Can extended warranty ever equal reliability?

Does the increasingly common practice of offering an extended warranty with a new EMC or EMP filter make that filter any more reliable or long-lasting? No, argues Paul Currie, sales and marketing director of the EMC, EMP and TEMPEST filter designers and manufacturers MPE Ltd of Liverpool. In this article, Paul highlights the reasons why the answer has to be no, and he goes on to discuss the practical implications and real costs of a filter failing in situ at different stages of its life

Paul Currie, MPE Ltd

Extended warranties are very commonly offered alongside commercial product sales. How many times have you been asked if you would like to purchase an extended warranty for an additional fee? Quite simply, this additional fee is the manufacturer’s mechanism for offsetting their additional risk. The lower the fee, the bigger the risk the manufacturer is willing to take.

So what about those ‘too good to be true’ offers where an extended warranty is included free? Well, there are a number of reasons why a manufacturer may offer this, most commonly because he has already built his risk into the unit price. However it is also commonly and simply used as a selling feature or because the manufacturer wishes to infer a message of reliability. It is this last reason which I wish to explore, and it begs the important question “Can we therefore infer that an extended warranty equals reliability?”

In the world of EMC and EMP filters, the manufacturer is often asked by installers or end-users “Do you offer an extended warranty?” Invariably the questions underlying this are “What is the lifetime of the filter?”, “When will I need to replace the filter?” or “How reliable is the filter?” So how can a manufacturer respond?

The manufacturer can enter dialogue regarding the design and manufacturing quality of the filter, providing any number of technical and quality documents to support his case. However, this can be a lengthy and protracted process and so not always attractive to the manufacturer. Alternatively, he may wish to convey his established track record and minimal failure rates. But again this requires significant effort and supporting information, which must be carefully researched and calculated and so, again, not the most attractive option. Accordingly, the quickest and simplest way for a manufacturer to answer may be to offer the magical ‘extended warranty’. But what does that extended warranty actually mean?

The overarching question must be: “Does the fact that the manufacturer is simply willing to repair the faulty filter for a longer period of time itself make the filter any more reliable?” The answer to that is categorically “No”. The filter will undoubtedly have been designed and manufactured following the same processes, whether it is to be warrantied for a 1-, 2-, 5-year or other period, and extended warranty has no bearing on this. So this then leads us to ask the question: “What does an extended warranty actually mean for the installer or user?” It is clear that it does not in itself make the filter more reliable, but does it offer additional security or, indeed, might it reduce costs?

To answer this using factual analysis of installed filters in the field, we first need to look at why filters can fail and when this typically occurs.

However tightly manufacturing processes are designed, employed and monitored, there is, as with any produced goods, the possibility of a manufacturing defect, however remote. In the case of any filter failure as a result of such a defect, this is almost always identified prior to or during installation.

On occasions and for a variety of reasons, there can be damage during shipping or transit. Again any filter damage caused through shipment is almost certainly identified at inspection prior to or during installation.

If a filter has been incorrectly specified for the purpose it is to be employed, this can result in the filter not operating as intended. In such an instance, the problem will be identified during installation.

In some cases filters may be required to be verified against certain published specifications or standards, HEMP filters to MIL-STD-188-125 for example. If the filter were not to pass such a verification test, this would again be identified prior to sign-off on site.

Regard the components of an EMC/EMP filter, the analysis of filter failures and returns shows that these components may be considered much like a muscle within the human body prior to exercise. It is widely documented and accepted within medical research publications that muscles are much more likely to be strained during the initial period following commencement of any exercise than at any time during the exercise that follows.

Recently the physiotherapist of an English Premier League football club commented that the number of players who damaged muscles during pre-match warm-ups far outweighed the number of players damaging muscles throughout the game. The same is true of filters.

