Archived Copies of Warranty Week
- Medical and Scientific Equipment Warranties: Most of the manufacturers in this industry have low warranty expense rates, except for those whose products use lasers or X-rays. But while their expenses are higher, they've also done the most to reduce warranty costs over the past decade.
May 23, 2013
- Appliance and HVAC Warranties: With huge amounts of warranty cost-cutting reported by United Technologies and others, the industry trend for expense rates is now firmly downwards. But HVAC and household appliance makers used to spend even less on warranty a decade ago.
May 16, 2013
- Aerospace Warranty Report While a huge increase in Boeing's warranty costs is driving up the average for aerospace OEMs, the suppliers of avionics, jet engines, spare parts and other aircraft components are seeing their lowest warranty expense rates of the past decade.
May 9, 2013
- Semiconductor Warranty Report: Unlike in most industries, with integrated circuits the production machinery generates most of the warranty cost while the actual products made by those machines generate less. However, the machinery makers have done a much better job of reducing their warranty expenses over the past decade.
May 2, 2013
- Telecom Equipment Warranties: With so many big companies off the list after acquisitions and bankruptcies, many of those still left are finding it hard to keep costs low. But a handful are making spectacular progress, according to the latest data.
April 25, 2013
- New Home Warranties: Sales are rising and so are some warranty expenses. Builders and their suppliers, slammed by the recession, are getting back to normal. But who is figuring out their accruals per home and why are they doing it so badly?
April 18, 2013
- Supplier Recovery: If all the warranty expenses that were caused by suppliers were paid by suppliers, what would the industry split be between them and the OEMs that they supply? And are the OEMs now recovering a quarter of what they could, half of what they could, or three-quarters of what they could?
April 11, 2013
- Automotive Warranty Report: Automotive manufacturers are cutting their warranty costs to the lowest levels of the decade. Sales are recovering from the depths of the recession but warranty expense rates are remaining low. However, some of the suppliers are paying more as the OEMs get better at seeking reimbursements.
April 4, 2013
- Computer Warranty Report: In terms of streamlining the warranty process so it can be as efficient as possible while making more reliable products, computer manufacturers and their suppliers are doing a great job. But at the same time, they went from spending the least on warranty in 2009 to the most ever in 2012. How can both statements be true?
March 28, 2013
- Tenth Annual Warranty Report,
Totals and Averages: The automotive manufacturers are cutting their warranty expenses while the computer makers are seeing higher costs. But put them together, and they're paying the smallest percentage of their revenue ever for warranty work on their products.
March 21, 2013
- Top 100 Warranty Providers of 2012: While most of the largest manufacturers continued to reduce their warranty costs last year, some saw dramatic increases. Here are the top up and down percentage changes of the year for three warranty metrics: claims, accruals, and reserves.
March 14, 2013
- Extended Warranty Conference: The WCM Conference provides both basic and advanced presentations about both manufacturer's warranty and extended warranty issues. So how can one person see it all? This week, we look at the sessions that are most appealing to extended warranty professionals.
March 7, 2013
- Warranty Conference: Opening in two weeks, the WCM Conference provides both basic and advanced presentations about both manufacturer's warranty and extended warranty issues. So how can one person see it all? This week, we look at the sessions most appealing to manufacturer's warranty professionals.
February 28, 2013
- Warranty Workshops: Three of the four pre-conference workshops at this year's WCM Conference are built around analytics, but none require much math. Instead, they lay out the business case for analytics, and the benefits the software and services can provide. Another workshop promises to show diversified manufacturers how to gain a global view of their warranty operations.
February 21, 2013
- Warranty Keynotes: The typical warranty manager is going to transform from a data processor into a data communicator, according to the predictions of the keynote speakers at next month's WCM Conference. They're going to become the eyes and ears of the corporation, advising other departments how their products are being used and what's causing them to break.
February 14, 2013
- Warranty Accounting Standards: Out with the old and in with the new. FIN 45 for product warranties and TB 90-1 for extended warranties have been replaced by the Accounting Standards Codification, a vast yet easy-to-navigate unification of all GAAP standards.
February 7, 2013
- Addressing Common Business Challenges Associated with Manufacturer Warranties: Proper estimation and accounting of warranty costs isn't easy, but the benefit of doing so is enormous. Actuaries in pursuit of precise and accurate forecasts can employ techniques similar to those used in estimating the financial impact of insurance coverage, and can help a company avoid restatements and other adverse impacts that could threaten its profitability.
January 31, 2013
- Dell's Extended Warranties: Though its hardware sales have flattened, the importance of Dell's extended warranty program continues to rise. While a few years ago it was twice as large as the product warranty operation, now it's four times larger. And it accounts for a rising percentage of the company's total revenue.
January 24, 2013
- Apple's Extended Warranties: Every once in a while, someone sues Apple over its sales of extended warranties. But they never quantify the amount of money involved. Turns out, it's huge, based on some assumptions we made using figures from the company's own annual reports.
January 17, 2013
- Service Contracts & Repair Costs: In the ongoing clash between those who sell extended warranties and those who say take your chances, the odds of saving money depend upon the cost and likelihood of needing a repair.
January 10, 2013
- Warranty Week 10th Anniversary: Over the past decade, as warranty professionals began to pay more attention to warranty chain management, a publication was launched that paid attention to them. And warranties have never mattered more, or cost their providers less.
December 20, 2012
- Computer OEM Warranty Metrics: There are multiple ways to look at the same statistics. And there are multiple ways to gauge cost-cutting, consistency, and accuracy with warranty totals and estimates. In different ways, using different metrics, Apple, HP and Dell are each leading their industry.
December 13, 2012
- Warranty Marksmen, Part 2: In high-tech industries, a few dozen companies have apparently learned how to expertly tune their warranty accrual rates and reserve fund balances, so that there's always enough money set aside to pay claims. Here are the top 20.
December 6, 2012
- Warranty Marksmen, Part 1: Given the average duration of a company's product warranties and the predicted repair cost, a company should be able to accurately estimate how much they need to set aside. But some companies are better at it than others.
November 29, 2012
- Warranty Estimates, Part 3: Companies in the building trades are supposed to carefully estimate the size of their warranty liabilities. But sometimes, their estimates are too low, and the amount they set aside is too meager to pay all their expected claims.
November 21, 2012
- Warranty Estimates, Part 2: Automotive companies are supposed to carefully estimate the size of their warranty liabilities. But sometimes, their estimates are too low, and the amount they set aside is too meager to pay all their expected claims.
November 15, 2012
- Warranty Estimates, Part 1: High tech companies are supposed to carefully estimate the size of their warranty liabilities. But sometimes, their estimates are too low, and the amount they set aside is too meager to pay all their expected claims.
November 8, 2012
- Most Improved Warranty Metrics, Part 3: While the short-term changes in warranty expense rates have a lot to do with the recession, the comparisons with 2003 and 2006 data have also identified numerous warranty cost-cutters.
November 1, 2012
- Most Improved Warranty Metrics, Part 2: Warranty expense rates have been on a downward trend for most of the past decade. And most of the manufacturers are reducing their claims and accrual rates year after year. Some, however, continue to cut costs faster than their peers.
October 25, 2012
- Warranty and Mobile Apps: Android and Apple mobile devices, already a huge market for extended warranties and service contracts, are quickly becoming a platform for warranty professionals who spend a lot of time away from the office.
October 18, 2012
- Most Improved Warranty Metrics, Part 1: While many companies manage to reduce the percentage of revenue they spend on warranty, some do it better than others. Rising sales helps. So does building a better product. And then some companies are merely returning to normal after ending a "warranty excursion."
October 11, 2012
- Homebuilding Warranty Metrics: The builders of single-family homes were always good at shifting warranty expenses to their suppliers and subcontractors. And though their warranty expenses are down considerably, that has more to do with slow sales than with anything else.
October 4, 2012
- Computer Supplier Warranties: Unlike in the automotive industry, computer makers are not trying to reduce their warranty expenses by shifting more of the burden onto suppliers. Instead, both OEMs and suppliers are reducing their costs by increasing product reliability.
September 27, 2012
- Aerospace Warranty Metrics: Unlike in the automotive sector, the aerospace OEMs and their suppliers split warranty expenses more equally, and have similar expense rates. But while the suppliers have been reducing their warranty costs lately, the OEMs are not.
September 20, 2012
- Automotive Warranty Metrics: While the major OEMs have made great strides with their warranty cost reduction programs and with efforts to use warranty data to improve product reliability, their suppliers are struggling to get back to where they were before the recession hit.
September 13, 2012
- Apple's Warranty Data: Warranty expenses began a swift climb at the end of 2009. But so did product sales, as the Mac and iPod gave way to the iPhone and iPad. And so, the share of total revenue spent on warranty didn't soar.
September 6, 2012
- Assurant Expert Services: While repairs are a huge part of aftermarket services, so are installations, assemblies, configuration and preventative maintenance. Assurant Solutions is putting them all under a single umbrella that it can offer to its retail clients who can in turn sell service to their end user customers.
August 30, 2012
- Large Vehicle Warranties: Claims rates spiked during the recession, but returned to normal soon after. For some of the OEMs, however, rates continued to drop as warranty processes were improved. The result is some of the lowest expense rates ever in the first half of 2012.
August 23, 2012
- Homebuilding Warranties: The data has yet to take an upturn, but at least it's not getting worse. Still, during the depths of the recession some of the homebuilders made some curious decisions about how much warranty expense they expected per new home sold.
August 16, 2012
- Warranty Software Report: IDC Manufacturing Insights has documented the spectrum of claims processing tools available to warranty providers and extended warranty administrators. And like it did in March with its warranty analytics vendor assessment, the crew once again looked at each company's current capabilities, target customers, industries served, and future strategies.
July 26, 2012
- Japanese Electronics Warranties: Four electronics manufacturers that are based in Japan but export their products worldwide show below-average warranty expense rates. Part of the reason is what they make. But could part of the reason also be where they make it?
July 19, 2012
- Warranty Cost per Vehicle: When it comes time to budget for warranty work, corporate planners apparently expect a Ford to cost twice as much as a Honda; a Fiat to cost twice as much as a Ford; and a Mercedes to cost twice as much as a Fiat. Currencies play a role in their planning, but so does selling price, parts cost and local labor rates.
July 12, 2012
- European Auto Warranties: Their annual reports tell a simple story: Daimler and BMW are reducing their warranty costs. VW is doing just fine. And Fiat is now absorbing the warranty costs of Chrysler.
July 5, 2012
- Honda and Toyota Warranties: After a couple of bad years, warranty costs at Toyota are getting back to normal. Meanwhile, at Honda, things have never been better, as warranty costs continue to drop.
June 28, 2012
- Navistar's Warranty Woes: Its older engines don't meet EPA standards and need more warranty work than expected. Profits have vanished as costs have risen. Competitors are winning both the technology battle and the court fights. And a hostile takeover attempt may be imminent.
June 21, 2012
- Handheld Warranty Costs: While RIM's costs rise, Apple's costs fall. And while other smartphone makers have reported high warranty costs, Nokia's are only half as high. Is there something about being small and smart that drives up warranty costs?
June 14, 2012
- Warranty Analytics Study: IDC has profiled nine of the top providers of warranty analysis software and services, ranking them on both capabilities and marketing strategies. And while SAS gets the highest score, the companies closest behind them are somewhat unexpected.
June 7, 2012
- Average Warranty Costs per Industry: One can get a good idea of the industries where warranty is most important by looking at both the amount they pay and the percentage of sales that those payments represent. And the data suggests that automotive, computers and appliances are at the top of the list.
May 31, 2012
- Fixtures, Furniture & Building Material Warranties: Though few of the companies in these segments are reducing their warranty expenses, some are actually seeing sales increases. In other words, some of the suppliers are seeing the beginning of a turnaround before the builders. How can that be?
May 24, 2012
- Appliance & HVAC System Warranties: While they haven't made much progress with warranty cost-cutting, they also haven't seen much increase. And given all the financial problems reported by builders lately, merely staying the same looks good in comparison.
May 17, 2012
- New Home Warranties: The new home industry is like the car industry without a bailout: stuck at the bottom with no improvement. Warranty expenses continue to contract, but so does sales revenue. And some companies seem to be artificially managing their accrual levels.
May 10, 2012
- Semiconductor Warranties: The companies that make the equipment that makes the semiconductors pay for more than half of the industry's warranty costs, even though their sales are less than a quarter of the total. But they've also done the most to cut their costs since 2003.
May 3, 2012
- Medical & Scientific Equipment Warranties: While it's true that systems using lasers or X-rays generate more than their fair share of warranty expense, it's also true that their manufacturers have been among the most successful warranty cost-cutters in recent years.
April 26, 2012
- Telecom Equipment Warranties: The data network equipment makers are cutting warranty costs and so are the broadcast companies. But the traditional telephone equipment makers aren't, and some of the satellite and microwave companies are actually seeing their warranty costs rise.
April 19, 2012
- Computer Warranties: While the computer OEMs still pay most of the claims, they've been very successful at cutting the percentage of sales they spend on warranty. Meanwhile, suppliers such as disk drive makers have also streamlined their warranty outlays, but the peripheral makers haven't been so lucky and are watching costs rise as a percentage of sales.
April 12, 2012
- Automotive Warranty Report: While suppliers seem to have gotten a reprieve from escalating pressure to pay a greater share of warranty costs, OEMs are enjoying fast sales growth and a return to old levels. Meanwhile, Ford has decided to begin reporting warranty and recall costs together.
April 5, 2012
- Aerospace Warranties: The makers of Boeings, Cessnas and Gulfstreams haven't made much improvement in the past five years. But their suppliers continue to boost revenue, cut costs, and reduce warranty expenses as a percentage of sales. And that divergence got worse as 2011 ended.
March 29, 2012
- Ninth Annual Warranty Report, Totals & Averages: Warranty expenses rose in 2011, as the recovery continued to take hold. But sales grew a bit faster, and the percentage of revenue used to pay for warranty work fell to record low levels.
March 22, 2012
- Top 100 Warranty Providers of 2011: While most of the largest manufacturers continued to reduce their warranty costs last year, some saw dramatic rises. Here are the top percentage increases and decreases of the year for claims, accruals, and reserves.
March 15, 2012
- Extended Warranty Survey: At long last, warranty researchers are publishing the results of surveys and vendor assessments, as the industry matures and the appetite for analysis and expertise grows. One study was released and another was previewed at this week's WCM Conference.
March 8, 2012
- Warranty Success Stories: Major manufacturers will share their insights and experiences at the WCM Conference next week, detailing the highlights of their warranty journeys and business process improvement efforts. What follows are some previews from the presenters.
March 1, 2012
- Warranty Experts: Attendees of this year's WCM Conference will have a rare chance to not only learn from the experts, but to engage them in lengthy question and answer sessions about the past, present and future of the warranty industry. And those who haven't learned how to be in two places at once can watch it all later on video.
February 23, 2012
- Warranty Workshops: Before the upcoming WCM Conference begins, warranty professionals have an opportunity to learn from the experts about topics such as text mining, fraud detection, risk management, supplier relationships, and reliability engineering.
