Archived Copies of Warranty Week

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January 1, 2007 to today

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. As warranty also involves customers directly, the larger imperative of organizational image is at risk. A prelude to warranty management is information stability, consistency and transparency.

The Chief Information Officer plays a pivotal role to iron out the initial impediments before laying out a smooth track for warranty management in any enterprise. This article brings out the different sources of warranty data, a collaboration model for warranty data, the business dynamics of multiple stakeholders with respect to warranty management and displays ways to assess and improve warranty information maturity.

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.

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.

Extended Warranty Solution: ServiceBench aims new service contract solution at manufacturers, retailers, dealers and distributors of appliances, HVAC, fitness equipment, and other underserved markets. Goodman Manufacturing and Icon Health & Fitness are the first to sign up. Rainmaker Systems to help with telemarketing.

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?

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?

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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?

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.

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.

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 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. Next month, they'll tell the Conference 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.

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

Dell's 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

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