High Warranty costs
Statement 1:
We are suffering from too high warranty costs for many years
57% of the participant agreed.
This is not wanted. High warranty costs have a few nasty side effects:
- Unsatisfied customers
- Bad advertising, running faster than good ones, with possible loss of market
- negative effect on company profit
- waste on development resources to solve these problems
- possible increase of costs
- time to market for other products delay because of a lack of development resources.
- ...
Why does this happen all the time? Despite all kind of quality actions we are unpleasantly surprised again.
Dead on Arrival (DOA)
Warranty costs are always spend after 0-hours, so after the quality period. DOA's are alarming. But they can have an economical reason as well.
There are customers who want their money back if the quality (conformance to their expectations) is not good. It is not always easy to get the money back unless you say the product doesn't work at all. Some suppliers accept it. The bottom line is that the product is sent back to their supplier with the remark DOA. Very annoying because it takes wasted time for finding a fault which does not exist.
There are also real DOA's. Reliability problems caused by storage, transport, inadequate handling by the customer? Do they read the manual? Most of the time they don't. Therefore it is strongly recommended that the product is designed in a way that a wrong connection can not kill the product. It will not work though. On return real DOA's are reproducible defective, hence can be analyzed and solved
But what if the DOA is present with the customer but not with the supplier. NDF (No Defect Found)? Most of the time they go back to the field for a special price.
Another problem is interfacing. The product does not work together with other connected devices. Mostly caused by a mismatch of interfacing (too critical parameters) or unknown properties of the products involved.
Many DOA's mean often a weak design, which also makes warranty a costly issue.
Sometimes there is a relation between DOA en rejects in the factory.
Early failures
In the beginning of life more defects are found. The so called early failures, the start of the well known bathtub curve. Customer are compensated for the costs by means of warranty. A long time ago they were considered as inevitable, but that is an old fashioned opinion. They are just not found early enough in the design stage by lack of adequate testing. A primary job for reliability engineering. Although, the more complex the product, the more difficult to find, but not impossible.
According to statistics there are products(eg. cars) from certain suppliers on the market who always suffer from early failures. Once they are on the market for almost two years most of these early failures are taken care of.
As long as their customers accept it, the supplier will not change their attitude. If it is economically correct is questionable. Modifications and repairs within warranty could be more expensive than prevention by a better developing and testing procedure. Certainly if safety aspects are involved. It could cost market share as well.
The important question for the top-down would be how many warranty costs one would accept for this product. If this is known it is easy to calculate the required reliability of this product. Development and testing should take this requirement into account and use reliability budgeting for a breakdown of the underlying parts.