-See how to cut warranty costs and reduce warranty accruals while enhancing product quality and customer satisfaction. -Learn how a major automotive manufacturer has saved a significant amount of time and money with warranty management. -Understand the key to enhancing product quality, reducing returns and warranty costs, is adoption of an effective warranty management software solution. Visit IBS America, Inc. for more information:

1. Logo Only Slide
Controlling
Warranty
Costs
Stephen
Cummings
IBS 2011 THE PRODUCTIVITY ADVANTAGE

2. Controlling Warranty
Costs with Closed Quality Management System Overview
Loop Quality
Management

3. How much is Warranty costing us?
According to Warranty Week, in
2010, the total amount of warranty
accruals reported by all U.S.-based
warranty providers was…
$14.8 Billion
$22.8 Billion
$28.8 Billion
IBS 2011 THE PRODUCTIVITY ADVANTAGE

4. Warranty Cost Pressures
Highly competitive markets  lower priced products  lower profit
margins
Increase in product complexity leads to increased numbers of problems
Increased customer expectations for high quality
Decreased product life-cycles (i.e. re-design frequency)
Corporate governance (SEC requirements)
IBS 2011 THE PRODUCTIVITY ADVANTAGE

5. Some actual numbers:
Warranty Accruals (in $ millions)
$1,600
$1,400
$1,200
$1,000
$800
$600 2009
$400 2010
$200
$0 Percent of Sales
3.50%
3.00%
2.50%
2.00%
1.50% 2009
1.00%
2010
0.50%
0.00%
*(Warranty Week posted numbers)
IBS 2011 THE PRODUCTIVITY ADVANTAGE

6. Warranty Costs
costs Used Part
New Part Costs
Costs
(Zero Mileage)
Supplier
Design Mgt
Production Warranty
Requirements Prototype O/G Shipping
Inspection
Rework
• Returns
Scrap
• Recalls
Chargebacks
IBS 2011 THE PRODUCTIVITY ADVANTAGE

7. Warranty Cost Element
Warranty Repairs
Parts & Materials
Claim Validity
Problem Re-occurrence
efforts
Problem detection
Problem Prevention
IBS 2011 THE PRODUCTIVITY ADVANTAGE

8. How do these numbers come together
1) Management Total
Warranty Decisions Warranty
 Customer Analytics Cost
 Competitor Analytics
3)Service
 Product Life Cycle Delivery
Costs Analytics-Driven
1) Warranty 2) Product
Terms & Reliability &
Conditions Responsibility
Quality-Driven Warranty Costs Level 1 Cost
RESPONSE
DETECTION Level 2 Cost Elements
&
PREPERATION
Corrective FMEA
Quality Control Action & Level 3 Cost
& Control APQP Elements
• 8-D Plan
Inspection • 7 Steps
IBS 2011 THE PRODUCTIVITY ADVANTAGE

9. How do these numbers come together
Warranty Service Delivery Costs
*Source: PRTM group
IBS 2011 THE PRODUCTIVITY ADVANTAGE

10. Long term impacts:
Loss of Reputation
Higher Warranty Accruals
Higher Inventory Costs
Lower Sales  Reduced Market
Share
IBS 2011 THE PRODUCTIVITY ADVANTAGE

11. How can warranty software help to reduce those numbers?
Align inter-departmental and cross-functional communications
Streamline the IT landscape by using an common, single data repository
Automate warranty management and claims processes
Access to warranty related data & KPI’s anywhere and anytime
Reduce the cost of quality improvement efforts
Tie Warranty Management to the QMS to improve product quality to prevent
repeated defects
IBS 2011 THE PRODUCTIVITY ADVANTAGE

