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The company imports critical medical diagnostic equipment from Germany and supplies it to hospitals. Thanks to a favourable market reception, just when the company wanted to import higher numbers, two issues began to surface. The import duty had gone up making the product costlier. Concurrently, the existing base of customers began registering complaints about the poor product performance.
The German principals attributed the complaints to erratic user conditions obtaining at the premises of Indian customers. Consequently, they did not feel obliged to undertake any remedy.
The issue was thrown open to a new batch of engineering graduates to undertake it as a performance challenge.
The equipment with an initial design life of 100 weeks was rated to work without any problems for 125 weeks in Europe.
The engineers studied the records of the frequency of field complaints registered in Europe and classified them according to the seven milestones the equipment crossed during the rated design life.
Still born (Week 0): Defects noted after clearance by Quality Assurance team at the manufacturing plant but detected before shipment from the warehouse.
Dead on arrival (Week 0-4): Equipment fails to function upon installation at customer site. The customer refuses to take delivery and the field installation team records the problems and reverts with a solution.
Infant mortality (Week 4-24): Equipment begins performing upon installation but inherent defects begin to show up gradually over use.
Mid-life burnout (Week 25-75): Erratic in its performance, the equipment breaks down with no prior warning and for reasons that are difficult to predict.
Plateaued performance (Week 75-100): Many of the special features begin to malfunction; equipment supports only the very basic vanilla functions.
On extended support (Week 100-125): Customers keen to use the equipment beyond the rated design life pay heavily for keeping the machine operational.
Sunset (Week 125+): The equipment sustains its performance well beyond the rated life and even after the manufacturers had stopped supporting the model.
How the data connect
The engineers correlated the above seven milestones to the specific component and the nature of the malfunction that impaired its performance.
The engineers continued to foolproof the problems progressively and put such machines on observation. They established the possibility of extending the service life up to 200 weeks, thereby doubling the life.
The savings meant postponing the replacement with a new equipment at a much higher cost and making up the incremental revenue lost through service.
Question for the Directors
The directors began to contemplate whether they should patent their knowhow and charge their principals for their expertise or whether they should open up product refurbishment of ageing machines in field as a new revenue stream or whether they should up the price and offer a ‘Total Satisfaction Guarantee' to their users and bind their relationship for life.
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