It has often been said that: “If the filter works first time, it will typically continue working”, and statistics also support this theory. Analysis of actual filter returns received by MPE since 2004 demonstrates unequivocally that 98.9 per cent of filter returns occurred within the first 12 months of manufacture. Therefore it can be seen that almost all filter failures occurred very soon after installation. The term ‘infant mortality’ is frequently used to describe this.

Filter failure rates over time

So, now let us explore some scenarios in which the filter does fail and, in each case, assume that the filter has failed in a mode which attributes the fault to the filter. This therefore presents the worst possible scenario, that where the filter has to be repaired or replaced. So what is the process and cost of this for the installer or user?

Failure at the point of installation or acceptance

As described earlier, factual analysis proves that, if the filter is to fail, it is most likely to fail at the time of installation or the acceptance test. Is this then okay, because the filter is under warranty? Well, yes and no. In this instance, remedial steps must commence with disconnection of the incoming power supplies to the filter, which may require a site-approved individual independent of the installation team personnel. Once supplies are disconnected, removal of the filter covers, disconnection of the filter connections and dismounting of the filter will be required. The accessibility of the installation, along with size and weight of the filter, will determine how simple or involved this process is. However, such a process is definitely going to involve at least two individuals and may call for additional personnel, specialist skills such as welding, specialist certifications such as working at height or rope access, and specialist equipment such as crawling boards, hoists or trolleys.

All of this remedial work is required before transportation of the filter back to the manufacturer or installation of a new filter can start to be considered. Such remedial tasks will differ widely from site to site, and so it is impossible to put a generic cost on these actions. But, suffice to say, there is a cost in terms of both finance and time and, even in the simplest of installations, these costs will not be insignificant.

The inaccessibility of filters

 

Filter installation and test

 

Installation via rope access

Now back to the warranty question: in this situation the filter will be repaired or replaced by the manufacturer regardless of any standard or extended warranty. However the significant site costs will be the same in either case. Additionally, in real terms, even if the filter were not covered by any warranty, the manufacturer’s cost to repair the filter would be a small fraction of the onsite remedial costs incurred. So, regardless of the warranty, the important factors are that the filter works first time, the filter is reliable and the filter does not fail.

Failure within manufacturer’s standard warranty period

Frequently in this scenario, the installation has been signed off and the installer has handed over the site to the end-user. We have seen earlier that, if the filter were to fail, it is most likely to fail during installation or acceptance. As such, failures in this situation are far less common. However, if a failure were to occur, the remedial steps that are required to remedy the failure are identical to those where the filter fails during installation. Nevertheless the costs will typically increase in terms both of finance and time, depending upon the maintenance contract in place at the time.

Returning to the warranty question, this scenario further reinforces the fact that filter reliability is key and indeed the most critical consideration. In real terms, were the filter not covered by any warranty, the manufacturer’s repair cost would be the same as where the filter fails at the time of installation: but this repair cost is an even smaller fraction of the onsite remedial costs incurred. Therefore, regardless of warranty, it is undoubtedly better that the filter works, continues to work and does not fail.

Failure outside manufacturer’s standard warranty period

The third scenario is one in which the site has been operational for a time, the installer has long left site and the manufacturer’s standard warranty has elapsed. Again the factual analysis proves that failures attributable to a filter fault are least likely in these circumstances (only 1.1 per cent of all returns) and so least common in reality.

However, let’s assume that a filter does fail and yet is covered by an extended warranty from the manufacturer. So everybody is happy, or are we?

Well, yes and no. Sure, the manufacturer’s repair cost for the filter is covered, the same cost as in each of the earlier scenarios. But, as we have seen, this repair cost is only ever a small fraction of the overall cost of remedial work. In the event of a filter failure, the remedial works would still be identical to those with the earlier scenarios. However, the time elapsed since installation often means that the user’s responsible site personnel and the installer’s personnel have changed, documentation has been archived and attentions have migrated to newer or current projects.

This means that, in the event of a filter failure, remedial actions are likely to be a much more protracted and involved process and, in turn, the costs and impact of remedial work are even greater.

