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Product Performance and Servicing: An Examination ofConsumer Problems and Business Responses. Report ofthe Sub-Council on Performance and Service of theNational Business Council for Consumer Affairs.National Business Council for Consumer Affairs,Washington, D.C.Department of Commerce, Washington, D.C.Sep 7358p.; For related documents see CE 008 158, 008160-166, and 008 168-169Superintendent of Documents, U. S. GovernmentPrinting Office, Washington, D. C. 20402 (Stock No.5274-00010,$1.15)

MF-$0.83 HC-$3.50 Plus Postage.Business; *Business Responsibility; *ConsumerEconomics; *Consumer Protection; *ElectricalAppliances; Motor Vehicles; Producer Services;Services

ABSTRACTThis report discusses consumer and corporate problems

associated with product performance and servicing of consumerdurables (such as automobiles, large and small appliances, .andtelevisions and phonographs), and outlines action which should betaken by manufacturers, trade.and professional associations, andgovernment to assure quality and responsiveness in this area. Thereport is divided into four main parts: (1) Rationale of thecommittee report, (2) before-sale activities (design, productassurance, product assurance system elements, product engineering,product standards and design, manufacturilg and quality control, andtransportation) , (3) during-sale activities (product informations,use, care, and service), and (4) after-sale activities (servicepersonnel recruitment and training, job status, job qualifications,vocational education and the service industry, manufacturer servicetraining, service personnel certification programs,*estimatingservice fraud, licensing, code of responsible servicing practices,replacement parts availability, and complaint resolutions). The 18recommendations, and the code of responsible servicing practices areincluded. (WL)

.

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* materials not available from other sources. ERIC makes every effort ** to obtain the best copy available. Nevertheless, items of marginal ** reproducibility are often encountered and this affects the quality ** of the microfiche and hardcopy reproductions ERIC makes available ** via the ERIC Document Reproduction Service (EDRS). EDRS is not* responsible for the quality of the original document. Reproductions ** supplied by EDRS are the best that can be made from the original. ************************************************************************

$.

I IPProductPerformance andServicingAn Examination of Consumer Problemsand Business Responses

Report of the Sub-Council on Performanceand Service of the National BusinessCouncil for Consumer Affairs

September 1973

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This report contains the resultsof studies by an Advisory Committee.It does not necessarily representthe policies or plans of theDepartment of Commerce or any otherFederal Government agency.

For sale by the Superintendent of Documents, U.S. Government Printing Office,Washington, D.C. 20402 - Price $1.15Stock Number 5274-00010

2

1.

National Business Council for Consumer AffairsSub-Council on Performance and Service

Chairman : Richard L. TerrellExecutive Vice PresidentGeneral Motors Corporation

Vice-Chairman: Charles M. OdorizziExecutive Vice PresidentRCA Corporation

Members

R. Douglass CooperPresidentR. Cooper Jr.., Inc.

John D. deButtsChairman of the BoardAmerican Telephone & Telegraph Co.

Robert E. DewarChairman & Chief Executive OfficerS. S. Kresge Company

Robert G. DunlopChairman & Chief Executive OfficerSun Oil Company

David B. HarperPresidentFirst Independence National Bank

of Detroit '

Felix N. MansagerPresident and ChairmanThe Hoover Company

Executive Secretary :Kenneth W. ErdmannProfessional Staff, NBCCAU.S. Department of Commerce

3

John J. NevinPresidentZenith Radio Corp.

Edward P. Reavey, Jr.Vice President & General ManagerConsumer Products DivisionMotorola, Inc.

George A. SpaterChairman & Chief Executive OfficerAmerican Airlines, Inc.

S. S. StecklerVice-ChairmanAllied Van Lines, Inc.

Robert D. ThomasPresident (get.)Firestone Tire & Rubber Co.

Robert H. WillisPresident & Chief Executive OfficerConnecticut Natural Gas Corp.

Honorable Frederick B. DentSecretary of CommerceWashington, D.C. 20230

Dear Mr. Secretary :

Attached for your consideration is a report entitled."Product Performance and Servicing : An Examinationof Consumer Problems and Business Responses," pre-pared by the Sub-Council on Performance and Service of theNational Business Council for Consumer Affairs:

In accord with the assignment the NBCCA received froinPresident Nixon, the Sub-Council has identified and examinedthe reasons for consumer dissatisfaction with the performanceand servicing of selected consumer durable products. Thereport includes recommendations for manufacturers, tradeand professional associations, and government which shouldresult in direct benefits for consumers.

We urge you to bring this report to the attention of inter-ested individuals and organizations in the private and publicsectors with your request for prompt action on its recom-mendations.

Sincerely,

c-4-rieez 49.77Robert E. Brooker, ChairmanNational Business Council

for Consumer Affairs

Richard L. Terrell, ChairmanSub-Council on Performance

and Service

Charles M. Odorizzi, Vice-ChairmanSub-Council on Performance

and Service

4

Page

Summa ry

I. INTRODUCTION

Consumer durables such as automobiles, large andsmall appliances, televisions and phonographs have be-come important parts of most consumer life styles. Fail-ure of these products can result in major inconveniences.If repairs cannot be completed promptly and competently,the resulting frustration can easily lead to general dis-satisfaction with the performance and servicing of allconsumer durable goods. Public opinion surveys indicatethat many consumers already hold this view.

This report discusses the consumer and corporateproblems associated with product performance and serv-icing, and outlines actions which should be taken to assurequality and responsiveness in this area.

5 II. BEFORE SALE ACTIVITIES

The manufacturer's first task is to design reliability,durability, serviceability, performance capability, andproducibility into the product. One method developed toassure these factors are adequately considered is the useof written guidelines for designing products. The adop-tion of such guidelines by a growing number of companiessuggests that :

RECOMMENDATION 1MANUFACTURERS SHOULD MAINTAIN AND ENFORCE UP-TO-DATE, WRITTEN POLICIES AND PROCEDURES ON PROD-UCT QUALITY AND RELIABILITY.

ecause reliability engineering can help assure con-sideration of vital consumer interests from the verybegidning of the product development cycle :

13 RECOMMENDATION 2MANUFACTURERS SHOULD ESTABLISH A RELIABILITY ENGI-NEERING RESPONSIBILITY AS A PRIORITY ACTIVITY IN THEDESIGN AND MANUFACTURING SEQUENCE.Reliability engineering tasks such as design for

serviceability, analysis of service problems, and stand-ardizatien of paits, all directly reflect consumer needsand expectations.

Establishment of product standards within the com-pany can improve product serviceability and reliabilityby setting minimum design criteria and performance

iv 5

Pagelevels, by promoting consideration of product safetycharacteristics during product design, and by reducingproliferation of parts. The Sub-Council thereforerecommends :

RECOMMENDATION 3 15MANUFACTURERS SHOULD PROMOTE THE DEVELOPMENTAND USE OF CORPORATE PRODUCT STANDARDS.

Several manufacturers have added review boards,warranty committees, and service technician advisorygroups to their product assurance systems. These unitscan demonstrate management's commitment to improv-ing quality and reliability and assure a continuing reviewand evalUation of the product assurance system.Accordingly :

RECOMMENDATION 4 17.MANUFACTURERS SHOULD ESTABLISH ADVISORY BODIESOF CORPORATE AND SERVICE PERSONNEL TO CONTINUALLYREVIEW AND MONITOR PRODUCT ASSURANCE SYSTEMS.

III. DURING SALE ACTIVITIES

The existence and use of two general types of in-formation at time of sale can help reduce the potentialfor consumer complaints. The first of theseproduct in-formationcan contribute to a better match betweenconsumer needs and ability to pay, and product capabil-ities. The seconduse, care, and service informationcan show the consumer how to operate and maintainhis product to obtain good and lasting performance.

Many segments of the business community are re-sponding to consumer demands for more and better prod-uct information. Development of such data is dependentupon the commitment of individual manufacturers toprovide information on their own products and to par-ticipate in efforts, usually carried on by trade associa-tions, which establish mechanisms for all manufacturersco provide similar material to consumers. Accordingly,the Sub-Council recommends :

RECOMMENDATION 5WHEREVER APPROPRIATE, MANUFACTURERS SHOULD PRO-MOTETHE DEVELOPMENT OF MECHANISMS FOR PROVIDINGCONSUMERS WITH PERFORMANCE INFORMATION ON CON-SUMER DURABLES.

6

20

22

PageIndustry efforts aimed at upgrading owner manuals

to improve their information content and readability canpay large dividends in complaint reduction. To achievethis goal :

26 RECOMMENDATION 6MANUFACTURERS SHOULD GIVE PRIORITY TO THE DEVELOP-MENT OF OWNER MANUALS THAT ARE INFORMATIVE ANDEASY TO UNDERSTAND ON INSTALLATION, OPERATION,SAFETY PRECAUTIONS, MAINTENANCE, SERVICE, AND COM-PLAINT RESOLUTION PROCEDURES.

26

A unique opportunity exists at time of sale for themanufacturer and retailer to communicate substanth,einformation to the consumer. Accordingly:

RECOMMENDATION 7RETAILERS SHOULD ENCOURAGE THEIR SALES PERSONNELTO STRESS THE IMPORTANCE TO THE BUYER OF PROPERPRODUCT USE AND CARE, AS OUTLINED IN HIS OWNERMANUAL.

27 IV. AFTER SALE ACTIVITIES

Despite the most conscientious efforts by manu-facturers, product failures will inevitably occur. Sys-tems must exist, therefore, to assure the consumerprompt, honest, and competent product repair.

Adequate maintenance and repair of products aftersale are primarily dependent on the availability and qual-ity of service technicians:

29 RECOMMENDATION 8MANUFACTURERS, TRADE ASSOCIATIONS, AND EDUCATORSSHOULD TAKE STEPS TO IMPROVE SERVICE PERSONNELJOB STATUS.

Service technicians are often viewed as lower levelemployees engaged in dirty, unrewarding work. Thisattitude must be changed if the technician shortage isto be reduced.

Unnecessary and artificial requirements for servic-ing positions also reduce the available supply. Accord-ingly :

30 RECOMMENDATION 9SERVICE PERSONNEL JOB PREREQUISITES SHOULD BEBASED ON TRAINING AND EXPERIENCE WHICH REFLECT THEACTUAL SKILLS AND APTITUDES REQUIRED.

7

PageVocational education has for many years been a

primary source for new applicants in the service profes-sions. To maximize vocational education benefits :

RECOMMENDATION 10 32MANUFACTURERS AND TRADE ASSOCIATIONS SHOULD EX-PAND EFFORTS TO ASSIST VOCATIONAL ,EDUCATION pRO-GRAMS TO ASSURE THAT TRAINING IS DIRECTLY RELATEDTO FUTURE JOB OPENINGS.

