Question: Our organisation has problems with DOAs (Defect on arrival). We want to reduce these, but how?
Answer: Research shows that on average 30% of all DOAs have their origin in the logistics, whereby the packaging is designated as the culprit.
However, it appears that the packaging is fine, but that the overall packaging process is often not streamlined in the supply chain. Does everyone everywhere in the chain know how to pack correctly and according to specification?
FPC scans the packaging policy in your supply chain using the Scope method, and proposes solutions so that the packaging instructions are clear and secured right to the roots of your logistics operation. This can eventually be accompanied by software implementations.
FPC has developed a tool to quickly make an estimate of the effect of a DOA reduction on an organization: the DOA Calculator.
By filling in 6 key variables the DOA calculator displays the current cost per DOA and the current total DOA cost per year for an organization. All of this based on the model from the research.
By operating the pushbar an estimate can be made of the saving that will be realized by reducing the number of DOAs.
Fill in the data of your organization below and make your calculation:
Click here for more explanation and background information regarding the DOA calculator.
The DOA Calculator makes a calculation based on direct cost, with components:
- Part damage
- Extra transport cost
- Inventory management
Because not all cost components were quantified, the University of Groningen started a further investigation in this matter. In this research the indirect cost of a DOA were mapped:
- Logistics; worldwide stocks are held to be able to react quickly to a sudden demand. Some parts are being sent around the world up to 10 times from warehouse to warehouse!
- Diagnosis; the service engineer has to do a proper report and the customer service department has to do an accurate intake and registration.
- Analysis; DOAs are investigated for their cause.
- Prevention; e.g. stock purges may be needed or bin checks need to be done.
- Management; a component that should not be underestimated from which corrective and preventive measures follow and actions need to be taken towards the customer.
Most important conclusion is that indirect cost are half of the amount of direct cost related to DOAs.
For example, when you have €20.000.000 direct cost, it is estimated that you will have another €10.000.000 indirect cost.
Customer satisfaction and image
The research has given us a good estimate of the direct and indirect cost involved in DOAs, but there is another important element that was mentioned at the companies involved in the research: customer satisfaction.
The aim is to also map this component by starting up a new research. The estimate is that the impact of DOAs on customer satisfaction could be a lot bigger than what has been quantified up til now!
Do you need help? Let us know!