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Description
Rohr warranty agreements provide for repair or replacement of Rohr-supplied products that fail during a designated period. Rohr suspects that the total cost of warranty service is grossly understated by its current accounting system and lack of consistent treatment of these costs. Better information on true warranty expenditures will increase the accuracy of new program quotes, help identify the most cost-effective use of engineering resources, achieve better payback from the deployment of technical resources and provide increased customer satisfaction through reduced product deficiencies. The initial data collection efforts for this study focused on two main areas: a review of existing cost documentation and a series of personal interviews with Rohr personnel involved with warranty issues. These initial efforts indicated that, in general, most costs were properly collected for the repair and replacement of problematic hardware. However, two key cost drivers were identified that should have been in the warranty "bucket," but were not added to the total warranty costs of each program. An enhanced definition of warranty was established to include the cost of design and manufacturing changes made in response to field problems. Using this definition, it was apparent that an analysis of costs associated with rectification of field problems was necessary. The warranty cost reported for 1996 is understated by 45 percent using the present definition. Clearly, major changes are necessary within Rohr so that it may (1) accurately capture the costs that it presently incurs for warranty related issues, (2) adopt an enhanced definition of warranty cost to better account for, predict, and measure warranty exposure, and (3) segment engineering and customer support into activity centers for accurate accumulation of task costs.