Many manufacturers and trade associations operateservice personnel training programs. Their activitiesneed to be intensified :

RECOMMENDATION 11 33MANUFACTURERS AND TRADE ASSOCIATIONS SHOULDPLACE HIGH PRIORITY ON THE- EXPANSION OF QUALITYSERVICE PERSONNEL TRAINING PROGRAMS.

.

Some companies and trade associations have alsoinitiated programs which go beyond training to thecertification of service personnel as qualified to carry outtheir responsibilities. These programs provide informa-tion which the consumer can use to recognize qualified'service personnel, and they also improve skill levels andraise job status. Therefore :

RECOMMENDATION 12 35MANUFACTURERS AND TRADE ASSOCIATIONS SHOULDESTABLISH SERVICE PERSONNEL CERTIFICATION PRO-GRAMS.

As another method for improving the quality ofproduct servicing :

RECOMMENDATION 13BUSINESSES SERVING THE CONSUMER MARKETPLACESHOULD JOIN, SUPPORT, AND ASSIST BETTER BUSINESSBUREAUS.

Notwithstanding action by local Better BusinessBureaus and other private organizations, and despitetechnician certification programs, incompetent and de-ceptive practices often cannot be controlled exceptthrough government action. To curb these practices :

RECOMMENDATION 14 38MANUFACTURERS, TRADE ASSOCIATIONS, AND OFFICIALSAT ALL LEVELS OF GOVERNMENT SHOULD COOPERATE INTHE DEVELOPMENT OF A UNIFORM STATE LAW FOR LICENS-ING AND REGULATING SERVICE fiRMS.

36

vii

PageA uniform system is necessary to prevent the dupli-

cation and cost to consumers and manufacturers whichis likely if many different licensing laws are adopted bystate and local governments.

Businesses and trade associations should take thelead in establishing voluntary guidelines regulatingtheir repair and service practices. Each industry needsits own set of guidelines, but some general principlesare broadly applicable. They are included in the follow-ing Code.

39 CODE OF RESPONSIBLE. SERVICING PRACTICES

1. Customers should be offered an estimate of cost inadvance of services to be rendered.

2. Customers should be promptly notified if serviceappointments cannot be kept.

3. Only repairs authorized in writing by the customershould be performed, except where other arrange-ments have been made to the customer's satisfaction.

4. A written, itemized invoice for all parts, labor, andany other charges, should be given to the customerupon completion of the work.

5. All repair services should be guaranteed for areasonable length of time.

6. Appropriate records of services performed andmaterials used should be maintained by the servicecompany for at least one year:

7. Service technicians should not be paid on a basis thatis contingent upon the size of the customer's repairbill.

8. The service dealer should maintain insurance cover-age adequate to protect the customer's property whileit is in his custody.

9. Service dealers should cooperate with consumer pro-tection agencies at all levels of government to insuresatisfactory resolution of custiiiner complaints.

10. Customers should be treated courteously at all times,and all complaints should be given full and fairconsideration.

Consumer complaint surveys generally indicate thatas many as 15 to 20 percent of complaints are directlyrelated to dissatisfaction in the handling of replacementparts. To reduce these figures:

RECOMMENDATION 15PRODUCTION ,41,!D DELIVERY OF 'REPLACEMENT PARTS\SHOULD BE GIV'.N MAJOR EMPHASIS IN THE MANUFACTUR-ING AND DISTRIBUTION PROCESSES.

All manufacturers should specify procedures forresolving consumer complaints. If, for example, a dealeris unable- or unwilling to resolve a complaint, the con-sumer should be able to obtain a review of his problemfrom the' manufacturer. If the consumer continues to bedissatisfied, voluntary arbitration systems can be em-.ployed. A number of firms are now using this approachwith success. Accordingly:

RECOMMENDATION 16BUSINESSES. SHOULD SUPPORT INDEPENDENT, THIRD-PARTY COMPLAINT SETTLEMENT PROCEDURES SUCH ASMEDIATION AND ARBITRATION FOR RESOLVING CONSUMERDISPUTES, ESPECIALLY IF OTHER VOLUNTARY MECHANISMSHAVE BEEN TRIED WITHOUT SUCCESS.

As another approach to complaint resolution, asso-.dation involved in the appliance industry have estab-lished a Major Appliance Consumer Action Panel of in-dividuals from outside the industry, who have volun-teered to review and resolve complaints. The success oftheir activities suggest that:

RECOMMENDATION 17TRADE ASSOCIATIONS SHOULD SEEK TO COORDINATE IN-FORMATION ON SERVICE PROBLEMS FOR THEIR INDUS-TRIES, INCLUDING THE ESTABLISHMENT OF INDEPENDENTCOMPLAINT RESOLUTION MECHANISyS.

Government agencies are also used by consumers asavenues for redress. Responsible businesses should co-operate with government agencies to assist wherevei.

possible in the fair disposition of consumer problems.Therefore:

RECOMMENDATION 18MANUFACTURERS SHDULD ESTABLISH DIRECT RELATION-SHIPS WITH CONSUMER PROTECTION AGENCIES.TD ASSISTIN RESOLVING CONSUMER. PROBLEMS WITH PRODUCTPERFORMANCE AND SERVICING.

1 0

Pag e

41

44

46

46

ix

Table of Contents

List of Sub-Council Members

Letter of Transmittal

Summary

.F oreword

I. Introduction 2

II. Before Sale Activities 5Design 5Product Assurance 8

Product Assurance System Elements 9Product Engineering 12Product Standards and Design 14Manufacturing and Quality Control 15

Transportation 18

III. During Sale Activities 20Product Information 20Use, Care, and Service 22

IV. After Sale Activities 27Service Personnel Recruitment and Training 28Job Status 29Job Qualifications 30Vocational Education and the Service Industry 31Manufacturer Service Training 32Service Personnel Certification Programs 33Eliminating Service Fraud 35Licensing 37Code of Responsible Servicing Practices 39Replacement Parts Availability 40Complaint Resolution 42

11

Foreword

This report has been prepared 132; the Sub-Council onPerformance and Service of the National Business Councilfor Consumer Affairs. The Council includes over 100 businessleaders and was established by executive order by PresidentNixon on August 5, 1971 to advise the Federal governmenton actions which would benefit consumers.

At its first meeting on August 5, 1971, the Counciladopted a mission statelnent pledging it to : "foster activitieswhich assure value, satisfaction and safety in the goods andservices provided to consumers." Specifically, this includesan attempt 'to "identify and examine existing and potentialconsumer problem areas; seek pragmatic sOlutions; developprograms benefitting consumers; and advise the Federalgovernment whenever appropriate." Seven-Sub-Councils wereestablished to carry out these tasks.

In seeking to satisfy these objectives, the Sub-Councilon Performance and Service chose as its highest prioritythe development of recommendations for reducing buyer com-plaints abo' (t. the performance and servicing of consumerdurable goods. Specific activities occuring before, during,and after sale of these products were examined, resulting inthe analysis and recommendations found in this report.

The Sub-Council has attempted to reach conclusions andrecommend action acceptable to all members: This report,therefore, represents a general consensus of the members,but all statements included are not necessarily supported byall members with .the same degree of conviction.

1 2

g` ...no group ofproducts better

reflects thematerial status

of the typicalAmerican family

than consume?durables . . ."

". . . to keep hisproducts operat-

ing, the consumermust consult and

contract with avariety of dealers,

manufacturers, andtiervice organiza-

tions."

I. IntroductionPerhaps no group of products better reflects the material

status of the typical American family than consumer durablesautomobiles, large and small appliances, televisions, radiosand phonographs. As Figures 1 and 2 show, ownership ofthese goods is now at a very high level. For example, nearlyone billion appliances and over 95 million passenger carsare currently in use. In additiOn, more than 100 million ap-pliances and 10 million new automobiles are sold each year.

Paralleling the increase in consumer use of these productsis the rise in their performance capability and, necessarily,in their complexity. The single speed wringer washer hasbeen superseded by automatic washers with a variety ofwashing cycles. Automatic defrosting refrigerators withautomatic ice-makers are becoming common, as are kitchenranges with self-cleaning ovens. Automobiles also carry anincreasing array of performance,. options which reflect con-sumer preferences. In the 1972 model year, 91 percent of thenew cars sold had automatic transmissions, 85 percent powersteering, 68 percent power brakes, and 68 percent air condi-tioning.

Years ago, when the average consumer owned only a car,a radio, a washer, and a refrigerator, his need for repairs mayhave seemed low. He had few products which could requirerepair, and even when repairs were necessary, the relativesimplicity of the products frequently made the jobs easy. Asa result, consumers often clie§rtheir own repair work.

Today, however, a consumer may be surrounded by twoor more cars, a boat, washers for dishes and clothes, severalradios and television sets, gasoline or electric lawnmowers,power tools, air conditioners, and combination refrigerator-freezers. The variety of these devices, and their degree oftechnical sophistication, prevents the vast majority of con-sumers from successfully completing all but the most simplerepairs. Instead, to keep his products operating, the consumermust consult and contract with a variety of dealers, manu-facturers, and service organizations. And if one major productfails, his dependence on it can cause a major inconvenience.If repairs cannot be completed promptly and competently,the resulting frustration can easily lead to general dissatis-faction with the performance and servicing of all consumerdurable products.

13

% of Homes with100

80

Figure 1

MAJOR APPLIANCE OWNERSHIP GROWTH1962-1972

=1972

Type of Appliance

Source: "Merchandising Week" 1973 Statistical & Marketing Report,RP. 30, 38 and Bureau of the Census.

Figure 2

PASSENGER CAR REGISTRATIONS IN THE UNITED STATESMillion Cars100

90

80

70

60

50

40

30

20

10

0

1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970

SOURCE: Motor Vehicle Manufacturers Assooialion 1971 and 1972 Automobile Facts & Figures(U.S. Department of Transportation)

1 4

90

80

70

60

50

40

30

20

10

01975

"No matter wherecomplaints are

first directed,manufacturers areusually blamed for

product sales orservice deficiencies."

