CASE STUDY: WARRANTY COSTS ESTIMATION ACCORDING TO A DEFINED
LIFETIME DISTRIBUTION OF DELIVERABLES
Vicente González Díaz a, Juan Francisco Gómez Fernández a and Adolfo Crespo Márquez b
a
PhD student of the Industrial Management PhD Program at the School of Engineering, University of Seville, Spain.
b
Associate Professor of Industrial Management School of Engineering, University of Seville, Spain.
This paper tries to describe a real case of warranty assistance, analysing its management in the framework of a
manufacturing company which provides deliverables during a specific period of time and following a scheduled
distribution. With the sale of a product, the manufacturer is nowadays obliged contractually to perform warranty
assistance to the buyer. Decreasing the incurred costs is clearly not the only aspect to achieve, since the decision
has to be global and strategical inside the company in order to purchase a reliable and robust product, offering as
well an appropriate after-sales service to the user. Therefore, key aspects will be presented along this study in
order to estimate costs and, consequently, to take proper decisions for leading correctly the company to a
successful goal. For that purpose, not only should managers and responsibles in a well-established and controlled
organization participate, it would also important to consider the experience given by the technical staff for
maintenance and warranty. As a result, this paper will show basically how analyzing the past performance is
possible to foresee and control the future. In our case, it will be possible to observe how the evolution of costs
during the lifetime of a warranty assistance program can help to correct and foresee with more accuracy the
expected total cost of the activity considered at the beginning of the program. The paper is based on an usual
procedure in special supplies for the public sector (for instance, a fleet of customized vehicles), between
companies inside the supply chain or directly to the final user, where this final user is for example a public entity
and the budget for the complete warranty assistance is already known from the beginning of the project.
Key Words: Warranty management, after sales, cost estimation, e-warranty, spare parts procurement
1
INTRODUCTION
Case studies have been normally used to support and help theoretical subjects in engineering and other research fields.
Developing these cases, it is usually found such amount of information that can either trivialize the study or complicate it
beyond a reasonable level. Therefore, the intention here is to synthesize a practical case which transmits easily how a proper
management of warranty assistances helps to reduce costs, enables to take suitable decisions, and improves the image of the
company in front of the client.
The case here exposed, starts mentioning the antecedents related to warranty cost models. This brief State-of-Art will show
how important is a warranty cost management system. Later on, it is described the scenario where contributions given in the
mentioned State-of-Art will be applied. Once defined the problem and along the development of this particular case, a
procedure is also proposed related to the way of working among different sections inside a generic company. This procedure
will be exposed succinctly using a workflow chart by BPMN (Business Process Modelling Notation) standard. Finally,
conclusions to this case study are expressed at the end of the paper.
2.
BACKGROUND
Although many manufacturing companies spend great amounts of money just due to their service warranties, in most of the
cases however, this reason does not receive too much attention. In spite of this, it is possible to find studies in the literature,
related to the warranty cost modelling with very interesting contributions [1]. The authors of these contributions try usually to
identify processes, actions, stages, tools, methods or necessary support techniques to manage properly the warranty costs.
Regarding processes, in order to apply an effective warranty management, is critical to collect the proper data and to exchange
adequately the different types of information between the modules in which the management system can be divided [2]. In our
case study, it will be proposed a warranty management system
based on a several modules organization.
PROBLEM / OBJECTIVE
In the literature review, different interactions between warranty
and other disciplines can also be observed, and how they are dealt
by the different models and authors. Particularly and summarizing,
three important interactions must be considered:
WARRANTY MANAGEMENT SYSTEM
ENGINEERING
MODULE
MANUFACTURING
MODULE
POST SALE
MODULE
MARKETING
MODULE
DECISION SUPPORT
1. Warranty and Maintenance: In many cases, the warranty
period is the time when the manufacturer still has a strong control
over its product and its behaviour. Additionally, the expected
warranty costs depend normally not only on warranty requirements,
but also on the associated maintenance schedule of the product [3].
Figure 1. Warranty management system in four modules (adapted from [2])
3. Warranty and Quality: The improvement of the reliability
and quality of the product has not only an advantageous and
favourable impact in front of the client; it also highly reduces the
expected warranty cost [5].
High
Management
Requirement
2. Warranty and Outsourcing: The warranty service or, in
general, the after-sales department of a company, is usually one of the
most susceptible to be outsourced due to its low risk and due also to
the fact that, among other features, outsourcing provides legal
insurance for such assistance services [4].