February 16, 2012
- Warranty Maturity Model: Now that three companies have put themselves through the self-assessment and compared notes, it's time to widen the offer to additional manufacturing companies. Next month, the three companies will present case studies at the WCM Conference in Orlando.
February 9, 2012
- Warranty Apps: Smart phones need warranty coverage. But they also can be used as platforms to better control their own warranty coverage. Some apps focus on the consumer, either before or after the sale. Others aim to assist the repair crew, after a claim has been filed.
February 2, 2012
- Consumer Electronics Warranties: Most of the best-known brands are imports. Most of the domestic brands are made by computer, appliance or telecom companies. Most of the emphasis is on sales of service contracts. So how can we analyze just the product warranty expenses of U.S.-based consumer electronics manufacturers?
January 26, 2012
- Truck Warranties: Unlike passenger cars, the truck OEM isn't usually responsible for the vehicle's entire warranty. Instead, many of the suppliers and component manufacturers issue their own warranties, and pay their own claims.
January 19, 2012
- Aerospace Warranty Report: Unlike the auto industry, the suppliers of this industry account for the bulk of its warranty spending. And yet these suppliers have been steadily cutting their warranty costs year after year, while the airframe makers are paying more than ever before.
January 12, 2012
- New Home & RV Warranties: When sales were falling, builders cut their warranty accruals. But, worried by claims payments that didn't fall as fast, they didn't cut accruals enough. So now some have built up excess levels of warranty reserves that may be in the multiple millions of dollars for at least 10 homebuilders.
January 5, 2012
- Top 100 Warranty Providers: While most manufacturers keep cutting their warranty costs, some have reported massive spikes in their claims and accrual rates for the year ended in September. Others continue to recover from past spikes, reporting some of the largest declines of the year.
December 29, 2011
- Solar Warranties, Part 3: What happens if my manufacturer goes under? Insurance carriers may have an answer for that question, both as backers for lengthy manufacturers' warranties and as underwriters for extended warranties. Homeowners want peace of mind just as much as do the investors behind the huge projects.
December 15, 2011
- Solar Warranties, Part 2: How the manufacturers of photovoltaic systems themselves explain the risks and metrics behind their product warranties, and how a few are securing warranty insurance to help reduce those risks.
December 8, 2011
- Solar Warranties, Part 1: They can last up to 25 years, but what does that really mean when the technology is changing so fast? And even if a company really expects to pay claims in 2036, how do they prepare for them now by making the right amount of accruals at the time of sale?
December 1, 2011
- Warranty Reserve Capacity: The ratio between warranty reserves and claims payments is always changing. But by measuring departures from the long-term average ratios, we can detect which companies have either too much or too little in their warranty accounts.
November 17, 2011
- Warranty Adjustments, Part 3: While all exporters must deal with foreign exchange fluctuations, some companies seem to be affected more than others. In fact, when compared to other warranty metrics, some of these fluctuations are huge. Is that caused by the unique nature of their businesses, or is it a sign of sloppy warranty accounting?
November 10, 2011
- Warranty Adjustments, Part 2: In the past few years, a small group of companies has made repeated and relatively large upwards adjustments to their warranty reserves. Are they simply bad at predicting the future? Or have they found a way to make their warranty costs look lower than they really are?
November 3, 2011
- Warranty Adjustments, Part 1: When a company discovers it has more in its warranty reserve than is needed, it can withdraw the excess funds and add them to profits. Some of these financial adjustments can be huge, and can help dress up an otherwise disappointing financial report.
October 27, 2011
- Warranty Acquisitions: Big companies are buying smaller companies all the time. But then they have to merge their product lines, combine their warranty reserves, and publish all the details. Divestitures, meanwhile, also happen once in a while, but not as often as entire companies are sold as a single unit.
October 20, 2011
- Warranty Cost Reductions: While the warranty costs of most companies are falling, the causes aren't always the same. The big companies are making the process more efficient. But for many of the smaller companies, the biggest cost reductions seem to arise after mergers and divestitures.
October 13, 2011
- Mid-Year Warranty Report: The good news continues into the first half of 2011, with massive warranty cost reductions extending their streak into a ninth straight year. With sales finally getting back to normal, product reliability has never been better, and repair costs have never been lower than they are now.
October 6, 2011
- Computer Warranty Report: The bigger the box, the smaller the warranty expense. And when phones get smart, and when computers get small enough to fit into pockets, warranty costs seem to grow proportionally. That's what the industry's warranty claims and accrual data, gathered over the past 8- years, seems to suggest.
September 29, 2011
- Automotive Warranty Report: As vehicle makers get back to normal and sales rebound, one thing that's not bouncing back is their warranty expense. Key warranty metrics continue to decline, including claims as a percentage of revenue. And once again, the warranty reserve fund balances of the top vehicle makers and their suppliers are growing.
September 22, 2011
- Warranty Software Acquisition: Engineering wants to talk to warranty and so does manufacturing. And warranty needs user manuals and parts from them. No single company's software can make them all talk to each other, not even a CAD/CAM company like PTC. So it bought warranty software company 4CS to round out its product line.
September 15, 2011
- New Home Warranty Report: Sales continue to fall and so do warranty costs. As homebuilders wonder if this is finally the elusive bottom of the economic cycle, we wonder whether they may be keeping more warranty reserves on hand than they really need.
September 8, 2011
- Warranties During Disasters: While warranties cover defects and insurance covers damage, there is quite a bit of overlap between the two. And in the past month, disasters and disturbances have made people aware that it really can happen to them.
September 1, 2011
- How to Buy Extended Warranties: Step One: Read the contract. Research the terms and conditions of the service contract while you compare the prices and features of the products themselves. Then use your common sense and Google to decide if the extended warranty offer is a deal worth adding, or if you should shop elsewhere.
August 25, 2011
- Sports Equipment Warranties: Though the uniforms and hats might be classified as apparel, the equipment used for many team sports and outdoor activities carries product warranties. More importantly, the companies making the gear manage those warranties with accruals and warranty reserve funds, just like any other manufacturer.
August 4, 2011
- Farming & Mining Equipment Warranties: Some of the companies whose heavy duty equipment is used to move the earth exhibit an annual pattern closely tied to the growing season. Others have seen the same recessionary rise in claims costs as the passenger car companies. But a few have been able to consistently reduce their warranty expenses across all cycles, both astronomical and economic.
July 28, 2011
- RV, Boat & ATV Warranties: All that's left now are the survivors, after a big drop in sales proved fatal to several of their peers. And now, looking back, it's revealing how some of those survivors handled their warranty expense accounts through the recession.
July 21, 2011
- International Warranty Costs: What you make matters more than where you make it. As in the U.S., the makers of appliances, computers and telecom gear have significant warranty costs. But for most consumer electronics manufacturers, warranty is not such a significant burden.
July 14, 2011
- Warranty Accruals per Vehicle: While we can't say who builds a better car, we can figure out which automakers are budgeting for the lowest warranty costs per vehicle. Worldwide, Honda leads and Daimler lags, but the order of the six OEMs between them is somewhat surprising.
July 7, 2011
- Toyota's Warranties & Recalls: For the first time ever, the automaker's worldwide recall costs have exceeded its warranty costs. And that has changed both what Toyota reports and how it gets reported in the company's financial statements.
June 30, 2011
- Warranty Reserves vs. Accruals, Part Two: A handful of computer, electronics and data networking companies have gotten very good at controlling their warranty funds, both in terms of how much they set aside and how much they keep on hand. Others just take their best guess and hope it all turns out well.
June 23, 2011
- Warranty Reserves vs. Accruals, Part One: With 32 quarters of data, it's becoming easier to see which companies carefully calibrate their warranty budgets and which make it up as they go along. Here are the "scores" for the top three in each of six industries.
June 16, 2011
- Power Equipment Warranty Report: While GE dominates the traditional end of the electrical power generation business, a whole group of new companies are jumping into the solar energy and electric car businesses. And some retailers that never had much to do with the gasoline engine are angling to become the new homes of the charging stations.
June 9, 2011
- Appliance & HVAC System Warranty Report: Every journey includes a few bumps, and both appliance and HVAC makers have hit a few in the past couple of years. But like other building material suppliers, they're doing much better than the homebuilders, because they have both home renovations and replacements to fall back on.
June 2, 2011
- Fixtures, Furniture & Building Material Warranty Report: Sales have fallen but warranty costs aren't falling as fast. Still, it's not as bad as things in the new home industry, because suppliers can fall back on existing home renovations.
May 26, 2011
- New Home Warranty Report: Though sales keep falling, claims are rising after several years of declines, and the accrual rates are holding steady. So is the worst over? Or are there homebuilders out there with even bigger problems ahead of them?
May 19, 2011
- Medical & Scientific Equipment Warranty Report: Though there is a strong seasonal pattern that drives their warranty costs up in the summertime, companies in this sector have generally been able to reduce those costs from year to year. Even the companies making warranty-intensive X-ray and laser equipment have been cutting costs in recent years.
May 12, 2011
- Telecom Equipment Warranty Report: The makers of network gear are generally seeing lower warranty costs, though their reserve funds are barely able to cover claims. And there's a new market leader, in terms of both the size of their warranty budget and the way they've been able to steadily reduce costs over time.
May 5, 2011
- Disk Drive & Semiconductor Report: Warranty costs are falling for most of the high tech component makers, both in dollars spent and as a percent of sales. And unlike in the auto industry, the computer OEMs are not yet as accomplished at pushing their warranty costs back onto their parts suppliers.
April 28, 2011
- Computer Warranty Report: After years of cost cutting, warranty expenses remained low last year and look to stay there this year, even as sales continue to rebound. Apple, meanwhile, is beginning to feel the effects of the increased warranty cost that comes in small packages.
April 21, 2011
- Aerospace Warranty Report: While the airframe makers and their suppliers pay out roughly the same percentage of product revenue for warranty claims, they keep very different levels of reserves. The airframe makers keep a balance equal to four years of claims, while their suppliers keep half as much in their warranty reserve funds.
April 14, 2011
- Automotive Warranty Report: After spiking to worrying levels in 2009, automotive warranty claims rates returned to normal in 2010, while the OEMs' accrual rates have never been lower. Their parts suppliers, however, continue to see their warranty costs escalate as the OEMs insist they share a bigger slice of the burden.
April 7, 2011
- Eighth Annual Warranty Report, Totals & Averages: When sales fell, so did warranty costs. But even though sales are rising again now, warranty costs are remaining low as a percent of sales. That reflects a change in reliability, and caps a multi-year success story resulting from the increased attention paid to warranties.
April 1, 2011
- WCM Conference, Part Three: The future of the consumer electronics industry was the subject of a panel discussion that brought together retailers, manufacturers, repair service providers, insurance underwriters and extended service contract administrators to talk about everything from OnStar to iPhone.
March 24, 2011
- Top 100 Warranty Providers of 2010: The biggest warranty providers also seem to be the most stable. Those that saw the greatest annual changes in warranty claims, accruals or reserves tended to be a bit smaller, whether the changes were up or down.
March 18, 2011
- WCM Conference, Part Two: Even just the highlights expected over the course of the three days would take a month to detail. So here are just some of the themes and topics selected by the warranty experts headed to San Diego next week.
March 10, 2011
- WCM Conference, Part One: With less than two weeks until the annual WCM Conference opens in San Diego, we take a look at some of the major themes expected. And almost every speaker has the same advice: don't try to do it alone without help from some of the warranty industry's experts.
March 3, 2011
- New IWCM Board Members Sought: As president and co-founder Glen Griffiths steps down, new leadership is sought for the Institute of Warranty Chain Management at its annual meeting on March 15 in San Diego. Two members have put their names in the hat, but additional openings exist.
February 24, 2011
- The Abt Experience: Not content to merely collect a sales commission and be done with it, Abt Electronics keeps tight local control over its extended warranties and service organization from a single location. And talk about customer loyalty. You want them to click the "like" button? We're talking customer love.
February 17, 2011
- NLA: No longer available (NLA) circuit board repairs offer profitable service addition for appliance contractors. By Badal Wadia, CoreCentric Solutions Inc.
February 10, 2011
- The First Service Contract: A GE appliance dealer sold it to a customer in Chicago nearly 77 years ago, along with a refrigerator that turned out to be highly reliable. Yet the same sales drivers used back then -- peace of mind, repair costs and technological worries -- still work today.
February 3, 2011
- Home Warranties for Appliances? Though home warranties are mainly for heating and cooling systems, and are closely tied to resales of existing homes, their ability to cover major appliances overlaps somewhat with store-bought extended warranties. Or does it?
January 27, 2011
- Top Appliance Retailers: In an informal online shopping excursion, we found all but one retailer selling extended warranties, typically for between 10% and 20% of the price of the appliances they cover. Durations ranged from two to five years, though one regional retailer also offered a ten-year "major component only" plan.
January 20, 2011
- The ServiceBench Legacy: In the household appliance industry, it's more or less assumed that warranty and service contract claims data will cross the ServiceBench network. In most other industries, each manufacturer and third party administrator has its own network, and its own claims submission format.
January 13, 2011
- Appliance Service Contracts: While hard data is difficult to find, one retailer discloses lots of details about extended warranty sales in its financial statements. But as detailed as these metrics are, they may not apply to other less forthcoming retailers.
January 6, 2011
- Telecom Equipment Warranties: Though the totals are down because of all the industry players that have headed for the exits, those who remain are also cutting their warranty expenses. And claims have never been lower as a percentage of sales than they've been in 2010.
December 23, 2010
- Medical & Scientific Equipment Warranties: Though their warranty costs have remained within a tight range for eight years, there's a definite seasonal pattern to the sector's data that's tied into the school calendar. And though these equipment makers typically spend a small percentage of sales on warranty costs, some products have much higher averages.
December 16, 2010
- Making Holiday Shoppers Happy with Extended Service Contracts: How to increase retailer extended warranty attachment rates in the midst of a holiday price war? With the 2010 holiday gift-giving season well under way, here are eight strategies to help retailers increase extended warranty sales. By Joe Erdeman, president of the Assurant Solutions extended protection solutions business.
December 9, 2010
- Automotive Supplier Warranties: While costs are down, so are sales. And while many suppliers are reporting higher sales in 2010, the proportion between their warranty costs and sales is higher than ever. And that's the unfortunate result of an increased effort by vehicle makers to push more of their warranty costs back onto their suppliers.
December 2, 2010
- Automotive OEM Warranties: As sales volumes recover, warranty costs are falling to unbelievably low levels. That's partly a side effect of the dismal truth that there are fewer two- and three-year-old vehicles in use. But it's also proof that those newer vehicles are built better than before and will need less warranty work over time.
November 18, 2010
- Security Equipment Warranties: The systems that scan baggage, cargo and passengers have to detect every single threat, every single time. And while these systems may require a lot of routine maintenance and warranty work to keep up with the heavy usage, they should never fail to do that job flawlessly. Lives literally hang in the balance.
November 11, 2010
- Aerospace Warranties: Unlike most other industries, aviation product manufacturers didn't see radical changes in their warranty costs during the recession. Yes, there were plenty of ups and downs, but they tended to be tied to new product cycles rather than to the economy.