4

.Recent public opinion polls indicate the current extentof consumer concern. A 1971 nationwide Louis Harris studycommissioned by Life magazine entitled 'Consumerism atthe Crossroads", reported that :

36 percent of the respondents believed they were over-charged by a .repairman on a product which had brokendown;46 percent classified repair service for appliances as beingshoddy and unreliable;only 34 percent were confident of the honesty and fair-ness of garage and auto repairmen.;only 42 percent had confidence in radio-TV repairmen;68 percent agreed with the statement "What's needed isnot so much better products as better servicing and war-ranties when you get a lemon." ;

69 percent felt it would be a good idea for a governmentagency to license all repairmen and people who serviceproducts.

The Harris-Life survey concluded in February 1972,"Consumerism II," found the folloWing:

40. percent of the respondents expected difficulty in ob-taining repairs for their automobiles and 34 percent for

Jelevision sets.31 percent believed auto repairs were made improperly,up from 16 percent in 1967.While the failure rate of most devices is lower today than

in years past, even a low percentage figure spread across themillions 'of items now in use results in a very large numberof complaints to manufacturers, dealers, service agencies,and public and private consumer protection organizations.No matter where complaints are first directed, manufac-turers are usually blamed for product sales or service defi-ciencies. These difficulties represent real and legitimate prob-lems for many consumers and positive steps should be takento help resolve them wherever possible.

The aim of this report is to outline actions before, during,and after product sale which will assist in the reduction ofthese consumer complaints. Many businesses are respondingto consumer demands, and the particular programs theyemploy have been used in preparing this report. Other actions,by trade associations, government, and consumers, can also behelpful and they are ircluded along with the recommenda-tions to individual businesses.

15

'IL Before Sale ActivitiesDesigning and Producing Products to Meet Consumer Demands

DESIGN Decisions made and actions-takenduring the design or first stage of

a product's life are essential to the reductibn' of consumercomplaints about performance and servicing. Indeed, thesuccess of nearly every other activity aimed at complaintreduction is heavily dependent upon the extent to.which thefollowing characteristics have been designed into the finalproduct :

reliability, or the continued capability of the product toperform its intended function to the satisfaction of thecustomer throughout the useful life of the product.

durability, or the ability of the product to withstandnormal use by the customer throughout its useful life.

serviceability, or the ease with' which the product can berepaired.

performance capability, or the capability of the productto perform its intended function to specified levels.

proc/ucibility, or the ease with which the product can beproduced.

In making design decisions involving these factors, manu-facturers and their design staffs are constrained by a funda-mental aspect of the mass production process. Despite thecharacteristics of any given design, no two mass producedcomponent parts, sub-assemblies, assemblies, or final productsare likely to be the same in every respect. In fact, massproduction itself is made possible by the ability to designproducts in such a way that individual part variations canbe accomodated, without detriment to overall product per-formance, to the extent they fall within specified "tolerancelimits." These limits cover all properties of parts andmaterialsdimensions, strength, chemical composition, ar-face condition, color, etc. Similarily, when people are factoredinto the process, unavoidable differences in performance andreliability will occur.

As production variations impose limitations on design,so too do differences in user or consumer demand. All users donot place identical demands on a product. In the case of auto-

1 6

. no two massproduced . . .

products are likelyto be the same inevery respect."

". . . the capabilitiesof manufacturedunits differ, and

these units aresubjected to

diff erences inuser demand."

"The manu-facturer's

challeng e is toreduce the

probability ofmalfunction."

6

mobiles, for example, one driver may accelerate slowly,another rapidly. And even under the most stable conditions,there are variations in the use environment. The line voltageavailable to any electrical appliance varies seasonally andwith ate time of day. The temperature and humidity historyof two television sets will vary widely in customer use, as willthe number of times the channels are changed or the setsswitched on and off.

The net result is that despite the existence of a carefullyspecified product design, the capabilities of manufacturedunits differ, and these units are subjected to differences inuser demand. Thus, the basic problem facing the manu-facturer is to recognize and adjust to this probabilistic situa-tion in the production and use of his products. That is, whenconsidering any characteristic of an individual product, theactual capability built into it and the actual demands placedon it by the user cannot be predicted or correlated with abso-lute certainty. The manufacturer and his designer must,therefore, treat product capability and use as probabilitydistributions.

Figure 3 presents a typical product probability dis-tribution for production and use. As shown by the position ofthe product capability curve, the manufacturer is usuallyable to produce a product that exceeds customer demands.However, as indicated by the shaded area where the twodistributions overlap, a very small portion of products areproduced which may malfunction when higher than antici-pated demands are placed on them by consumers. The manu-facturer's challenge is to reduce the probability of malfunc-tion. He usually has little or no control over the use environ-ment, so he must concentrate on the product capability dis-tribution. Figures 4 and 5 show his two options.

The manufacturer can reduce his allowable tolerancesin an attempt to make each unit more nearly identical, asshown in Figure 4. This would be possible for example, byinvestment in tighter process control, more precision machin-ing, stricter quality control, or more stringent materialspecifications. Or he can increase the capability of the product,thus shifting the capability distrintion curve to the right as

1 7

MAX

CUSTOMER DEMANDDISTRIBUTION

Figure 3

PRODUCTION CAPABILITYDISTRIBUTION

MIN

MIN

MAX

IMPOSED LOAD DURING CONSUMER USE

CUSTOMER DEMANDDISTRIBUTION

Figure 4

MAX

PRODUCTION CAPABILITYI-. DISTRIBUTION

MIN

MAX

MIN

VARIATION

POTENTIALMALFUNCTION

ZONE

IMPOSED LOAD DURING CONSUMER USE

Figure 5

MAX

PRODUCTION CAPABILITYDISTRIBUTION

CUSTOMER DEMANDDISTRIBUTION tI

I tI %

I t

Ititt

%

PRODUCTION ttvVARIATION VARIATION I t/ tt

POTENTIAL i %

MALFUNCTIONe°ZONE

ss.

MINMIN IMPOSED LOAD DURING CONSUMER USE MAX

": . . the totalsystem of sale

and service shouldbe designed to

assure that everycustomer receives

fair value forthe prN paid."

8

in-Figure 5. This can be accomplished by use of a more effec-tive design, more or better material, or by incorporating re-dundant parts.

It is in the manufacturer's interest to avoid makingproducts that contain any defects since they result in con-sumer frustration, loss of sales, warranty expenses, or in somecases, litigation and product liability awards. But since it isalso true that costs may increase substantially as perfection,or "zero defects" is approached, these final improvementsmay be prohibitively costly to attain under competitive mar-ket conditions. A nearly "defect-free" appliance can be pro-duced, but at a price which few, if any, consumers would pay.However, if the quality and reliability of the product are toolow, the total life-cycle product costs will be excessive for boththe Manufacturer and his customers.

While dealing with these statistical distributions acrosshis production units, the manufacturer must also recognizethat each consumer is an individual, buying an individualunit, and that the total system of sale and service shouldbe designed to assure that every customer receives fair valuefor the price paid. If a defective product is purchased, aprompt and effective system should be ii place to make thenecessary corrections.

The implications of this discussion are clear. There isalways 'some possibility that defects and breakdowns willoccur and each manufacturer should have an efficient andeffective system for correcting them. Prompt, honest, andcompetent service must be provided each product user toproduce individual satisfaction in each case. Chapter 4 of thisreport contains several suggestions for developing such a serv-ice system, while several methods which manufacturers canuse to lower their defect rates are described in the remainderof this chapter.

PRODUCTASSURANCE

The label commonly applied to thesystem used to limit product defectsis "product assurance." It includes

all activities conducted by the manufacturer to assure that

19

products, as used by customers, conform with realistic per-formance, durability, reliability, and serviceability goals.This involves activities in purchasing, engineering, manu-facturing, servicing, and other departments, and is thusmuch broader than the traditional quality control function.The existence, extent, and effectiveness of a total productassurance systemthe activities that determirie the actualquality and reliability of the- product delivered to the buyerare among the most basic policies determined by management.Tangible day-to-day .decisions, such as providing sufficientinspectors, keeping equipment in good repair, using reliablecomponents, shutting clown production lines when qualitylevels cannot be maintained, and providing responsive answersto customer complaints., are all indications of management'scommitment to product assurance. Written guidelines can bemost helpful in demonstrating management's demands inthese areas to all employees. The Sub-Council .thereforerecommends :

RECOMMENDATION 'I

MANUFACTURERS SHOULD MAINTAIN AND ENFORCE UP-TO-DATE WRITTEN POLICIES AND PROCEDURES ON PRODUCTQUALITY AND RELIABILITY.

Only when management consistently and systematicallyacts to improve quality and reliability will the entire organiza-tion respond positively to these goals. As the costs of warrantyreimbursement, product service, loss of sales due to consumerdisaffection) and other less quantifiable costs continue to rise,more and more companies have revised their total productassurance system., as suggested by the above recommendation.We t ?lieve all manufacturers should do so.

Product AssuranceSystem Elements

No single measure exists that man-agement can adopt to assure that aproduct achieves specified levels of

reliability, quality, serviceability, or other properties. Rather,the innovations required are changes in organization andoperating methods which reflect the systematic nature ofproduct assurance. The changes necessarily vary between

2 0

( productassurance activities )are among themost basic policiesdetermined bymanag ement."

9

10

firms and products, but in all cases, they involve measuresthat are mutually supporting of each- other. By so doing,they close the gaps and minimize overlap in the total productassurance system. The major activities which comprise sucha system are shown in Figure 6.