So again, this scenario – more than any other – further reinforces the point that filter reliability is the single biggest factor and the most critical consideration and, as we have seen earlier, a warranty, whether standard or extended, does not improve reliability at all.

Pie chart comparing filter failures covered by standard and extended warranty

The impact of remedial work

As an illustration of the impact and costs of remedial work, let me provide an example that unfortunately many of us will have experienced. Recently my car was hit in the rear by another vehicle whilst I was stationary. Fortunately, all parties were unhurt, but the same could not be said of my car. Whilst my car was driveable, it did require remedial repair work, although of course it was all covered by the other party’s insurance, so no problem?

Financial cost of repair aside, this then entailed several phone calls to insurers and the repair centre. This was quickly followed by a visit to the repair centre to estimate the damage and the work required. Once the repair work was agreed and booked in, I again visited the repair centre, dropped off my car and picked up a courtesy vehicle.

Having arranged to collect my repaired vehicle some days later, on the morning of the collection day I was informed that a part had not arrived from the supplier and so my car could not be collected. Cue further calls regarding the courtesy vehicle and the rearranging of appointments, to clear a further day for collection of my car.

Now in this instance, I was of course thankful that the financial cost of repair was not my burden, but that thankfulness quickly dissipated when I began to experience the inconvenience factor and logistics of remedial repairs which were solely my burden. Let’s also consider that, in this illustration, I was provided with a courtesy vehicle and so could still be considered operational. Can the same be said of many site installs, where a filter does fail? Do our increasingly tight budgets always allow us to order or carry spare filters? Therefore are we always left operational where the filter fails?

So what does an extended warranty provide?

As we have seen, an extended warranty provides cover for only a small fraction of any remedial work costs and impact that may be incurred and in a scenario where filter failures are least likely. The analysis puts that small fraction at only 1.1 per cent of filter returns. Put simply, extended warranty marginally mitigates cost, in circumstances where cost mitigation is least likely to be required.

A suitable analogy would be to consider a new model of display car or classic car. For those of us of a certain age, think Steve McQueen’s iconic Ford Mustang in Bullittor the wonderful Ferrari Spyder from Ferris Bueller’s Day Off.

Let’s imagine that our pristine vehicle has been safely loaded onto a transporter at the manufacturer, ferried via congested roads to the showroom, unloaded from the transporter and then manoeuvred into the showroom. At that point would we consider taking out upgraded bodywork insurance on a vehicle that will then never leave the showroom and only ever receive increasing layers of lovingly applied polish?

Of course there is always the chance that, when manoeuvring the car in the showroom, the bodywork may get damaged. But, where speed is minimal, there are no other vehicles involved and movement is infrequent, say once a week, we would be mitigating what is an already tiny risk. The greatest opportunities for potential risk – loading, transportation and unloading – have already passed. Before anyone points it out, I do recognise that Mr McQueen drove his Mustang with a certain disregard, and I also recall what happened to the Spyder when Mr Bueller took his now infamous day off but hey, that’s Hollywood. In reality, we would be much better served mitigating the risks with higher probabilities.

To summarise, let’s think of an operational site and ask a direct question: “Is it more important for our site to continue uninterrupted in its operational role, or is it more important for us to mitigate a minimal percentage of costs in the event that we have a failure?” I think we will all agree that continuing in our operational role is by far the most important factor. Therefore whilst we might accept that warranty, extended or otherwise, may be nice to have, in answer to our question right at the beginning “Can we infer that an extended warranty equals reliability?” the answer is a resounding “No”.

In conclusion, maybe the next time during a procurement process we think of asking “Do you offer an extended warranty?” we should instead think about the real reasons we are asking the question and then pose the far more relevant and important questions “How long will the filter continue to operate?”, “What is the lifetime of the filter?” or simply, “How can you prove your filter is reliable?”

www.mpe.co.uk

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