November 5, 2010
- Implementing iWarranty: 4CS Inc. has a long history of outfitting agricultural and construction equipment makers with its Web-based warranty claims processing software. More recently, it's added a pair of electric car makers, along with two of the biggest construction equipment makers headquartered outside the U.S.
October 28, 2010
- Construction Equipment Warranties: While sales fell in 2008, warranty claims continued to rise well into 2009. So some of the top construction equipment makers saw their claims rates reach all-time highs last year. In the first half of 2010, however, things seem to be getting back to normal.
October 21, 2010
- New Home Builders & RV Makers: Even among the survivors of the Great Recession, warranty costs are now rising to alarming levels. And for some builders, home sales are still falling year-over-year. The result is a state of affairs where warranty work is financed from a shrinking pool of reserves.
October 14, 2010
- HVAC & Appliance Warranties: Both claims and accruals have taken a nosedive this year. But that's good news if it's the result of increased quality and reduced cost, rather than merely a symptom of slowing sales. The problem is, it's hard for external observers to tell the difference.
October 7, 2010
- Warranty Maturity Model: As a proof of concept, IDC and the iWCM are asking all warranty professionals to take a brief survey to help verify that their responses can be used to assign a relative level of maturity to their warranty processes.
October 1, 2010
- Data Storage Warranties: Sales are once again rising and warranty costs are falling or at least remaining under control, despite longer warranty durations. But while some companies are cutting their warranty costs for real, at least one is merely changing the way it reports the numbers.
September 23, 2010
- Computer Warranty Claims & Accruals: No news is good news as the computer industry's top warranty providers turn in predictable warranty expense reports. Despite economic turmoil, new product launches and multiple recent acquisitions, claims and accrual rates just aren't changing much.
September 16, 2010
- Vehicle Service Contract Administrators: As we conclude our VSC industry tour, we take a look at the financial strength ratings of the underwriters, the end user revenue of the administrators, and the myriad of links they have with each other, with auto dealers, and with the vehicle manufacturers.
September 9, 2010
- Vehicle Service Contract Underwriters, Part 2: Numerous corrections need to be made, and multiple explanations need to be given, before we can move on to the final phase: Tracking the administrators. And it's becoming obvious that the reason there's so little market research on the VSC industry may be because there's so many moving parts to consider.
September 2, 2010
- Vehicle Service Contract Underwriters, Part 1: If you know how many vehicles were sold and how much insurance was purchased, you can make a pretty good guess of how much consumers have spent on vehicle service contracts. But who sold them? How much were they? Some answers follow.
August 26, 2010
- OEM Vehicle Service Contracts, Part 2: As we continue our tour of the vehicle service contract industry, we find that some of the cars the contracts cover are being made better than before. Still, it's increasingly the fortunes of third party administrators and underwriters that will be most directly affected by the reduced need for VSCs.
August 19, 2010
- OEM Vehicle Service Contracts, Part 1: The top brands of passenger cars frequently administer and also underwrite the vehicle service contracts their franchised dealers sell. But they prefer if not much is said about it publicly.
August 12, 2010
- Extended Warranty Insurance Companies: All four of our imaginary investments from 2009 are up, with AIG rising the least and Assurant rising the most. And now our hypothetical extended warranty stock fund has grown with the addition of four more insurance companies that also underwrite service contracts.
August 5, 2010
- INDS Signs with Virginia Surety: One of the largest vehicle service contract administrators has selected one of the largest service contract underwriters to help it diversify and expand.
July 29, 2010
- Japanese & European Warranties: While consumer electronics have some of the lowest warranty costs, computers have some of the highest claims rates. And telecom gear is somewhere in the middle, as a look at eight of the top international suppliers details.
July 22, 2010
- Warranty Accruals per Vehicle: Multiple readers said something wasn't quite right with the warranty data in last week's newsletter. So this week we're diving into the deep end, probing to see if it's possible for both accruals and prices to fall as fast as the math says they are.
July 15, 2010
- Auto OEM Accruals per Vehicle: Measured as a percentage of revenue or as an amount of money set aside per vehicle sold, warranty accruals have declined dramatically for Ford and GM. Some warranty metrics even put Ford slightly ahead of Toyota, though Honda remains the low-cost champ.
July 8, 2010
- Top Auto Insurance Companies: One would expect a high correlation between those offering auto insurance policies and those offering vehicle service contracts or mechanical breakdown insurance to consumers. But Zurich Financial Services is the only one with a major presence in both.
June 25, 2010
- GMAC Service Contracts: While the huge downturn in GM's auto sales hurt GMAC's service contracts, what forced the finance company to seek a TARP bailout was a really bad bet on home mortgages. Now the government-owned company has become a bank and is pursuing non-GM dealerships.
June 17, 2010
- Retail Auto Parts Warranties: While many of the major auto parts chains are willing to go above and beyond the warranties that manufacturers offer on products such as batteries, most are reluctant to begin selling service contracts. But at least one retail chain has taken that step, and has also begun to offer extended warranties on its own labor services.
June 10, 2010
- Automotive Warranties: GM and Ford are cutting their warranty expenses and closing the gap with both their competitors and their suppliers. And it's beginning to get some notice in the daily newspapers.
June 3, 2010
- Fleet Warranties: Among companies that operate fleets of hundreds or even thousands of vocational vehicles, service contracts are rarely bought. Some ask their manufacturers for longer warranties, but most prefer to fix their trucks and buses themselves. And what they like to outsource isn't so much the repair labor as it is the labor associated with warranty claims submission.
May 20, 2010
- 50/50 Warranties: Dealers who sell used vehicles sometimes can't afford or won't risk the cost of a limited warranty policy. So they ask customers to split the cost of repairs for the first 30 or 90 days. Some regulators say these types of warranties are unfair or misleading, but others say all that's needed is adequate disclosure.
May 13, 2010
- Motorcycle Service Contracts: As with passenger cars, the policies exclude consumables, accidental damage, and routine maintenance. And as is done with RVs, they are starting to cover perils such as being stranded far from home. But some say that takes them dangerously close to the line between service contracts and insurance. Others wonder if these new bells and whistles are all that necessary.
May 6, 2010
- RV Service Contracts: Perched as it is at the junction of homes and vehicles, the RV industry has been hard-hit by the recession and the credit crunch. But the sellers of RV service contracts may have been helped by all that uncertainty, offering peace of mind to an industry full of turmoil.
April 29, 2010
- Additive Product Warranties: They may have found a loophole that allowed them to evade most service contract industry rules, but they couldn't escape the wrath of the customers they swindled, the regulators they duped, or the competitors their antics tarnished. Now a consensus is forming around the idea that everybody should play under the same set of rules.
April 22, 2010
- Warranty Claims & Accruals by Industry: There's been a massive divergence between claims and accrual rates, and it can't all be blamed on the recession. It looks more like some companies are managing earnings by reducing their accrual rates to make their numbers. As claims rates soar, accruals fall.
April 15, 2010
- Seventh Annual Warranty Report, Totals & Averages: Claims are down. But accruals are down by more, and it looks like they're down by more than they should be. Ten charts provide a snapshot of the warranty landscape as manufacturers exit the recession and enter the recovery phase.
April 8, 2010
- Top 100 Warranty Providers of 2009: By comparing companies to themselves over time, we're able to identify those with the biggest changes in claims and accrual rates. And while change is good, too much change may not be such a good thing. Appearances on multiple top 10 lists can imply instability or an unfamiliarity with the warranty process.
April 1, 2010
- Warranty Search Application: Endeca Technologies is promoting a new approach to warranty analytics that allows users to take unscripted journeys through their claims data, asking questions they hadn't anticipated and looking for patterns and anomalies they didn't know were there.
March 25, 2010
- Warranty Improvement - The Journey: The big difference between warranty and transaction processing is the human factor. Caterpillar has found that heeding the human factors has helped it accelerate a global warranty improvement effort significantly, cutting years off a journey that began in 2008.
March 18, 2010
- Design for Warranty: Products can be designed so that not only can they be fixed faster, but also so they can be fixed by customers themselves. Given that labor is the major component of warranty claims, product designs that plan for customer self-repairs can also cut warranty costs.
March 11, 2010
- Vehicle Shopper Survey: Buyers in 2010 will take more time, do more research, and ask more questions. But these "tire kickers" may also be the best prospects for sales of add-ons such as extended warranties and other vehicle protection services, according to a survey being released this week at the WCM Conference.
March 1, 2010
- Warranty Fraud Detection: SAS says send us your claims data and we'll show you the fraud. If upwards of 10% to 15% of claims are in some way suspect, such a system could pay for itself in just a few months. Does it sound too good to be true? GE Appliances was the first customer.
February 25, 2010
- Warranty Master Class: The day before the sixth annual Warranty Chain Management Conference opens next month in Los Angeles, several warranty experts will deliver three-hour workshops aimed at those who already have some familiarity with warranty analytics.
February 18, 2010
- Service Contract Underwriters: The insurance companies that back service contracts are graded on their financial stability. And while the Detroit Three automakers and some of the other recipients of the TARP bailout billions get relatively low grades, most of the majors remain on the honor roll with an A- or better.
February 11, 2010
- VSC Industry Structure: In a business as opaque as the vehicle service contract industry, it's not always obvious who all the players are or how they all work together. And auto dealers who make the wrong choice of partners may not know it for years.
February 4, 2010
- Vehicle Service Contract Attachment Rates: Has the chaos of the Great Recession actually increased the appeal of vehicle service contracts? Auto dealers aren't selling as many as they used to, but for the past five years roughly one out of every three customers has bought one. And the recent trend seems to have been slightly upwards, as unlikely as that sounds.
January 28, 2010
- Vehicle Service Contract Industry: Consumers seem to prefer the term extended warranty. But industry professionals prefer the term service contract, even when they work for companies with the word warranty in their name. The problem is, there are at least three dozen other terms used to describe the product. Or is it a service? A service product?
January 21, 2010
- Vehicle Protection Association: Although it would have been better to prevent the "expiring warranty" scam from trashing the reputation of the vehicle service contract industry, efforts are now under way to repair the damage by making direct marketers adhere to a code of conduct. In the UK, however, the code preceded the need, so there was no problem, at least in the vehicle service contract industry.
January 14, 2010
- Expiring Warranty Companies: With Eagle Warranty closing its doors and US Fidelis halting its sales, the era of fast talk and easy money in vehicle service contract sales may be coming to an end. But they and others have left a giant mess that various attorneys general are only beginning to clean up.
January 7, 2010
- Home Warranty Market Share: While American Home Shield continues to dominate, electrical and water utilities are shaking things up with the growth of their wire and pipe protection services. And despite a continuing multi-year dip in home sales, the home warranty industry set a record this year with $1.5 billion in premiums paid by consumers.
December 22, 2009
- Chinese Drywall Woes: It smells bad and it ruins anything made of copper or silver. The gases given off by wallboard imported from China may also sicken homeowners and their families. Some say the affected homes will have to be gutted or bulldozed. But others say a simple solution is possible, if the focus is shifted to how the foul odor is produced.
December 10, 2009
- Home Warranties & Foreclosures: As the industry looks for a way up from the bottom, home warranties may become a valuable selling tool. Buyers, worried about the damage done by departing owners, vandals, and the weather, might appreciate the coverage of a home warranty. Industry insiders, meanwhile, report that claims costs on foreclosures aren't that different from other policies.
December 3, 2009
- Home Warranty Insurance: While our American cousins go on holidays to eat turkey and watch football, we're shifting our focus to how the governments of New South Wales and Ontario have gotten deeply involved in new home warranties. Both require those warranties to be insured, but that hasn't worked out as well in Australia as it has in Canada.
November 25, 2009
- Home Inspection Warranties: It seems like a natural pairing. First the home inspector eyeballs the appliances, and then the home warranty company agrees to cover them. But it's not so simple in a business where honest advice is hard to find, and wariness about possible conflicts of interest is everywhere.
November 19, 2009
- Home Warranty Association: Why are at least 90% of existing home sales in California covered by a home warranty? A mix of court rulings, government regulations, and industry response seems to have reassured home buyers that home warranty companies are both willing and able to pay claims. And thanks to a statewide educational effort, the realtors are able to explain how it all works to their clients.
November 12, 2009
- Home Warranty Scam? Home Warranty Scam? There are good extended warranty companies and there are bad extended warranty companies. One of the worst seems to have a policy of denying all claims over $100 for what at first seem like legitimate reasons, and then hiding from the angry mob behind the anonymity of its web site, toll-free number, and post office box.
November 5, 2009
- Price Optimization: A Potent Weapon for the Warranty Industry. By Christopher W. Hurst and Jose Moreno Codina of Towers Perrin. Traditionally, many in the warranty industry have priced their goods and services based on production cost plus a margin for profit. In contrast, the hotel industry has long taken advantage of flexible pricing, based on demand, the type of customer, the day of the week and the season. When a more sophisticated pricing approach is implemented, operating profit increases significantly, much more than when other factors such as costs or volumes are adjusted.
October 29, 2009
- HVAC, Appliance & Building Material Warranties: We conclude our mid-year product warranty report with a look at the supplier side of the homebuilding industry, where we find at least one group paying more for warranty claims this year than they did last year.
October 22, 2009
- Telecom Equipment Warranties: Though industry sales are down in general, a handful of telecommunications, data networking and broadcast equipment manufacturers have managed to reduce their warranty costs and increase their sales at the same time. But as dramatic as some of the recent cost reductions are, the companies rarely mention either the cause of the initial problem or how they solved it.
October 15, 2009
- Medical Equipment Warranties: Doctors, hospitals, and laboratory technicians want sturdy and reliable medical systems, and for the most part the manufacturers that supply them have been steady and predictable. But every once in a while, a massive recall or a production glitch causes warranty costs to spike. And it's when the trend line leaves its historical range that we know there's something wrong.
October 8, 2009
- Aerospace Industry Warranties: In an industry that puts a premium on safety and reliability, warranty costs rarely stray far from the baseline. And while many aviation companies cope with the double whammy of rising warranty costs and declining sales, some such as Boeing and Gulfstream are actually seeing sales rise and claims fall.
October 1, 2009
- New Home Warranties: One CEO recently said the worst of this cycle may be behind us. In terms of sales decreases and price declines, maybe so. But in terms of warranty costs, the worst is right now, as builders have less cash to pay for warranty work on units they sold at the end of the boom years. And then there's the question of how costly the defective Chinese drywall will turn out to be to replace.
September 24, 2009
- Computer Industry Warranties: For most of the major players, sales declines caused relative warranty costs to increase. Turmoil in other industries caused a major PC maker to become the biggest warranty provider in the U.S. And for the lucky few, sales rose and warranty costs fell, despite a tough market full of customers still reluctant to spend.
September 17, 2009
- Automotive Warranties: With GM now government-owned and several mobile home makers trapped in bankruptcy, industry-wide warranty statistics are beginning to lose their meaning. And thanks to the distortions caused by the massive sales declines that have taken place this year, claims rates have also lost much of their relevance during this recession. But among at least the well-run warranty providers, accrual rates have remained proportional to sales rates and quality levels.
