Finalize the definitions and secure management approval. 8. Assign responsibility for data collection and report preparation. 9. Collect and summarize the data. Ideally, this should be done by accounting. 10. Present the initial and final quality cost results from the quality improvement project to management. Request authorization to proceed with a broader company wide program of measuring the costs and pursuing projects. Clearly, the sequence must be tailored for each organization. Capturing Quality Cost Tips 1. Established expense accounts. Examples include inspection department appraisal activities and customer response warranty expenses. Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 34
2. Define and analysis the ingredients of established expense accounts: For example, suppose an account called customer returns reports the cost of all goods returned. Some customers returned defective goods. Categorized these as cost of poor quality. Some customers return goods to reduce inventory. These are not cost of poor quality. You must break the customer returns into two separate expense accounts. To help distinguish the quality costs returns, someone must study of the return documents and classify all returns. 3. Improve accounting documents: For example, some production department employees conduct product inspection. By securing their names, the associated payroll data, and inspection time you can quantify these cost of quality. 4. Include estimates: Input from knowledgeable personnel is clearly important.
5. Use temporary records. For example, some production workers spend part of their time repairing defective product. Here you can create a temporary record to determine the repair time and thereby the repair cost. This cost can then be projected for the study time period.
6. Utilize work sampling: Take random observations of activities. Within a few sampling you can calculate the percent of time spent in each of a number of predefined quality cost categories. Ask employees to record the observation as prevention, appraisal, failure, or first time work.
7. Improve allocation of total resources: For example, some engineers are part-time engaged in making product failure analyses. The engineering department, however, makes no provision for charging engineering time to multiple accounts. Ask each engineer to make an estimate of time spent on product failure analysis. Do this by keeping a temporary engineering activity log for several representative weeks. Categorized time spent due to a product failure as a failure cost.
d. Track unit cost data: Here, the cost of correcting one error is estimated and multiplied by the number of errors per year. Examples include billing errors and scrap. Note that the unit cost per error may consist of corrections costs from several departments.
e. Utilize market research data: Cost of quality includes lost sales revenue due to poor quality. Although difficult to estimate, market research studies on customer satisfaction and loyalty can provide input data on dissatisfied customers and customer defections.
DOES QUALITY COST ANYTHING? The cost of quality (COQ) is defined as the sum of the costs of everything that would not have been necessary if everything else was done right the first time, Control of the cost of quality is one of fire major benefits of implementing total quality management. Historically, there was the mistaken notion that achievement of better quality requires higher costs. it was this myth that prevented many Indian companies to invest more strongly into activities and programmes leading to quality improvement. Perhaps this notion of Indian companies did not allow their to enter and spearhead the quality movement Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 35
simultaneously with Japan, the West, the US and other Asian Tigers. As a matter of fact, poor quality implies waste of material, machinery, equipment and manpower arid thus results in higher costs. Philip B. Crosby has written in his book titled: Quality is Free that manufactured and supplying the best quality products and services do not cost anything, rather it improves profitability by avoiding repetitive work. Optimum utilization of resources such as men, money, materials and machines ensures better quality and thereby lowers the costs of products and services. A.V. Feigenbaurn in 1956 propounded the concept of quality costs. he defined quality costs as: Those costs associated with the creating and control of quality as well as the evaluation and feedback of conformance with quality, reliability and safety requirements, and those costs associated with the consequences of failure to meet the requirements both within the factory and in the hands of customer. Many organizations while initiating total quality concentrate on two areas, namely; the attainment of registration to quality assurance standard ISO 9000 and satisfaction of customers through customer care programmes. These organizations disregard the fact that TQM can also lead to substantial cost savings. Increasing efficiency and minimizing waste through assessing and reducing the cost of quality, can have a potent effect upon the cash flow and profitability of business. It has been widely accepted in the industrial arid management world that the cost of quality is typically 25 per cent of the sales turnover. In the services industry, it can be more akin to 40 percent. Some of the world class companies have poised themselves as the example by reducing the cost of quality tip to 90 percent. Such successful reductions in the cost of quality have been particularly dramatic in Europe, the US and Japanese companies. For example, Rank Xeroxs Business Product and Systems organisation achieved the following improvements by tackling its cost of quality: (i) A reduction in the number of defects per machine by 78 percent and (ii) A decrease in unscheduled maintenance by 40 perce4nt and service response time by 27 percent. This way the company saved millions of dollars by first identifying the cost of quality and then undertaking corrective measures to reduce the same. In view of the above example, Indian companies can do a wonderful job for themselves as well for their customers by reducing costs and increasing their profitability. This way they can help India in becoming the number one economy of the world. The benefits to the small and medium organizations will be fantastic as there will be profit increase of nearly 40 percent of sales turnover. Improvement to a companys products and services are achieved without spiraling cost increase simply by carefully monitoring quality cost.
The Quality Cost Conformance Model