Low
Moderately
Externalizable
Not
Externalizable
Highly
Externalizable
Less
Externalizable
Interactions Requirements
High
Figure 2. The outsource decision (from [1])
EAC = Cost to Date
+
Estimated Cost of Remaining Work
€
Estimated Final Cost
Cost to Date
Project tracking
In reference to costs estimations, and apart from
warranty issues, there are nowadays several methods
to estimate accurately the final cost of a specific
acquisition contract. In our case study, the method
applied in a simplified way is denominated
“Estimate at Completion” (EAC).
In a nutshell, EAC is a management technique
used in a project for the control of costs progress.
Now
Time
Here, the manager foresees the total cost of the
project at completion, combining measurements
related to the scope of supply, the delivery schedule,
and the costs, using for that purpose a single
integrated system.
Figure 3. EAC Formula (adapted from [6])
Finally, taking into account the above mentioned antecedents, one can see that by reengineering of management processes
and by the application of a correct warranty cost model, it is possible to:
ƒ
Increase sales of extended warranties and additional related products.
ƒ
Increase quality by improving the information flow about product defects and their sources.
ƒ
Improve better customer relationships.
ƒ
Reduce expenses related to warranty claims and processing.
ƒ
Better management and control over the warranty costs.
ƒ
Reduce invalid-related expenses and other warranty costs.
2
Therefore, a well-established warranty management system will help basically to achieve a successful goal in the
performance of the company warranty services.
3
SCENARIO OF STUDY
The case company is a large manufacturer in the metal industry that operates worldwide. The company designs,
manufactures and purchases a wide range of industrial vehicles (such as forest machines, hydraulic excavators or track loaders)
for industrial customers, as well as other related products like spare parts. In addition to the purchase of standard vehicles,
nowadays is being also often the customization of machines.
In our case, the company must supply to a client a specific amount of customized vehicles following a defined schedule. In
the contract is included the assistance of warranty for the vehicles of the fleet during a period, starting when each vehicle is
delivered to the customer. To provide the after-sales service in a satisfactory way, it is required the fulfilment of some
conditions by the company:
1.
Teams formed by personal with appropriate training.
2.
Tools for maintenance / warranty tasks.
3.
Materials and spare parts to carry out the repairs.
The first two conditions are considered fulfilled. Regarding the third condition, the necessary materials for warranty
operations are obtained from the same warehouse of the assembly line. By this way, there are two possibilities to give back the
material:
ƒ
When the piece is repairable, a spare part is taken from warehouse being later put it back after the repair of the
disassembled piece.
ƒ
When the piece is not repairable, a spare is also taken from warehouse, but the material must be restored by
purchasing.
This situation is possible because the stock for manufacturing allows the loan of material for warranty without risk to the
necessities of the assembly line. The problem in this scenario is defined as follows: Due to the fact that manufacturing and
warranty assistance share the same warehouse, there will be a moment when the manufacturing is very advanced and
simultaneously there are many vehicles under warranty. From this moment onwards, every decision must be taken prioritizing
one of the two activities.
Apart from the above described context, the study takes place during the lifetime distribution of deliverables. That means
that, historical data regarding costs, failured items etc. are available for the research. In reference to the failured items, it has
been used a classification tree with several levels following a hierarchical structure based mainly on their functionality, and
reaching a sufficient level of detail in terms of procurement aspects.
Custom ized Vehicle
Electrical System
Disjunctor
Cable
Hydralic System
Valve
Pum p
Level 0
Mechanical System
Gear
Brake
Auxiliary System
Intercom
Figure 4. Classification tree of components
In figures, the described scenario and the delivery schedule are as shown in table 1.
Our case study will be developed considering also the following hypothesis:
ƒ
Every vehicle has the same reliability (they have the same failure probability).
ƒ
The warranty cost is constant with the time.
ƒ
The warranty time does not stop in any moment.
3
Navigator
Level 1
Level n
Table 1
Data of the described scenario
ƒ
Total amount of customized vehicles to be delivered:
350 units.
ƒ
Warranty period for each vehicle:
2 years.
ƒ
Warranty expiration for last vehicle:
March 2015.
ƒ
Time point of the case study (t1):
April 2009 (150 units already delivered).
