In this episode…
The Sofeast Group’s head of New Product Development, Andrew Amirnovin explores what the product return rate is and provides advice you can take to reduce yours before you even start mass producing your product. If you do start to receive product returns, he also gives you a 6-step process you can follow to categorize the issues, focus on the most important, fix them, and monitor to see if the fix is working.
Product returns are bad news as they may show that something is wrong with your product’s quality and/or reliability, so take away this advice and start implementing a better NPI process that avoids these issues today…
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🎧 Your Product Return Rate & How To Control It 🎧
00:00 – Greetings, introducing the topic.
01:17 – Andrew introduces his role as new product development head in the Sofeast group.
A brief explanation about how we work with customers at Sofeast and Agilian Technology to bring new products to market using a comprehensive 5-phase new product introduction process from design to prototype testing to assure quality, reliability, and compliance.
02:58 – What is the product return rate?
When a customer returns a product after purchase for whatever reason, this is a product return. The return rate is the percentage of sold products that are returned and lower is always better of course.
05:07 – How return rates vary depending on product type.
For general consumer products, especially those sold in large quantities in online marketplaces, the return rate could be as high as around 20%, but for sensitive products like medical devices, we would expect a very low rate as defective products could harm users.
06:45 – What are the 5 main causes of product returns?
The 5 main causes are all linked to a degree. The first two are probably responsible for the highest percentage of returns and in these cases, there may actually be nothing wrong with the product which is why a high consumer product return rate for products sold in large quantities doesn’t always mean the product is a disaster.
- Customer remorse – customer changes their mind about the purchase and returns it.
- Gift returns – customer returns an unwanted gift.
- DOA – products are fine when shipped, but are dead on arrival.
- Poor quality – the product doesn’t meet your or the customer’s standards, for example, it’s the wrong color.
- Poor reliability – the product breaks down or fails too soon, angering the customer.
The solutions to these causes would usually be found by doing stricter testing and validation during the NPI process.
10:37 – 7 Steps you can take to ensure you get as low a return rate as possible BEFORE the product is sold.
Reducing the chances of products being returned takes work before the product goes into mass production. There are 7 steps you should consider:
- Having quality design – this needs to be right from an early stage, otherwise, it causes problems throughout. The product design stage is often responsible for around 70% of the total project costs.
- Sourcing quality components – garbage in, garbage out! Components will preferably exceed quality requirements to provide a buffer.
- Adopting optimum reliability & transportation testing – companies often skip transportation testing (ISTA-2) on packaged products which can result in DOA products as they get damaged during transit. Products also need to be reliability tested for as many use case scenarios as possible leaving no stone unturned, as otherwise when they get into users’ hands, reliability issues will come up that were missed as that potential scenario wasn’t tested for.
- Having quality manufacturing – the manufacturing environment needs calibrated equipment and tested processes, and this can lead to lower yields and products being shipped with issues. Finding ISO 9001 manufacturers and auditing them will help.
- Doing ongoing reliability testing (ORT) – for new products especially, this is critical in the first few months after mass production starts and is where products are tested for reliability over time to provide a safety net and find any issues that had escaped notice up to then.
- Conducting outgoing QC – assures the integrity and quality with batches of products being inspected for quality issues, maybe adhering to an AQL, before being shipped.
- Using proper storage – paying attention to storing components in a suitable environment and using a FIFO (first in first out) system to ensure that products don’t get made with faulty inputs is important. Conducting supplier audits will ensure that the storage facilities and manufacturing environment are suitable.
25:51 – If a product you’re already selling starts getting returned, what can you do? (6 steps)
Unfortunately, putting issues right when a product already on sale starts getting returned is very costly, so ideally it’s better to avoid them by taking the measures discussed before. However, there are 6 steps to take to find and fix issues when products get returned:
- Triage – categorize the returns based on the problem found. The data can be used to find the 20% that cause 80% of the issues and focus on those first.
- Establish a sustainability team – including team members from supply chain, design, manufacturing, etc, who each lend their skills to work together on determining how to fix the problem/s.
- Determine fixes – what recommended actions should be taken to fix the issue? This could be redesigning an aspect of the product or using a different component, for example. Testing will probably be done on prototypes to assure the fix is effective.
- Update the lessons learned database – the fix must be written down in the database so it can be referred to later and provides a learning resource for this and future products.
- Manufacture a new-build product with the fixes – the fix is now rolled out into a new production run.
- Monitor the field return rate of the new-build product – keep a close eye on returns and see if the return rate decreases, in particular for the issue that was fixed.
33:00 – Some famous product recalls.
The Takata airbag scandal led to driver deaths and recalls of 35 to 40 million airbags. A classic case of problems that could have been avoided with more comprehensive earlier testing.
More than 200 people died due to unreliable Firestone tires in the USA which also led to a mass recall.
36:10 – The role of the NPI process – good design, good testing, and good manufacturing make up a solid NPI process. Reliability is a crucial focus during new product development and this is comprehensively validated and tested during EVT, DVT, and PVT. Finding issues in the product design and fixing them long before the product is ready for manufacturing is the purpose of investing time and resources into following a solid NPI process.
38:27 – Wrap up.
- Our foreign-owned and managed contract manufacturing subsidiary Agilian Technology can help you develop and mass produce your new product in China.
- Read The New Product Introduction Process Guide for Hardware Startups
- Watch New Product Introduction Process Walkthrough (For New Electronic Products)
- Listen to Why Skipping NPI Phases Is A Big Mistake [Podcast] and Sourcing from Taobao for mass production? Stop it! [Podcast]
- Watch a number of videos we created about the NPI process
- Read 5 Main Reasons For A High Product Return Rate
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