The quality cost conformance model provides an example of a constrained optimization approach. In this model the economic conformance level (ECL) is obtained where prevention and appraisal costs are equal to external and internal failure costs. Prevention and appraisal costs increase as the level of conformance quality increases. Conformance quality refers to conformance to specifications as opposed to design quality, i.e., service functions or features. Failure costs are expected to decrease as the level of conformance quality increases. Therefore, the total costs associated with conformance quality will be Ushaped as indicated in the exhibit below. Prevention costs include quality engineering, training and related supervision costs. Appraisal costs include inspection, testing and supervision related to these activities. Internal failure costs include spoilage, scrap, rework and the associated downtime costs, while external failure costs include warranty costs and the costs of lost customers.
The ECL model is associated with Juran. Deming and others, such as Crosby (author of Quality is Free) view the calculation of the ECL as a waste of time. From this perspective, the main problem with the ECL methodology is that the model is likely to be mis-specified by underestimating or ignoring the costs associated with lost customers. A revised model with the "quality is free" perspective is provided in the exhibit below. This model provides a long run view where the lost sales dollars resulting from past failures are included in external failure costs. Of course, lost sales dollars are unknown amounts, but there is adequate reason in most industries to believe that they represent substantial amounts, perhaps so large that the two curves never intersect.
Optional Quality Cost
116.
For an organization not steeped in TQM, the costs of internal failures and lost opportunities will comprise the biggest part of the total Cost of Quality. As these non-conformance costs are identified and managed, the relative balance between conformance and non-conformance costs shifts. In a steady state, both the conformance and non-conformance costs decline, though as a percentage of total Cost of Quality, the conformance costs increase as shown in Exhibit 7.
Total Quality Costs As the figure below shows, quality costs are the total of the cost incurred by: Investing in the prevention of nonconformance to requirements. Appraising a product or service for conformance to requirements. Failing to meet requirements.

Unit III Leadership and Quality Costs

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Unit III Leadership and Quality Costs

Uploaded by

Copyright:

Available Formats

Sub: TOTAL QUALITY MANAGEMENT

LEADERSHIP AND QUALITY COSTS:

Characteristics of quality leader

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 1

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 3

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 5

2.0 A BRIEF HISTORY OF LEADERSHIP

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 6

3.0 CHARACTERISTICS OF QUALITY LEADER

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 10

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 11

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 12

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 13

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 15

WHY LEADERS FAIL?

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 16

2.0 QUALITY STATEMENT

3.0 STRATEGIC PLANNING

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 18

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 19

4.0 COST OF QUALITY

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 20

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 21

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 22

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 28

COST OF QUALITY ASSURANCE

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 29

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 30

Quality costs increase over time

Failure found by customer Field repair costs Failure found at installation

Failure found at final inspection

Time when failure found

Hidden Costs of Poor Quality

Overtime to correct errors

practice, industries can arrive at the target quality level.

Costs and values of Qualities

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 33

The Quality Cost Conformance Model

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 36

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 37

Optional Quality Cost

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 38

Notes on TQM By: SB MALLUR,STJIT,MED,RANEBENNUR 39

You might also like