Date
March 2006
Accumulate amount of vehicles
Roll-Out
April 2007
45 units
April 2008
100 units
April 2009
150 units
April 2010
200 units
April 2011
260 units
April 2012
315 units
April 2013
350 units
Regarding the EAC for warranty, it depends on the company policy. Usually, the budget for warranty is determined as a
percentage of the project total cost. In our case study, the manufacturing plus indirect costs for each vehicle is supposed that
amounts to ca. 375.000,00 € and the percentage for warranty attendance will be the 2 % of the budget for total costs. That
yields around 2.625.000,00 € for the attendance of warranties during the whole project.
4
ANALYSIS, DEVELOPMENT AND RESULTS OF THE CASE STUDY
4.1 Costs analysis of the warranty assistances
As mentioned, the study happens in a moment when the company has already delivered an amount of 150 vehicles. In this
time, there are 105 vehicles under warranty. Some preliminary data are shown in table 2. Together to this, there is also a
sample about the amount of vehicles under warranty according to the defined delivery schedule. Some figures here have been
rounded off in order to simplify their use during the study.
In September 2011 (t2), the already delivered fleet -285
units- will have a maximum in the amount of vehicles
simultaneously under warranty –128 units- (see yellow
graphic line).
Monthly Delivery
Delivered Vehicles (Acumulate)
Vehicles in warranty
Amount of Vehicles
The table 2 (as commented) is only a sample extracted
from the complete delivery schedule. From this complete
schedule, it is possible to notice that the warranty expiration
of the first vehicles takes place obviously on March 2008
and, also, that the most critical moment (t2) will happen in
September 2011. Graphic in figure 5 can help to illustrate it.
t2
m
ar
-0
se 6
p0
m 6
ar
-0
se 7
p0
m 7
ar
-0
se 8
p0
m 8
ar
-0
se 9
p0
m 9
ar
-1
se 0
p1
m 0
ar
-1
se 1
p1
m 1
ar
-1
se 2
p1
m 2
ar
-1
se 3
p1
m 3
ar
-1
se 4
p1
m 4
ar
-1
5
In this moment, we can observe how close the end of the
deliveries is (April 2013). Consequently, much closer (and
critical) is therefore the manufacturing of such last vehicles.
400
350
300
250
200
150
100
50
0
Warranty Evolution
t1
Month
Figure 5. Warranty evolution graphic, in terms of delivered vehicles
4
Table 2
Extract of the delivery schedule
Date
Ac. Amount of
vehicles
Monthly
Delivery
Vehicles in
Warranty
ƒ
March 2006
Roll-Out
5 units
5 units
April 2007
45 units
2 units
45 units
April 2008
100 units
3 units
91 units
April 2009
150 units
2 units
105 units
April 2010
200 units
7 units
100 units
April 2011
260 units
2 units
110 units
April 2012
315 units
2 units
115 units
April 2013
350 units
0 units
90 units
April 2014
350 units
0 units
35 units
No. of delivered Vehicles in t1:
V1 = 150 units
ƒ
No of Reclamations in t1:
R1 = 1.200 reclamations
ƒ
Warranty incurred cost in t1:
C1 = 1.000.000,00 €
ƒ
EAC for Warranty:
EACw = 2.625.000,00 €
ƒ
No of vehicles to be delivered:
V(t) = [according to delivery schedule]
In t2, our teams of maintenance / warranty technicians will have to assist a high number of vehicles which will demands a
huge amount of spare parts. At the same time, the operators of the assembly line will be requesting pieces for the production of
the last vehicles. The shared warehouse will have then in store enough pieces for manufacturing but no more, so the loan of
any spare part demanded by the after-sales personal must be decided taken into consideration the importance of the material,
the time to repair the disassembled piece, and / or the time to restore it by purchasing.
Every piece in the classification tree (see figure 4) belonging to the lowest level (level where materials can be procured),
will have a weight (or criticity) which changes with the time. Every piece will be considered much more critical, as closer is
the end of manufacturing. Therefore, and taking also into account a costs analysis, it will be necessary to have in mind the
investment of a minimum strategical stock in order not to leave warranty claims unattended.
Monthly Increase of Warranty Cost
Warranty Cost (Acumulate)
Warranty Cost
t1
2500000
Considering the above indicated data, it is possible
to carry out a simple costs analysis obtaining some
average values.
