Reinventing warranty at Hewlett-Packard: An engineering approach to warranty

The mechanisms used to understand and reduce warranty costs often focus exclusively on the analysis of product failures. However, warranty costs can also be incurred by events such as support calls that do not involve a product failure. We describe a method used by a major electronics manufacturer to understand warranty costs by modeling warranty events. Furthermore, event modeling that uses a time-dependent warranty event rate instead of the more standard average rate of failure allows the improved prediction of warranty costs and better accruals. As a result of the modeling, warranty engineers can help product managers more accurately predict the costs associated with removing certain warranty events, changing warranty policies and offering extended warranties for their electronic products.