This concept was introduced to me by John Seddon at the Deming Forum 2004.

The concept is very simple, but as is so often allows one to see a situation in a new way. Failure demand describes the demand on the resources of an organisation caused by its own failures.

For example, suppose I order product X from a company. This is normal demand and is profitable to the company if they organise themselves properly. Suppose that it is now two weeks later and I phone to ask where my product X is. This is still a demand on the organisation, but one from which there is no hope of making money. If the organisation had delivered to me sooner (or told me clearly enough how long should expect to wait) then this demand on resources would have been saved.

This is failure demand - demand on the organisational resources caused by some sort of failure (e.g. to act or communicate).

It is comparably easy to monitor the level of demand, normal and failure in many organisations, especially those with call centres. In simply listening to the calls received by these centres for a few days John typically identifies a very high (50-90%) level of failure demand. In addition most of the failure demand is typically caused by repetition of the same issues.

John rails against those companies who claim to save money by outsourcing a call centre to India: it is even cheaper not to receive the call in the first place - cheaper to satisfy the customer the first time…

The elimination of failure demand on an organisation is part of creating a quality within an organisation, and is how increased quality can lead to dramatically reduced costs.



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