Warranty Cost Evolution
t2
Calculation of some values:
ƒ
1500000
ƒ
500000
Warranty cost per vehicle:
mar-15
jul-14
nov-14
mar-14
jul-13
nov-13
mar-13
jul-12
nov-12
mar-12
jul-11
nov-11
mar-11
jul-10
nov-10
mar-10
jul-09
nov-09
mar-09
jul-08
nov-08
mar-08
jul-07
nov-07
mar-07
jul-06
CV = C1 / V1 = 1.000.000,00 / 150 = 6.666,67 €
nov-06
0
Warranty cost per reclamation:
CR = C1 / R1 = 1.000.000,00 / 1.200 = 833,33 €
1000000
mar-06
EUR (€)
2000000
Month
ƒ
Reclamations per vehicle:
RV = R1 / V1 = 1.200 / 150 = 8 reclamations
Figure 6. Warranty evolution graphic, in terms of warranty costs
With these values, and in order to make it more illustrated, it is included a graphic (figure 6) with the warranty evolution in
terms of costs. One can see that lines in this graphic follow the same behaviour or track as the ones from figure 5.
5
That is because the total incurred warranty cost of every vehicle has been considered in a conservative way. That means
they have been treated as already incurred just when each vehicle is delivered to the customer. Therefore, the accumulate
warranty cost does not increase after the delivery of the last vehicle.
In further studies, it will be possible to add also the consideration of several destinations of the vehicles, where local
maximums can happen in different moments of the defined lifetime and costs must include the movement of warranty teams to
different locations.
Comparing the above results with the foreseen costs
indicated in the EAC, a graphic is obtained as the one
exposed in figure 7. The EAC is formed by a first part
already known (pink line), which refers to the Incurred to
Date (ITD); plus a second foreseen part (blue straight
line), which refers to the Estimate to Completion (ETC).
Warranty Costs Comparison
t1
3000000
2500000
2000000
EUR (€)
1500000
1000000
Month
Figure 7. EAC vs. Average Cost Line
That means, there is a budgetary buffer of ca. 290.000,00 €, which can be used to invest in a strategical stock of spare parts.
This amount would correspond to the budget for attending the warranty of around 43 vehicles, or equivalent as if the warranty
assistance should be taking and advantage of ca. 15 months before the manufacturing end.
Other interesting average values that can be obtained from this exercise are for example the estimated total amount of
warranty claims, which shall be around 2.800 reclamations. Anyhow, and as the main conclusion of this analysis, the
procurement of these strategical spare parts should avoid the use of the stock shared with assembly line, offering by this way
an appropriate service to the client.
That is due to the possibility of assisting warranties independently of the manufacturing department and consequently, not
affecting to the final goal of the project.
4.2 Quantitative analysis of the claims
Data for a huge variety of items have been possible to compile with the customer’s complaints. These items are classified
according to their functionality and divided also into components that can be procured (see figure 4: Classification tree of
components).
COMPLAINTS ACCORDING TO COMPONENT
100
The figure 8 exposes a sample of the gathered data as an
example for this case study. This kind of analysis usually helps
not only to the Quality department, but also to the
Manufacturing, in order to pay much more attention in those
components that have many incidents during the warranty
period.
95
90
80
70
62
60
54
50
Improving the manufacturing process or taking care during
the component assembly, it is possible to reduce the complaints
regarding a specific item.
46
38
40
30
30
26
22
10
8
6
4
3
2
Cable
12
Horn
14
10
Steering wheel
18
20
Heater
Navigator
Seats
Antenna
Lights
Intercom
Regulator
Gear
Disjunctor
Valve
Alarm
Brake
Battery
Pump
0
Engine
No. of COMPLAINTS
70
Due to the huge amount of components in such complex
systems as an industrial customized vehicle, is suggested the
choice of items in order to make all the gathered information
easily manipulated. The criteria to select a group of items can
be not only in terms of failures quantity. It is also important the
cost of such components, the delivery time to procure them,
etc.
6
mar-15
jul-14
nov-14
mar-14
jul-13
nov-13
mar-13
jul-12
nov-12
mar-12
jul-11
nov-11
mar-11
jul-10
nov-10
mar-10
jul-09
nov-09
mar-09
jul-08
nov-08
mar-08
jul-07
nov-07
mar-07
jul-06
0
nov-06
500000
mar-06
Apart from the EAC line, the warranty cost line
obtained from the cost average in t1 is also here
implemented (green line). As a result from this graphic
comparison, it can be seen that cost at the end (ca.