Figure 6

MAJOR ELEMENTSOF A TOTAL PRODUCT ASSURANCE SYSTEM

A. DEVELOPMENT OF PRODUCT QUALITY AND RELIABILITY

Definition of consumer's use and environment of the productDevelopment of validation methods simulating use (standards)Use of past- product field and Manufacturing information as prob-lem prevention guideProblem identification, reporting, correction (closed loop system)in development phaseAnalysis of failed parts from fieldEstablishment of reliability objectives3-and serviceability require-mentsInputs and design review by manufacturing, quality control,processing, cost control, purchasing, and service; applied to bothnew designs and design changes.Analysis for likelihood and consequences of failure (failure modeanalysis)

Identification and specification of controls in design of featurescritical to

SafetyReliabilityQua lity

Recognition of, and making provisions to account for, manufactur-ing variationsReview of design validation requirements, including

Number of units to be testedType of material relative to production materialLength of test period (time, cycles)

B. PRODUCT QUALITY PLANNING AND CONTROL

Development of plans to assure that critical performance charac-teristics of the product are maintained through

ProcessingInspectionFunctional testDeveloping a program Thr reviewing quality and reliability as-pects of product design

2 1

Review of field service feedback to identify quality and reliabilitydeficienciesTool and guage control

CalibrationPreventive maintenance and replacement schedules

Optimization of quality control plans consideringAutomatir. inspection capabilitiesProcess control effectivenessCriticality of featuresSampling audit techniques

Establishment of methods for identification and correction ofproduction quality problems

ScrapReworkDeviations from design specifications

Training of inspection and quality control personnelManagers and supervisorsTechnicians

C. PROCESS QUALITY PLANNING AND CONTROL

Validation of process capabilitiesMatching of process controls and instrumentation to processcapabilitiesDevelopment of a program to review the product to assure it isbuildableEstablishment of continuous or periodic check of process capabilityTraining of process control engineers and technicians

D. SUPPLIER QUALITY EVALUATION AND CONTROL

Development of methods for audit and appraisal of vendor per-formanceEstablishment of quality requirements, sampling plan, and rejec-tion arrangementsAssuring all requirements are specified to vendors and that vendorsacknowledge their understanding and acceptance of these re-quirements

E. CUSTOMER INFORMATION

o Establishment of product information plan for use at the point of, sale

Product capabilities and limitationsService and warranty provisions

F. FIELD EVALUATION, CONTROL, AND FEEDBACK

Eslablishment of system for continuous evaluation of productperformance in customer service

2 2 11

r,

"The incentive tomanagement is

clear : reduceproduct assurancecosts and enhance

customer satisfac-tion by spending

the product assur-ance dollar more

effectively.':1

12

Development of methods for routine and priority informationfeedback

Product performanceFailure reportingServicing problems (frequency, accessibility, parts availability)Provide feedback on results of corrective action

The list highlights the major individual components of atotal product assurance system, but the real challenge tomanagement is to structure and integrate the organizationand tasks, and draft the appropriate policies and procedures,to assure that employees at all levels conform with manage-ment's product assurance goals.

The aim of such a system should be to transfer the costsof separating badly produced units from the good, and thehigh failure costs resulting from inadequate quality andreliability, into the cost incurred to prevent occurrence ofdefectswith a final objective of reducing the total productassurance costs. A typical response to high cost resulting fromdefects appearing in products already in the consumer's handsis to inspect more heavily to preclude shipment of defectivegoods. This can increase scrap and inspection costs, but itmay not correct the basic causes of defective production.The incentive to management is clear : reduce product assur-ance costs and enhance customer satisfaction by spending theproduct assurance dollar more effectively.

ProductEngineering

raditionally, engineering groupshave placed heavy emphasis oncreating products which provide

required performance functions, are attractive, and are eco-nomical to manufacture. Today, the degree to which firmsaugment these major criteria with additional consumer-oriented criteria, such as reliability' and serviceability, is ameasure of company commitment to meet the challenge ofrising consumer expectations. One method employed for assur-ing consideration of vital consuimer interests at the verybeginning of the product development cycle is the establish-ment of a reliability engineering function within the productengineering department. In some firms this has been accom-

23

plished by the creation of completely new units. In others,reliability is explicitly assigned to the design engineer.

The reliability engineering tasks involved, by their verynature, reflect consumer needs and expectations, for example:

Design for serviceabilityDevelopment of product tests that correspond to con-sumer use patternsAnalysis of past and current field problemsAnalysis of total product life costsReview of manufacturing capabilitiesStandardization of partsAnalysis of failed partsEstablishment of quantitative failure ratesPredictive analyses for the likelihood and consequencesof failure.

These are significant activities in corporate systems whichseek to meet consumer needs. Because of their.basic impor-tance, the Sub-Council recommends:

RECOMMENDATION 2MANUFACTURERS SHOULD ESTABLISH A RELIABILITY ENGI-NEERING RESPONSIBILITY AS A PRIORITY ACTIVITY IN THEDESIGN AND MANUFACTURING SEQUENCE.

Two reliability engineering tasks deserve special men-tion. The first is the need to preestablish qnantitative stand-ards for the service conditions the product will encounter.These are reference points against which design criteria canbe quantified, and the problems encountered in the -field canbe measured.

The second task is the establishment of a strong informa-tion link between product engineering and field service data,such as warranty service reports, customer and dealer con-tacts, and insurance or legal claims. These should be fed backto design and production personnel. Some .of this informa-tion can be relayed through simpla tabulations of the recordsof Q.ervice outlets. In some casek-spdcial product defect reportscompleted by field service personnel can help to quickly notify

24

"The reliabilityengineering taskinvolved, by theilvery nature, reflconsumer needs aexpectations . . ."

13

the factory that repetitive defects have been found. Other in-formation systems can measure service against the salesbase to indicate when defects are excessive.

A new program designed to achieve rapid correction ofproduct defects has recently been announced by the AmericanGas Association and the Gas Appliance Manufacturers As-sociation. Known as the Gas Appliance Improvement Network(GAIN ) , the program utilizes appliance service reports of50 gas utilities in widely separated, high density, populationareas throughout' the country. These "reporting" utilitiesforward reports to 18 "contact" utilities who provide per-sonal liaison with the concentrations of manufacturers ofappliances in their area. Each of the contact utilities, who alsoserves as one of the 50 reporting utilities, analyzes the reportsto determine patterns or trends of deficiency or error inproduction, design, performance, or installation of appliances.When appropriate, the contact utility assists the manu-facturer in the development of a solution to problems identifiedby the network. Participation by the gas utilities and appli-ance manufacturers is wholly voluntary.

Product Standardsand Design

Popular terminology uses the word"standard" to encompass severalbasic elements, singly or collectively.

These include :

A. Quantified values of product characteristics.

B. Maximum and/or minimum values for the character-_

istics.

C. Standard test methods to reliably compare actualproducts with their standards.

Establishment of product standards within the company isone noteworthy influence of reliability engineering. Thesestandards become benchmarks for measuringproduct per-formance and reliability characteristics and serve as basicdesign requirement inputs. In addition, in simplified form,these standards can be used by the consumer to evaluatethe performance, quality, reliability, and service character-istics of products according to his own individual needs.

14 25

All, mass produced goods are covered by design stand-ards which make possible their production in quantity.Typically, these standards are specific to the model andproprietary to the manufacturer, but such trade associationsand professional societies as the Society of Automotive Engi-neers, the Gas Appliance Manufacturers Association, and theAmerican National Standards Institute have recommendedstandards which have been voluntarily adopted by other pro-ducers on an industry-wide basis. These standards permitinterchangeability among products and product components,and enable consumers to purchase fuses, light bulbs, automo-bile wheels, and countless other products and components withassurance that they will be compatible with their intendeduse.

Company standards can improve product serviceabilityand reliability by setting minimum design criteria and per-formance levels, by promoting consideration of product safetycharacteristics during product design, and by reducing pro-liferation of parts. The Sub-Council therefore recommends :

RECOMMENDATION .3MANUFACTURERS SHOULD PROMOTE THE DEVELOPMENTAND USE OF CORPORATE PRODUCT STANDARDS.

These activities are of major importance to consumers, andthey deserve to be encouraged within the corporate structure.

Manufacturing and Manufacturing and quality controlprograms which have proven usefulin reducing customer complaintshave frequently evidenced one or

more of the following characteristics :

Heavier emphasis on pre-production review and accept-ance of new product designs by manufacturing, quality,and service groups.Greater effort to make suppliers part of the productquality team.Increased stress on attaining better product reliability.Separation of the quality assurance responsibility fromproduction and quality control, and giving quality assur-ance officials authority to stop shipment a finishedproducts when standards are not being met.

Quality Control

26

"All mass pro-duced goods arecovered by design

_standards which'make possible theirproduction inquantity."

15

kio me companieshave establishedpermanent war-

ranty cost reductioncommittees of

senior operatingofficials."

Heavier dependence on feedback from the field to correctproduct problems.

Pre-production acceptance of new products is beingplaced on a more formal basis by companies which haveestablished review boards of senior operating officials. Theboards have authority to stop introduction of a new productunless safety, performance, reliability and producibilitystandards have been met. Inputs from manufacturing, proc-ess engineering, industrial engineering, cost accounting, qual-ity and reliability assurance, and service are used by theboards in their decision-making process. An important aspectof their deliberations is to make certain the design under con-sideration incorporates the latest thinking in all areas toreduce the number of running changes after a product hasbeen introduced. This permits production lines to reach out-put rates and quality goals sooner.

Some companies have established permanent warrantycost reduction committees of senior operating officials whorepresent product engineering, production, quality and re-liability assurance, purchasing, cost accounting, and service.Their task is to reduce warranty claims arising from actionsor inaction during the entire product design, manufacturing,and service cycle.

Still other firms are trying to build a better product byusing the knowledge dealers and distributors have of customerneeds and likely operating conditions. One firm has broughttogether a group of service specialists to inspect and evaluate,products with respect to their conformity to establishedserviceability guidelines. As a result the company has noticedan increase in consumer goodwill and in sales, as well asimproved in-plant productivity and recluced production linerepairs.

Another firm has formed a council of service technicianswho are authorized to make recommendations on any aspectof product development, -engineering, production qualityassurance, service or parts which might help improve thequality and reliability of its products and product operation.On the subject of quality assurance, for example, memberswill be invited to comment on : (1) "out of box" product

quality ; (2) long term product reliability; (3) performancecharacteristics; and (4) the durability of products under fieldconditions.

Review boards, warranty committees, and service tech-nician advisory groups can become important factors in amanufacturer's total product assurance system. They demon-strate management's commitment to improving quality andreliability, and-they see that the product assurance systemis continually being reviewed and evaluated by appropriatepersonnel. Accordingly, the Sub-Council recommends:

RECOMMENDATION 4MANUFACTURERS SHOULD ESTABLISH ADVISORY BODIESOF CORPORATE AND SERVICE PERSONNEL TO CONTINUALLYREVIEW AND MONITOR PRODUCT ASSURANCE SYSTEMS.

Greater efforts are also being made by some manu-facturers to make sumiliers of components and materials apart of the product quality teani. Periodic reviews are heldwith supplier engineering, quality, and reliability personnelto help the supplier more fully understand the application tobe made of his component and the environment in which itmust work, and to help assure the manufacturer that his ap-plication is within the capabilities of the component ordered.

Reliability testing activities have also been expanded bymanufacturers on components and finished products inenvironments simulating user conditions. The informationfrom these testsobtained under controlled conditions, as theconsumer might use the equipmentis supplied to desigurs,resulting in improved design reliability and better assemblyand component reliability.

As the final step before shipment, some producers ofexpensive products conduct a 100 percent inspection of criticalfunctional characteristics. A number of firms have also addedan audit for performance characteristics to achieve greatercontrol of the produces conformance to design. The auditcovers one to two percent of the total finished products andis followed by an operational test under controlled conditions.The airn of the audit, and the potential key to its success, israpid feedback to the quality and production management.Multiplant operations producing consumer durable products

28

II some producersof expensiveproducts conducta 100 percentinspection ofcritical functionalcharacteristics."