September 10, 2009
- Top 100 Warranty Providers at Midyear: Was that the sound of the bottom of the recession? If so, financial data from the first half of 2009 provides a detailed record of how warranty providers reacted to a collapse in sales and a jump in claims. Though some of the largest warranty providers didn't make it, those that did are enjoying the benefits of recent claims processing automation projects and other cost-cutting efforts.
September 3, 2009
- Lifetime Warranties: Companies are free to define a lifetime any way they wish, but they have to be clear about their rules and their exclusions. Some issue the warranty to just the first owner of the product. Others qualify it with words such as reasonable or useful. And some high-tech companies spell out a policy under which the warranty's lifetime will end after sales cease and spare parts run out.
August 13, 2009
- Used Auto Warranties: Signs of life are beginning to appear in the used auto industry as partnerships are formed and annual sales increases are claimed. One of the latest deals is struck between the makers of electronic contracts and tax form software and a veteran administrator of service contracts sold by used car dealers.
August 6, 2009
- Warranty in Financial Statements: Because warranty disclosures began appearing in annual reports less than seven years ago, it takes a bit of skill to hunt down the right data and turn it into meaningful percentages and ratios. So until the procedures are old enough to make it into the accounting textbooks, here's a step-by-step guide to how it's done, using one company's most recent disclosures as an example.
July 30, 2009
- Worldwide Auto Warranties, Part Two: It turns out that Volkswagen, BMW, and Fiat do disclose their warranty data, if one knows where to look and what to look for. And thanks to the help of a reader who's fluent in five languages, we now have hard numbers for the warranty costs of more than half the world's vehicles, and all five of the top OEMs.
July 23, 2009
- Selling Peace of Mind: With all the negative publicity generated by the "expiring warranty" telemarketing scam, these days it's the auto dealers that need some reassurance about the value of selling vehicle service contracts to consumers. Here is a list of some of the benefits of the different types of VSCs, written by Dominic Sansone of Warrantech Automotive, followed by two different lists compiled by the industry associations SCIC and PCI, which can help consumers spot a scam before they buy into it.
July 16, 2009
- Worldwide Electronics Warranties: It's not where you're from as much as what you make. European and Japanese electronics companies report warranty expense rates similar to what their American competitors do. The difference is that while U.S. companies must report what used to be trade secrets, the international companies are simply doing their New York Stock Exchange shareholders a big favour.
July 9, 2009
- Worldwide Auto Warranties: Why do Japanese automakers and heavy equipment manufacturers seem to have such low warranty costs? Though sales are down since last year, warranty costs remain under control, according to annual reports filed recently by Toyota, Honda, Komatsu and others.
July 2, 2009
- Auto Part Supplier Warranties: Claims are up a bit but sales are down a lot. And while most suppliers have reduced accruals proportionally, at least one seems to have taken an accrual holiday.
June 25, 2009
- NEW's Smart Procurement: By taking advantage of ServiceBench's connectivity with servicers and parts distributors, NEW is hoping to speed up repairs by helping servicers to find and order parts. The resulting reduction in turnaround time should make NEW's retail clients happier, and its service contract customers less unhappy.
June 18, 2009
- RV Extended Warranties: As sales plummet, the nameplates are dropping like flies. But the dealers have to make a living, and they've found that extended warranties -- sold at a discount or practically given away -- are a great way to induce skittish buyers to drop a quarter million dollars or more on an otherwise as-is purchase.
June 11, 2009
- Warranty Service Providers: It's all mixed up. Retailers are selling products under their own brand names and manufacturers are selling their own service contracts. Bankruptcies have exposed how precarious product warranties can be, while insurance has demonstrated how extended warranties can survive even a liquidation. Perhaps it's time for OEMs to think about partnering with administrators and insurance companies?
June 4, 2009
- OEM Extended Warranties: Working with a manufacturer to sell service contracts is a little different from working with a retailer. The OEMs need more help with sales and marketing, and they want more failure data analysis to help them with product quality and parts planning. They'll also need just as much help as the retailers with risk management, compliance, and regulatory issues.
May 28, 2009
- Warranty Insurance: Properly insured and administered, an extended warranty can survive the bankruptcy of a retailer, dealer, or manufacturer. And in cases where customers doubt the survivability of a manufacturer's product warranties, insurance can reduce uncertainty and build confidence. Could this also work in Detroit?
May 21, 2009
- Extended Warranty Insurance Companies: They always tell you not to buy extended warranties, but they never told you not to buy extended warranty companies. And there are at least four publicly traded warranty insurance companies, at least two of which offer tempting and dependable dividend yields and perhaps also capital gains as the recovery takes hold.
May 14, 2009
- Annual Warranty Totals & Averages: While claims were up slightly in 2008, both warranty reserves and accruals actually plunged last year. And as sales fall, the percentage of product revenue spent on claims has risen. With no less than 21 charts, we detail the industry totals and averages for the past six years.
May 7, 2009
- Homebuilders' Warranty Accruals: Rather than looking at warranty costs as a percentage of sales, would it be valid to calculate warranty costs per home? Using such a metric makes some homebuilders look very precise and consistent, while others look like they're just guessing how much to accrue per home sold.
April 23, 2009
- Appliance & Building Material Warranties: The economic downturn that started with the homebuilders is showing its effects on the makers of appliances, fixtures, tools, furniture and building materials. But some segments haven't seen very big recent declines in warranty expenses, and some companies have actually seen their warranty costs rise.
April 16, 2009
- Aerospace Warranty Trends: Unlike the computer and passenger car industries, in the commercial aviation industry the customer-facing brand names and their suppliers share warranty costs much more equitably. Then again, these multi-million-dollar jets and helicopters are hardly consumer products. And since safety and reliability are such top priorities, consistently low warranty costs are to be expected.
April 9, 2009
- Telecom & Medical Equipment Warranties: While Motorola sets the pace in the telecom equipment warranty sector, no one company dominates medical equipment warranties. In fact, if anything, the medical and scientific instrument makers are known for consistently low rates of warranty spending.
April 2, 2009
- Computer Warranty Trends: While other industries are seeing claim rates rise and accrual rates fall, warranty providers in the computer industry are seeing claims rise slightly and accruals rise a lot. And it's not so easy to blame those changes on sales declines, or to link them with quality increases.
March 26, 2009
- Auto Warranty Trends: While the RV makers are imploding, the farm vehicle makers are thriving. Somewhere in between are the passenger car and light truck makers, for whom warranty has become an important issue in the government bailout. But the 1.9% gap in warranty costs between OEMs and their suppliers remains firmly in place.
March 19, 2009
- Top 100 Warranty Providers of 2008: Of all the companies spending the most on warranty, none of the largest reported massive percentage changes in 2008, which confirms the stability of their warranty programs. But there were plenty of big changes in claims and accrual rates further down the list, some for the better and some for the worse.
March 13, 2009
- Warranty Conference: Economic turmoil is likely to take its toll on WCM 2009 attendance, but those who can make it to Orlando next week will see a series of how-to presentations by some of the biggest warranty providers in the world. Legal and regulatory issues are also on the agenda, and yes, there will be a quiz at the end.
March 5, 2009
- Warranty Improvements: Clever companies are now looking beyond warranty, wondering what else they can do with their data to improve quality and service and further reduce costs. At the WCM Conference in a few weeks, several will report on the status of these efforts.
February 27, 2009
- Warranty Experts: It's one thing to hear software salesmen talk about the benefits of their products. It's something else when that company's own customers stand up and say how happy they are, despite the challenges they had to overcome. And when warranty professionals gather next month in Orlando, multiple warranty experts from major manufacturing companies will do just that.
February 20, 2009
- Warranty Optimization Workshops: Warranty data analysis can help you understand where you've been and where you're going. But can it also help you choose the right way to get there? At pre-conference workshops next month, leading warranty optimization companies SAS and Fulcrum plan to show how both product warranty and service contract programs can benefit from the careful use of analytics.
February 12, 2009
- Warranty Workshops: What's the probability that two Russian physicists with degrees from the same university would deliver back-to-back workshops on new statistical approaches to warranty data? On March 10, that's exactly what's on the agenda for the WCM Conference's opening day.
February 5, 2009
- Early Warranty Data: While only a few dozen of the hundreds of warranty reporting manufacturers have filed their year end 2008 financial reports so far, very few of these early filings reflect the turmoil one would expect, given the gloom of recent headlines. Are these early filers the exceptions? Or are things really not as bad as they seem?
January 29, 2009
- New Warranty Regulators: As the Obama administration gets up and running, new appointees are assuming command of the agencies that affect warranty policy. So far, the Dept. of Transportation, the EPA, and the SEC have new leaders, with announcements expected for the FTC and NHTSA within days. So what's likely to change?
January 22, 2009
- The Value of Warranty Expertise: Is warranty management merely a clerical skill, or is there more to it than just paperwork? Some see warranty as not only a leading indicator of product quality but also a major chance to impress a customer. However, that conversation can only take place if the warranty professional is trained to do more than merely process and pay claims.
January 15, 2009
- Warranty Work: Sometimes you don't know the value of something until it's gone. Automakers measured the value of warranties by their absence. And as retail sales slow and job losses deepen, warranty professionals may appreciate hearing that recruiters are back at work.
January 8, 2009
- Warranty Trends in 2008: With the filing of the last few financial reports of this cycle, it's time to look at warranty costs by industry. The big story in 2008 is how falling sales have made warranty claims less affordable for some companies. Warranty reserves peaked at the end of 2007, but claims are still rising. And for hard-hit sectors such as autos and homebuilding, the worst may still be ahead.
December 18, 2008
- Sports Equipment Warranties: Everything from StairMasters to snowmobiles carries product warranties, and cost their manufacturers a significant amount of money for warranty work. But compared to the billions spent by GM, HP and others, it's easy to overlook their corner of the warranty industry.
December 11, 2008
- Security Equipment Warranties: Although big ticket military contracts don't usually include what we'd call product warranties, the maker so numerous other products that help protect people and property do pay claims and maintain warranty reserves. What follows are snapshots of the past six years of warranty expenditures for four of the market leaders in their respective corners of the security marketplace.
December 5, 2008
- Warranty Cost Cutting: The warranty reserve balance rises and falls, along with claims and accruals, in reaction to changes in sales volumes and product quality. But merely measuring the balance doesn't provide as much insight as does using it to measure a company's capacity to pay claims.
November 26, 2008
- Warranty Cost Cutting: Among the top 100 warranty providers, more than half have reduced the percentage of sales they allocate to warranty costs in the past year. Some have cut their accrual rates by a third, a half, or even more. And many have also seen their claims rates fall, suggesting not only cost cutting but also quality improvements.
November 20, 2008
- General Motors' Warranties: The world's largest automaker is running out of cash, and if a government loan doesn't come through soon, bankruptcy may follow. As the largest U.S.-based warranty provider, GM's fortunes may have a Lehman-like ripple effect throughout the entire manufacturing sector. Then again, maybe a court-supervised opportunity to reorganize is just what the company needs?
November 13, 2008
- Warranty Software: SigmaQuest debuts a new root cause analysis module that helps manufacturers reduce the scope of product recalls and cut warranty costs. It's also priced by the month and uses a Web interface to reduce the cost, time and effort needed to begin using it.
November 6, 2008
- Warranty Institute Opens: The Institute of Warranty Chain Management begins accepting memberships this weekend, more than two-and-a-half years after forming. The Web site's almost done, some 60 white papers are waiting to be downloaded, and a training program for warranty professionals is scheduled to begin in March.
October 30, 2008
- Verizon's Extended Warranties: Carrier to leverage monthly billing and longtime customer relationships in a bid to sell service plans for TVs, PCs and phones plugged into its networks.
October 23, 2008
- Warranty Management: Value and price are affected by product quality, which can be measured by fluctuations in warranty cost. But warranty is too often treated as merely a cost that must be reduced, without heeding its link to quality, price, and ultimately profits. And warranty is very different from accounting in that a big part of the job is using probability functions to predict the future. By Vadim Kozyrkov of Aculocity.
October 16, 2008
- Telecom Equipment Warranties: Claims are up slightly and accruals are down slightly, as are total warranty reserves. But within the telecom sector are a handful of companies that have seen warranty costs fall significantly in the past five years.
October 9, 2008
- Medical Equipment Warranties: While claims are increasing, sales are rising a little faster in the medical and scientific equipment industries. And at least eight companies have cut their warranty expenses by big percentages over the past five years.
October 2, 2008
- Furniture & Appliance Warranties: At the half-year mark, warranty costs are creeping up as sales slowly decline for some well-known brands. But others have seen sales rise and warranty costs fall.
September 25, 2008
- Computer Warranties: At the half-year mark, HP is up and Dell is down, while Apple and Seagate keep their warranty costs under control. At Lexmark and Palm, however, already-elevated warranty costs keep going higher.
September 18, 2008
- Off-Road Vehicle Warranties: As might be expected, companies selling vehicles closely linked to summer recreation and the growing season show a cyclical pattern in their warranty claims. Those more identified with construction equipment, however, show no cyclical pattern, though several have seen recent rises in warranty costs.
September 12, 2008
- Top 100 Warranty Providers: Compared to a year ago, much has changed in terms of warranty claims, accruals, and reserves. Key ratios suggest that some companies are enjoying vastly reduced repair costs thanks to quality gains. However, for the largest manufacturers, the percentage of sales they spend on warranty hasn't changed much.
September 5, 2008
- "Expiring" Warranty Scams: Existing laws are not much of a deterrent and the lawsuits are merely a cost of doing business. But a group of auto warranty finance companies think they have a better way to stop the pre-recorded phone calls and misleading postcards: banding together and refusing to do business with the scammers.
August 14, 2008
- Flat Rate Extended Warranties: For shoppers, the choice at the cash register is to say yes or no. The competition is between administrators vying for exclusive contracts with the retailers. But now there's a new choice, for consumers to go home and buy their extended warranties over the Internet.
August 7, 2008
- Warranty Research Report: There are only a few more days to download free copies of the latest report from the Aberdeen Group. Using survey data, it finds a huge correlation between metrics, analytics, and success in warranty management.
July 30, 2008
- Aerospace Warranties: Though the industry trend is upward, some aerospace companies have managed to reduce their warranty expenses significantly over the past five years. But a few have seen their warranty costs go back up in early 2008.
July 24, 2008
- Warranty Cost per Vehicle: If one has a figure for warranty accruals and for annual sales, one can quickly calculate an estimate of what a given automaker expects to spend on warranty claims over the life of its vehicles. And better yet, all the complexities of warranty durations, local currencies, labor and parts cost are built into the estimate.
July 16, 2008
- Automotive Warranties: In terms of warranty accruals, vehicle makers are setting aside less funds in 2008 than they did a year ago, while their suppliers are setting aside more. But before one concludes that supplier recovery efforts are the primary reason, let's allow some time for recent litigation and asset sales to be fully reflected in the numbers.
July 10, 2008
- Worldwide Warranty Providers: With the attention of most Americans turned towards long weekends at the beach, barbecues and mountain getaways, we turn our focus to ten well-known international brands that are among the few non-U.S.-based companies to reveal their warranty expenses.