2.335.000,00 €) is slightly lower than the budget
considered at the beginning of the project (2.625.000,00
€).
Estimate to Completion (ETC)
Incurred to Date (ITD)
Warranty according to Cost Average
Figure 8. No. of Complaints per Component
In general, is important to know how critical each component is for the company and for the fulfilment of the production
line. All these features will be conditions to have in mind when comes the time to take a decision. In other words, these
features will be turn into factors which will give a specific weight to each component. This weight will help finally to the
manager to take the proper decision.
Taking this into account, and regarding again the former figures, those data included in the graphic, are possible to be
transformed in terms of relative frequency. This relative frequency refers to the number (ni) of times that an event (i) takes
place (in our case, failures), and divided per the total number of events (Σni).
Considering therefore statistical concepts (together with other factors) is possible further on to weight, as mentioned, the
value of each component in order to prioritize between the loan to warranty assistance or to keep the piece available for the
manufacturing.
Table 3
Relative frequencies
Component
Claims Nº
fi = ni / Σ ni
Component
Claims Nº
fi = ni / Σ ni
Pump
95
0,1827
Lights
18
0,0346
Engine
70
0,1346
Intercom
14
0,0269
Battery
62
0,1192
Antenna
12
0,0231
Brake
54
0,1038
Seats
10
0,0192
Valve
46
0,0885
Heater
8
0,0154
Alarm
38
0,0731
Navigator
6
0,0115
Gear
30
0,0577
Horn
4
0,0077
Disjunctor
26
0,05
Steering wheel
3
0,0058
Regulator
22
0,0423
Cable
2
0,0038
The rest of components are basically not considered because:
ƒ
They have been affected by very little amount of failures.
ƒ
They have been delivered fast enough and mostly in time.
ƒ
There is an extra stock in warehouse due to the purchasing of minimum quantities, higher than the real necessity.
ƒ
Or they are not, definitively, under the interest of the project managers’ point of view, due to other reasons.
Summarizing, with the tasks before explained in order to obtain a set of chosen components (those acknowledged as
critical), what we are really composing is a list of strategical spare parts. This means that, in case the company approves the
use of the budgetary buffer for the supporting of the warranty service, the purchasing process can be quickly launched.
All these actions will finally lead the company to positive returns:
ƒ
by reducing the probability of paying penalties due to a global delay in the project delivery, and
ƒ
by improving the confidence of the client due to the completion of contractual terms as the warranty assistance.
It is necessary to remark that, every failure referred here were incidences considered under warranty. For further researches
on this field, is proposed for example the inclusion also of those incidences not considered under warranty. The analysis of
such events must take into account the reasons why these situations happen (bad training of the user?; poor information for
maintenance?; clients accustomed to other family product with different behaviour?...). Anyway, in each case and even when
the failure is not attributed to the manufacturer, the company must be interested in the possible causes.
7
4.3 Spare parts management for warranty assistances
The change in the utilization of pieces from assembly line to warranty assistance has a negative effect in cost for the whole
project. The extracosts associated to the spare parts are of course due to the different price between the acquisition of a piece at
the beginning of the project for the whole fleet, and the acquisition of a piece punctually during the lifetime of the project and
for a specific incidence.
Therefore, the accounts management must apply a compensation between the difference values in order not to remain such
increment in the total costs of manufacturing, but to incurre it in the total warranty costs. Taking this into consideration is
possible to calculate properly the costs of the loans. Consequently, the percentage incremented in the final acquisition price can
be also a factor to have in mind when it will be estimated the weight for each component.
Figure 9. Typical feedback of analysis from collected reliability and maintenance data (from [7])
In order to assure a correct warranty attention, the proposed action is basically to acquire a lot of reserves that allow
reparations without delays in the vehicles manufacturing and, simultaneously during this process, to supply spares to the
warranty service from the assembly line in a reasonable way.
According to the mentioned considerations, and together with the collected data, the experience of warranty / maintenance
technicians, the knowledge of the engineering department and of course using the already developed techniques in
maintenance (figure 9), is possible not only to elaborate a spare parts purchase plan for warranty, but also to improve the
business process of decision-making as well as to contribute with improvements actions for engineering and manufacturing.
