Playbook: Identify Faulty SKUs Costing You Money
How to use fault data, return rates, and failure analysis to find the products silently driving your losses.
This playbook shows you how to identify which products are driving your return and warranty costs — and what to do about it.
The Goal
Move from "returns are a cost of business" to "we know exactly which SKUs, fault types, and suppliers are costing us money."
Step 1: Configure Failure Analysis Thresholds
Go to Settings > Warranty Settings and set:
- Amber threshold: 2% (default) — flag products approaching concern
- Red threshold: 5% (default) — flag products with a serious failure rate
Products exceeding these thresholds are highlighted in analytics with traffic light indicators.
Step 2: Ensure Fault Codes Are Being Assigned
Fault data is only useful if it's being captured. Check that:
- Your fault code hierarchy covers your product range
- SKUs are mapped to product families
- Your team is assigning fault codes on every warranty RMA (not just writing free-text notes)
If fault codes aren't being assigned, your analytics will be empty.
Step 3: Review Product Return Analytics
Go to Analytics > Products and look at:
Highest Return Rates
Which SKUs have the highest return rate as a percentage of units sold? A product with a 4% return rate on 300 units sold is a bigger problem than one with 10% on 10 units.
Most Returned SKUs
Which SKUs have the highest absolute return volume? These drive the most operational cost regardless of rate.
Return Type Breakdown
What percentage of returns are warranty vs regular? A product with 50% warranty returns has a quality problem, not a customer satisfaction problem.
Faults by Category
Which fault types are most common across your catalogue? If "charging issues" dominate, that's a design or supplier conversation.
Faults by Severity
Are you seeing more CRITICAL faults over time? That's a quality trend that needs intervention.
Step 4: Build Your Supplier Case
Export the data and present it to your supplier with:
- SKU-level failure rates — "Product X has a 4.5% warranty return rate"
- Fault classification data — "68% of returns for Product X are charging-related"
- Severity distribution — "35% of faults are classified as HIGH or CRITICAL"
- Cost impact — use warranty resolution data to show repair costs, write-off value, and shipping costs
This is how you get credits, replacements, or quality improvements from suppliers.
Step 5: Take Action
Based on the data:
| Finding | Action |
|---|---|
| SKU above red threshold | Escalate to supplier, consider pulling from sale |
| Recurring fault category | Request design change or batch investigation |
| High write-off rate | Negotiate supplier credit or return-to-supplier arrangement |
| Shipping cost concentration | Review whether customer-paid returns should apply |