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by Jeff Moad, MA Editorial Staff   | Abstract: | A surprisingly large number of warranty returns turn out to be for products that, in fact, aren't broken. Now manufacturers are deploying a range of technologies in order to understand what's really behind No Trouble Found (NTF) returns and put an end to them.
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It's no secret that warranty costs are becoming a major and expensive headache for many manufacturers. In the first three quarters of 2006, the 50 largest U.S.-based warranty providers reported $17.1 billion in claims, up 3.5% over the same period in 2005, according to figures collected from financial reports by the U.S. Securities and Exchange Commission. It's not unusual, in fact, for warranty claims to make a noticeable impact on the bottom line. Ford Motor Co., for example, recently reported that warranty accrual adjustments related to claims on Land Rover and Jaguar models contributed to the company's humongous $12.7 billion 2006 loss. What often passes below the radar, however, is the fact that a high percentage of costly product returns and warranty claims are generated by incidents in which the manufacturer cannot find or duplicate the failure that supposedly prompted the return. Such mysterious events — known in some manufacturing verticals as No Trouble Found (NTF) and in others as No Fault Found (NFF) — represent 20% of warranty claims on average, experts estimate. In some industries such as automotive, NTF returns represent an estimated 30% of warranty claims. And, according to research firm WDS Global, up to 60% of cell phone and other mobile device returns are NTF, resulting in an annual global cost to manufacturers of $4.5 billion. Despite the high costs involved, many manufacturers honor even NTF claims rather than risk alienating customers and channel partners. And, experts say, the NTF problem is only getting worse — and more expensive. [Click to continue] |