This purchase plan means an adequate list of essential pieces to assure the properly assistance of a high amounts of
reclamations. At the end of the warranty period, the remaining spare parts can be negotiated with the client for their use in later
maintenance tasks. This fact forces to control properly all these materials thus, at the conclusion of the project, they must be
available to be supplied to the customer. At the same time, this action will suppose an opportunity to recover in a future, part of
the incurred cost.
In general, the decision-making will be the result of a process focused to a final choice among several alternatives. In our
case, in order to lead the company to a fast and adequate decision-making, every department should know very clear what they
have to do and which the scope of their responsibility is. For our company case, we have adapted the idea of a warranty
management system divided in modules (see figure 1), proposing furthermore, certain interactions among different
departments inside the company, which share the information, take suitable decisions according to their responsibilities, and
coordinate activities to a common and profit goal for the whole company.
In order to illustrate such interactions, activities etc., it has been used a workflow (figures 10 and 11) following a BPMN
(Business Process Modelling Notation) methodology as a graphical representation for this specific business process, being by
this way easily understandable. The considered departments here (including the client) are:
ƒ
Logistics Department (LD)
ƒ
Quality Department (QD)
ƒ
Manufacturing Department (MD)
ƒ
Purchasing Department (PD)
ƒ
Management Board (MB)
ƒ
Engineering Department (ED)
ƒ
Aftersales Department (AD)
ƒ
Customer (C)
The process starts when the customer detects a failure in a vehicle and informs consequently to the company. The
communications can be addressed to different sections of the company, but the most appropriate way is to focus them in only
8
one communicator as, for example, the Management Board. Anyway, the Aftersales Department can also detect failures in the
course of its maintenance activities.
YES
NO
Communicates the
failure to MB.
CLIENT
Is acepted?
Are there
spares in
warehouse?
LOGISTIC DEPT.
YES
NO
MANUFACTURING DEPT.
NO
Decides, as a last resort, if the failure
must be repaired under warranty.
Transmits the information to AD.
MANAGEMENT BOARD
NO
Communicates the corresponding dept.
the necessary actions in order to
facilitate the material to AD.
Repair under
warranty?
YES
Must the failure be
considered under
warranty?
Analizes the
initial data.
AFTER-SALES DEPT.
SI
Determines resources and
deadlines for the repair.
YES
NO
Is any material needed
for the repair?
Figure 10. Proposed warranty management process workflow (part 1 of 2).
Once the information reaches the Aftersales Department, they analyse the given information. In case that the incidence is
considered not object of repair under warranty (for example, when the cause of the failure has been a wrong or bad utilization),
they inform to the Management Board who decides finally if, in spite of this, the incidence is repaired as warranty.
If the incidence is discarded as warranty repair, the Management Board should inform the customer about that. The
customer can of course disagree with such consideration. Therefore, a list of interventions (those not considered firstly as
warranty) must be negotiated between the parts.
If the incidence is considered under warranty conditions, the Aftersales Department must carry out a diagnosis of the
incidence, detecting the problem, analyzing its solution, and determining the resources (staff and materials) and the necessary
time for its repair. In reference to the material, the warranty technicians must identify between the repairable and the non
reparable / consumable materials.
YES
Sends to MB its
Approval.
CLIENT
YES
LOGISTIC DEPT.
NO
MANUFACTURING DEPT.
Is possible to
obtain it by
cannibalization?
YES
NO
YES
MANAGEMENT BOARD
NO
AFTER-SALES DEPT.
QUALITY DEPT.
Does it affect
to the delivery
schedule?
NO
Decides, as a last resort, if the
piece is lent.
Makes the corresponding Non
Conformity Register and sends the
failured material to the factory.
Is it a systematic
failure?
NO
Is the piece
lent?
NO
YES
Informs to AD about the
disposition of materials for the
repair.
Informs to MB and
C about its Action
Plan.
Informs the C about
the closing of the
incidence.
Resolves the
incidence and fulfils
the Closing Report.
Makes and manages the Data Base associated
to the incidences, needed for its follow-up and
periodical review.
Manages the repair whose
charges impact in AD.
YES
Manages the purchasing whose
charges impact in AD.
PURCHASING DEPT.
ENGINEERIING DEPT.
Analyzes and justifies the
causes.
Figure 11. Proposed warranty management process workflow (part 2 of 2).
