Reliability and Warranties

Methods for Product Development and Quality Improvement

Marlin U. Thomas

• Publisher: CRC Press
• Year: 2006
• ISBN:
  9781000654097
• Edition: 1
• Topic: Commerce
• Subtopic: Opérations

Our modern view of quality is a multifaceted conglomeration of probability, planning, and perception. Although warranties are important first as an estimate and then as a measurement of reliability, most books on reliability and quality relegate the topic of warranties to a single chapter. Today's engineering student needs an integrated view that c

1

Product Quality and Warranty

1.1    Introduction

Manufacturing continues to be the major source for creating wealth and promoting economic growth and development throughout the world. In the U.S. the proportion of jobs in the manufacturing sector has declined for many decades, but the relative impact of job creation in non-manufacturing areas that was generated from manufacturing has increased significantly. This increasing workforce multiplier is due to new and advanced technologies. Global competition has never been greater for introducing and producing new products at reasonable costs that can meet the high expectations of today’s well-informed consumers. Successful producers must not only be efficient and cost effective in producing products, but these products must also meet high customer expectations in terms of their usefulness and overall appeal as well as having high performance. Today the public is well-informed of the availability of products and emerging technologies that will impact the markets and people rightfully demand high quality. Essentially every major company is engaged in some form of total quality management program that is aimed at organizing systematic changes in processes that will ensure continuous improvement. To be effective any such program must receive the support and participation of the employees throughout the organization and they need to be knowledgeable of all aspects of their product quality and the factors that can influence it throughout design and development, production, delivery, and customer use. The modern interpretation of quality is broad and incorporates all of the features and characteristics that influence a product’s value relative to both consumers and producers of the products. To properly account for the total balance of weight or importance that should be given in making economic decisions, which pertain to product quality, it is necessary to consider a systematic view that incorporates all of the invested interests in achieving customer acceptance and economic feasibility for the manufacturer.

This book provides methods for analyzing and evaluating product quality issues important in developing and producing manufactured products. These methods deal specifically with warranty information based on the concept that warranty feedback is the key to understanding overall quality. The primary emphasis will be on manufactured products, though the methods can be applied to services as well. The over-arching philosophy for product quality, reliability, and warranty is as follows:

1.  Quality is a vector of attributes that relate to the way a product is designed, developed, produced, and accepted by customers.

2.  Reliability is a vital element of quality that impacts all other elements.

3.  Warranty feedback provides a relative measure of product performance.

A modern interpretation and complete description of product warranty requires multiple characteristics one of which is reliability. These characteristics and their relative importance can vary as they are viewed by customers, manufacturers or producers, and independent agents such as dealers who represent both customers and producers (Garvin, 1987). Since reliability relates to product design and the processes used in production, it influences essentially all other elements of quality and, therefore, is a natural focus for seeking quality improvement. Warranties provide consumers with relief from the threat of quality problems and serve as a marketing tool for manufacturers. Moreover, they provide manufacturers with feedback information on the quality performance of their products. Therefore, it is appropriate to consider quality, reliability, and warranty as a threesome in developing technologies for quality improvement.

1.2    Background and Scope

The word quality has evolved over time and for products it casts a quite different meaning today than it has in the past. Prior to 1900, most products were produced by individuals and families. Quality, as an overall level of satisfaction, was maintained by the self-imposed standards of individual owners who were motivated largely by their pride in workmanship and service. The industrial revolution in the early 1900s brought on the division and specialization of labor which decentralized the personal sense of responsibility for producing good parts and products and necessitated the need for more standards and control methods. During the early years of mass production when the number of manufacturers who produced consumer products was quite small, high volume production typically out weighted testing and inspection options in cost trade-off decisions for ensuring that standards were met since competition was generally not a concern. In spite of the ongoing evolution of quality control methods (see Mitra, 1998), quality was considered almost exclusively as the degree to which production and engineering specifications were achieved. This interpretation held until early 1970 when international competition and new technologies forced a major change in management philosophies, shifting attitudes and consciousness that ultimately altered the meaning of quality throughout the world. By the 1980s, producers were more sensitive to customer needs and customers were becoming more informed on quality and costs. Manufacturers of consumer products started implementing continuous quality improvement programs that would later become standard industry practice.

From an historical perspective reliability emerged independently from quality management and control. Originating from concerns for public safety, fatigue studies of structures and life testing of materials started to appear in the literature in 1929. That same year, Professor Walodie Weibull of the Royal Institute of Technology in Sweden proposed what is now known as the classic Weibull probability distribution for representing the breaking strength of materials, as well as other failure characteristics. Reliability theory as we know it today, emerged in the early 1940s largely from support requirements for World War II. The Department of Defense (DOD) discovered shortly at the onset of the war that over 50% of the airborne electronics equipment that was stored in warehouses as war reserves was found defective or incapable of meeting Air Force and Navy mission requirements. In 1952, DOD established the Advisory Group on Reliability of Electronics Equipment (AGREE) to consolidate the needs for all of the military services to establish measures for increasing the reliability of equipment and reducing maintenance actions. This ultimately led to the first military standard for reliability, MIL-STD-785, published in 1965 that has since been expanded to cover the integration of reliability with design, development, and production functions throughout most industries. These standards are aimed at identifying reliability problems during the embryonic stages of system and product developments.

