High Warranty Costs – Losing Customers

Project Details

A privately held, high volume manufacturing company was experiencing extreme rejects rates from key customers. This was not only resulting in excessive warranty costs and financial burden but also was leading to the loss of these large and critical customers. Unknowingly the company was shipping product with 16 percent non-conformance. Consequently, identification of the root cause was critical as well as process redesigns to avoid recurrence.

Processes and Solutions

Mondek Solutions was engaged to work with their quality department to conduct a thorough evaluation of the returned goods, evaluate their quality tools and instruct quality personnel where needed. A project was initiated to define the processes involved, identify root causes and determine the solutions. Internal meetings with floor personnel and operators were held to brainstorm potential causes as well as gather input. Customer meetings were also facilitated to clearly define the mode of nonconformance and expected success criteria. Once all parameters were understood Mondek Solutions developed and conducted a design of experiences (DOE) to encapsulate all related parameters. It also introduced the client to quality software that would greatly enhance their ability to statically analyze data.

Results

The DOE was successfully completed and key drivers with interactions identified. Recommended controls were then put in place along with the use of the software. This resulted in an 85 percent reduction in PPM rejects, rescued the business with the key customers and greatly reduced warranty costs.

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