Manufacturers Need To Take Closer Look At Warranty Costs

June 5, 2006

Unnecessary costs are being incurred after a warranty claim is made according to a recent study by Manufacturing Insights. At the June 6 conference of the Automotive Industry Action Group's Early Warning System, survey results from top U.S. manufacturing companies revealed that the North American auto industry spends almost $14 billion annually on warranty claims.

"The survey results support our hypothesis that there are several contributing factors to the increase in warranty expenses subsequent to the warranty event," states Joe Barkai, director of research for Manufacturing Insights' warranty and quality management program. "The No Fault Found and first time fix data that we collected should persuade auto executives to reevaluate their current warranty repair process and their ability to meet the increasing demand for accurate first time repair."

The study indicates that cost recovery could be one area of improvement. Adds Barkai, "This data suggests that there is a disconnect between executive perceptions of warranty costs and those actually managing the warranty process. It's time for executives to incorporate warranty management into their daily dashboard."

About the Author

Adrienne Selko | Senior Editor

Focus: Workforce, Talent

Follow Me on Twitter: @ASelkoIW

Bio: Adrienne Selko has written about many topics over the 17 years she has been with the publication and currently focuses on workforce development strategies. Previously Adrienne was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck? which made the Cleveland Plain Dealer's best sellers list. She is also a senior editor at Material Handling & Logistics and EHS Today.

Editorial mission statement: Manufacturing is the enviable position of creating products, processes and policies that solve the world’s problems. When the industry stepped up to manufacture what was necessary to combat the pandemic, it revealed its true nature. My goal is to showcase the sector’s ability to address a broad range of workforce issues including technology, training, diversity & inclusion, with a goal of enticing future generations to join this amazing sector.

Why I find manufacturing interesting: On my first day working for a company that made medical equipment such as MRIs, I toured the plant floor. On every wall was a photo of a person, mostly children. I asked my supervisor why this was the case and he said that the work we do at this company has saved these people’s lives. “We never forget how important our work is and everyone’s contribution to that.” From that moment on I was hooked on manufacturing.

I have talked with many people in this field who have transformed their own career development to assist others. For example, companies are hiring those with disabilities, those previously incarcerated and other talent pools that have been underutilized. I have talked with leaders who have brought out the best in their workforce, as well as employees doing their best work while doing good for the world.