For the virtual chain, handoffs and outsourced delivery can markedly reduce the company s control over quality. More importantly, quality failures in the e-chain are visible to the customer. In the theory of quality management, quality failures are distinguished as either internal or external failures. Internal failures are quality defects discovered by the supply chain before the customer sees them. These represent the vast majority of failures experienced by the traditional chain.
External failures are ones discovered or seen by the customer.
These failures are the most expensive both in terms of correcting the defect and regaining the lost goodwill. Unfortunately for e-tailers, external failures are the far more prevalent of the two. Traditional retailers typically have in-house repair personnel. And in any case, they would take responsibility to ensure that the repair is done correctly before the item is delivered. Internet firms do not have a local presence, so they typically outsource repair to a third party such as FurnitureMedic .