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Warranty Mysteries Revealed

In a recent blog, Who Warrantees the Products You Buy?, I raised a couple of questions about the warranty process in the electronics manufacturing industry, in response to research recently conducted by IDC Manufacturing Insights. IDC immediately contacted me to answer some of those questions, and the news — at least as it pertains to warranty procedures — isn't good.

“What we found was the overall ability to drive warranty improvement is low,” said IDC's Sheila Brennan in a phone interview. “There wasn’t a lot of commonality in the [manufacturing] industry,” which, for the IDC study, included automotive companies, white goods makers, industrial equipment manufacturers, and consumer electronics companies.

In my blog, I noted that it was unclear from the IDC study where exactly the warranty process was being measured. The answer is anywhere and everywhere — the development and execution of warranty practices can originate in a company's IT department or its legal, manufacturing, or financial divisions. “Every title under the sun was responding to the survey,” said Brennan. “It was clear that there are a lot of discrepancies among manufacturing companies.”

I also wondered if outsourcing has had an impact on benchmarking and warranty performance in finished goods. Although outsourcing wasn't specifically measured in the survey, warranty practices are ultimately the responsibility of one party: the OEM (or brand owner). “No matter how many hands a warranty passes through, a good or bad customer experience will impact the brand owner,” Brennan said. “It becomes very critical that the brand is connected to the warranty execution.”

IDC has recognized opportunity amidst the chaos — it has developed a model by which companies can self-assess their warranty practices. IDC intends to make the Warranty Management Capability Maturity Model available through non-profit organizations such as the Institute of Warranty Chain Management. In addition to benchmarking, the model helps companies use the data they generate to improve performance.

“What we'd like to see is an emergence of voluntary compliance practices,” Brennan said. “We'd like to turn [the model] over to an organization that can help its members evolve. Once we saw what we had, we thought 'let's develop it and put it in the right hands going forward.'”

12 comments on “Warranty Mysteries Revealed

  1. Ariella
    June 2, 2011

    I wonder if there are stats around that show how many people put in a claim on a warranty versus how many people just didn't bother and either fixed the problems themselves or replaced the product. Some warranty are rather sneaky in their wording so that you buy the product thinking everything is covered and then find out that what you want to claim is excluded for some reason. Also when you have coverage for parts but have to pay for labor, it does not necessarily help you much.

  2. jbond
    June 3, 2011

    Ariella, your comments are exactly right. Many warranties aren't spelled out without using some loopholes. It seems like today many products have become throw away products. If something goes wrong with them, it is cheaper for you to throw them away and buy a new one rather than paying to repair it. This even includes something’s covered under warranties. I personally have at least 2 companies that I won't buy their products anymore after dealing with their warranty departments and their contradictive statements. That is definitely a few cases where brand recognition comes into play.

  3. FLYINGSCOT
    June 3, 2011

    In the semiconductor industry we measure warranty performance in terms of number of field returns and time to respond successfully to the satisfaction of the  customer after an issue.  Our customers keep similar metrics of our warranty performance which they then use to rank their suppliers with the worst performers being removed from the approved vendor list.  This then means we cannot sell to them anymore.  An interesting observation is I have seen companies with poor quality products beat out those with fairly high quality products because the former was much quicker to resolve the customers warranty issue eg. a customer could be a lot happier if it had 10 warranty claims that were fixed immediately versus 1 warranty claim that took ages to resolve.   Something to ponder when developing a warranty strategy for your own company.

  4. t.alex
    June 3, 2011

    Ariela, you are right. I realize a few times there is always fine print in the warranty which we almost never bother to read. What people care most about warranty? I guess it is the duration, i.e. how many years the product is covered.

  5. Ariella
    June 3, 2011

    flyingscot, what you report indicates that customer service really is key in retaining loyalty. I know that I get very annoyed when I find that a place does not live up to the guarantees it proclaims. That's why they like to keep loopholes that are not spelled out, but sometimes they just don't live up to their guarantees even without loopholes. I remember contacting an online retailer who had the “guaranteed lowest price.” I told him that I found the exact same product at another site for less. The manager didn't offer to beat it or even to meet. Instead, he toldme I should buy it from the other place. So much for promises.

  6. Barbara Jorgensen
    June 3, 2011

    Flying Scot–that is an intersting point–lower-quality goods doing better because the warranty response is more prompt. An example of warranty practices being a competitive advnatge, much as he supply chian can be when well executed.

  7. Adeniji Kayode
    June 4, 2011

    Ariella:

    I agree with you on that. Left to me i don,t think there is anything called warranty.While it is not available on some products, some manufacturers or stores dont even offer it, the moment what you bought worked well at the point of purchased,that is all. But some times you just arrive from the store and the gadget you bought few minutes ago will not come on and you have to return it all for you to pay for the repair.

  8. Adeniji Kayode
    June 4, 2011

    jbond:

    you are right, i think the warranty stuff has become a bait more that a customer care

  9. Adeniji Kayode
    June 4, 2011

    That is true but I think any company would have done the same just to gain ground in the market and climb up the ladder.

  10. Ariella
    June 4, 2011

    In cases like that, Adeniji, most reputable stores will take the product back and at least offer you an exchange. You just have to push a bit for it sometimes. It happened that I once purchased a digital camera from Office Max, and the hinge over the memory card broke when I put it in. I brought it back. The store clerk said that their policy was not to offer a refund on anything that was opened, but they coudl offer an exchange. I explained that I didn't want an exchange because the camera's design appeared flawed to me. I also pointed out that I could either circumvent the rule by taking the exchange and then returning the sealed camera or just honestly get a my refund credited on the open one. The store manager understood my position and granted the refund.

  11. SunitaT
    June 6, 2011

    Barbara,

     Can you throw some light on Warranty Management Capability Maturity Model. What are important input parameters to this model ? Is the model currenly available or IDC is still working on the model ?

  12. Barbara Jorgensen
    June 6, 2011

    Hi–the model operates like a SCORE model and is a type of self-assessment tool by which compnaies can idenitfy their warranty porcess and then identify areas for self-improvement. I guess another term would be a benchmarking tool. IDC is currently working with a Warranty Association group to make the tool available for free on the members' website. I'm not sure if it is avaialble for download yet–i think IDC is giving warranty-industry associations right of first refusal.

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