Increasing the visibility of hidden failure costs

Abstract

Purpose

The purpose of this study, with its central thesis placed on excelling at business measures, is to underscore the need for business entities to understand the significant implication of hidden failure costs and its impact on their business processes. The study also stresses the need for organizations to systematically break the many norms.

Design/methodology/approach

This study looked at capturing the often‐overlooked component of poor quality cost via a simple function of measurement which requires an effortless yet painstaking way of collecting data pertaining to intangible wastages in the form of time, service charges and material.

Findings

A simple formula is introduced, using three types of indicators that could be used to monitor the level of poor quality costs (PQC), to quantify the total failure costs by accumulating the values of both hidden and visual failure costs.

Originality/value

The study breaks the boundaries of existing methods of understanding and calculating the all‐embracing cost of doing business, hence paving the way to make inroads in business processes improvement, enhanced job‐scope comprehension, agility and performance, further intensification of internal and external customer satisfaction.

Citation

Krishnan, S.K. (2006), "Increasing the visibility of hidden failure costs", Measuring Business Excellence, Vol. 10 No. 4, pp. 77-101. https://doi.org/10.1108/13683040610719290