Using Warranty Prediction to Make a Better Product

Throughout the years, I have had the opportunity to travel throughout the world. Some of those travels brought me to Asia, and in high-velocity manufacturing settings. I have a special interest in product warranty analysis partly from my Six Sigma Black Belt training, but also from a business financial point of view. Warranty prediction is critical to any manufacturer. From a financial perspective, warranty prediction drives warranty provisioning. In other words, how much money do we need to budget for returned product? Apple iPhone warranty prediction is based on some of the tools mentioned below. So is car warranty. Car warranties are not guessed.

Of the great ideas I hear from the many people I get to meet I often break their hearts when I ask them what their returns plan is. They look at me puzzled and say, “Well I don’t think of that.”

Unfortunately, many investors want to understand your risks and one of the key ones is about product returns. This does not necessarily implying that your product will fail, but that your customers will return products for various reasons. This could cause revenue erosion by increasing additional costs such as returns (RMA) processing.

How to predict your product returns count and how to set a reasonable warranty period based on a warranty prediction analysis

As more and more people become independent and start small companies, I also recognize that there are many that do not incorporate reliability engineering into their designs or products. The reason is simple: more and more entrepreneurs are OEM’ing products that are increasingly available and simply rebranding and repacking many of them after getting bulk pricing from sites like alibaba.com or even ebay.

Minitab’s Warranty Prediction Tool
Many warranty prediction software tools are available but my favourite is in Minitab. Minitab offers you the triangular matrix warranty analysis which allows you to enter the number of units shipped and the number of units returned for a predetermined future period.