"DOA costs even higher than originally thought"

Erik Drissen
Erik Drissen
Business Consultant
More articles by Erik Drissen

Seminar results DOA research on 16 June 2015

On Tuesday afternoon 16 June 2015, a presentation took place on the latest results of a recent study on DOAs by the University of Groningen (RUG). Johan Faes – CEO of Faes – welcomed the seminar participants himself and told the audience more about our vision, including in the field of Defects On Arrival. 

Following Johan’s introduction, I briefly presented the results of the 2013 RUG study. This study focused mainly on direct costs.

Demonstration: how can PackAssist help prevent DOAs?

After presenting the research results, I told our participants more about PackAssist. This packaging management software has been developed to contribute substantially to the reduction of Defects On Arrival. Packaging instructions are immediately made visual for logistics staff, so that even language is not a barrier to the correct and well-protected packaging of (fragile and valuable) products. As an example we treated a folding box. The participants were given the correct instructions via PackAssist and they could start working with them immediately.

We discussed not only direct and indirect costs of DOAs, but also some consequences that are less easy to demonstrate with data.

Erik Drissen | Business Consultant at Faes

What about the indirect costs of DOAs?

During the seminar, our participants learned that delivering products or components with damage not only involves direct costs, but also indirect ones. In addition to the direct costs, the indirect costs take another 10% off the profit! Joris ten Doesschate presented the results of his (follow-up) research into the indirect costs of DOAs. Using an Activity Based Costing methodology, the following cost items emerged:

  • Logistics effects
  • Diagnostic costs of a component
  • Analysis costs for determining the causes
  • Prevention costs
  • Management time for correction and prevention

More about the financial consequences of DOAs – direct and indirect – read my blog ‘DOAs take 30% of profits’ here.

Invisible consequences of DOAs: customer satisfaction and image

Then there were even more consequences of DOAs that we discussed during the seminar. Consequences that are sometimes difficult to map and the effects cannot always be expressed in figures. Another important element of DOAs is customer satisfaction. Although this is not yet fully insightful, the estimate is that the effect of DOAs on customer satisfaction and image may well be much greater than previously thought.

Would you like to know more about the indirect costs of DOAs and what consequences this could have for your company? Let us know via the contact form below, or contact us directly!

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