Dead on Arrival products incur high costs due to transport, stock and repair work. This article explains who is responsible for these costs and how better packaging and chain collaboration can structurally reduce the number of DOAs.
Summary of this article
Dead on Arrival (DOA) sounds like an occasional incident at most, but in reality it is a structural and costly problem in many industrial chains. Products that arrive damaged, defective or misdelivered not only cause direct damage such as replacement and emergency transportation. They also incur hidden costs that are often many times the value of the original product. Research shows that the total cost of a DOA delivery can be as much as 1.35 to 2.19 times the value of the part (Swieten, 2013). Yet in practice, the question often remains unanswered: who is responsible and who ultimately pays the bill?
Dead on Arrival, abbreviated as DOA, describes a situation in which a product or component is immediately assessed as unusable upon arrival. The research distinguishes between three main types. The first is a completely defective product that does not function technically. This may be caused by internal damage, manufacturing defects or damage sustained during transport. The second is a cosmetically unacceptable product. In this case, the component still functions, but its appearance does not meet the customer’s requirements, for example due to scratches, dents or contamination. The third category concerns delivery issues, such as incorrect or missing components, which prevent the product from being used.
Although these categories may seem different, they have one thing in common: they directly disrupt planned activities. Technicians and Field Service Engineers are unable to complete their work, customers experience delays and expensive urgent shipments are often used to resolve the situation. In many cases, the cause of the DOA is only identified after several parties have been involved, further increasing the complexity and costs.
The impact of a DOA goes beyond the value of the defective component. According to the research, the total costs are on average 1.35 to 2.19 times higher than the product value. This is caused by three main factors: damage to the component, additional transport costs and higher inventory costs.
The research shows that damage to components, including the working hours of Field Service Engineers (FSEs), accounts for the largest share of the total costs of DOA deliveries. The combination of material damage and three to five additional technician hours amounts to more than 100 to 140 percent of the average cost price of the component.
Transport costs also increase significantly because urgent shipments are used much more frequently for DOAs: an average of 14 percent compared with 4 percent for regular deliveries. Such urgent shipments can be up to eight times more expensive than a standard shipment, approximately €1,200 compared with €150. As a result, the average transport cost per DOA amounts to almost €500.
DOAs also often result in additional inventory, which can increase costs by 2 to 10 percent. On top of these direct cost items, there are indirect consequences such as penalties, delays and reputational damage, which in some cases can have an equally significant impact.
Although DOAs are often seen as incidents, the research shows that the causes can usually be traced back to structural problems within the chain. Broadly speaking, three main groups can be distinguished.
The first is logistics. Damage can occur during transport, storage or transshipment, for example due to inadequate shock absorption, unsuitable packaging materials or poor handling instructions. In one of the cases studied, standardizing packaging from hundreds of variants to a few dozen led to a significant reduction in logistical damage. This shows that prevention often starts with the packaging and how it is used.
The second cause is service quality. Improper installation, mishandling or lack of proper tools among mechanics and field service engineers can lead to direct damage or misdiagnosis. This can result in a DOA registration even if the product is technically sound.
The third cause is product quality. Consider manufacturing defects, components not meeting specifications or Type II inspection errors where defective parts slip through quality control. Especially with complex or fragile components, a small defect can have a major impact on functionality.
In practice, the cause of a DOA is often ambiguous. Different parties such as manufacturer, logistics provider, service partner and end customer each have a role in the process. This makes determining responsibility complicated and can lead to delays in resolving the problem, resulting in escalating costs.
Who ultimately pays the bill in the event of a DOA depends greatly on the agreements made and how the cause is determined. Contracts and service level agreements (SLAs) often specify which party is responsible in the event of damage or defects. When a clearly demonstrable manufacturing defect is the cause, the responsibility usually lies with the manufacturer. If the damage occurred during transport and can be traced to insufficient protection or careless handling, the logistics service provider can be held liable.
In many cases, however, it is not easy to conclusively prove causation. Damage can occur in an intermediate stage or through a combination of factors. Consider a part that is properly packaged but where the packaging proves unable to withstand unexpected conditions, such as extreme vibration or temperature changes. In such situations, cost allocation often becomes a point of negotiation, with commercial considerations and customer relationships playing an important role.
Some companies choose to absorb the costs themselves, even when they are not entirely at fault. This is done, for example, to avoid protracted disputes or to preserve customer relationships. Other organizations follow a strict cost allocation, recovering all costs from the responsible party once there is sufficient evidence. Sector and product type play a role here. In high-tech and medical industries, the value of parts is high and the impact of a DOA on customer critical processes can be significant, increasing the pressure for quick and clear cost settlement.
The research shows that the cost of a DOA adds up quickly and that in many cases it is more efficient and cheaper to prevent provenance than to recover financial damages after the fact. Prevention starts with packaging design and selection. In one of the cases studied, the number of packaging variants was reduced from about six hundred to twenty-five. This standardization led to a reduction in logistical DOAs of nearly forty percent within five years. Such an approach not only ensures better protection during transport, but also makes quality control easier.
Improving RMA processes can also significantly reduce DOAs. By systematically recording when and where damage occurred on returns, the cause can be identified and remedied more quickly. This becomes even more effective when this data is linked to traceable packaging and sensor information about shocks, tilts or climate conditions during transport.
In addition, reducing rush shipments can provide direct cost savings. In the study, DOAs averaged 14 percent express shipping as opposed to 4 percent for regular deliveries. By strategically positioning inventory in advance or using clear decision rules for deploying expedited shipping, this ratio can be substantially reduced.
Faes’ strength as a Packaging partner lies in the independent role we take. As partner, we analyze relevant supply chain data to gain insight into performance and bottlenecks. Based on this, we perform root cause analysis for causes of problems such as DOAs. We then translate these analyses into clear conclusions and concrete recommendations for structural improvements in the supply chain. By operating independently and focusing on facts from data, we ensure that improvement measures do not remain incidental, but lead to permanent reduction of risks and costs.
Preventive measures require an initial investment in design, materials and process optimization, but the payback period is often short. By taking targeted action in the weak links of the process, companies can not only reduce the direct costs of DOAs, but also increase their reliability towards customers.
Dead on Arrival is not an incidental problem but a structural cost that is unnecessarily high in many industrial chains. The study shows that the true cost often goes far beyond the replacement value of a part and can be more than twice the product value. The causes are diverse, from logistical damage and poor service quality to manufacturing defects, and the question of blame is rarely straightforward in practice.
In such a complex environment, it is tempting to put energy into cost recovery, but the greatest gain lies in the structural prevention of DOAs. That requires chain-wide cooperation, transparency and preventive measures that are demonstrably effective.
This is where the added value of Faes as a Packaging partner lies. In our independent role, we analyze relevant supply chain data to gain insight into performance and bottlenecks. On this basis, we perform root cause analyses into the causes of problems such as DOAs and translate these into clear conclusions and concrete recommendations. By operating independently and focusing on facts from data, we ensure that improvement measures do not remain incidental, but lead to a permanent reduction of risks and costs.
The question of who pays thus becomes less relevant. The question of how to avoid paying at all becomes the new starting point.
Thijs Canjels is Business Innovation Manager at Faes and specializes in packaging management and supply chain optimization. In his blogs, he shares insights on efficiency improvements, cost savings and the strategic role of packaging in modern supply chains.
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