12. Example: Automotive Supplier
 Identify systemic problems: multiple repairs, parts of other manufactures
 Quick search for specific defects, defect location, root cause, parts numbers etc.
 Automate plausibility checks to identify invalid claims for long term cost reductions
 Cost reduction and transparency by elimination of heterogeneous systems
 Simplified ad hoc reporting with integrated data
 Identify “accepted” and “rejected” claims for further customer negotiations
 Lessons Learned data base: share problem resolutions and experiences
 Reduction of cycle times per issue
 Elimination of duplicate entries
 Add. Reports are possible, e.g. 3 Panel (R/1000), Pareto, Time-in-Service (TIS; MOP; MIS)
 Ability to easily interface with ERP, e.g. SAP to automatically pull information to reduce
administrative burden
IBS 2011 THE PRODUCTIVITY ADVANTAGE

13. Warranty Decision-making
E(Reworked)
– E(Scrapped)
+ E(Chargebacks)
_________________
Potential Value of a Return Shipping & Admin Cost to Return
IBS 2011 THE PRODUCTIVITY ADVANTAGE

14. Sample Warranty Management Claims Management Process:
Automotive Supplier
Sample size
of parts to be Various means of acquiring
inspected warranty data
- Offline (Excel & Email)
- Online
- Field services (Web Portal)
1
Global Warranty cases
Import Log on to
the central
*Cyclical 3 Management
information
System
provided by IBS
customers
e.g. in form of Quality
excel Management
X number of cases
documents 2
Portal  Company
Reporting:
4
E-Mail  Company
 by Industry
 by country
 Costs
 Product related KPI’s
IBS 2011 THE PRODUCTIVITY ADVANTAGE

15. CA/PA Process supporting Lessons Learned &
Elimination of repeated defects
Customer Claim
data
(Excel)
OEM 1
OEM 2 8D
OEM n
IBS: Converter
tool
IBS 2011 THE PRODUCTIVITY ADVANTAGE

16. Typical Questions
Typical sample questions that can be answered:
 Cost analysis: Warranty per customer (Field)
 Failures per month/year
 Failures by industry or market segment – commercial vehicles, passenger cars, etc.
 ppm per customer (based on deliveries)
 Where did the parts fail (Countries, Plants, etc.)
 Estimates based on statistical sampling of how many parts are really at fault (basis for the
negotiations with a customer – especially surrounding the technical factor calculations)
IBS
QSYS
Evaluations:
4
 by Market
 by Country
 Costs
 KPIs
 accepted vs. rejected claims
IBS 2011 THE PRODUCTIVITY ADVANTAGE

17. Sample Reports: Drill-Down Reporting
Highest ranked failing part and
Claims by year defects causing
disruptions in 2008
Top 5 Customers
Top 10 returns from
this Customer
Top 5 defects on this Item
IBS 2011 THE PRODUCTIVITY ADVANTAGE