17

"One basicproblem is the

high cost oftransportation f or

small shipments,e.g . replacement

parts."

18

can be brought under effective uniform control by the use ofsuch an audit if identical standards and reporting methodsfor all plants are made a part of the system.

These are some of the devices and techniques that haveproved to be effective in upgrading product quality. They de-serve careful consideration by all manufacturers to be surethat the causes for legitimate consumer complaints arereduced to minimum levels.

TRANSPORTATION As the consumer's demand for awider variety of goods has in-

creased, transportation of parts and final products has becomean essential ingredient of the manufacturing and distributionprocess. Transportation difficulties, such as lost and damagedgoods and shipping delays on replacement parts, often leaddirectly to consumer complaints. Several factors can be citedas contributors to these problems, i.e. industry rate struc-tures, competitive conditions between different transporta-tion modes, and labor conflicts. These subjects are far toocomplex to be adequately treated here, but there are somenarrower problems and issues which led themselves to actionby individual firms.

One basic problem is the high cost of transportation forsmall shipments, e.g. replacement parts. In most major cities,this is caused by the existence of numerous terminals whichresult in a wasteful duplication of services. Many of theseterminals are operated below capaCity ; some lack modernhandling equipment.

Economies of scale are possible when small shipmentsare consolidated in strategically located terminals. Todaythere are approximately 130 shipper cooperatives, composedof groups of shippers, who combine small shipments into car-load lots thereby obtaining significant reductions in freightrates. Manufacturers should examine whether terminal con-solidation could yield similar beneficial results to themselvesand their customers.

Management recognition of the interrelationships be-

2 9

tween transportation and other costs of production can leadto substantial cost savings for consumers. For many execu-tives, transportation merely means moving raw materials intoproduction plants and distributing finished goods to custom-ers. But the actual movement of goods and materials is onlypart of the setting; other factors are also involved. Forexample, inventory and warehousing costs are a function oftransportation. Through the use of transportation, inventorylevels can be reduced if the movement of goods is coordinatedwith accurate sales forecasts and production schedules.

One action being taken by some manufacturers to helpassure appropriate consideration of transportation-costs is theraising of the corporate traffic manager's job to the top man-agement level. In this position the traffic manager is betterable to achieve the best cost and service combination betweentransportation and purchasing, product design, manufactur-ing, warehousing inventory control, processing orders, andpackaging.

The rising rate of loss and damage to goods in transitis another major transportation problem. Between 1960 and1970 the ciaims paid by rail, motor, and air .carriers increasedmore than 20 percent. Though firm figures are not available,the damage to consumer durables in transit amounts to manymillions of dollars annually. One way to reduce the incidenceof this loss is to replace manual handlings with mechanicalhandlings wherever possible. One of the most effective waysto accomplish this at present is by use of a contaikerizationplan for less-than-truckload traffic. Interlining, the process bywhich two or more carriers transport a shipment, is one ofthe principlal causes of loss and damage. With containers,instead of handling shipments piece by piece, carriers canexchange container loads, and loss rates are minimized.

To date, the principal applications of containerizationhave been in air freight, where containers reduce aircraftturn-around time, and in ocean freight, where handling costsprovide strong incentives for investment in containerizationsystems. Consumer complaints about lost and damaged goods-amount to strong incentives for the motor carfier industryto examine the feasibility of developing a containerizationprogram for less-than-truckload traffic.

3 0

"The risingrate ofloss anddamage to goodsin transit isanother majortransportationproblem."

19

". . . the existenceand use of two

general types ofinformation can

help reduce thepotential for

consumer com-plaints."

20

Ill. During Sale ActivitiesMatching Product Capabilities With Consumer Needs

After careful effort to design and produce products thatpossess the qualities described in the preceding chapter, man-ufacturers and retailers are ready to sell them to consumers.At this point in the product's life cycle, the existenceand use of two general types of . information can helpreduce the potential for consumer complaints. Thefirst of theseproduct informationcan contribute to abetter match between consumer needs and ability to pay,and product capabilities. The seconduse, care, and serviceinformationcan show the consumer how to operate andmaintain his product to obtain good and lasting performance.

PRODUCT Many segments of the businessINFORMATION community are responding to con-

sumer demands for more and betterproduct information. Trade associations are especially active,with the Association of Home Appliance Manufacturers(AHAM ), a piime example. AHAM is an association ofmore than 100 appliance manufacturing firms. It has de-veloped more than a dozen product standards covering suchitems as electric coffeemakers, electric ranges, dishwashers,humidifiers, and household food waste disposers. .

A brief examination of two of these AHAM standardssuggests their potential value to customers. The room airconditioner standard is designed to establish a uniform pro-cedure for determining the performance and rating of roomair conditioners under specified test conditions. Character-istics tested include cooling capacity, moisture removalcapacity, electrical input requirements and, where applicable,heating capacity. To communicate test results to consumers,AHAM administers a certification program indicating,through use of a certification seal, that a particular model'sperformance capabilities have been accurately stated andindependently verified in accordance with the Association'sstandard. An independent testing laboratory is retained byAHAM to administer the testing of models and verification ofdata. Although these programs are voluntary, every room airconditioner sold in the United States, including imports, iscertified by AHAM. .

For those products which are certified, the AHAMstandard and certification program for household refrigera-

LS

tors and freezers provides data consumers need to make betterinformed buying decisions. The standard specifies proceduresfor testing the following product characteristics : net generalrefrigerated volume, net freezer volume, net refrigeratedVaiiine, and net shelf area. The certification program assures.consumers that measurements have been made in the samemanner by all participating manufacturers and that thevalues have been independently verified and are honestly pre-sented in all advertising and point-of-Sale materials.

As another example of business activity in this area, theSociety of Automotive Engineers and the American Societyfor Testing and Materials, have developed an AutomotiveGasoline Performance and Information System to provide aset of consumer-oriented performance standards for auto-mobile gasolines. The system involves a group of easy tounderstand symbols that indicate to the consumer the char-acteristics -of the given product and the level of its perform-ance regardless of season or location. Automobile manu-facturers are expected to include the appropriate gasoline'symbol for each of their future models in owner's manuals.

These efforts indicate a growing recognition of thenecessity for producing easily understood and comparableinformation on consumer durable products. However, de-spite commitments from private and public groups, manyproblems remain to be solved. Chief among them are thef ollowing:

First, a consensus must be reached on the characteristicswhich should be measured for each product. The primarycriteria here should be whether consumers will generallyrecognize a given characteristic as a meaningful indica-tor of product capabilities.Second, standard methods will have to be developed andgenerally accepted for teging each characteristic toaSsure that products are evaluated on a fully comparablebasis.Third, the test results for individual products must bereadily available to the consumer in an understandableand useful manner.In the near future The Association of Home Appliance

Manufacturers is planning to announce a new program whichsuggests one way these three problems could be solved forits industry. AHAM has developed guidelines for Recom-

"These effortsindicate a growingrecognition of thenecessity forproducing easilyunderstood andcomparableinformation onconsumer durableproducts."

01

mended Fact Lists for major appliances, containing itemswhich AHAM members believe are of basic importance to theconsumer. Wherever possible the guidelines suggest includ-ing performance data certified by AHAM. The end result isa fact list which will accompany each major appliance in aform which the manufacturer deems appropriate, e.g. sticker,label, tag, or pamphlet. The guideline facts are to be presentedfirst in product literature and will be differentiated from otherinformation, particularly that which might make the in-dividual brand or model unique. Figures 7, 8, and 9 containthe proposed guidelines for room air conditioners, refrigera-tors and refrigerator-freezers, and automatic washers.

Similar programs for other consumer durables may behelpful to customers. The development and success of theseinformation programs are dependent upon the commitmentof individual manufacturers to provide information on theirown products and to participate in efforts, usually carriedon by trade, associations, which establish mechanisms forall manufacturers to provide easily comparable product in-formation. Accordingly, the Sub-Council recommends :

RECOMMENDATION 5WHEREVER APPROPRIATE, MANUFACTURERS SHOULD PRO-MOTE THE DEVELOPMENT OF MECHANISMS FOR PROVIDINGCONSUMERS WITH PERFORMANCE INFORMATION ON CON-SUMER DURABLES.

Trade associations have a major role in this area, butprofessional societies, private testing laboratories, consumerorganizations, and government agencies can help to assurethat appropriate product characteristics are chosen and meas-ured in a manner fair and equitable to both manufacturersand consumers. Nevertheless, individual manufacturers willcontinue to have the principal responsibility for solving the.difficult problems which arise in these efforts.

USE, CARE, The second type of informationAND SERVICE needed by consumers at tithe of

saleuse, care, and service mate-rialsshows the consumer what he should do to attain thelevel of performance-his product is capable of achieving, andhow to assure that it will be properly repaired. No firm figuresexist on the number of complaints that arise 'because con-

22 33

Figure 7

AHAM Recommended Fact List Guidelinefor

ROOM AIR CONDITIONERS

MODEL: (Use either mOdel series or model number designation.)

SAFETY: This symbol on the product means it is listed by Underwriters' Labora-tories, Inc.

(Use UL symbol)

A properly grounded electrical outlet of the diagrammed configurationis required for safe operation.

Outlet Diagram

(Use Voltsappropriatediagram) Amperes

CERTIFICATION: This seal on the product means the capacity, watts, and amperesstated below have been certified by the Association of Home ApplianceManufacturers:

BTU/hr Cooling Capacity

Amperes

Watts

BTU/hr Heating Capacity*

(Use appropriate AHAM seal)

ELECTRICAL VOLTAGE REQUIRED,

INSTALLATION REQUIREMENTS:(Provide a description of the minimum window size, and type of windowrequired for installation and information on installation kit availability.)

CABINET DIMENSIONS:(Inches) Height Width Depth

Further product information at manufacturer's initiative.

* If applicable.

3123

Figure 8

AHAM Recommended Fact List Guidelinefor

REFRIGERATORS AND REFRIGERATOR-FREEZERS

MODEL(S): (Use either model series or model number designation.)

SAFETY: This symbol on the product means it is listed by Underwriters' Labora-tories, Inc.

(Use UL symbol)

Grounded circuit recommended.

(Use appropriate AHAM seal)CERTIFICATION:

AHAM certified cubic feet net general refrigerated volume.

AHAM certified cubic feet net freezer volume.