The global ao general needs are communicated to the Management Board who addresses the actions to the corresponding
department (Logistics, Manufacturing and / or Purchasing Department), in order finally to facilitate the material to the
Aftersales Department. At that point is when the Management Board must take the most important decisions in terms of costs
and manufacturing prevision. Once the Aftersales Department has the material (either by a loan from warehouse, a loan by
cannibalization, or acquisition by purchasing), it communicates to the Management Board (and afterward to the client), its
action plan.
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The damaged material is sent to the company where the Quality Department (together in some cases with Engineering
Department) analyzes the failure. If the repair has been by replacement and the material is identified as repairable, the Quality
Department manages the repair, taking into account the appropriate certification. The material, once repaired and certificated,
will be stored again in warehouse for its use in the assembly line. In this process, every data about the incidence, damaged
material, repair etc., gathered by Aftersales, Quality and Engineering Departments are introduced in a Data Base which is
followed-up and reviewed by the Quality Department.
Once the incidence is solved, Aftersales Department communicates the closure of the assistance to the Management Board,
who transmits this to the client. From the customer is important to receive a document with the approval of the performed tasks
and the acceptance of the service closure. The Data Base associated to these incidences and necessary for their follow-up
should include, not only those incidences considered under warranty, but also the data about preventive and corrective
maintenance performed on every vehicle, in order to enable the analysis of, for example, repetitive or systematic failures
among others studies.
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CONCLUSIONS
With the help of a case study, this paper summarizes a business process inside a specific framework: the warranty
management. The analysis observes how information related to warranty and maintenance, gathered during the lifetime of the
project, can be profitably used to take decisions reducing unnecessary expenses and improving the quality, the service and,
essentially, the image of the company in front of the client.
The data compilation enables to weight those parameters needed to choose properly among alternatives. Such decisions are
expressed in the workflow as gateways. Nowadays, the use of computing tools can be helpful not only to make automatically
choices, but also to model and simulate business processes in order to detect for example their weak points. Particularizing to
our case, future studies can consider other conditions as for example:
ƒ
Final products with different reliability.
ƒ
Local maximums at different times and places.
ƒ
Warranty cost depending on time.
ƒ
When the budgetary buffer is negative.
ƒ
Diverse inoperance degrees.
ƒ
Etc.
In general and nowadays, e-technologies are being applied in many and different fields. In our case, further research can be
focused to the e-warranty in the same way as e-maintenance. The concept of E-Warranty will be them defined as that warranty
support which includes resources, services and management, needed to enable proactive decisions in the process execution. Etechnologies as e-monitoring or e-diagnosis will be, consequently, key factors to reach high levels of quality, reliability,
effectiveness and, of course, confidence before the client.
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REFERENCES
1
V. González Díaz, J.F. Gómez, M. López, A. Crespo, P. Moreu de León. (2009) “Warranty cost models State-of-Art: A
practical review to the framework of warranty cost management”. ESREL 2009, Prague.
2
K. Lyons, D.N.P. Murthy. (2001) “Warranty and manufacturing, integrated optimal modelling”. Production Planning,
Inventory, Quality and Maintenance, Kluwer Academic Publishers, New York. Pp. 287–322.
3
Boyan Dimitrov, Stefanka Chukova and Zohel Khalil. (2004) “Warranty Costs: An Age-Dependent Failure/Repair
Model”. Wiley InterScience, Wiley Periodicals, Inc.
4
J. Gómez, A. Crespo, P. Moreu, C. Parra, V. González Díaz. (2009) “Outsourcing maintenance in services providers”.
Taylor & Francis Group, London. Pp. 829-837. ISBN 978-0-415-48513-5.
5
Stefanka Chukova and Yu Hayakawa. (2004) “Warranty cost analysis: non-renewing warranty with repair time”. John
Wiley & Sons, Ltd. Appl. Stochastic Models Bus. Ind. 20, Pp. 59–71
6
D. Christensen. (1993) “Determining an accurate Estimate At Completion”. National Contract Management Journal 25.
Pp. 17-25.
7
ISO/DIS 14224, ISO TC 67/SC /WG 4. (2004) “Petroleum, petrochemical and natural gas industries - Collection and
exchange of reliability and maintenance data for equipment”, Standards Norway.
Acknowledgments
The author would like to thank the reviewers of the paper for their contribution to the quality of this work.
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