Are your products reliable? – Three questions every CEO should get answered
Have you experienced product failures?
In recent months we have seen several companies featured in the news because of product failures in the market place. This is often followed by reporting of poor financial results and/or tumbling share prices. Warranty claims are a nightmare for many companies, the more so with social media highlighting and accelerating consumer knowledge, concerns and action over corporate failures.
How can reputable companies end up with faulty products? What are the questions that chief executives and chief finance officers should ask that drive minimum risks and resultant claims?
Q1: Are we making the best and right use of field failure data?
You can be sure that customers will tell you when products fail – just look at the many reference websites. But do you have the expertise in your company to analyse these data and inform you of the real risks? There are sophisticated data modelling tools available that will forecast field failure rate from past data but they must be used in the right way to avoid false conclusions.
Q2: Do we have effective learning loops in place to prevent recurrence?
Does the data indicate that rates of failure are falling? Or do you wonder why you continually have to take angry calls from dissatisfied customers? Businesses seem too busy to learn from failure and yet there is huge opportunity for reduced cost and improved reputation, if only experts in the business can stop and fix. “Prevention is the best form of cure”. And the returns are worth it. Research indicates that good problem solving activity can deliver an ROI of over 6.
Q3: How do I know that new products being developed are going to return the forecast reliability?
New product introductions tend to focus on speed to market. So often they are rushed to meet deadlines driven by the sales order book. What is so often overlooked is the inherent design reliability. There are models to measure design reliability that can be used to predict field failure rate at launch. That takes the guesswork out of the decision to launch and introduces valuable accountability into the process thereafter.
These are areas that are not prevalent in companies’ product quality armouries, but they present a powerful source of competitive advantage. Have you got them in your business?
For more discussion on warranty claims check out another Insight at http://oaklandconsulting.com/four-steps-to-prevent-warranty-claims-in-your-business/