Archive for the ‘Warranty Cost’ Category

Creating a brand that lasts.

chillinOne of the best ways to improve your brand is to improve your products.  The most common way is to provide more goodness for less cost – think miles per gallon.  Usually it’s a straightforward battle between market leaders, where one claims quantifiable benefit over the other – Ours gets 40 mpg and theirs doesn’t.   And the numbers are tied to fully defined test protocols and testing agencies to bolster credibility.  Here’s the data.  Buy ours

But there’s a more powerful way to improve your brand, and that’s to map your products to reliability.  It’s far a more difficult game than the quantified head-to-head comparison of fuel economy and it’s a longer play, but done right, it’s a lasting play that is difficult to beat.  Run the thought experiment:  think about the brands you associate with reliability.  The brands that come to mind are strong, lasting brands, brands with staying power, brands whose products you want to buy, brands you don’t want to compete against.  When you buy their products you know what you’re going to get.  Your friends tell you stories about their products.

There’s a complete a complete tool set to create products that map to reliability, and they work.  But to work them, the commercialization team has to have the right mindset.  The team must have the patience to formally define how all the systems work and how they interact. (Sounds easy, but it can be painfully time consuming and the level of detail is excruciatingly extreme.)  And they have to be willing to work through the discomfort or developing a common understanding how things actually work. (Sounds like this shouldn’t be an issue, but it is – at the start, everyone has a different idea on how the system works.)  But more importantly, they’ve got to get over the natural tendency to blame the customer for using the product incorrectly and learn to design for unintended use.

The team has got to embrace the idea that the product must be designed for use in unpredictable ways in uncontrolled conditions. Where most teams want to narrow the inputs, this team designs for a wider range of inputs.  Where it’s natural to tighten the inputs, this team designs the product to handle a broader set of inputs.  Instead of assuming everything will work as intended, the team must assume things won’t work as intended (if at all) and redesign the product so it’s insensitive to things not going as planned.  It’s strange, but the team has to design for hypothetical situations and potential problems.  And more strangely, it’s not enough to design for potential problems the team knows about, they’ve got to design for potential problems they don’t know about. (That’s not a typo.  The team must design for failure modes it doesn’t know about.)

How does a team design for failure modes it doesn’t know about? They build a computer-based behavioral model of the system, right down to the nuts, bolts and washers, and they create inputs that represent the environment around the system.  They define what each element does and how it connects to the others in the system, capturing the governing physics and propagation paths of connections. Then they purposefully break the functions using various classes of failure types, run the analysis and review the potential causes.  Or, in the reverse direction, the team perturbs the system’s elements with inputs and, as the inputs ripple through the design, they find previously unknown undesirable (harmful) functions.

Purposefully breaking the functions in known ways creates previously unknown potential failure causes.  The physics-based characterization and the interconnection (interaction) of the system elements generate unpredicted potential failure causes that can be eliminated through design.  In that way, the software model helps find potential failures the team did not know about.  And, purposefully changing inputs to the system, again through the physics and interconnection of the elements, generates previously unknown harmful functions that can be designed out of the product.

If you care about the long-term staying power of your brand, you may want to take a look at TechScan, the software tool that makes all this possible.

Image credit — Chris Ford.

Product Thinking


Product costs, without product thinking, drop 2% per year. With product thinking, product costs fall by 50%, and while your competitors’ profit margins drift downward, yours are too high to track by conventional methods. And your company is known for unending increases in stock price and long term investment in all the things that secure the future.

The supply chain, without product thinking, improves 3% per year. With product thinking, longest lead processes are eliminated, poorest yield processes are a thing of the past, problem suppliers are gone, and your distributers associate your brand with uninterrupted supply and on time delivery.

Product robustness, without product thinking, is the same year-on-year. Re-injecting long forgotten product thinking to simplify the product, product robustness jumps to unattainable levels and warranty costs plummet. And your brand is known for products that simply don’t break.

Rolled throughput yield is stalled at 90%. With product thinking, the product is simplified, opportunities for defects are reduced, and throughput skyrockets due to improved RTY. And your brand is known as a good value – providing good, repeatable functionality at a good price.

Lean, without product thinking has delivered wonderful results, but the low hanging fruit is gone and lean is moving into the back office. With product thinking, the design is changed and value-added work is eliminated along with its associated non-value added work (which is about 8 times bigger); manufacturing monuments with their long changeover times are ripped out and sold to your competitors; work from two factories is consolidated into one; new work is taken on to fill the emptied factories; and profit per square foot triples. And your brand is known for best-in-class quality, unbeatable on time delivery, world class performance, and pioneering the next generation of lean.

The sales argument is low price and good payment terms. With product thinking, the argument starts with product performance and ends with product reliability. The sales team is energized, and your brand is linked with solid products that just plain work.

The marketing approach is stickers and new packaging. With product thinking, it’s based on competitive advantage explained in terms of head-to-head performance data and a richer feature set. And your brand stands for winning technology and killer products.

Product thinking isn’t for everyone. But for those that try – your brand will thank you.

Engineering’s Contribution to the Profit Equation

We all want to increase profits, but sometimes we get caught in the details and miss the big picture:
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Profit = (Price – Cost) x Volume.

It’s a simple formula, but it provides a framework to focus on fundamentals. While all parts of the organization contribute to profit in their own way, engineering’s work has a surprisingly broad impact on the equation.

The market sets price, but engineering creates function, and improved function increases the price the market will pay. Design the product to do more, and do it better, and customers will pay more. What’s missing for engineering is an objective measure of what is good to the customer.

To read the complete article, click this link.

75% Warranty Cost Reduction – Preview of Upcoming Event

Warranty cost: not a glamorous subject, but an important one.  It’s a great surrogate for what your customers experience.  Some companies try to reduce warranty costs by trimming their warranty policies — reducing costs but offering customers less.  Bad idea, kind of like increasing insurance deductibles and co-pays.  Warranty cost is best reduced by increasing product robustness — how well it functions over a wide range of inputs (or uses).

Here’s a link to Assembly Magazines’ Assembly Summit which will be held in Clearwater  Beach Florida on October 18-20, where I’ll present on warranty cost reduction of 75%.

Assembly Magazine’s Assembly Summit — How we radically reduce warranty cost (Oct. 19 at 2:00).

For a preview, take a look at this short video on warranty reduction.  The mindset — reduce warranty cost and design out product cost AT THE SAME TIME.  AT THE SAME TIME.

Mike Shipulski Mike Shipulski
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