Warranty processing cost

Improperly set tolerances and uncontrolled variation are one of the greatest causes of defects, scrap, rework, warranty returns, increased product development cycle time, work flow disruption and the need for inspection (Gerth and Hancock, 1995). If manufacturing processes did not exhibit variation, quality problems would not arise, therefore reducing the effects of variability at the design stage, in a cost-effective way, improves product quality (Bergman, 1992 Kehoe, 1996). 

Your general aim should be to improve product quality, increase productivity, and reduce the cost of development and manufacture. However, productivity is not easy to measure with multiple products on multiple lines, each at a different stage of maturity. This makes comparisons to detect changes in productivity difficult, if not impossible. However there may be factors common to all product lines, such as labor costs. Merely outsourcing manufacture to developing countries may not improve your productivity. The labor costs may reduce but rework and warranty claims increase. Productivity is only improved if product quality has been maintained. Certain processes may also be common to more than one product line and hence improving productivity of common processes can have wide-ranging impact. 

Customer complaints Warranty claims Failure analysis reports Process capability studies Service reports Concessions Change requests Subcontractor assessments Performance analysis Deviations and waivers Contract change records Quality cost data External Quality Audit records... 

In the given case study, it is possible to introduce additional terms into this comparison which may look at energy implications such as process machinery and infrastructure life cycle energy costs, warranty repair, supply chain PSS, for example, depending on the company s scope and business model. 

Interesting contributions as the one above mentioned can be found in the literature regarding this topic. In order to synthesize and summarize them, let say that authors of these contributions try usually to identify the process, the actions, stages, tools, methods or necessary support techniques to manage properly the warranty costs. 

Basically, a well-established model on warranty management shall help to achieve a successful goal in the performance of the company warranty service. Hence, by reengineering of management processes and the application of a correct warranty cost model, it is possible to ... 

In addition to these cases, there are other authors mentioned in the literature review who deal with warranty and maintenance. For instance, in that scenario where failure/repair are age-dependent (case 9), the evaluation of the warranty cost depends on the failure process, the degree of repairs, and the prescribed maintenance of the item. The expected warranty costs associated with the product sold under warranty would depend on the warranty contract and the maintenance schedule associated with the product (Boyan Dimitrov et al. 2004). Most technical items have some... 

A warranty cost model must help to define new, clearer policies and procedures for claims processing. Basically, a global management model shall involve ... 

Finally, archived process data are useful in an investigation of field failures. The traceability of the troubled product to the exact process parameters used on the assembly line at that time, material lots, operators, and so on can be accessed these data are invaluable for the follow-up root-cause analysis, particularly in the case of high-valued, high-consequence electronics systems (e.g.,military equipment, space and satellite hardware, as well as medical and automotive electronics). Understanding the circumstances under which the defective product was made can also provide insight into implications regarding long-term reliability and specifically warranty costs versus liability and the need to implement a product recall. 

The simulation of the costs of a warranty event and the statistical conclusions are only one part of the risk assessment process. 

Also important is the calculation of the revenues of the warranty arrangement for the maintenance company. To consider this information a database is included in the risk simulation process, containing all warranty rules and maintenance contract details. After the cost simulation every simulation run is filtered by the revenue database which results in the real revenue of a warranty event. Beside the contract and warranty information economical company parameters like marginal returns and handling charges are included as well. 

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