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An external failure is a product that ships from a manufacturer and reaches a customer that has some type of flaw or is otherwise defective. This can be physical, and include a product that is damaged but is not held within the company but instead is sold to a customer. There are also functional flaws that can constitute such a failure, which can include an electronic device that does not work properly or which stops working in a short period of time. An external failure can be extremely damaging to a company, since it not only costs resources to replace or repair, but also diminishes a business’s reputation.
There are basically two major types of failure that can occur for a product, which incur different types of costs. An internal failure is a product that is found to be defective or flawed while it is still within a company, which is often caught by someone working in quality control. These types of failures can be fairly expensive for a business, usually due to a waste of resources and expenses to ensure that other products are not similarly flawed.
An external failure, however, is a defective product that is not caught or held within a company, and instead is released for sale to the general public. This can be a single product, perhaps one of thousands of produced items that had a flaw unnoticed by internal quality control. Large scale issues can also arise, however, in which an external failure occurs on multiple products that are shipped out and sold to customers. A mass-produced item might have a structural flaw that occurs on hundreds or thousands of products, and each of these can then be sold to customers.
In the past, this type of external failure was the most common, when a simple mistake in manufacturing resulted in a subpar product. With improvements in technology, however, more recent failures often involve some type of issue with electronics or internal software. This type of external failure can be much more difficult to detect and may require a great deal of time to replace or properly fix for customers.
The expense of an external failure is twofold, both financial and reputational. Companies often pay a great deal of money to recall items that have an ongoing flaw or dangerous defect. Even replacing a few dozen products can require a large expense for the entire process of altering, evaluating, and re-shipping a product. Greater than financial expenses, however, is the damage that such a failure can do to the reputation of a company. Customers may choose competitors after experiencing issues with the products offered by a manufacturer, and large-scale defects can be catastrophic for some businesses.