July 3, 2008
- Computer Warranty Providers: Like a dog that doesn't bark, what hasn't happened to the likes of Apple, Seagate, and other major warranty providers in the computer industry is more remarkable than what did. Meanwhile, HP, Sun, IBM, Western Digital, 3Com and Cisco continue to slowly but surely reduce their warranty costs.
June 27, 2008
- RV & New Home Warranties: Sales are declining so claims rates are rising. But a few homebuilders have radically cut the amount they set aside per unit sold, raising suspicions that they're intentionally estimating low. Meanwhile, homes on wheels continue to show higher warranty costs.
June 20, 2008
- Top 100 Warranty Providers: Key ratios show how some manufacturers have made fairly radical changes in their warranty finances over the past year. But, like a dog that doesn't bark, what's remarkable is how few of the biggest warranty providers have seen relatively big increases or decreases since March 2007.
June 12, 2008
- Green Warranties, Part Four: Solar cell manufacturers betray their youth and inexperience when it comes to warranty accounting. Very long warranties, new technology and rapidly increasing sales don't make their jobs any easier.
June 5, 2008
- Green Warranties, Part Three: To help the environment, extended warranty administrators are stepping up to offer customers gift cards in return for their waste computers and cameras and more energy-efficient replacements for their unrepairable home appliances.
May 30, 2008
- Green Warranties, Part Two: While product warranties are focused on repairs at the beginning of a product's life, anti-pollution efforts aim to reduce energy usage over the full life of a product while recycling efforts are focused on waste disposal at the end of a product's useful life.
May 21, 2008
- Green Warranties, Part One: As the price of traditional fuels soar, the alternatives are becoming more viable. And manufacturers are promoting the growing viability of electric and biofuel-powered vehicles through longer warranties. Government is also getting involved by mandating higher fuel efficiency, new fuel blends, lowered emissions levels, and longer warranties.
May 14, 2008
- Five-Year Warranty Trends, Part Six: The total balance in all U.S. manufacturers' warranty reserve funds first surpassed $40 billion in 2007. The total is up 4.3% since 2006 and is up 16% since 2003. But while balances in some industry sectors are soaring, in others they're actually shrinking from year to year.
May 8, 2008
- Five-Year Warranty Trends, Part Five: American manufacturers now keep $41.1 billion in their warranty reserves, equal to 17 months' worth of claims paid. And it's been more or less steady at that capacity level for the past five years. Meanwhile, average accrual rates have stayed close to 1.7%, although different industries accrue for warranty at different rates.
April 29, 2008
- Five-Year Warranty Trends, Part Four: Warranty costs as a percentage of sales have remained rather stable since 2003. But while some industries are always below the overall average, others are always above it. And that depends not only on the product being made but also on the maker's spot in the supply chain.
April 17, 2008
- Five-Year Warranty Trends, Part Three: Measured in dollars, claims were up by only $300 million last year (+1.4% over 2006) while accruals rose $1.5 billion (+5.4%). But Microsoft's Xbox 360 debacle accounted for much of those increases in a year that saw warranty expenses decrease or remain the same for most other U.S.-based manufacturers.
April 10, 2008
- Five-Year Warranty Trends, Part Two: While several of the biggest warranty spenders have compiled remarkably consistent results since 2003 in terms of the percentage of revenue they spend on warranty work, others have managed to reduce their costs considerably over time. And then there are the handful that saw costs rise by remarkably high amounts.
April 2, 2008
- Top 100 Warranty Providers: Though total warranty claims were up only slightly in 2007, some manufacturers saw massive changes up or down. While we can't compare companies directly to each other, we can compare each company to itself. And we can measure those rates of change, detecting both improving and deteriorating warranty circumstances.
March 26, 2008
- The Institute of Warranty Chain Management: Membership opens this spring and certification courses begin in the fall. Yet some people still wonder why it's taking so long. The reason is a perceived need by the board to develop content and services to retain members before recruiting them.
March 19, 2008
- Ford's Warranty Costs: Figures presented at the Warranty Chain Management Conference last week showed a massive drop in the automaker's warranty expenses. But that had much to do with the accounting for the soon-to-be-sold Jaguar and Land Rover divisions. Still, even after adjusting year-ago figures to account for that impending sale, Ford's warranty costs are down significantly.
March 12, 2008
- WCM Preview: Attendees at the Warranty Chain Management Conference will have their choice of two panel discussions and survey overviews on Thursday morning. Via different routes, both come to much the same conclusion: more work needs to be done on document communication and collaboration efforts.
March 4, 2008
- Warranty Analytics: The Warranty Chain Management Conference in San Diego next week will feature both a workshop on loss cost analytics aimed at extended warranty providers and a warranty analytics software enhancement aimed at engineers and quality managers.
February 28, 2008
- WCM Workshops, Part Two: The day before the opening of the Warranty Chain Management Conference next month, attendees have a chance to hear experts talk about how to reduce warranty-related litigation and how to cut down on the amount of warranty fraud.
February 21, 2008
- WCM Workshops, Part One: The day before the opening of the Warranty Chain Management Conference next month, attendees have a chance to hear two experts talk about the pitfalls of relying upon seemingly simple statistical measures of warranty cost.
February 14, 2008
- WCM Keynote Address: For the first time, a top automotive executive delivers the keynote address at the WCM Conference next month in San Diego. His message to attendees will stress the need for common standards to improve warranty workflow among partners, suppliers, competitors, and dealers.
February 7, 2008
- Automotive Warranties: What once looked like a trend turned out to be a temporary spike. So the gap between the warranty costs of OEMs and their suppliers remains close to 2% wide. But the good news is that warranty expenses are no longer soaring for automotive manufacturers.
January 31, 2008
- NEW Acquires ServiceBench: One is a leading service plan administrator and call center operator. The other is a major network hub for warranty professionals. Together they can set the standard for warranty claims processing, customer care, extended warranty administration, service dispatch, and end-of-life recycling.
January 23, 2008
- Circuit City's Extended Warranties: Are the financial losses and sales declines self-inflicted? Or is this the bleeding edge of an industry downturn that will eventually strip other retailers of their profitability? Circuit City blames both.
January 16, 2008
- Top 100 Warranty Providers: While manufacturers' warranty costs shouldn't be compared directly against one another, they can be compared against themselves over time. And when one looks at those with the biggest percentage increases and decreases, one sees the biggest warranty winners and losers of the past year.
January 10, 2008
- DVD & Hard Drive Recorder Shopping: Recording television programs has never been easier, thanks to a new crop of DVD and hard disk recorders with capacities of two to 400 hours. But some carry only 90-day warranties, which makes service contracts even more appealing.
December 19, 2007
- Camcorder Shopping: All the major brands except Canon give only 90-day warranties on labor, making extended warranties an attractive add-on. But there are numerous small brands that give the full year on both labor and parts. Meanwhile, extended warranties are priced low by some retailers, while a few try to get more for the protection plan than they do for the product it covers.
December 5, 2007
- Extended Warranty Shopping: Everybody knows that prices vary from one retailer to the next, but the prices they charge for extended warranties vary even more. And while some retailers sell their products low and their service plans high, others discount both while a few overcharge for both. So while some bundles are rip-offs, others could be seen as compelling bargains.
November 28, 2007
- Warranty Management: Warranty management for manufacturing and sales organizations is becoming an intense focus area. Warranty spending by US-based companies surpasses the Gross Domestic Product of some nations. But warranty is an avoidable cost, if managed efficiently and judiciously. By Sudripto De and Sandeep Kumar of Infosys Technologies.
November 14, 2007
- Dell's Warranty Accounting: While it came up short in terms of scandal and financial impact, Dell's accounting investigation did produce one benefit. At long last, the company separated its basic and extended warranty programs. And it turns out that extended warranty was even bigger than we thought.
November 7, 2007
- Warranty Benchmarks, Part Two: Big companies really do pay more. The larger the manufacturer, the more warranty claims they pay. And in both the automotive and computer industries, OEMs tend to pay more claims than their parts suppliers.
October 31, 2007
- Warranty Benchmarks: Graphs of all manufacturers' claims and accrual rates don't follow bell curves. They're Pareto distributions, where lots of companies spend small amounts on warranty and a few heavyweights spend a lot.
October 24, 2007
- Warranty Benchmarking Survey: Though the sample size was small, the results were significant. And this is just the initial round of APQC's planned expansion into the benchmarking of warranty repairs and other after-sales services.
October 16, 2007
- Fulcrum Analytics: New software tools give warranty and service contract providers new insights into cost, revenue, and profitability. But those who use them won't talk about them, to preserve the competitive advantage these analytical tools give them.
October 10, 2007
- Aerospace Warranties: In this industry, there doesn't seem to be a wide gap between the claims paid by aircraft makers and their suppliers, as is the case with cars and computers. In this respect, the makers of Boeing, Cessna, and Gulfstream aircraft are different from Ford, GM, HP, and Dell.
October 2, 2007
- New Home & Appliance Warranties: At the midpoint of 2007, sales are falling faster than claims can be reduced, driving claims rate percentages upwards for many companies in the building trades. But unlike in the automotive or computer industries, claims in this sector were always rather evenly distributed among new home builders and their suppliers.
September 25, 2007
- Computer & Peripheral Warranties: At midyear, it looks like many of the major brand names continue to cut their warranty expenses, as do many of their suppliers. But soon Dell will restate its warranty accruals and that could erase the declines completely. Or will it add to them?
September 18, 2007
- Automotive Warranties: Are claims soaring or falling? It depends how you slice the market. One way is to compare OEMs to their suppliers. Another is to group OEMs by the size of the vehicles they make. Either way, passenger car and light truck makers always seem to end up paying the most.
September 11, 2007
- Mid-Year Warranty Report: Numerous companies continue to fine-tune their warranty spending, reacting to claims rate fluctuations by modifying accruals. While warranty spending by one company can't be compared to another's, we can compare a company to itself over time, by way of a series of top ten lists.
August 15, 2007
- New Home Warranties: While sales are declining, warranty accruals are declining even faster. Is it because of warranty cost cutting? Could it be better quality construction? Or are they simply putting less aside and hoping that nobody notices? Also, a letter to the editor about compliance with state laws on service contracts.
August 8, 2007
- Warranty Definition: Rather than counting what warranty costs a company internally, manufacturers should instead look at what it costs the customer and the brand image externally. Warranty is an opportunity for a company to listen to its customers, and improve the integrity of its brand image. By Ed Staats from Tavant Technologies.
July 31, 2007
- Extended Warranty Solution: ServiceBench and Rainmaker partner to bring service contract sales capabilities to manufacturers, dealers and distributors of appliances, HVAC systems, and fitness equipment. Goodman Manufacturing and Icon Health & Fitness are the first to sign.
July 25, 2007
- Warranty Acquisitions: When companies merge, what happens to their warranty expenses? Is it just a mathematical sum of the two? Or does the frugal side of the business teach the other side how to reduce its warranty expenses?
July 17, 2007
- Xbox Warranty Costs: For a company that's never reported a warranty expense, Microsoft sure has a problem on its hands, now that it lengthened the Xbox 360 warranty to three years and took a billion-dollar charge to finance those repairs. But outside of the warranty community, does anybody really care?
July 10, 2007
- Ten Worldwide Warranty Providers: It's holiday time in the U.S. this week, so we're taking the opportunity to present warranty data for ten global brands based in other countries. Despite the currency and accounting differences, many pay warranty claims at rates close to those turned in by their U.S.-based peers.
July 5, 2007
- Institute of Warranty Chain Management: The time has come for companies in the warranty industry to write a check to fund the launch of warranty management training and certification services. If the fundraising goes well, individual memberships are set to follow by year's end.
June 26, 2007
- Changing the Way We Think About Warranty Management: Warranty is a critical element of new product strategy. It not only provides assurance to customers, but also serves as a very effective promotional tool. A change in the approach to warranty management is needed so that warranty related decisions are made in the context of the product life cycle and take into account the interaction between warranty and other decision variables. This new strategic approach is similar to that which has transformed supply chain management over the last 10 to 15 years. By D.N. Prabhakar Murthy, Wallace Blischke, Steve Kakouros, and Dorothea Kuettner.
June 19, 2007
- Warranty Reserves by Industry: Longer warranties usually mean larger reserves. And in industries where warranties are getting longer, the ratio between claims and reserves is growing. But in some sectors, the need for earnings may be forcing companies to live with more risk and smaller reserves.
June 12, 2007
- Worldwide Computer Warranties: Thanks to exact data for U.S. product warranties and good data for worldwide market shares, we can estimate a worldwide figure of $12.3 billion for IT hardware warranties and $4.9 billion for PC warranties. With mobile phones, however, the precision drops because so much of the industry is based in Asia and Europe, where warranty data remains relatively scarce.
June 5, 2007
- Worldwide Automotive Warranties: Sure there are good numbers for the U.S.-based automakers, but what about the rest of the world? With a few educated guesses, we're able to estimate the worldwide auto warranty number to be $36.9 billion, roughly 3.4 times U.S. figures alone. But it's different for every size of vehicle, and exchange rate and warranty duration also have an effect.
May 30, 2007
- HVAC, Appliance & Building Material Warranties: Since so many manufacturers straddle the plumbing, appliance, and HVAC industries, we're profiling them together. But warranty occurs at very different rates for each product type. And some of the most expensive products from a warranty point of view seem to be small kitchen and personal grooming appliances.
May 22, 2007
- Automotive Warranties: Thanks to reduced warranty expenses at GM, claims were up only slightly for the auto industry in 2006. With four years of data in hand, it's now possible to calculate typical claims rates by product or vehicle type. And while warranty expenses for some are on a downward trend, others have seen costs rise.
May 15, 2007
- Computer Warranties: Though warranty costs increased only slightly for PC makers as a group in 2006, a few companies saw radical changes in their claims and accrual rates. And Dell's still missing, with no new warranty data in almost a year.
May 8, 2007
- Consumer Electronics Warranties: While most of the brands are imports, there is a short list of American CE manufacturers. But while the Japanese brands have relatively low warranty expenses, the American brands pay claims at rates more like those seen in the computer and automotive businesses.
May 1, 2007
- New Home Warranties: Pre-fab and mobile homes have much higher warranty costs than site-built homes. But even for site-built homes, there are big differences between the builders in the way they save and spend their warranty funds.
April 24, 2007
- Semiconductor Warranties: Although warranty costs are volatile across the industry, it's the makers of test equipment and production machinery that seem to pay the most. And it's the chip and circuit board makers that pay the least -- some so little that they don't bother to report it to the SEC.
April 17, 2007
- Product Warranty Claims, 2003-2006: Signs are emerging that suggest a peak in warranty spending by American manufacturers. Is it better management? Shorter warranties? Or could it be nothing more than sales rising faster than costs? With four years of data to examine, there's evidence for each scenario.
April 11, 2007
- Warranty Spending in 2006: With the total over $28 billion and climbing, warranty claims reported last year by US-based manufacturers have never been higher. But while some companies pay out more of their sales in warranty claims, others have cut some key ratios significantly.
