Dead On Arrival (DOA) means that a product arrives damaged at the customer's premises, immediately incurring high direct and hidden costs. It reduces customer satisfaction, damages your reputation and can amount to as much as 5% of turnover. Good packaging solutions minimise this risk and protect both your margin and your customer relationship.
Summary of this article
They rank high in the top 10 biggest annoyances of high-tech manufacturers, among others: DOAs. But what does DOA mean and what are the consequences for these companies?
DOA stands for Dead On Arrival: in short, a component or product that is already broken at the time of delivery to the customer. They are a source of tricky discussions about system availability, Service Level Agreements and claims.
It can always happen sometime: an entire department shut down because of a breakdown in one of its machines or systems. The cause is usually found quickly. A component is broken and must be replaced. The manufacturer of the machine, a logistics service provider or one of the suppliers quickly pulls a replacement component from the parts warehouse, puts it in a box and sends it by the first available courier to the downtime company. But when the service engineer unpacks and installs the component, he reacts in bewilderment; the machine still doesn’t work. Cause; it turns out the new component is also broken!
Remarkably, DOAs are still not often high on the priority list of manufacturers. That while addressing them can lead to increased net profits, and that’s just talking about the direct costs. By this I mean the costs to repair the damage. Here you can think of:
Although not every manufacturer records the annual cost of DOAs, these costs are, in principle, relatively easy to calculate. Indirect damage and costs are more complex to quantify.
A customer may accept one damaged delivery, but if it happens repeatedly without the root cause being addressed, it can cause significant reputational damage. The customer may start looking for another supplier and may also tell others that the quality of your deliveries is inadequate. These consequences partly develop outside your direct view, but they undoubtedly occur.
In practice, how DOAs are measured appears to vary from company to company. Whatever definition or performance indicator is used, the figures cited by the various high-tech manufacturers do end up being fairly similar. Some companies talk about 0.2%, others indicate that the amount of damage due to DOAs can be as high as 0.5% of annual company sales. That may not seem like a lot, but this percentage is largely based on direct costs only.
Companies report that the costs associated with repairing DOAs can be as much as ten times the cost of the DOA itself. Think of special transports, field engineers who have to stay longer at the location concerned, downtime of the machine in question and extra logistical and administrative actions that have to be taken as a result of the DOA. Viewed through this lens, we are no longer talking about 0.2% to 0.5% of costs to be saved, but about 2% to 5%.
At Faes, we do not see packaging as a standalone product, but as part of the entire logistics process. Especially for fragile, valuable, or critical components, we look beyond the product itself. We analyse how it is transported, stored, handled, and, where applicable, returned.
Based on this analysis, we develop packaging solutions that help reduce risks caused by shock, vibration, moisture, temperature fluctuations, and handling errors.
This may involve custom packaging with the right fixation and cushioning, as well as reusable packaging concepts, packaging management, cleaning, repair, and lifecycle services. In this way, Faes helps companies not only prevent transport damage, but also gain control over hidden costs, downtime, return flows, and packaging performance across the entire supply chain.
For companies in industries including high-tech, medical technology, defence, and industrial manufacturing, this means a lower risk of DOAs, greater control over the supply chain, and packaging that demonstrably contributes to continuity, reliability, and cost control.
When you realize the direct and indirect impact DOAs can have on your business, hopefully you will no longer see good packaging as an expense, but as an investment. Good packaging leads to fewer claims, which leads to more satisfied customers and thus more sales and profits. My colleagues and I are happy to help you understand your DOAs and packaging processes and, of course, develop the right packaging.
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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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