AHAM certified cubic feet net refrigerated volume.

AHAM certified square feet net shelf area.

ELECTRICAL REQUIREMENTS:VOlts ; Amps

EXTERIOR DIMENSIONS:Height ' ; WidthDepth (door open)Uncrated weight

; Depth (door closed) ;*

SPACE RECOMMENDED FOR INSTALLATION:Height ; Width

DEFROST METHOD:(Manual, Semi-Automatic, Automatic "Cycle Defrost,"

"No Frost" as defined in ANSI Standard B-38.1)

ICE-MAKING:

(Trays, Automatic, or Optional Automatic Add-on)

(Water connection required if automatic ice-maker**)

Further product information at manufacturer's initiative.

* Depth measurements include handle.** This notation, if applicable.

24

Figure 9

AHAM Recommended Fact List Guidelinefor

AUTOMATIC WASHERS

MODEL: (Use either model series or model number designation.)

Sr ;ETY: This symbol on the product means it is listed by Underwriters' Labora-tories, Inc.

(Use UL symbol)

A properly grounded electrical outlet of the diagrammed configurationis .ecommended.

Outlet Diagram

Use appropriate diagram

ELECTRICAL REQUIREMENTS:Volts Amps ; Maximum Wattage

PLUMBING REQUIREMENTS:Stand pipe drain (yes, no or check)Drain tub (yes, no or check)

DIMENSIONS:Height ; Width ; Depth Uncrated weight

CAPACITY:lbs. (According to AHAM Standard HLW-1)

WASHING ACTION ANO SPEED:

,Type (Agitator or Tumbler)

Available speeds .

MAXIMUM WATER CONSUMPTION:

Hot Water TotalWATER FILL METHOD:

(Describe pressure or time fill)

WATER LEVEL SECTIONS:

WATER TEMPERATURE COMBINATIONS AVAILABLE

Wash Rinse

Further product information at manufacturer's initiative.

01! 25

26

sumers are uninformed about these matters, but most ob-servers believe they are high. Industry efforts aimed at up-grading owner manuals to improve their readability cantherefore pay 'large dividends in complaint reduction. Toachieve this goal the Sub-Council recommends :

RECOMMENDATION 6MANUFACTURERS SHOULD GIVE PRIORITY TO THE DEVELOP-MENT OF OWNER MANUALS THAT ARE INFORMATIVE ANDEASY TO UNDERSTAND ON INSTALLATION, OPERATION,SAFETY PRECAUTIONS, MAINTENANCE, SERVICE, AND COM-PLAINT RESOLUTION PROCEDURES.

Depending upon the product, owner's manuals shouldinclude the following topics :

1. Installation instructions2. Operating instructions.3. Safety warnings.4. A do-it-yourself repair section for simple failures, when-

ever appropriate.5. A list . of those parts safely replaceable by the

consumer and where they can be obtained.6. The warranty and an explanation, as to where and how

to get warranty service.7. Where and when to seek service.8. Who to call if the service agency provides unsatisfactory

service.9. An index which is as complete as possible to allow ready

access to the manual's information.When simple and complete owner manuals have been

prepared, a unique opportunity exists at time of sale for themanufacturer and retailer tu communicate substantive in-formation to the consdmer. The Sub-Council thereforerecommends:

RECOMMENDATION 7RETAILERS SHOULD ENCOURAGE THEIR SALES PERSONNELTO STRESS THE IMPORTANCE TO THE' BUYER OF PROPERPRODUCT USE AND CARE, AS OUTLINED IN HIS OWNERMANUAL.

Retailers should also give attention during 3ales forcetraining programs to the customer's eventual need i'Dr productservice and the procedures he must follow to obtain it. Thenext chapter suggests several ways in which service activitiescan be improved to inCrease consumer satisfaction.

37

IV. After Sale ActivitiesResponding to the Consumer

The purchase of a major household appliance, an auto-mobile, a television set, or other durable product is a relativelyrare event, for a consumer. Typically, it involves the invest-ment of a substantial amount of money and protracted pay-ment. Accordingly, the consumer's performance expectationsfor these products are usually deep-seated and strongly held.

in the design and production phase of product develop-ment, the manufacturer is concerned with providing a qualityproduct at a reasonable initial cost to the consumer. But thismay be only a part of the total cost to the consumer overthe life of the product, if the dollars and inconvenienceassociated with maintenance and repair are considered. There-fore, the manufacturer must be concerned with the consumer'ssense of continued satisfaction with the product after sale.

Providing continuing, quality post-sale servicing is adifficult undertaking for manufacturers and retailers. Failureto achieve this objective can result in the following types ofconsumer complaints:

Poor quality of repair. The continuing shortage oftrained service technicians has often resulted in ineffec-tive and inefficient product servicing and repair.Unethical business practices. Although most productservice businesses are reputable, some firms are dis-honest or incompetent in ways which are difficult forthe consumer to detect.Inordinate delays. Unavailability of parts, too few serv-ice technicians, and product complexity lead to consumercomplaints about repair delays.Impersonal response to complaints. Consumers rightfullyexpect solutions to be found for their individual problems,and this is not alway forthcoming,Inadequate information on, available avenues for re-course. Frustration stemming from the consumer's in-ability to quickly identify after sale responsibility forservice can be the source of serious problems.Providing for all the elements needed for effective post-

sale relationships with consumers is a demanding and complexprocess. Even the basic needs for an adequate product serviceactivity are complex and expensive to establish,

". . . the manu-facturer mustconcerned with theconsumer's sense ofcontinued satisfac-tion withthe productafter sale."

"Even the basicneeds for anadequate productservice activityare complex andexpensive toestablish."

38 27

" . brand namelentification leads

the consumer,to hold the

manufacturer toaccount whenmalfunctions

occur."

28

The manufacturer's role in satisfying the consumer afterthe sale is complicated. The manufacturer often has little or nodirect control over events and often lacks direct contact withthe customer during and after sale. Service is frequentlyprovided by dealers or by independent service facilities whichare difficult to influence under existing legal constraints.However, brand name identification leads the consumer tohokl the manufacturer to account when malfunctions occur.

This is a complicated setting for manufacturer action,but there are a number of steps which can be taken in theconsumer's interest, as outlined below.

SERVICEPERSONNELRECRUITMENTAND TRAINING

Adequate maintenance and repairof products after sale is primarilydependent on the availability ofqualified service technicians. Al-though the manufacture and sale of

consumer durables has been growing rapidly, the recruitmentand training of personnel needed to service these productshas lagged far behind.

For example, shortages of trained service personnelhave keenly felt in the automobile industry, where tens ofthousands of additional mechanics are said by industrysources to be needed annually. In another area, the use ofelectronic products has been sharply rising, but according tostatistics compiled by the Department of Health, Education,and Welfare, the number of individuals completing vocationaltraining in electronics repair has actually been declining. Formajor appliances, sales have grown during the past decade ata rate of over nine pencent a year, but recruitment and train-ing of service personnel has not kept pace.

These are serious shortages, which call for all reasonablesteps to bring them to an end. The following sections setforth some of the more promising opportunities for improve-ment.

39

JOB STATUS Sevvice jobs currently carry littleappeal as a career choice for high

school students. A number of factbrs are responsible for thiscondition, but one of the most important is the emphasisplaced on the college degree as the preferred stepping stoneto success. The attraction of continued academic educationhas discouraged students from entering vocational fields. Inaddition, the relative cost of vocational education is higherthan other secondary school alternatives. In view of these fac-tors, it is not surprising that vocational training has not ex-panded to keep up with the growing service job market.

The negative emphasis placed on service occupations bythe educational system is reinforced by a general public viewthat service technicians are lower level employees engagedin dirty, unrewarding work. For most service occupationsrelated to the consumer durables covered in this report, thisimpression is not a true reflection of the careers available, andit should be corrected whenever possible. The Sub-Counciltherefore recommends:

RECOMMENDATION .8MANUFACTURERS, TRADE ASSOCIATIONS, AND EDUCATORSSHOULD TAKE STEPS TO IMPROVE SERVICE PERSONNEL JOBSTATUS.

Some of the contributing factors in overall perception ofjob status are relatively easy to modify, and the results couldbe significant. For example, the simple decision to change thetitle of a job from "repairman" to "service technician" hasbeen shown to have a substantial effect on the employee's con-cept of his own position, as well as on the custcmer's reactionto him.

Another job characteristic which is important is anidentifiable avenue of professional growth. Whether the actualtitle clearly reflects it or not, the service occupation shouldhave, as do other skilled occupations, a clearly defined "ladderof success' through which an employee may acquire increasedresponsibility. This can be difficult t6 accomplish for someservice occupations but it is a worthwhile objective whichdeserves special efforts by employers of service personnel.

4 0

"Service jobscurrently carrylittle appeal asa career choicefor high schoolstudents."

". . . the simpledecision to chan.gethe title ofa job from"repairman" to"service technician"has been shownto have asubstantial effect . .

29

"Artificiallyhigh academic

equirements serveas unf ortunate

and undesirabledeterrents to

applicants . ."

80

When it can be achieved, this avenue of growth can reduceemployee attrition, raise morale and contribute significantlyto better customer service.

Although a specific industry may have already defineda scale of job levels, and even assigned titles accurately re-flecting job status, these must be carried to the appropriateaudience : the potential serviceman and his sources of influencein job selection. Thus parents, educators, and students needto be made aware of the career opportunities available in theservice professions. Similarly, consumers ought to be educatedabout the level of skill required to provide effective repairservices. Manufacturers can contribute to this educationalprocess by ensuring that the image of service occupationspresented in advertising and product sales literature reflectsthese factors.

JOB As a part of the general notion thatQUALIFICATIONS formal academic education is both

desirable and economically neces-sary, there has been a trend in recent years to place increasingemphasis on academic qualifications for jobs in many employ-ment sectors. Artifically high academic requirements serveas unfortunate and undesirable deterrents to applicants whoseformal education is limited but whose technical aptitude maymake them well suited for skilled jobs required in productservicing. For this reason, the Sub-Council recommends :

RECOMMENDATION 9SERVICE PERSONNEL JOB PREREQUISITES SHOULD BE BASEDON TRAINING AND EXPERIENCE WHICH REFLECT THE ACTUALSKILLS AND APTITUDES REQUIRED.

All companies involved in product servicing should re-view their employment criteria to 'be sure that unnecessaryrequirements are not a part of the recruitment conditionsfor servicing positions. In addition, trade associations cancontribute to this end by assuming major coordinating rolesin developing general job criteria for service positions withinspecific industries.