18. IBS reporting tool
PPM Defective by Month Manufactured Pareto of Defects
400.0 TW broken in balancing area 1
350.0 No Fault Found 5
BW
300.0 Nut torque 5
R/1000 Defective
BW Incorrect Assembly 6
250.0
Noise 1
200.0
Blow By 1
150.0
FOD 7
Daimler
100.0
Customer Damage 4
50.0 TW broken Blade 6
0.0 Oil Leaking by the compressor side 36
4
5
6
7
4
5
6
7
8
4
5
6
7
8
4
4
4
5
5
5
6
6
6
7
7
7
8
TW broken 1/2 25
l-0
l-0
l-0
l-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
0
0
0
0
0
n-
n-
n-
n-
n-
ov
ov
ov
ov
ay
ep
ay
ep
ay
ep
ay
ep
ay
ar
ar
ar
ar
ar
Ju
Ju
Ju
Ju
Ja
Ja
Ja
Ja
Ja
M
M
M
M
M
N
N
N
N
M
M
M
M
M
S
S
S
S
Build date 0 5 10 15 20 25 30 35 40
Root Cause
Monthly
Volume
Contained
1235
1764
1483
1044
PCA
276
296
635
799
828
862
816
594
308
606
672
492
0
0
Location
Problem
Serial
Aug-05
May-05
May-06
Nov-05
Sep-05
Dec-05
Feb-05
Jun-05
Feb-06
Jun-06
Mar-05
Apr-05
Mar-06
Apr-06
Jan-05
Jan-06
Oct-05
Jul-05
Total
Open / Number or
D3
D4
D6
Brief Problem Description 8D # Closed Date for
Permanent Corrective Action Taken
PCA
No Fault Found 79 Field 2 7 12 10 9 6 9 3 2 3 3 2 3 2 6 - - - - - - -
ITEC
Customer Damage 8 Field 3 2 1 1 1 - - - - - - -
Shaft & Wheel brokem 15 Field 2 8 3 2 4751 E E E closed 8/8/2006 Re-validate the weld process
WG Arm Broked 5 Field 1 4 - - - - - - -
E E E
Increase stock material in the casting to avoid
Pinched O-ring 4 Field 1 1 2 2208 closed 10/5/2006
component misalign
E E E
Snap Ring Out of Position Comp.Wheel All K-16 and K-27 must pass through the balancing
2 Field 1 1 5278 Open 05/29/2006
rubbing machine
BW
WG Corroded 1 Field 1 - - - - - - -
WG Arm Frozen 1 Field 1 - - - - - - -
Broken Fin 1 Field 1 - - - - - - -
Missing the mounting flang 1 Field 1 - - - - - - -
Oil Inlet pipeline leaking 0 Field 5675 Open
IBS 2011 THE PRODUCTIVITY ADVANTAGE

19. Alternative entry points via Web Portal
Customer Claim
data
(Web Portal)
IBS: Reporting
Tool
IBS 2011 THE PRODUCTIVITY ADVANTAGE

20. Summary of Integrated Warranty Management
Warranty Cost Management
• Claim Reporting
• Claim Validation
• Better accrual forecasting
• Centralized database
Warranty Cost Prevention
• Integrated Feedback
• 8D, 7-Step, etc.
• Lessons Learned
• Engineering Change
• Supplier Management
IBS 2011 THE PRODUCTIVITY ADVANTAGE

21. About IBS
IBS Baltic UAB
IBS AG
IBS SINIC GmbH
IBS America, Inc.
IBS Shanghai, Ltd.
Founded 1982
Headquarters:
Employees 200
Customers > 4.000 in 18 countries
Automotive (OEM and supplier)
Industries
Plastics and metal industries
Electronics/medical technology industries
IBS 2011 THE PRODUCTIVITY ADVANTAGE

22. Key Competences and Positioning
Overview
IBS‘s key competences:
Innovative Integration with
Services
software solutions enterprise IT systems
Directors MIS
 Implementation
ERP
 Training Compliance
Management MES
 Solution-oriented Company mgmt.
Process
integration control
 Industry-independent Production
Machine
control
Process consulting
Quality Production
Management Management Implementation Operation Maintenance
IBS 2011 THE PRODUCTIVITY ADVANTAGE

23. IBS Customers:
Automobile and Construction Industry
IBS 2011 THE PRODUCTIVITY ADVANTAGE

24. Customer Examples:
Electronics and Semiconductors
IBS 2011 THE PRODUCTIVITY ADVANTAGE

25. IBS Customers:
Industrial Suppliers
IBS 2011 THE PRODUCTIVITY ADVANTAGE

26. Successful Projects and Satisfied Customers
OEMs
Automotive Suppliers
IBS AG/BAK 2009
(40% of Top 100
®2008/IBS AG BAK
are customers)
Broad Customer Base in
Segments like:
Plastics, Metal, Electronics,
Medical devices, Process industry
IBS 2011 THE PRODUCTIVITY ADVANTAGE

27. Questions?
Logo Only Slide
Next Step:
Contact IBS For a
Complimentary Gap-Analysis
P:781.862.9002
E: info@ibs-ag.com
W: www.ibs-us.com
Stephen
Cummings
IBS 2011 THE PRODUCTIVITY ADVANTAGE