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HP and Industry Experts Partner to Reduce Warranty Costs for Manufacturers


PALO ALTO, Calif., Mar 21, 2006, HP today introduced an initiative designed to help reduce warranty costs by streamlining the entire warranty chain management process for discrete manufacturers, those that produce distinct items such as automobiles, appliances or computers.

Using its own experience as a guide, HP leveraged the warranty chain management expertise of four solution providers – Microsoft, PolyVista, iTAC Software and 4CS – to deliver a “closed loop” solution that spans manufacturing and parts traceability to warranty claims and customer satisfaction.

The solution identifies early product reliability issues and provides information to manufacturing divisions to correct the problem. That information is then passed to design and engineering divisions to help correct the problem in future products. Finally, the information flows to vendors and suppliers to help improve long-term product reliability.

Manufacturing Insights, an IDC company, expects warranty claims for North American manufacturers to reach or exceed $27 billion in 2005.(1) Industry and government compliance requirements add further complications. These factors challenge manufacturers to improve product quality as well as better measure product tracking and traceability to protect their brands and to comply with regulations.

“The data we have gathered so far from the first three quarters of 2005 suggests that most manufacturing companies will report an increase in warranty claim expenses,” said Joe Barkai, program director, Product Life-cycle Strategies, Manufacturing Insights. “To address this trend, the best practices employed by forward-looking companies include quality improvement; design for warranty; design for serviceability; and a collaborative approach to reduce warranty costs within the company and with suppliers.”

To better manage its own warranty chain, HP has invested in improved processes and technologies. From 2001 to 2003, HP saved hundreds of millions of dollars in warranty costs by streamlining its warranty chain; it also reduced the time it takes to detect problems in many product areas from 120 days to 24 hours.

“At HP, we’ve seen how the right solution can lower a company’s warranty reserves, free up cash and protect its brand promise to customers through controlling the quality of its products,” said Brian Walker, director, Automotive Industries, Worldwide Manufacturing and Distribution Industries, HP. “Working with Microsoft, PolyVista, iTAC and 4CS, HP has expanded upon its warranty management methodology to deliver a complete warranty management solution.”

HP works with solution providers to close the loop on warranty management

PolyVista enables business-users to move beyond reporting to discover new and valuable business insights hidden in their data. The software company works with HP to deliver early warning/detection solutions that transform customer warranty and quality management processes from reactive to proactive. PolyVista provides a robust analysis environment that automatically uncovers the complex relationships hidden in the data that are extremely difficult to discern using traditional reporting/analysis. The software takes analytics far beyond reporting.

Microsoft brings a simple and agile foundation to HP’s warranty management solution with its .Net platform, which enhances the capabilities that PolyVista delivers by adding collaboration and search capabilities through the use of SharePoint Server, Office 2003, SQL Server 2005 and Biztalk Server. Microsoft’s online analytical processing tool, OLAP, enables users to see data in multiple dimensions. The Microsoft platform provides the basis for third-party applications, like PolyVista’s, to plug into and provide functional capabilities such as warranty transaction processing, warranty analytics reporting, component traceability and collaboration between manufacturing and engineering.

iTAC Software, an expert supplier of MES systems focusing on traceability solutions for the discrete manufacturing industry, focuses on high-volume, high-variant manufacturing – particularly for companies in the automotive industry producing electronic and non-electronic safety-relevant parts. iTAC’s “easy works” parts-traceability solution provides complete transparency of manufacturing data and processes down to the single item level, across multiple plants located in different parts of the world. The result: a streamlined, more efficient production with reduced scrap rework and product recalls.

The 4CS iWarranty software solution focuses on automating the claims process from claim submittal, processing, payment, warranty intelligence, through to quality control. iWarranty software helps track which parts are under warranty and which parts are under supplier warranty. iWarranty helps identify any parts that have failed and what the root cause of that failure is so that information can be shared to enable the problem to be fixed and prevented from recurring. 4CS is an industry expert in warranty software solutions that has focused on the automotive industry for the past 10 years and supports industry standards from automotive industry associations out of the box.

More information about HP’s warranty chain management solution is available at

About HP

HP is a technology solutions provider to consumers, businesses and institutions globally. The company’s offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended Jan. 31, 2006, HP revenue totaled $87.9 billion. More information about HP (NYSE, Nasdaq: HPQ) is available at

(1) Theory & Practice, “Warranty Costs Continue to Plague the Manufacturing Industry” by Joe Barkai, Jan. 23, 2006.

This news release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they ever materialize or prove incorrect, could cause the results of HP and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including the expected development, performance or rankings of products or services; statements of expectation or belief; and any statement of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the development, performance and market acceptance of products and services and other risks that are described from time to time in HP’s Securities and Exchange Commission reports, including but not limited to HP’s Annual Report on Form 10-K for the fiscal year ended Oct. 31, 2005 and other reports filed after such report. HP assumes no obligation and does not intend to update these forward-looking statements.


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