4 1

VOCATIONALEDUCATION ANDTHE SERVICEINDUSTRY

For many years vocational educa-tion has been a primary source fornew applicants in the service pro-fessions, but in the past few yearsenrollment has decreased, and

many programs have failed to keep pace with the real jobopportunities avaHable. In addition, recent surveys indicatethat many vocational school graduates in repair-oriented cur-ricula do not enter repair positions at graduation. The increas-ing complexity of major consumer products contributes tothis problem since they require specialized service and repairtraining which is frequently not available in general voca-tional schools.

For many years, business and industry, as well as tradeassociations, have worked extensively with local boards ofeducation to assist them -in designing the service-needs cur-ricula of vocational schools. This support has included :

sponsoring business and vocational advisors to localboardsdonating product components to schools offering generalservice curriculaproviding instructors .

conducting plant tours for studentsconducting training workshops for vocational instruc-tOrs

participating in local cooperative training programs.

Special trade associations programs, such as the Associ-ation of Home Appliance Manufacturers' vocational educationguide "Training the Home Appliance Service Technician," orthe Automobile Manufacturer Association's (now the MotorVehicle Manufacturers Association) cooperative developmentof "Standards for Automotive Service Instruction in Second-ary Schools," have assisted in setting product-related guide-lines for vocational education. In general, however, a closerrelationship between businesses and educational programswould assure that graduates have the specific skills requiredfor the current service job market. The Sub-Council thereforerecommends :

4 2

many vocationalschool graduatesin repair-orientedcurricula do notenter repairpositions atgraduation."

4 4. a closer

relationship betweenbusinesses andeducationalprograms wouldassuire thatgraduates havethe specificskills required .

31

"Many tradeassociations have

come to acceptthe need to

support industry-wide trainingprograms as a

;ssary supplementto other

trainingresources."

32

RECOMMENDATION 10MANUFACTURERS AND TRADE ASSOCIATIONS SHOULD EX-PAND EFFORTS TO ASSIST VOCATIONAL EDUCATION PRO-GRAMS TO ASSURE THAT TRAINING IS DIRECTLY RELATED TOFUTURE JOB OPENINGS.

Direct interaction with both local school officials andnational vocational education groups should be maintained ona continuous basis wherever possible to specify and updatedetailed skill requirements for service technicians. This busi-ness assistance should assure the availability of good quality,modern equipment for vocational training programs.

MANUFACTURERSERVICETRAINING

programs variesinvolved.

Most major manufacturers havepermanent staff members to under-take the training of service person-nel. The specific character of these

widely depending on the product-line

In the appliance field, manufacturers offer assistance tolocal, independent service shops by conducting frequent work-shop sessions throughout the country, and by making avail-abk current factory service manuals for study. Most train-ing programs deal exclusively with factory authorized per-sonnel, but there are a few companies which have establishedtechnical training schools for independent service personnel.In some of these programs, the curriculum is function-oriented, not product-oriented, and graduates are trained toservice a range of products from several manufacturers.

Many trade associations have come to accept the needto support industry-wide training programs as necessarysupplement to other training resources. For example, TheAuto Body Association of America, the National Associationof Auto Trim Shops, the National Electronic. Association, theRefrigeration Service Engineers Society and the ElectronicsIndustries Association have all instituted industry-orientedtraining programs.

Programs of this type are worthwhile and they shouldbe created for other industries where servicing needs exist.

43

Such programs not only, could help provide adequate numbersof service technicians but they also can assure the continuing'education which is essential to quality service and repair.Consumer demands for the services which depend upon prop-erly trained service personnel will continue to require em-phasis on the development of these training programs. TheSub-Council therefore recommends:

RECOMMENDATION 11MANUFACTURERS AND TRADE ASSOCIATIOAS SHOULD PLACEHIGH PRIORITY ON THE EXPANSION OF QUALITY SERVICEPERSONNEL TRAINING PROGRAMS.

These training programs should include not only the basictechnical skills necessary to detect and repair product failuresin the shortest possible time, but also mechanisms for periodicup-dating of training as new products are introduced. In ad-dition, these programs should provide basic training in soundbusiness practices and customer relations.

SERVICE In recognition of the need forPERSONNEL quality in product servicing activi-CERTIFICATION ties, some companies and trade as-PROGR:4MS sociations have initiated programs

which go beyond training to thecertification of service personnel as qualified to carry outtheir responsibilities. In addition to assuring quality service,these programs also can provide a visible means for the cus-tomer to identfy service personnel as qualified prior toauthorization of repair.

Service personnel certification programs vary widely.Some companies offer certificates of proficiency to graduatesof in-house training programs. Other use a network of"authorized" service dealers who have been specially trainedto handle the firm's products. Some trade associations, suchas the National Electronic Association, base their certificationon national examinations.

On July 25, 1972 the automobile industry announcedthe formation of the National Institute for Automotive Serv-ice Excellence. Among other projects aimed.-;at improving

4 1 33

34

automotive service, the Institute conducts a comprehensive,voluntary testing program to certify mechanics' competence.In its operations, the Institute is governed by a 27 memberBoard of Directors of working mechanics, employers ofmechanics, public-interest representatives, educators, andexperts from the automotive service industry.

The first steps toward formation of the Institute weretaken in early 1970 by the National Automobile Dealers As-sociation and the Automobile Manufacturers Association(now the Motor Vehicles Manufacturers AssofAation) . Theiraim was to develop a nationwide, voluntary program throughwhich mechanics employed in automotive service could obtaincertification of their achievement of specified levels of com-petence in their work. The Educational Testing Service (ETS )of Princeton, New Jersey received a contract from the twogroups to develop Certified General Automobile MechanicTests.

ETS used a Task Force of training directors and otherrepresentatives of domestic car and truck manufacturers,along with personnel from dealerships and other service shopsto develop general specifications for the tests. Vocational in-structors and auto mechanic teachers drafted the specific testitenis: In July 1971, a field study was conducted, involvingapproximately 800 working mechanics of various degrees ofcompetence from all major segments of the automotive serviceindustry, to determine whether the tests developed werevalid measurements of competence.

The final ETS product is a set of four 80-question tests,each requiring about three hours. Each test covers a particu-lar vehicle area :

Engines and their main systems: induction, ignition,exhaust.Transmissions, clutches, drive lines, 2nd axles.Suspension, steering, and brake systems.Starting, charging, basic electrical, and air conditioningsystems.

ETS condUcts and scores each test. A candidate who passesall four tests and who has two years of experience as a work-

4 5

ing mechanic will qualify as a Certified General AutomotiveMechanic. The Certified Mechanic will be required to pass arecertification test every three years to assure that he iscurrent with vehicle changes and improvementg in servicingtechnology.

Initial costs of the National Institute have been under-written by the program's innovators. Thereafter the Instituteis expected to be self-supporting from test fees. The presentfee is $10 per test or $40 for the full series.

Programs such as these serve two important functionsfor the service industry. First, they provide informationwhich the consumer can use to recognize qualified servicepersonnel. Second, from the point of view of the servicetechnician,, certification represents an incentive to improvehis skill level, and informally recognizing this accomplishmentit imparts a higher degree of job status to his position. Theseare important benefits, and they call for wider creation ofservice personnel certification programs. Accordingly, theSub-Council recommends :

RECOMMENDATION 1 2MANUFACTURERS AND TRADE ASSOCIATIONS SHOULDESTABLISH SERVICE PERSONNEL CERTIFICATION PRbGRAMS.

These certification programs can serve to focus businessand trade association attention on the importance of qualityservice personnel training. In addition, the mechanismcreated can provide continuing frameworks for review andimprovement of quality service systems for the consumer.

Even though responsible businessesELIMINATING take every reasonable step to assureSERVICE quality in product servicing, seri-FRAUD ous problems remain for many con-sumers. There is ample evidence in all repair fields associatedwith major consumer products that in many cases repairs areentrusted to incompetent and dishonest service firms.

Deceptive practices 'are employed by only a small minor-ity of servicers, and the consumer is usually unable to detectthese practices prior to a losing experience. Redress afterthe fact is almost impossible in these cases.

". . the consumeris usually unableto detect thesepractices priorto a losingexperience."

35

36

One technique encountered in this regard is the "baitand switch" advertisement, where specific repairs are ad-vertised at low price in order to attract customers. Recom-mendations for more extensive repairs follow, involvingunnecessary work, the selling of old parts as new, or chargesfor services not rendered.

The economic consequences of these incompetent anddeceptive repairs are substantial. For example, estimates ofthe cost to consumers of inadequate auto repairs run tobillions of dollars annually.

Business action can help to control some of these activi-ties, through support of local organizations dedicated to theexposure and elimination of unethical practices in the mar-ketplace. The most prominent agencies active in this field arethe Better Business Bureaus, now established in 137 metro-politan areas. Local BBB's have been subject to substantialcriticism in the prA, but recently, concurrent with the estab-lishment of a national council to support and coordinate localaction, the BBBs have begun to take strong steps to improvetheir performance. They deserve the unqualified support ofall reputable businesses in the important tasks they performfor consumers. The Sub-Council therefore recommends :

RECOMMENDATION 13BUSINESSES SERVING THE CONSUMER MARKETPLACESHOULD JOIN, SUPPORT AND ASSIST BETTER BUSINESSBUREAUS.

Smaller firms fulfill this obligation to consumers byactive participation in BBB functions at the local level. Largerfirms, especially those serving a nationwide market, have theadditional responsibility to support the national Council ofBetter Business Bureaus in its goal to maintain a vigorousand effective network of local BBBs. Further, large companiesshould assure that their local offices support BBB activitieswithin their communities. A new organization, the Commit-tee for Constructive Consumerism, has just been formed tobroaden the CBBB's financial base and thereby improve theservices provided consumers by local BBBs. Each corporatemember of the Committee, representing a major nationalcompany, will be asked to join the CBBB and local BBBs, and

47

pay a "fair-share" membership fee based upon sales and prof-its. They will then be asked to seek membership and financialsupport from 1,300 additional companies, with emphasis onincreased activity in local BBBs. This effort deserves thestrong support of the entire consumer durabh goods industry.

LICENSING Notwithstanding action by localBBBs and other private organiza-

tions, or the adoption of industry certification programs, in-competent and deceptive practices sometimes cannot be con-trolled except through government action. In recognition ofthis fact, seven states (California, Connecticut, Florida,Indiana, Louisiana, Massachusetts, and Oregon ) have en-acted some form of service licensing laws covering electronicsrepair. In addition two states (California and Connecticut)have licensing laws for automobile repair. A number of otherstates are considering adoption of similar statutes.

