When products are returned by consumers this is a huge problem for businesses. In this post, I’m going to share the secret to low product return rates with you so you can reduce your risks of launching a product on the market that turns out to be unacceptable in some way.
Why a low product return rate should be your goal
Honoring warranty claims is expensive and if it turns out that your product has reliability, safety, or quality issues after it’s being mass-produced and is in their hands in the field, putting them right will be a huge headache. Best case, it’s only a small amount of products that need to be returned, but if there’s a problem with the design it could be far worse.
For instance, a high number of products could need to be recalled, production stopped, and the product redesigned and developed to subsequently undergo comprehensive quality and reliability testing before it’s safe to restart mass production.
Could your business cope with the increased costs to recall products en masse, go through design and development again, and then restart production? How about the disruption in supply for the months it could take? What if your brand is damaged by the high product return rate and poor reviews from irate customers?
There are steps you can take to mitigate the risks of defective product returns, though, and many of these start long before you go into production…keep reading for 7 secrets to getting a low return rate.
1. Having quality design
A good product starts from a quality design which typically focuses on the end-user use case environment, customer requirements, and, most importantly, design for excellence optimizations (such as design for manufacturing, reliability, quality, sustainability, etc) appropriate to your product and its market.
A well-designed product with DFX in mind tracks that the above has been taken care of and that the product design meets your specifications as well as your customers’ requirements as well as how it will be used in the worst-case scenario in the field. A couple of examples of this will be how the products stand up to extreme heat or cold in unusual environments like the Arctic or deserts, or if they will break if used incorrectly by consumers.
Learn more about why your product design needs to be mature before you start working with a manufacturer on development or production here: Why NOT To Work With A Manufacturer Until You Have Mature Product Designs!
Listen to this interesting podcast episode from Sofeast’s podcast where we explain some of the key DFX optimizations importers focus on for their new product designs: DFX: 12 Product Design Optimizations You Should Consider [Podcast]
2. Sourcing quality components
Every product contains numerous components and it’s critical that these components work for the product design specifications and meet the extended use case environment, otherwise higher product return rates can be expected.
For example, if the user is planning to use the product in a very cold environment such as in Alaska, then every single component of that product must be able to function in that cold environment and, similarly, if the product is supposed to be working in a very hot and humid environment such as in the Amazon in Brazil then you have to make sure that you source components that meet and exceed all the temperature-humidity requirements that the product will be used for.
In addition, the suppliers of those components need to go through an extensive supplier audit process and every critical component must have two suppliers to ensure that if one supplier can’t meet the quantity required for production, the second supplier can step in to supplement the rest.
If necessary for some of the CTQ (critical to quality) components some tests need to be conducted by engineering to validate their functionality. Because most CTQ components are custom parts, validation and verification of the specification are required and in some cases, reliability tests may need to be conducted to make sure that they can actually meet and exceed the overall product level reliability requirements.
3. Adopting optimum reliability & transportation testing
You can have a really good design and great components, however, if you can’t have an optimum reliability test plan to test the product then you have no idea how the product will perform in the field.
For that reason, it’s critical to have a very comprehensive reliability test plan that keeps in mind the use case environment, customer requirements, and environmental requirements that have already been mentioned.
In this case, the reliability engineer must create a test plan that is going to be agreed upon by the engineering team and in some cases the customer, and this test plan must be conducted according to design requirements and specifications meaning that before and after the reliability tests the overall product level functional tests must be conducted to make sure the product meets product-level design and performance requirements.
It’s also helpful to perform ISTA II transportation testing, too, during the product development phases. Sometimes you will have products that pass outgoing quality control testing and definitely meet design and reliability requirements, however, once shipped to the customer, you will still have some returns coming in because in this case, the majority of the failures happen during transportation.
For example, if they’re being shipped by train or truck sometimes the vibration causes some of the products to fail. Also sometimes more often the products are sitting in the shipyard or in their shipping containers on the ship and they endure extreme temperatures (high during the day and low at night) that can also cause failures in the units and then once those units arrive at the customer, unfortunately, they may be DOA. Therefore, tests to validate whether the products and their packaging can stand up to the stresses they’ll come under during transit need to be done to ensure that any design weaknesses are taken care of and you maintain low product return rates.
Learn more about how to do product reliability testing in this detailed guide here: How To Do Product Reliability Testing?
We have our own in-house testing laboratory here at Agilian, take a look at some information about it here: Our In-House Testing Laboratory in China
4. Having quality manufacturing
The other piece of the puzzle, in order to achieve high quality and reliability products and benefit from low product return rates, is the manufacturing process. Most often, activities take place during the manufacturing phase of your project that the product design and development teams are not aware of. These include double sourcing or single or multiple sourcing of existing suppliers, or replacing existing suppliers that were qualified and tested during the design and development phase by replacing them with a cheaper second source supplier.
The problem with this occurs when the cheaper second source suppliers have not been audited or qualified and the cheaper components have not been qualified and tested either. If so, then more often than not it causes the product not to meet your specifications nor pass the final test in production as the components are not fit for use. So in order to make sure that this never occurs it’s best that all of those activities in terms of second sourcing or cost-cutting activities relating to suppliers and components take place somewhere towards the end of the development phase before production starts.
Once the production starts the product design and components must be frozen so that no design or component changes take place during production so the only variable will be the production process/es itself in order to reduce your overall risks of problems in manufacturing. Perhaps then you would only expect to, say, find issues with the soldering or placement machine or assembly, and that is the only area that should be focused on as you will not need to worry about untested components being used.
