One of the key advantages to buying components through an authorized distributor is the pass-through warranty. In other words, an authorized distributor can automatically guarantee the same quality and support of a product as the original manufacturer.
This is a key differentiator in the channel for authorized distributors -- while other channels will take back and replace defective parts, only an authorized distributor can act on behalf of the supplier, repairing, replacing, or sending back defective parts directly to the manufacturer's factory.
Components makers want to protect their brands by making sure they are not associated with counterfeit or substandard parts that are passed though the channel with their brand name attached. The same holds true for finished products: Brands have to make good on their promises and their warrantees if customers are going to continue to associate their brands with high quality.
These are reasons why I found a recent report by IDC Manufacturing Insights so surprising. The report reveals that while most product companies recognize the criticality of effective warranty management practices, very few companies are addressing the problem effectively.
Key findings from the survey include:
- Most product companies do not consistently benchmark their warranty organizations, with less than 20% of companies even benchmarking internally.
- Low product quality and poor warranty coverage and repair can significantly tarnish a brand. However, only a little over half of leading companies and less than 20% of laggards use warranty management proactively to improve their brand image.
- Nearly all (92%) of leading companies are pursuing opportunities to improve accrual management, but only 61% of laggard companies do.
- Approximately 60% of leading companies employ proactive means to improve warranty performance through the use of fraud detection methods and early quality warning systems. Less than 20% of laggard companies do.
According to Joe Barkai, practice director for IDC Manufacturing Insights' Product Lifecycle Strategies research service, "the manufacturing industry's ability to drive warranty improvement is minimal." He said:
The use of benchmarking to assess performance and implement continuous improvement is disappointedly low and the application of IT tools to manage warranty transactions, perform warranty and quality analysis, and improve financial management is very inconsistent. Until now, the industry has not had a set of best practices to rely upon.
I know in the components arena, suppliers measure distributors' on-time delivery, accuracy and quality on a continual basis. The total quality management (TQM) revolution in the 1980s vastly improved both manufacturers' and distributors' quality performance and helped companies established their own performance benchmarks within their organizations. In finished goods, however, I wonder if outsourcing has had an impact on benchmarking and warranty performance. Many OEMs also rely on their EMS and ODM partners to ship and support finished products.
It's unclear from the IDC study where exactly the warrantee process is being measured. Some OEMs still directly support their products through their own repair services: General Electric Co. (NYSE: GE) appliances still have their own repair people; Sharp Electronics Corp. , and Dremel (these are just a few companies I've dealt with recently -- I am sure there are many more) require consumers to ship defective products back their factories.
For the most part, I've been happy with warrantee support from these companies. I've been less happy with some furniture, where the warrantee on the frame is 5 years but the materials (in this case, leather) are only covered for 1 year. This is because two different companies are responsible for supporting those particular products.Purchasing professionals: How comfortable are you with the warrantee coverage you receive with your purchases? Let us know on the message board below, or write to us at email@example.com