Usually the management is aware of actual expenses of prevention, appraisal, repairs and corrective actions, and even downgrade of a product as a result of errors, faults and improper treatment.
But management does not consider additional and sometimes heavy intangible losses such as those mistakes that give the supplier a poor reputation resulting in loss of customers.
These intangible losses are very important to service organizations such as transportation, hotels, communication services, post office services, repair shops, educational facilities, banking and others, which depend on continuous and wide contact with their client.
When the customer is not satisfied by the requested service he will most likely not contact the same supplier again, particularly if there are others around, which is usually the case.