Today, quality has a much broader interpretation, relating to the way products are designed, produced, and accepted by consumers. Therefore several attributes, one being reliability, are required to completely describe product quality. The relative significance of these attributes will vary among different products, marketing conditions and relative competition. However, reliability is always a key dimension and it significantly impacts customer attitude and acceptance of products. In nearly all cases, quality problems lead to more failures and dissatisfied customers, which result in higher warranty cost to the producer. Likewise, products of high quality have less warranty expenses.

A warranty is a commitment by a manufacturer or producer to provide quality products or services for some specified period of time. An historical account of the evolution of warranties is given by Loomba (1995). The concept of a warranty dates far back in time, but it is only during the past 60 years or so that effective programs have been implemented as we know them today. Today, virtually every consumer product producer offers some type of warranty, either explicitly provided by a formal program or implied through consumer protection legislation (Brennan, 1994). During the warranty period the manufacturer assumes some portion of the expenses that arise from the repair or replacement of defective products. This provides the customer with some relief from the financial risk and inconvenience of failures that might occur during the warranty period. When the quality of the product is high then the cost for the warranty will be relatively low. Similarly, when a low-quality product lot is released, the manufacturer will eventually realize increased costs associated with the warranty. Moreover, if a manufacturer continues to produce items of low quality over time then the market position will also decline and the associated warranty costs could become insurmountable. Indeed, a minimum cost warranty program is an essential element for overall cost control in manufacturing.

Warranties provide consumers with some security against poor quality and are often used by manufacturers as a value added feature to promote a product. This value depends on the quality and expectations by consumers. The warranty policy reflects the manufacturer’s view toward the quality of the product and the strategy for marketing it relative to the competition. To do this, of course, it is necessary that the failure characteristics and associated repair and replacement costs be well known in advance. If the manufacturer has a good record of producing high quality products then there is normally less need to offer a lengthy warranty period, unless there is an attempt to penetrate the market. When consumers perceive a product as being of high quality they will perceive the personal risk to be less and therefore will demand less warranty protection. Both the manufacturer and consumer will face some risk due to the randomness and uncertainty with product failures and costs.

Quality is a state of acceptance of how well a product or service is received and used by customers. While several factors can influence acceptance, a very important one is reliability which expresses the level of dependence given to an item that functions properly when in use. Reliability expresses the amount of failure-free time that can be expected from a product. Warranties provide customers with a guarantee of suitable service or functioning for a prescribed period of time. This threesome: quality, reliability, and warranty are fundamental in understanding and predicting failures and product performance over time.

For this book, Chapter 2 begins with some preliminary results for dealing with product failures. Common distributions and methods for analyzing failure times are reviewed, including probability transforms and methods for fitting failure time distributions. There are several characteristics and features that relate to the quality of a given product, all of which ultimately impact on the associated warranty cost. In Chapter 3, we introduce a modern view of quality defined in terms of a set of multidimensional attributes that prescribes the value of an item in terms of the manner in which it is developed, produced, and used by customers. Reliability is one of the most important dimensions of quality. Reliability and quality concepts are presented as they pertain to assessing overall quality. In Chapter 4, warranty is introduced as a relative measure of total quality and methods are presented for using warranty information as feedback for diagnosing and targeting areas for quality improvement. Cost models are developed for the basic types of warranties that are applied to consumer products. Methods for determining optimal warranty periods and determining the amount of reserve funds that should be set aside to cover ensuing warranty expenditures for current sales are presented in this chapter as well. In Chapter 5, warranty is introduced as a relative measure of total quality and methods are presented for using warranty information as feedback for diagnosing and targeting areas for quality improvement. Chapter 6 describes an approach for establishing product quality improvement targets, which includes a decision analysis framework for structuring improvement options, identifying failure modes and criticality analysis, and methods for allocating lower subsystem or element improvement goals. Chapter 7 concludes by providing summary remarks on analyzing and examining product warranties through a quality, reliability, and warranty (QRW) paradigm for understanding and accounting for quality performance. Current and future technologies provide opportunities for sensing and making fast online, real time decisions. This is the path to achieving ultra high reliability goals.

References

Brennan, J.R., 1994, Warranties: Planning, Analysis, and Implementation, McGraw-Hill, New York.

Garvin, D.A., 1987, Competing on the eight dimensions of quality, Harv. Busn. Rev., 65, 6: 107-109.

Loomba, A.P.S., 1995, Product Warranty Handbook, W.R. Blischke and D.N.P. Murthy, Eds., Marcel Dekker, New York, Ch. 2.

Mitra, A., 1998, Fundamentals of Quality Control and Improvement, 2nd ed., Prentice-Hall, Upper Saddle River, NJ, Ch. 2.

2

Preliminary Results for Analyzing Product Failures

Failures occur due to problems in the way a product is developed, produced, and distributed to customers. If a product is well designed and manufactured then it should last or provide ...