Warranty
Problem Solving

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Background

Through many years of working in the warranty department at a major OEM and in the supply base, we have used many different methods trying to problem solve and provide warranty reduction. The common cause reason for ineffective problem solving is creating an “engineering quick fix” solution instead of identifying the “root cause”.  Unfortunately, the quick fix is the highest cost solution and usually only temporarily reduces warranty costs, call it a band-aid.

Objectives

The warranty objective is to identify the root cause first, then discuss different economical solutions and apply the one that best provides the complete desired result.

Experienced Solutions

  • Test it “right” the first time (Product Validation)
  • Educate your Customers (On product usage) Dealership Training
  • Closely monitor failures during product pre/post launch (Data Analysis-Trends)
  • Develop a program to periodically gather parts for warranty problem solving analysis
  • Evaluate both conforming and non-conforming parts for contrast and leverage analysis
  • Apply solutions/error-proofing to similar  products/processes (read-across)
  • Incorporate lessons learned into new product designs

Warranty Drivers

The most expensive time to utilize technical problem solving in design or process is after the vehicle has been delivered to the end user.  These costs are both direct (cost of labor at dealer service, costs for dealer marked-up parts) and indirect in a devastating way (customer dissatisfaction)

Warranty claims rise from many causes:

  • The part fails one or more of its designed functions
  • The customer has wrong expectation for function of the part
  • The design is successful but logistics or process are weakening its function causing failure
  • Other systemic causes beyond engineering and manufacturing

But the potential warranty savings are enormous:

  • Labor accounts for approximately 50{c145be4de7246592da52de1c48499f1d89ada9817d19d7527f412d27309c84ec} of total warranty costs
  • Improved serviceability processes reduce basic vehicle warranty costs
  • Direct cost reductions in actual part costs
  • Extended Service Plan (ESP) warranty costs, often twice the basic vehicle warranty
  • Organizations should not take on a warranty reduction task or technical problem solving task without an understanding of the entire warranty reduction cycle: the data collection system, claims processes and organizational entities that manage their part/component after it leaves the assembly plant, the acquiring of the pristine defective parts for analysis, effective technical problem solving, the validation of the root cause, the error-proofing to ensure zero defects, complete document updates and application of lessons learned on new programs and read-across on current programs.

warranty-reduction-cycle

 

Know your OEM’s warranty policy for your commodity  (Better yet, help write it)

  • Suppliers should be proactive in approaching their OEMs with regard to warranty implementation and warranty cost sharing.  Getting in early offers the supplier an opportunity to guide policy guidelines, standards, and implementation.
  • Prepare for warranty sharing costs only after thorough data analysis

 

Many discussions are necessary before an agreement is struck.  For example, important ones to research immediately would be:

  • Your OEMs’ business systems: access to warranty data, claims criteria
  • Exposure impact if de-sourced
  • OEM-directed sourcing and its impact on your warranty performance
  • Opportunity to change specifications in order to reduce your warranty costs
  • Dealer charges vs. actual costs to implement claims.
  • Warranty agreements already signed by companies you are looking to acquire

warranty-drivers

Recommendations and Acknowledgements

  • Warranty problem solving is a highly technical specialized skill
  • Develop a Warranty Process Map to describe how you follow through your organization
  • Include data analysis and customer data (mining) interaction as a necessary skill set
  • Continual warranty project work to maintain your skill set (i.e. Sustenance Training)
  • Customer to dealership to OEM to supplier working knowledge for factual data facilitation
  • Thorough understanding of Multiple Environment Over-Stress Testing (MEOST) principles and application and Aggravation Testing application.