What's the part got to do with it?

Early Warning & You

Ask yourself a question, when was the last time you worried about your cars exhaust?

Not from an environmental point of view, specifically about the exhaust on your car.

Was it this morning? Did you turn on the engine and think; I wonder if my exhaust is still working properly. Did you hop out of the car and start sniffing the air searching for a sign that perhaps the exhaust system wasn’t functioning?

Let’s imagine that you did and you realised that the car needed repairing. Would you go straight to the dealer? How far up your list of priorities would this issue be?

It would probably not be much of a concern; your vehicle is still working after all.

Your car is full of parts that aren’t an integral part of your driving experience. There is a simple sliding scale that reflects the importance of a part in your vehicle when it fails.

All of the parts that don’t cause the vehicle to stop moving live in the zone between immediate repair and no action taken depending on the value that the customer places on the operation of that part.

This accounts for the majority of the parts in a vehicle and the percentage is growing larger by the day as cars are filled with ever larger numbers of devices that aren’t involved in the movement of a vehicle from A to B.

Therefore the key factor in the disclosure of the failure of most parts to a manufacturer is the driver not the part.

So what does this have to do with early warning, the forecasting of part failure rates?

Understanding the relationship that the driver has with every single part in their vehicle is integral to the process of forecasting what the claims you are seeing today for any given part means for the total number of part failures. Indico uses actuarial techniques to model the distribution of claims for every part in your vehicle across the life of its warranty, By understanding the claims distribution over time you can forecast, early in the life of the vehicle, what the total number of claims will be and hence understand ultimate frequency and cost for the failure of every part. Rather than approximating distributions with standard statistical techniques, Indico reflects the actual flow of claims.

The graph below shows a comparison of two part failure profiles for the misfiring of ignition coils and the failure of a battery. Along the X axis we have the age of the part in days since the vehicle went onto the road, The Y axis shows the % of total claims paid by the day for a specific part. If you were to total all of the points on the graph they would add up to 100% of the claims received for the part over 2 years.

We have purposely removed the legend to make you think about which profile is likely to correspond to which part.

The red line shows a part that fails and is repaired at a fairly constant rate, with an increase around the 2 year point. The black line shows a part with almost no repaired failures in the first year with a steadily increasing rate of claim throughout the second year. This suggests that the red part isn’t exposed to wear and tear and the black part is.

If you want to know which profile matches which part send an email to info@indicobi.com

The easiest way to reach the right conclusion is to think about how you feel about these parts. What would you do if your battery stopped working?

Early warning isn’t just about a failing part it’s about you and what you will do when it fails.

• With an understanding of this you can
• Identify epidemic failure quicker
• Forecast part failure rates & costs
• Budget for total warranty costs
• All with a new level of accuracy.

Why Warn Early

Early warning is being driven forward by four stake holders:

• The Customer
• The Manufacturer
• The Supplier
• The Government

The customer wants a better product. Accurate early warning data from Indico highlights vehicle problems sooner enabling manufacturers to improve their vehicles quicker.

The manufacturer wants to sell more cars, make a better product, reduce their warranty costs and communicate with their supplier. Indico’s forecasting notifies the manufacturer of part problems sooner allowing them to rectify the issues with the supplier. This reduces warranty expenses for the manufacturer and improves product reliability. With the consumer relying ever more on publicly available reliability statistics like JD Powers IQS survey, improving vehicle reliability will result in more cars being sold.

The supplier wants to make better product too. For most manufacturers communication with the supplier about part reliability is at best dysfunctional, for some it is non-existent. Informing the supplier about likely ultimate failure rates will help them understand the financial and customer impact better. With manufacturers now passing on a growing proportion of warranty expense to the supplier part failure monitoring is growing ever more important.

Governments around the world are becoming increasingly interested in forecasting part failure rates. Since the USA introduced the TREAD act following on from the Firestone incident manufacturers have been waiting to see what NHTSA (National Highway Traffic Safety Administration) will do with the warranty claims data they now collect. It is likely that the Office of Defect Investigation (ODI) will soon publish its own early warning results. When it does manufacturers will need their opinions on early warning ready too. With the EU due to pass similar legislation soon this won’t remain just an American concern for long.

Indico’s early warning data can help the customer, manufacturer, supplier and government achieve their goals for early warning data.

Why Indico?

Manufacturers around the world are already using the unique actuarial techniques that Indico uses to forecast part failure rates and warranty costs.

Using a range of delivery methods from a full suite of web based BI reports and dashboards to in depth quarterly paper reports.

We design our output around the individual needs of each customer. Our team of analysts define each of the reports and outputs around the questions that our customers have, not just the answers we think they will need.

We can deliver information into existing platforms and systems; we do not force our customers into our delivery mechanisms. We just want to provide the data in whatever way makes it easiest for our customers to use it.

The concepts that we use are best explained in person. If you are interested in learning more about Indico we would be more than happy to explain them in detail. With a growing client base around the world we are likely to be in your area soon, so please do not hesitate to contact us to arrange a meeting via either of the methods below.

As the title of this white paper says, as a vehicle driver you are part of the early warning problem, contact us and be part of the solution.