April 3, 2007
- Warranty & the Law: Some laws that affect warranties go back decades. Others are just a few months old. At the recent WCM Conference, three lawyers provided some perspective on how they see these laws affecting both manufacturers and extended warranty providers who find themselves in court defending against a breach of warranty lawsuit.
March 27, 2007
- The Chief Warranty Officer: Having detected something of a plateau in warranty activity, one speaker at the WCM Conference calls for the creation of a job position that cuts across the many departments with interests in warranty. Yet some top executives still see warranty as nothing but a cost that needs to be reduced, and pay little attention to its potential to increase customer loyalty or build a brand's image of quality. Perhaps that's why a warranty champion is needed?
March 20, 2007
- Warranty Conference Exhibitors: In between all the keynote speeches and panel discussions in Tampa this week, WCM attendees will have an opportunity to take a look at the offerings of a diverse cross section of warranty software and service providers.
March 13, 2007
- Warranty Institute: A year after his call for the formation of a warranty industry association, HP's Glen Griffiths plans to announce the official launch of the Institute of Warranty Chain Management next week in Tampa.
March 6, 2007
- Warranty Conference, Day One: Whether by design or by coincidence, this year's Warranty Chain Management Conference seems to have two major themes: the globalization of warranty management and the legal aspects of warranty and extended warranty. At times, attendees will have to choose between two or even three equally good choices when deciding which track to follow.
February 28, 2007
- Warranty Analysis Workshops: Four pre-show workshops and an automotive warranty seminar make the day before the official opening of WCM 2007 a worthy destination, and may presage an era when advanced courses and professional certification become a routine feature of warranty industry events.
February 21, 2007
- Warranty Conference Keynotes: Globalization is already a major trend in warranty service provision, according to WCM Conference keynote speakers from Solectron and Lenovo. In Tampa next month, they'll say that what's happened to them is what may happen to everyone else soon, as mobile phones and laptops amplify global demand for warranty service -- turning next week into next-day.
February 14, 2007
- The Warranty Dashboard: If a picture's worth a thousand words, then two graphs should be enough to detail a company's warranty history at a glance. Readily available data can be used to compute three key ratios that can illustrate trends and highlight anomalies.
February 6, 2007
- Warranty Reserve Levels: Most large companies seem to pick a size and stick to it, even as sales and claims vary. Whether measured in dollars or as a multiple of claims paid per month, the size of most of the largest warranty reserves has changed very slowly over the past four years.
January 30, 2007
- Warranty Financial Management, Part 2: Optimizing Warranty Reserves. Rightsizing a $100 billion dollar worldwide warranty reserve by turning lazy capital into working capital. By Greg Spraker of SAS Institute.
January 23, 2007
- Warranty Claims & Accrual Rates: Half the industry segments follow seasonal patterns, with claims and accrual rates peaking during the same quarter every year. Four segments are following downward trends while two are on upward slopes. But what's most surprising is how small the fluctuations have been over the past 15 quarters.
January 17, 2007
- Warranty Accounting: Dell is now seriously late with its quarterly financial reports because of investigations some say were prompted by its peculiar warranty accounting methods. Meanwhile, Apple's seems to have turned a corner regarding its recent iPod warranty problems.
January 9, 2007
- Warranty Compliance Online: Four years after first looking into online compliance with warranty laws, we find the situation has deteriorated, with many Web merchants completely ignoring disclosure rules. And the FTC remains silent.
December 19, 2006
- Product Warranty Spending: With most of the third quarter financial reports behind us, it's looking like warranty spending is up only slightly in 2006. But the changes at some of the top warranty providers are very large, in both dollar and percentage terms.
December 12, 2006
- Service After Sales: Getting the biggest bang for your buck in after-sales solutions through benchmarking. By Deb Unzicker and Cheryl Harrity of APQC.
December 5, 2006
- Extended Warranties: Consumer Reports took their best shot. Now the industry has responded, citing the value, price, convenience and savings of time and money as some of the benefits of enhanced service plans.
November 29, 2006
- Extended Warranties: Consumer Reports says they're not needed except in a few cases. Others say they're a good value at a reasonable price. As the holiday shopping season begins, whose advice will buyers follow?
November 21, 2006
- The increasing importance of reverse logistics in technology companies. By David Cope, MGH Consulting
November 14, 2006
- Warranty Claims vs. Accruals: Using a few key warranty metrics, it's becoming easier to tell when a given company is managing its claims and accruals responsibly. It's also becoming easier to tell when things run off the rails, even if a company makes no specific disclosures of a crisis.
November 8, 2006
- Warranty Stability: Whether a company pays a little or a lot for warranty claims, the stability of the reserve fund should be preserved. But out of the top 100 warranty providers, only 24 seem to be doing it well, as measured by changes in some key ratios over time.
October 31, 2006
- Extended Warranty Pricing: Retailers charge a premium of anywhere from 1.2% to 36% for a Canon EOS 30D extended warranty, and anywhere from 5.6% to 43% for a Panasonic 42" plasma TV service plan. With Target now entering the market, service plan prices will be under increasing pressure.
October 24, 2006
- Automotive Warranty: For some the trend is up, while for others warranty costs are falling. And those who make vehicles aimed at either summer or winter activities are seeing a seasonal pattern in their warranty costs.
October 17, 2006
- Copy/Print/Scan/Fax Warranties: While in this digital era it has become increasingly difficult to find standalone office machines on the market, it has also become very difficult to find anything for sale with more (or less) than a year's warranty.
October 11, 2006
- Warranty Management: The Next Frontier in Cost Reduction and Product Quality Improvement? A new approach for exploiting warranty data offers manufacturing organizations a means of quickly finding and fixing product failures. By Al Alaverdi and Nader Fathi of SigmaQuest.
October 3, 2006
- Top 100 Warranty Providers: In this midyear report, we look at who's up and who's down compared to a year ago. Driven by acquisitions and longer warranties, some companies are paying out more than ever before. But others have found ways to cut their outlays by big numbers.
September 26, 2006
- Digital Projector Warranties: Engineers have known since the days of Thomas Edison that bulbs eventually burn out. For customers looking to buy a projector, however, the high cost of replacement lamps and the relatively brief warranties provided for them aren't always top of mind.
September 20, 2006
- Warranty Financial Management, Part 1: Defining Warranty Expense Management. By Greg Spraker of SAS Institute.
September 12, 2006
- Television Warranties: Bigger is usually better, when it comes to TV warranties. While the old tube TVs are more or less disposable, flat screen vendors usually either fix them in the home or send someone out to pick up the units that fail. And while a year is the most common warranty period, several TV manufacturers issue multi-year warranties on their premium lines.
September 7, 2006
- CD & DVD Warranties: Only Sony is willing to back its optical disc products with multi-year warranties, and only its high end units benefit from the five-year coverage. Everyone else issues manufacturer's warranties of one year or less.
August 29, 2006
- Disk Drive Warranties: As our warranty tour continues, we've finally found a product segment for which warranties vary tremendously from one company to the next. And competitive marketing strategies seem to matter more than either product specs or price.
August 22, 2006
- Digital Media Warranties: Digital music players and digital cameras, despite prices that sometimes surpass several thousand dollars, are never warranted for more than a year. Some manufacturers will cover labor charges for only the first 90 days, which pushes these units right to the edge of disposability, given the cost of repairs.
August 15, 2006
- Peripheral Warranties: With computer printers and monitors, older technologies frequently get longer warranties than new. And while one would think higher prices mean longer warranties, that doesn't seem to be the case.
August 8, 2006
- Computer Warranties: While most computers still carry a one-year warranty, some are covered for only 90 days while many office computers still cling to three-year warranty periods.
August 2, 2006
- Ford's Powertrain Warranties: How does a carmaker get people talking about product quality and confidence? By lengthening the warranty on the engine and transmission. But it didn't work so well for Chrysler, so why should it work for Ford?
July 25, 2006
- Warranty Research: As one important new warranty research project concludes, another is beginning. AberdeenGroup's warranty report is now complete and available for download, while APQC's survey questions are available for a first look.
July 18, 2006
- Warranty Reporting vs. Analytics: One turns the past into charts. The other turns the future into actionable items. But some people who know the difference between the two don't want to talk about it, for fear that they'll lose an edge on their competition.
July 11, 2006
- Transforming a Warranty Program: IBM drives warranty service quality improvements through a Business Partners network. Its new Service Advisory Council suggests paying bonuses for achieving certain performance metrics. Guest column by IBM's Joe Ciulla.
July 5, 2006
- Warranty Investments: One Wall Street-weary extended warranty administrator is going private while another was swept up by an acquisitive company out to corner the market for mobile phone extended warranties. And then there's ServiceBench, carefully planning its next logical step.
June 27, 2006
- Auto Warranty vs. Quality: Does the total cost of warranty have any correlation to product quality? Based on the worldwide claims rates seen for the top five carmakers and quality data collected in the U.S. by J.D. Power and Associates, one does seem to be related to the other.
June 20, 2006
- Shadow Drivers of Warranty Cost: Survey data suggests that some auto service technicians are wasting their time by replacing the wrong parts and perhaps too many perfectly good parts because they don't always have access to the right information.
June 13, 2006
- Warranty vs. Earnings: While a few Wall Street analysts are beginning to treat warranty as a leading economic indicator, fluctuations in claims rates don't always translate into earnings shifts. Yet warranty news is already moving stock prices.
June 6, 2006
- Warranty Inspections: Crawford and Company, already a major player in claims administration services , and home inspections, wants to go deeper into the warranty business.
May 31, 2006
- Warranty Compliance: The list of companies reporting upon their warranty accounts is constantly changing as new companies begin complying with the new rules while old companies close down or get acquired. A handful of companies sometimes forget to include details about their warranty spending, while others simply disregard the rules.
May 23, 2006
- Warranty Marksmanship: Companies that accurately predict warranty claims and maintain adequate warranty reserves are at the top of their game. And now it's possible to compare their aim by looking at a chart that compares reserves to accruals.
May 16, 2006
- Warranty Reserves: Over time, both companies and industries make consistent choices regarding how much revenue to put aside to fund future warranty claims, reflecting the outlook of their forecasters.
May 10, 2006
- Computer & Electronics Warranties: As is the case in automotive, those with their brand names on the outside end up paying most of the warranty claims. But the computer OEMs don't pay out as much as some of the printer companies or the makers of high-end semiconductor production equipment.
May 2, 2006
- Automotive Warranties: While GM and Ford spend the most on warranty, other types of vehicle manufacturers pay out a greater share of their total revenue on claims. And while most parts suppliers have relatively low claims rates, those in the aftermarket report some of the highest rates of all.
April 25, 2006
- Top 50 Warranty Providers: While most large manufacturers saw warranty claims rise in 2005, most also saw sales gains that helped relieve the pain. Even GM and Ford saw only modest upticks in the percentage of sales they pay in claims. And some such as Boeing saw claims plummet.
April 19, 2006
- High-Tech Warranties: Designing products that can be fixed easily or replaced quickly will reduce warranty expenses. What's required, though, isn't so much better software as better teamwork and planning. Meanwhile, a hunt for patterns and anomalies also works for fraud detection.
April 11, 2006
- Warranty Claims Automation: For a motorcycle manufacturer and a home appliance manufacturer, it wasn't so much that their warranty systems were broke or that their costs were rising. It was just that their old warranty processes were inefficient and couldn't keep up with company growth.
April 4, 2006
- Extended Warranty Advice: An industry expert tells retailers and manufacturers how to get more value from their extended warranty data, possibly helping them to decide what to sell and how to price it based on how much it costs to repair.
March 28, 2006
- Warranty Legal Solutions: So often warranty cost reduction efforts are focused on either the product or the process. But what about the warranty itself? At the WCM Conference, an attorney explained how the right choice of words can limit liability and reduce warranty cost.
March 21, 2006
- Early Warning Standards: Decades ago the AIAG helped set standards for electronic commerce when it developed new data interchange standards. Now it's doing similar work with warranty data communications standards, looking for ways to reduce delays, improve accuracy, and cut warranty claims costs.
March 14, 2006
- Warranty Chain Management: After another successful conference, the warranty community has asked for an industry association in addition to the groups already operating. Warranty community builders said positive things. But now the hard work is just beginning.
March 7, 2006
- Warranty Software: Good planning pays off as Ingersoll-Rand converts its first, second, and third business units to a new Web-based warranty claims processing system. Now, as other departments eye all that warranty data, the company looks for better reporting and analysis tools.
February 28, 2006
- Extended Warranty Association: A new trade group aimed at vehicle service contract administrators plans to focus on certifying inspectors and other business issues, leaving the lobbying and legal efforts to others. But is that enough to attract the big industry players?
February 22, 2006
- Manufacturer's Extended Warranties: Although retailers dominate the business, a handful of manufacturers do very well for themselves in the extended warranty business. Now a major bank's insurance unit wants to help more of them to launch service plan sales efforts.
February 14, 2006
- Extended Warranty Bankruptcies: Like a tree falling in the woods, recent dot-com warranty failures went largely unnoticed by the media and unpredicted by either the regulators or the ratings agencies. So how can a customer be expected to make the right choice?
February 7, 2006
- Fixing Computers: If it ain't broke but it won't work, making a warranty claim won't fix it. But some companies are now hiring "geeks" to sell PC tune-ups, or they're giving away free advice with their service plans, to help customers do everything from removing viruses to installing wi-fi modems.
January 31, 2006
- Customer Recovery: While efforts to push warranty costs back onto suppliers have met with limited success, a handful of manufacturers have pushed most if not all of their warranty expenses back onto their customers by selling them extended warranties.
January 24, 2006
- Mark Your Calendars: Both pre- and post-show events now surround the WCM conference in early March, plus there are now additional warranty events to consider attending in February and June.
January 18, 2006
- Product Warranty Trends: 2005 is shaping up to be a $27 billion year for the warranty industry, though claims still represent only 1.7% of sales. More than a dozen companies have cut their claims rates appreciably. Some manufacturers, however, have seen their claims rates soar into the danger zone.
January 10, 2006
- Telecom Equipment Warranties: Unlike in other industries, there doesn't seem to be any typical spending rate for warranty claims in the phone, data, wireless, or broadcast equipment sectors. For every high there's a low, and for every upward trend there's a decline.
December 20, 2005
- Auto Parts Warranties: Despite the best efforts of the OEMs to push warranty costs back up the supply chain, auto parts makers still have some of the lowest claims rates around. Notable exceptions to this rule include diesel engines and aftermarket replacement parts such as mufflers.
December 13, 2005
- Semiconductor Warranties: In most industries, the consumer-facing brand name suffers most of the warranty cost, and their suppliers get off lightly. But with semiconductors, it's the production platform providers who are left holding the bag.
December 6, 2005
- Aerospace Warranties: The makers of airplanes and jet engines seem to spend much less on warranty than do the makers of automobiles, PCs, or appliances. Having airlines with their own mechanics as customers helps, but so does the emphasis on safety and schedules.
November 29, 2005
- Appliance Warranties: As with computers and cars, warranty claims in a range of 2% to 3% of sales are typical for most appliance brand names. But unlike cars or PCs, warranty costs for appliance and HVAC manufacturers appear to be highly seasonal.