5. Doing ongoing reliability testing (ORT)
One other thing that is very necessary, especially if you have high volume production, is ongoing reliability testing (ORT) that happens during mass production. This helps reduce product return rates caused by defects being caused by production issues, for instance, a faulty process that causes production operators to inadvertently assemble a product incorrectly causing a defect.
ORT can be done in two ways:
- You can take the existing final reliability test that was done in the development phase and remove some of the critical tests from it and combine it with a few random samples taken from the production on a daily, hourly, or weekly basis depending on the product and the volumes. Then you conduct weekly or daily ongoing reliability testing, the main purpose of which is to catch any non-conformances related to product reliability.
If the ORT finds failures then much larger samples must be taken from production and the last reliability validation test conducted during the end of the product development (usually DVT or PVT) needs to be conducted once more to ensure that there are absolutely no critical failures. If any critical failures are found they all need to be corrected and in some cases, production may have to be shut down to prevent any defective products from escaping the line into the field. - The second type of ORT can be in the form of a HASS (highly accelerated stress screening) that utilizes a HALT chamber to apply a variety of stresses (vibration, temperature, etc) to random samples that are more rigorous than traditional tests but should be able to be withstood by the product.
It’s very quick and effective for finding issues that may be very critical to product reliability in the field and traditionally takes place during production (whereas similar HALT testing is done during the product design and development phase).
6. Conducting outgoing QC
Once the product has been manufactured there has to be outgoing quality control to ensure that the product to be shipped to your customers meets and exceeds all the product’s quality requirements (your quality standard would be key here). If not, poor quality units will inflate your product return rates.
Typically AQL is used as a means of measuring the quality of products in the pallets that are going to be shipped. AQL is a random sampling process that finds quality non-conformances in terms of accepting and rejecting per lot that is inspected, and thorough inspections following this process allow every manufacturer to ensure that the lot to be shipped is going to be mainly free of any defects (any defects that are statistically shipped will be within your agreed tolerance or AQL level which should be a part of your quality standard).
Many importers choose to conduct a Final Random Inspection using AQL levels on lots that are ready to ship, as this represents the last time to check the products’ quality before the products reach you. Once they’re in your country it’s probably too late to do much other than try to chargeback the cost of any defective pieces to the manufacturer (if you are even able to do so). Of course, at this point, defective product returns could still be damaging and costly for your business even if you do manage to get some restitution from the manufacturer.
Learn more about the AQL here: What is the AQL (Acceptance Quality Limit)? An exhaustive guide
Listen to this podcast episode where we discuss quality standards: 4 Quality Standard Levels You Should Implement To Reduce Risks [Podcast]
7. Using proper storage
The final step for assuring that you have low product return rates is storing it correctly.
Most companies fail to have a temperature and humidity-controlled storage area/warehouse and as a result, some of the products go through the highs and lows of daytime and nighttime temperature during their storage and the manufacturer has no idea that the products sitting there have become defective. They then ship them thinking that they’re as good as they were when they came off the line and passed all testing.
Aside from the storage area being temperature and humidity-controlled, every stored product must have a date code showing the date of production so that you can tell what their shelf-life is. If they’re too old you must remove those products or else most likely they will have aged enough that they will cause defects to be found in the field and subsequent defective product returns. This is exactly the same principle as use-by-dates on food or medicines.
Finally, you need to have some kind of inventory system. Just-in-time (JIT) is one system where it keeps rotating the product as the new product comes in so that the whole product is taken off the shelf and doesn’t sit there ageing.
It’s generally important not to build up a huge inventory of products in excess of what you will reasonably be able to sell as so much money is tied up in inventory and its storage costs. Many manufacturers build products as they ship and only retain a certain amount in storage as inventory to cover warranty replacements for customers and a little in reserve for emergencies such as a temporary disruption of supply.
Read more about how much inventory you need in this post: Supply Chain Risk Management, Part 4: How Much Inventory Do You Need?
Conclusion
The work done to assure that you only have low product return rates of units that don’t work as expected in the field mainly happens well before mass production, as you can see in points 1 through 4. In addition, in points 5 through 7, there are steps you can take after products have been made to provide an extra safety net against defective products sneaking through into consumers’ hands.
If you wait for returns to come in before investigating why it’s happening, you’re already far too late. Testing and validation need to happen at the product design and development stage to assure that you’ve got a reliable product that will delight customers, as well as packaging that won’t let you down during transit.
P.S.
If you do end up getting returns it’s helpful to understand why customers have requested them. This helps you get started on finding the issue/s and also categorizing the returns. Find out the reasons here: 5 Main Reasons For A High Product Return Rate.
P.P.S.
I’ve mentioned the design and development stage of your manufacturing project a number of times, but where does this fit in? Read this post to see the typical NPI process for electrical and mechanical products and get an understanding of what it takes to get quality, safe, and reliable products to market on time and within budget: An Effective New Product Development Process for Electronics
Author
Our head of New Product Development, Andrew Amirnovin, is an electrical and electronics engineer and is an ASQ-Certified Reliability Engineer.
He is our customers’ go-to resource when it comes to building reliability into the products we help develop. Before joining us he honed his craft over the decades at some of the world’s largest electronics companies such as Nokia, AT&T, LG, and GoPro.
At Agilian, he leads the New Product Development team, works closely with customers, and helps structure our processes.