November 22, 2005
- Automotive Warranties: As seen by its third quarter financial statements, Ford is catching up to GM, both in terms of revenue and warranty spending. Ford has now become only the second American manufacturer to ever pay out $1 billion or more in warranty claims per quarter. Meanwhile, other U.S.-based vehicle manufacturers have their own warranty ups and downs to report.
November 15, 2005
- Computer Warranties: It's entirely possible that HP, Dell, and IBM are each now paying roughly the same percentage of their hardware revenue to satisfy warranty claims. A year ago, HP was paying much more, and Dell and IBM were paying much less.
November 9, 2005
- Extended Warranties: Now that Wal-Mart has finally jumped into the business, let's take a detailed look at how this seemingly minor source of revenue is in fact a major source of many retailers' profits.
November 1, 2005
- Extended Warranty Income: Though most extended warranties are sold by retailers, a few computer manufacturers continue to make a killing by selling their own service contracts. Extended warranties can account for a significant slice of profits, and sometimes can actually be the difference between profit and loss.
October 25, 2005
- Longer Warranties: Sometimes they boost sales and other times they just boost costs. Meanwhile, sometimes shortened warranties hurt a brand's image while other times the changes pass unnoticed. Why the difference?
October 18, 2005
- Warranty Report: A white paper commissioned by Microsoft finds that the auto industry needs better communications and collaboration tools to reduce warranty costs.
October 12, 2005
- Warranty Webinar: Early warning systems allow manufacturers to detect emerging issues before they become major liabilities. In a roundtable discussion, experts suggest the best strategies for implementing these systems, and how to use them to reduce warranty cost, boost product quality, and increase customer satisfaction.
October 4, 2005
- Warranty Management Conference: If the WCM show in March drew heavily from Silicon Valley, last week's warranty show in Chicago attracted a mainly Midwestern crowd of manufacturers, who came to hear about the best practices of their peers. What they heard instead was lots about service and quality and other topics at the periphery of warranty.
September 27, 2005
- New Home Warranties: Is there any correlation between what a company spends on warranty and the satisfaction levels of its customers? For some, fewer claims equals happier customers, but for others, there does seem to be such a thing as not enough warranty.
September 20, 2005
- Medical Warranties: Though health services don't come with warranties, much of the medical and scientific equipment used by doctors, hospitals, and laboratories is in fact warranted. But it takes a crisis before most companies will say more than the required minimum about their costs.
September 13, 2005
- Warranty Claims by Industry: Over the past ten quarters, warranty claims patterns have remained remarkably consistent in numerous industries. Those closest to consumers in the supply chain seem to experience the highest claims rates.
September 7, 2005
- Top 50 Warranty Providers: While 20 saw declines in the percentage of revenue spent on warranty claims, all but 12 paid out more claims in dollars during the first half of 2005. Rising product sales made the difference.
August 30, 2005
- Warranty Claims & Accruals: Ten quarters of data for the top ten U.S.-based warranty providers show just how variable and seasonal claims rates can be for some companies and how consistent they've been for others.
August 23, 2005
- Warranty Analysis: Rather than becoming another "accidental" warranty software vendor, the SAS Institute was driven into the market by customers such as GM and Ford.
August 16, 2005
- Warranty Forum: Manufacturing Insights plans to invite the CIOs of all manufacturing companies to meet quarterly to talk about warranty and other topics.
August 9, 2005
- Warranty Laws: Though the federal government has been quiet, there are plenty of laws and regulations governing product warranties and service contracts at the state level.
August 2, 2005
- Warranty Complaints: Consumers with gripes about denied warranty claims are best advised to file a complaint with their local Attorney General, and not to bother with the federal watchdogs.
July 26, 2005
- Warranty Software: Rather than selling warranty analysis software, PolyVista sells analysis software that can look at warranty claims as easily as it can look at airline flight data or oil and gas trading records.
July 19, 2005
- Warranty Acquisitions: With the purchases of Active Web Services and Syncata, ProQuest has acquired its way into a potential leadership position in the automotive warranty processing industry.
July 12, 2005
- Aftermarket Financial Products: Auto dealers who reinsure their vehicle service contracts are pleased by a recent IRS ruling. Guest column by Andrew J. Weill, Esq. & Craig Gordon, Esq.
July 6, 2005
- Warranty Registrations: A digital marketing communications company named MediaKube is adapting Sony's CD-ROM technology to warranty and product registration applications.
June 28, 2005
- The Nine Lives of Entigo: After numerous name changes and shifts in focus, Entigo has returned as a player in the warranty chain management software market.
June 21, 2005
- Global Services: Solectron helps major electronics companies design and manufacture their products, but in the future it sees a major opportunity to expand its operations in warranty repair and even recycling services.
June 14, 2005
- Early Warning Systems: The benefits, we suspect, are huge. But so are the costs. In an era when investments in new computer software must show a return or else, what will be the ROI for warranty analytics?
June 7, 2005
- Fixing Things: The best way to measure performance is not just by counting the number of failures or adding up the warranty costs. A better alternative is to measure how the product consumes energy to perform each of its functions. Guest Column by John Allen.
May 31, 2005
- Automotive Warranty: The Big Three feel the bite of increased warranty costs in the first quarter, just as sales begin to fall. But how can companies be compared over time if their accounting standards and even their currencies are different?
May 24, 2005
- Warranty Reserves: How much is enough? Given a company's industry and the nature of its product warranties, how much should be kept in the warranty reserve fund? The funding decisions of 700 CFOs provide some insights.
May 17, 2005
- Warranty by Industry Sector: While claims grew by 4.9% to $25.1 billion in 2004, warranty's slice of revenue actually shrank a bit. In some industry sectors, both dollars and percentages actually fell, but computer and automotive OEMs still process the vast majority of all warranty claims.
May 10, 2005
- Top 50 Warranty Providers: Manufacturers spent more than $25 billion last year on warranty claims, but sales rose a bit faster, so claims as a percentage of revenue fell slightly. Most of the top 50, however, saw their claims rates fall more.
May 3, 2005
- Warranty Conference, Part Eight: Behind the numbers used in warranty metrics, there's a lot that's left up to the discretion of each company. This makes comparisons somewhat unreliable without a standard set of definitions detailing what is and what isn't a warranty expense.
April 26, 2005
- Warranty Conference, Part Seven: Warranty fraud is a big problem for both manufacturers and warranty administrators. What's surprising is how deliberate and organized their schemes have become.
April 19, 2005
- Warranty Conference, Part Six: Warranty fraud is a big problem for vehicle service contract administrators. But surprisingly, the biggest culprits are usually the mechanics and repair shops, not the consumers.
April 12, 2005
- Warranty Conference, Part Five: With extended warranties, a lack of regulations invites inconsistency. But too much regulation could drive up costs. The SCIC's attorney helps states find a middle ground.
April 5, 2005
- Warranty Conference, Part Four: Your best customers buy extended warranties. And the proper administration of extended warranties can boost customer loyalty. Two top executives explain how it's done.
March 29, 2005
- Warranty Conference, Part Three: Extended warranties may look like easy money to some, but beneath the surface there are lots of moving parts. Here's one expert's how-to guide in 12 parts.
March 22, 2005
- Warranty Conference, Part Two: Members of the AIAG detailed their effort to create an early warning system that uses new warranty data communications standards to improve product quality.
March 15, 2005
- Warranty Conference, Part One: During the kickoff keynotes by HP and IBM at the Warranty Chain Management conference, the need to involve people in warranty transformation projects outranked all technical and financial challenges.
March 8, 2005
- Warranty Retirements: What happens when a warranty expert finishes his career and takes decades of accumulated expertise with him?
February 23, 2005
- Warranty Exam: If you pass the test, you get the sale. But Sub-Zero didn't even tell SAS what to look for in its warranty data.
February 15, 2005
- Warranty Analysis Software: Skeptical buyers and long sales cycles can be overcome with relevant demos using a customer's own data.
January 25, 2005
- Extended Warranty Administrators: While auto and PC manufacturers have the top spots, insurance companies and third party administrators grab the bulk of the pie.
January 19, 2005
- Product Warranty Trends: Manufacturers seem to pack their end-of-year reports with as much warranty expense as they can find, creating a kind of step function in the quarterly data.
January 11, 2005
- Product Warranty Providers: Gateway holds onto the title of most improved for 2003-2004, but almost three-quarters of the top 50 manufacturers are seeing their warranty claims rates decline year over year.
January 5, 2005
- Integrated Warranties: Assurant Solutions, along with partner General Electric, has quietly built itself into one of the largest and most diversified extended warranty service providers.
December 14, 2004
- Unusual Warranties: Ever since it pioneered the sale of extended warranties for VCRs almost 25 years ago, VAC Service Corp. has boldly gone where no administrator has gone before.
December 7, 2004
- The Power of One: The Aon Warranty Group has turned vertical integration into a strategic advantage, expanding and acquiring its way to a position where it can sell extended warranties on electronics, homes, or cars, all of which it can underwrite itself.
November 30, 2004
- Warranty Outsourcing: For one service contract administrator, discretion is a virtue. Some clients don't want anyone to know they outsource claims administration. Some don't even want their names to appear in print.
November 23, 2004
- Public Warranty: Of all the companies in the extended warranty business, most are either small units within very large companies, or they're family-owned or privately-held companies. Only one is publicly held, and lately that's been a problem for them.
November 16, 2004
- Extended Warranty Income: If comparing extended warranty to net income is misleading, then let's correct the record by comparing apples to apples: warranty claims paid to recognized revenue over the past two years.
November 9, 2004
- Service Dispatch: With home appliances, warranty work almost always involves a housecall. Claims administrator ServiceBench has turned the dispatch of service technicians into a strategic advantage.
November 3, 2004
- Extended Warranty Profits: For many manufacturers, the sale of extended warranties contributes heavily to net income. But only a handful of companies have made the financial disclosures needed to figure out how important it really is to them.
October 26, 2004
- Selling Customer Care: While an extended warranty is a type of insurance contract, NEW sells it as an enhanced customer assistance program, promising consumers 24x7 access to advice and boosting customer loyalty for retailers.
October 19, 2004
- Home Warranties: Three decades ago, American Home Shield, now part of ServiceMaster, invented a new category of extended warranties, covering the major systems and appliances in a home but not the home itself.
October 13, 2004
- Auto Inspectors: Continuing our tour of the extended warranty industry, we take a look at a company whose detailed inspections help warranty adjusters decide whether or not to pay a claim.
October 5, 2004
- The SAFE Guys: As with manufacturer's product warranties, the extended warranty industry is huge yet easy to take for granted. Two industry experts explain why they left the comfort of the insurance business to open their own extended warranty consultancy.
September 28, 2004
- Warranty Promotions: Once an afterthought for both manufacturers and customers, warranty is becoming the simplest way to express the quality of a product. Lengthened warranties, which began as a bid for market share by certain auto importers, are now spreading to computers and home electronics.
September 21, 2004
- The Warranty Reserve: With 18 months of data in hand, it's now possible to begin defining a normal range for the size of the warranty reserve fund, expressed as a multiple of the average amount spent per month on claims.
September 14, 2004
- Auto Warranties: It's not just Ford and GM. There are numerous other types of vehicles, and numerous automotive suppliers to those OEMs who make them, which each have their own characteristics when it comes to warranty claims and accrual rates.
September 8, 2004
- Home Warranty Claims & Accruals: Homebuilding, heating and cooling each have their peak seasons. But do warranty claims for new homes and HVAC units also have a peak season? Recent data suggests that claims actually peak later in the year, months after sales do.
August 31, 2004
- Computer Warranty Claims & Accruals: The companies whose brand names go on the front of the computer continue to pay the lion's share of warranty claims. Makers of disk drives, printed circuits, semiconductors, and most types of peripherals see a significantly smaller share of warranty claims.
August 24, 2004
- Warranty Claims & Accruals: While some U.S. manufacturers are still preparing their latest financial statements, most of the largest warranty providers have already announced their second quarter claims and accruals. While some of the top 50 are spending more on warranty than a year ago, most are spending less, and a few are spending a lot less.
August 17, 2004
- Microsoft Automotive: The company will enter the warranty claims processing business through partnerships with Active Web Services, Capgemini, and others.
August 10, 2004
- Seagate's Five-Year Warranties: Is it a bold marketing move that will increase sales? Or is five years a bit too long for a product in such a fast-changing industry?
August 3, 2004
- Warranty Seminar: Last month, a business intelligence software developer sponsored a morning seminar in California on the topic of the TREAD Act and warranty claims. For those who couldn't make it, here's a brief overview of the proceedings.
July 27, 2004
- The Accidental Warranty Software Developer: Manufacturers pressure an electronics testing software vendor to do more to help them avoid warranty costs. As has happened to so many others, they find themselves pulled into an industry they barely noticed was there all along.
July 20, 2004
- Setting Warranty Policy: For products that generate annuity streams, most warranty-management analysis concerns warranty as cost, the effect of warranty on customer satisfaction, or the signaling impact of warranty on customers. This article describes a study where the focus was not on the product under warranty, but rather on the effect that warranty length might have on the sales of related peripherals and supplies. By Scott Ellis and Steve Kakouros.
July 13, 2004
- Warranty Primer: As requested by a student writing an independent study project, what follows is an essay about How Warranty Works. Industry experts who regularly read this column have a choice of either taking this holiday-shortened week off or correcting the editor's mistakes.
July 7, 2004
- Guest Column: As a major part of consumer protection, warranty has a high priority in the policy of the European Commission. Consumers are protected by mandatory warranty periods of two years, by legal instruments to guarantee access to the aftermarket for automotive spare parts and by stringent rules for product safety. However, increasing warranty costs in the automotive industry may indicate that the reality of product quality has not yet met the requirements of those legal rules. A warranty industry association is needed to satisfy consumers and to reduce these tremendous costs. By Dr. Ekkehard Helmig.
June 29, 2004
- Industry Segments: Year to year, each industry's overall share of warranty claims changes slowly, as do their individual claims rates as a percentage of sales. But because many companies operate in more than one industry, precise calculations are elusive.
June 22, 2004
- Declining Warranty Claims: In both dollar amounts and as a percentage of product sales, warranty claims took a steep dive during the first quarter of 2004. Was it caused by cyclical factors? Was it due to rising sales? Or has there been a product quality improvement?
June 15, 2004
- The Warranty Cushion: Very large companies put aside proportionally more to pay warranty claims than either mid-sized or small companies, while very small companies allow their reserve fund ratios to rise and fall. The difference between them is their skill at the arts of warranty estimation and accruals
June 8, 2004
- Warranty Claims Rates: In both the automotive and computer industries, the OEM -- the brand name on the product -- is frequently left holding the bag when it comes time to pay warranty claims. As the latest data shows, their suppliers usually see much lower warranty claims rates.
June 2, 2004
- Warranty Measures: Matching warranty claims and accruals to reserves has always been a balancing act. Now it must be done in public, making it harder to conceal raids on the reserve fund or spikes in claims. But it's also easier to see how a company's quality improvements and claims reductions can translate to bottom-line gains by reducing the need for reserves.
May 25, 2004
- Warranty Claims: While many U.S. manufacturers are still preparing their latest financial statements, most of the largest warranty providers have already announced their first quarter claims and accruals. Half of the top 50 are spending more on warranty than a year ago while half are spending less.
May 18, 2004
- Warranty Intelligence Software: How does one launch a warranty software company that attracts John Deere and Whirlpool as early customers? And how does one attract the CIA as both an end user and an investor? Perhaps it takes equal parts skill, spunk, and luck.
May 11, 2004
- Warranty Industry Associations: Readers respond to a brief survey, expressing a clear preference for an independent cross-industry warranty group and a multi-day warranty industry conference focused on quality, best practices, measuring return on investment, and benchmarking efforts.
May 4, 2004
- Warranty Industry Associations: Until recently, nobody thought warranty could support a trade association, especially one that crosses industry boundaries. But when a warranty seminar held in a Detroit suburb in the middle of the week sells out, you can bet people will take notice. So who can host a talking shop for warranty professionals?
April 27, 2004
- Telecom Warranties: While the ups and downs of the heavyweight manufacturers throws off the averages, it appears that TV and radio broadcast equipment generates half as much in warranty claims as newer technologies such as cellular and Internet gear. Are telecom warranty rates related to the maturity of the technology or the age of its manufacturers?
April 20, 2004
- Automotive Warranties: Ford and General Motors are not only the largest providers of automotive warranty. They're also paying a higher percentage of their revenue in claims than everyone but the makers of RVs and rider mowers. While their dealers love warranty work, many other automotive manufacturers spend less than 1% of their revenue on claims and accruals.
April 13, 2004
- Warranty Reserves: While the average manufacturer spends 1.9% of product revenue on warranty claims and keeps a little over a year's worth of funds in reserve, each industry is different. Computer manufacturers and automakers fund their warranty programs at different levels than telecom or aerospace manufacturers. But in any group, as with any trend, there's always the odd man out.
April 6, 2004
- Warranty by Industry: While automotive warranties continue to account for half of all claims, a diverse mix of other industries makes up the balance, from air conditioning to airplanes. Manufacturers grouped by the types of products they make exhibited distinct personalities during the past year.
March 30, 2004
- Top 50 Warranty Providers: The data is in, and there are four new names on the list of companies with the largest warranty programs. American manufacturers reported more than $23.5 billion in warranty claims during 2003 -- a rate close to $2 billion a month. For at least nine companies, warranty is now a million-dollar-a-day enterprise.
March 23, 2004
- Is the TREAD Act Working? It may still be too early to say for sure, but recent auto safety-related announcements have been filled with specific quantitative data about warranty claims and failure rates. Could it be that the TREAD Act's Early Warning Reporting system is really doing its job?
March 16, 2004
- Business Jet Warranties: Unlike the airlines, the owners of corporate jets expect the white glove treatment. While they'll gladly bring their jets to an authorized service center for warranty work, they'll never try to do their own repairs. And while they expect their planes to be fixed fast, they'll almost never have their own spare parts on hand.
March 9, 2004
- Jetliner Warranties: In the good old days, the airlines and aviation parts manufacturers already swamped by regulatory paperwork had little time for the additional bother of warranty claims. But in an era of falling revenue and rising costs, warranty has suddenly become very important to both operators and their suppliers.
March 2, 2004
- Skatepark Warranties: Whether they're made of steel, plywood, plastic, or paper, the ramps and rails installed in skateboard parks are sold with a warranty. But whether the warranty lasts for a year or 20 years seems to have more to do with marketing than the strength of the materials.
February 24, 2004
- Stadium Warranties: Like any other large construction project, sports stadiums come with product warranties. Just because there's no warranty registration card in the box doesn't mean that the builders don't face warranty claims from stadium owners. Two examples follow, from Seattle and Houston.
February 17, 2004
- Turf Warranties: In some of North America's largest sports stadiums, the grass is always greener, thanks to AstroTurf and its successors. Unlike the sods it replaces, an artificial sports surface comes with an eight-year warranty. But if you're planning to make a claim, bring your lawyer.
February 10, 2004
- Reducing Warranty Claims: Sometimes a company focuses its engineering talent on a manufacturing problem that once solved, results in soaring product quality improvements and plummeting warranty costs. Other times, a company gets lucky as product families mature and installed bases age themselves out of warranty.
February 3, 2004
- Auto Warranties: While the Big Three sold two-thirds of the vehicles purchased in the U.S. last year 2003, they settled three-quarters of the warranty claims. Detroit pays twice as much in claims per vehicle as Toyota and Honda. But that's not the only quality gap. Recent research finds striking gaps between perceived and actual quality levels.
January 27, 2004
- Extended Warranties in the UK: After concluding that British retailers charge some of the highest prices in the world for extended warranties, the UK's Competition Commission's final report advocates reforms of the salesperson-to-consumer relationship.
January 20, 2004
- Warranty in the IT Industry: Readers ask for more details on warranty claims and accruals in the computer, telecommunications, semiconductor, disk drive, and peripherals industry sectors.
January 12, 2004
- Controlling warranty costs and exposure using early warning systems. Warranty becomes a boardroom-level issue. By David Froning, warranty analysis product manager at the SAS Institute Inc.
January 5, 2004
- FASB Non-Compliance: While most of the major US-based manufacturers now include the warranty tables mandated by FASB FIN 45, at least one-in-five have chosen non-compliance. What happens to them? FASB says they can be called non-GAAP companies, but the SEC says little about enforcement plans.
December 29, 2003
- The Warranty Reserve: Manufacturers apparently allowed their reserve fund balances to shrink by some $2 billion during the third quarter, not only because of a 4% rise in claims but also because of numerous downwards changes of estimate and cuts in accrual rates.
December 22, 2003
- Warranty Claims & Accruals: In some industries, warranty claims and accrual rates move together in parallel. In others, they each seem to have a mind of their own. This week we take a look at nine months of warranty claims totals and the percentages of sales they represent in nine different industries.
December 15, 2003
- Warranty Claims: While over 600 manufacturers have now filed financial reports detailing their warranty activity during the third quarter, it remains unclear why claims rose by more than four percent. Is it a seasonal fluctuation? Or is it proof that the recession is finally behind us?
December 8, 2003
- Extended Warranties: The default of Warranty Gold Ltd. on the heels of the collapse of its Cayman Islands-based underwriter puts into question whether online sales of vehicle service contracts are worth the risk, and whether the risks were underpriced.
December 1, 2003
- Guest Column: Responding to the European Commission's WEEE & RoHS Directives. Electronics & appliance manufacturers must consider environmental impact beyond the point-of-sale. By Justin Voyle of MGH Consulting Ltd.
November 24, 2003
- Ford's Warranty Reserves: Standard & Poor's cut Ford Motor Company's credit rating from BBB to BBB-, citing write-offs at Ford Europe, reduced warranty accruals, and lowered reserves for bad loans by Ford Credit. But were those reduced warranty accruals justified by reduced claims costs?
November 17, 2003
- Don't TREAD On Me: NHTSA has announced that TREAD Act reports will be presumed to be confidential. If, as some expect, NHTSA won't be able to analyze the flood of data it's about to receive, and it won't release that data to the public, what's the benefit of compliance beyond penalty avoidance?
November 10, 2003
- Don't TREAD On Me: Estimates of the cost of TREAD Act compliance vary all the way from the U.S. government's own $89 million figure up to a $1.7 billion estimate recently published by AMR Research. While small manufacturers continue to count their actual costs, the government continues to insist those costs will be close to zero.
November 3, 2003
- Don't TREAD On Me: While the top tier of automotive manufacturers fumes about the burden of TREAD Act compliance, a group of small trailer manufacturers mounted a grassroots effort to gain an exemption for themselves from Congress.
October 27, 2003
- Extended Warranties: Heard of NAT? Even some within the automotive and insurance industries that the company serves haven't. But with marquee clients such as Universal Warranty on board and a focus on meeting and greeting all the industry players, that's about to change.
October 20, 2003
- Letter to the editor: A reader raises an issue with the data for warranty reserves, claims, and accrual statistics published over the past five weeks, suggesting the use of just printer hardware revenue to compute a claims rate paints a misleading picture.
October 13, 2003
- The Warranty Reserve Fund: Given the availability of six months of data detailing changes in the warranty reserves of more than 600 U.S. manufacturers, what trends are becoming visible so far?
October 6, 2003
- Warranty in the Air, Sea, and Ground: Compliance with FASB FIN 45 rules concerning product warranty disclosures has spread tremendously in just the first two quarters of 2003, making it possible to find ranges and averages for warranty accrual and claims rates in numerous market segments. In addition to the automotive and IT industry sectors detailed in the past two issues, here are charts for six more market segments.
September 29, 2003
- Warranty in the IT Industry: Spending on warranty claims for everything from handheld computers to television transmitters showed a 2.5% increase during the second quarter, while both claims rates and reserve fund balances were down. Collectively, some 233 IT equipment manufacturers spent almost $2 billion honoring warranty claims during the period.
September 22, 2003
- Warranty in the Auto Industry: Spending on warranty claims showed a slight decrease during the second quarter, while claims rates and reserve fund balances were both up and down. Here are the details.
September 15, 2003
- The Warranty Week 500: Most of the major players in warranty claims management recently reported details about their warranty reserve funds, claims and accruals during the second quarter of 2003. Here are the summary results and the top 50 US-based warranty spenders.
September 8, 2003
- Guest Column: Guarantees, Customer Service and Chips? How RFID can transform the warranty industry. By Ian Gertler of Intellareturn.
September 2, 2003
- Who Are You? Warranty Week editor asks readers to identify themselves and their places of business, and tabulates the results.
August 25, 2003
- GM's Warranty Reserves: Both GM and Ford made sizeable withdrawals from their reserve funds during the second quarter. GM cited increased product quality. But analysts said the move lowered earnings quality. Ford said nothing, and nothing was said. What's behind the changes of estimate?
August 18, 2003
- Warranty Services: While most of the service providers in the warranty industry focus exclusively upon the sale and administration of extended service plans, a handful of intrepid companies have outsourced product warranty claims processing for manufacturers in the consumer electronics industry, where repairs can be performed by any of tens of thousands of service centers.
August 11, 2003
- Warranty Software: Is there such as thing as a company conceived and launched to provide nothing but warranty claims processing software? Apparently not, but at least two companies decided a year ago to focus almost exclusively upon warranty.
August 4, 2003
- Warranty Software: In the automotive market, sooner or later virtually every software package has to interact with warranty data. And why not? Warranty is a $9 billion activity for vehicle manufacturers, and it could be as useful to the engineers as it already is to the accountants.
July 28, 2003
- Warranty Software: There's no heading in the software catalog for it, yet all manufacturers of warranted products have to use it. At Hewlett-Packard, two companies that don't even call themselves warranty software vendors are helping the company manage its warranty costs with analytical tools that weren't designed with warranty in mind.
July 21, 2003
- Warranty Registrations: Given that nine out of ten consumers don't bother filling out the postcards, what can be done to boost response rates? Two new warranty registration systems from veterans of the messaging industry are spotlighted.
July 14, 2003
- The Warranty Reserve Fund: Now that warranty accrual tables and warranty claims figures are in the public domain, it's time to look at the differences between companies in the relative size of warranty reserve funds and the estimates that are used to produce these differences.
July 7, 2003
- Warranties in the HVAC/R Industry: As temperatures climb, so does the need for air conditioner and refrigerator repairs. But even in the cold winter months, HVAC/R vendors spent an average of 1.9% of product sales to satisfy warranty claims, according to recently filed financial statements.
June 30, 2003
- More details on the top U.S. warranty spenders: Readers ask for the warranty cost of the 40 largest, with 85% of total warranty spending, to be retabulated on the basis of warranted product revenue only.
June 23, 2003
- Home is Where the Warranty Is: Most of the major homebuilders recently reported details about their first quarter warranty spending. Here are the results.
June 16, 2003
- Introducing the Warranty Week 500: Most of the major players in warranty claims management recently reported details about their first quarter spending. Here are the results, organized by industry.
June 9, 2003
- Windfall for Warranty Managers: FASB requires U.S. manufacturers to include never-before-seen details on product warranty costs and reserve fund balances.
June 2, 2003
- Spam causes gridlock on the information superhighway: Some mailboxes will be abandoned, others will be walled off from the outside world, impacting information delivery services
May 27, 2003
- HP integrates the Compaq product line, and unites its warranty and service upgrade options. But extended warranty revenue isn't what it could be, and buyers facing too many choices may instead be choosing to do nothing.
May 19, 2003
- Dell Cuts Warranty Cost, Raises Warranty Revenue: Doing both at the same time is possible with a shift towards extended warranty options.
May 12, 2003
- Fujitsu delivers mixed message: The company with the best plasma display panel warranties also has the most restrictive terms.
May 5, 2003
- Diesel engine makers deliver upbeat quarterly results. Warranty crisis averted, sales gains reported for new generations of cleaner burning diesel engines.
April 28, 2003
- Comparing Warranties at the New York Auto Show.
April 22, 2003
- Don't TREAD On Me: Automakers and consumer advocates argue over public disclosure of early warning report data.
April 14, 2003
- Don't TREAD On Me: Service providers and software vendors assess the costs and benefits of TREAD Act compliance.
April 7, 2003
- Don't TREAD On Me: Because of the Firestone tire fiasco, automakers must begin compiling quarterly reports on consumer complaints and warranty claims beginning April 1.
March 31, 2003
- Clash of the Titaniums: How a golf club maker turned a shiny metal into a reason to dump its auditors.
March 24, 2003
- Motown Breakdown: Auto supply glut could drive Detroit into unprofitability. Ford seen as the most vulnerable of the Big Three.
March 17, 2003
- British investigators struggle with extended warranty regulatory issues. Multiple studies find problems, but voluntary solutions haven't worked.
March 10, 2003
- Meet the SCIC: The Service Contract Industry Council fills the role of lobbyist and extended warranty industry watchdog.
March 3, 2003
- Extended Warranty Deception: Two companies misuse the power of the Web to set their bait for unsuspecting auto warranty shoppers
February 24, 2003
- Extended Warranties: Something worth buying or something to avoid?
February 17, 2003
- Cummins fights FUD with warranties: New diesel engines aren't duds, in fact they're now guaranteed.
February 10, 2003
- Chrysler's Transferable Warranties: Do They Boost Resale Values? Increase New Car Sales? Or Are They Just Confidence Builders?
February 3, 2003
- FTC allows 50/50 warranties on used cars. Decision supports industry group and contradicts consumer advocates.
January 27, 2003
- What recession? Consumer electronics thrives during downturns, Las Vegas CES Show was packed.
January 20, 2003
- Computer car crashes: Do automobile telematics boost reliability? Or will the clock in the car soon be blinking midnight? Report from the CES Show floor.
January 13, 2003
- What's in the box? Pre-sale warranty disclosures are sparse among online consumer electronics retailers.
January 6, 2003
- Online retailers have different approaches to warranty law compliance.
December 23, 2002