One of the most successful licensing programs is thatadministered by the California Bureau of Repair Services.Since enactment of the Electronic Repair Dealer RegistrationLaw in 1964, all persons engaged in the business of repairing,servicing or maintaining television, radio, tape recorders, orphonographic equipment must register with the Bureau andpay a fee. On July 1, 1973 home appliances became subject tothe provisions of the 1964 law. The Bureau both initiatesits own investigations and responds to consumer complaints.It may also informally mediate dealer/consumer complaints.The Bureau is empowered to suspend or revoke the registra-tion of any repair shop for cause after appropriate hearingand may also seek injunctions against specific abuses. Actsthat may result in revocation or suspension of registrationinclude: authorizing false or misleading advertising; falselyinducing a customer to authorize repairs ; any other fraud-ulent or dishonest act ; and gross negligence. Registrantsare required to give their customers an invoice describing allservice work done and all parts supplied and their price,

jabor charges, the shop's registration number and name

48 37

. manufacturersselling in

interstate marketscan be faced

with a varietyof regulationsaffecting their

products andservices . . ."

38

and address. Upon customer request, a written estimate ofrepair costs must be made which may not be exceeded with-out customer consent. Finally, the law prohibits techniciansfrom being paid a commission on parts they install.

Between 1964 and January 1973 the Bureau of RepairServices has handled more than 21,000 consumer complaints.It currently receives about 2,000 complaints a year. ThroughJanuary 1973, more than 250 repair dealers had been- prose-cuted for violation of the law ; the fines ran as high as $550and one dealer received a six-month jail term. Bureau officialssay, however, that their most effective weapon in cases in-volving fraud continues to be their power to put rel'air shopswhich violate the law out of business. The Bureau estimatesthat, based on the amount spent on repairs in 1963, it hassaved the California consumer $15 million a year in false orexcess charges. On June 30, 1972 a new law took effect re-quiring California automotive repair dealers to register witha Bureau of Automotive Repair. More than 17,000 consumercomplaints were received by the Bureau during its firsteight months of operation.

The existing licensing and industry certification pro-grams operated at the state and local levels can provide theexperience and information necessary for the development ofregulatory systems which best assist the consumer in obtain-ing honest and competent service. However, each of the cur-rent regulations originates from a different authority, so theyoften differ significantly in their impact on business. Thus,manufacturers selling in interstate markets can be facedwith a variety of regulations affecting their products andservices, a situation which will be impractical and costly tothe consumer in the long run. A uniform system will thereforebe the best future solution to continuing problems in this area.To develop that system nationwide :

RECOMMENDATION 14MANUFACTURERS, TRADE ASSOCIATIONS, AND OFFICIALSOF ALL LEVELS OF GOVERNMENT SHOULD COOPERATE INTHE DEVELOPMENT OF A UNIFORM STATE LAW FOR LICENS-ING AND REGULATING SERVICE FIRMS.

An appropriate focus for this effort is the National Con-ference of Commissioners on Uniform State Laws. The Con-

49

ference is the national organization of the state commission-ers appointed by the Governor of each state, the District ofColumbia, and Puerto Rico to promote uniformity in state lawon all subjects where uniformity is desirable and practicable.Through the Conference, the Commissioners payticipate indrafting specific acts, and from the Conference the Commis-sioners on Uniform State Laws of each state obtain helpin their endeavor to secure the enactment by ordinary legisla-tive procedures identical acts in each state so that uni-formity can be achieved. Interested, private and public groupsand officials can propose that the Conference develop a uni-form state licensing law and assist in its drafting. Such a lawshould help curb deceptive practices by technicians as well asshop owners, since the latter will be less likely to condone ac-tions by their employees which might result in loss of theowner's license to do business.

CODE OF Notwithstanding current or futureRESPONSIBLE regulation in this area, businessesSERVICING and their associations should ad-PRACTICES

here to responsible voluntary guide-lines for business practices in the

service sector. In addition to guiding operating practices,such a code would serve to inform consumers about the treat-ment to be expected when products are serviced.

Each durable goods industry involved in service andrepair should establish its own specific set of guidelines onthis subject, tailoring the provisions to the needs of its cus-tomeri. However, some general principles are applicablebroadly to all such codes. They are :

Code of Responsible ServicingPractices

1. Customers should be offered an estimate of cost in ad-vance of services to be rendered.

2. Customers should be promptly notified if service ap-pointments cannot be kept.

3. Only repairs authorized in writing by the customershould be performed, except where other arrangements.cve been made to the customer's satisfaction.

50 39

4. A. written, itemized invoice for all parts, labor, and anyother charges, should be given to the customer upon com-pletion of the work.

5. All repair services should be guaranteed for a reason-able length of time.

6. Appropriate records of services performed and mate-rials used should be maintained by the service companyfor at least one year.

7. Service cechnicians should not be paid on a basis that iscontingent upon the size of the customer's repair bill.

8. The service dealer should maintain insurance coverageadequate to protect the customer's property while it isin his custody.

9. Service dealers should cooperate with consumer protec-tion agencies at all levels of government to insure satis-factory resolution of customer complaints.

10. Customers should be treated courteously at all times, andall complaints should be given full and fair consideration.

REPLACEMENT Many manufacturers are placingPA R TS greater emphasis on parts avail-AVAILABILITY ability and service than ever be-

fore. This change started long be-fore the present widespread public interest in consumer prob-lems, and was the result of corporate recognition of the im-portance of consumer satisfaction, the contribution it madeto repeat or related sales, and the profit opportunities of aneffective parts and accessories operation. Although the vastmajority of demands for replacement parts are being met ona timely and efficient basis, most manufacturers realize thatfurther improvements are needed and are moving ahead withplans and programs to achieve an even higher level of partsavailability for consumers.

Complaint surveys on consumer durables generally indi-cate that as many as 15 to 20 of complaints are directlyrelated to a dissatisfaction in the handling of replacementparts. Most of these complaints involve delays in making

40 SI

critical replacement parts available. In the meantime, theconsumer, must usually do without the use of his product.Consumers have also complained about the costs of replace-ment parts, especially where they are high in relationship tothe initial cost of the product.

In some case; manufacturers have made great improve-ments in parts availability operations, but apathy on the partof the distribution network has failed to pass this through tothe consumer. Thus, manufacturers need to assure that theentire distribution network is aware of the importance of thereplacement parts business to better customer service. Ac-cordingly, the Sub-Council recommends:

RECOMMENDATION 15PRODUCTION AND DELIVERY OF REPLACEMENT PARTSSHOULD BE GIVEN MAJOR EMPHASIS IN THE MANUFACTUR-ING AND DISTRIBUTION PROCESSES.

This emphasis should be firmly established by all manu-facturers, since consumers expect timely service. Investmentsin plant and personnel to improve service and repair arewasted whenever the parts needed are not readily available.

A recent survey of consumer tolerance in waiting for"critical" replacement parts, conducted for a major electronicproducts manufacturer, demonstrates the public's expecta-tions on this subject. Heads of households were asked howlong they would be willing to wait for a replacement part foran automobile, coloy television set, and automatic washer,assuming that only one of each was available to the household.The t:,t fame was measured for equipment which was 30days oi, three years okl, and six years old. The data receivedis sun,marized in the following table :

MEAN ACCEPTABLE DELAY (DAYS)

Age of ProductProduct 30 days 3 years 6 years

Automobile 1.2 1.7 2.1

Color TV 2.2 2.2 4.5

Automatic Washer 2.9 4.0 4.6

41

"The inabilityto obtain prompt

repair oftenresults in the

consumer' sconclusionthat a poor

choice was madein selectingthe original

product."

42

TbP results indicate that very little delay is acceptablein the repair of these common consumer products. In fact,the length of time a consumer is willing to wait for a replace-ment part is, in general, much shorter than the delivery cyclethat most manufacturers can offer if the part is not availablelocally.

The inability to obtain prompt repair often results inthe consumer's conclusion that a poor choice was made inselecting the original product. Thus, to the manufacturer,this situation can have significant effects on repeat sales andcompany reputation. Accordingly, manufacturei s shouldestablish standards and procedures for timely delivery ofreplacement parts which will meet customer expectations.One difficulty in this area has been the view by some manu-facturers that the replacement parts business is only an obli-gation, rather than also an opportunity. In some cases, manu-facturers have seen rising costs limit their ability to operatea replacement parts business profitably. However, most busi-nesses now have recognized the profit potential in the replace-ment parts business. As a result these operations have beenorganized on a more efficient basis, so that satisfactory re-turns can be made on the investments required. In some cases,this business has expanded into related accessories on thesame product lines to gain a broader base for profit potential.Distributors and dealers also find this expansion presents thesame opportunity to them, and as a result, better replacementparts service is made available to the consumer at a lowercost.

COMPLAINT Despite the increasing complexityR ESO LUTI ON of consumer products, technologi-

cal advances have greatly improvedoverall product reliability. Repair statistics on major con-sumer products show conclusively that substantially less re-pair 'service is required per product today than in the past.This may not seem true to the typical consumer however,since the use of these products is increasing steadily andmany households now contain 15 or 20 major electrical or

53

mechanical products. In addition, these products have beenbacked by lengthening periods of Warranty, and they nor-mally achieve a longer life span than equivalent products ofa few years ago.

Both manufacturers and buyers recognize that productfailure will eventually occur, even in the most reliable prod-ucts. The consumer does expect, however, that when theproduct fails it will be repaired quickly, efficiently, and withminimum inconvenience. If the problem is not a matter readilysolvable by product repair, or is an outgrowth of repair ex-perience (poor warranty service for example), the consumerfurther expects that there is some representative of the manu-facturer to whom he can turn for assistance.

The substance of these corriplairits should be resolved ona direct person-to-person basis whenever possible. Even if theproblem causing the complaint cannot be rectified immedi-ately, the manufacturer should take action to be certain thatthe consumer is aware of the steps being taken to satisfy him.

Effective complaint resolution requires that knowledge-able personnel be available to deal authoritatively with indi-vidual consumer problems with products Or services. Althoughcomplaints must be handled on an individual basis, it isequally important for the manufacturer to maintain overalltrend analyses of consumer complaints, to reduce future prob-lems for other customers.

In designing the operational systems for consumer com-plaint handling, steps should be taken to ease consumer accessto this avenue for redress. This might include posting thename, address, arid telephone number of the manufacturer'sor retailer's "consumer relations" staff at the point of pur-chase, giving such information to each Better Business Bu-reau office, or sponsoring advertising programs providinginformation about where to voice complaints. Manufacturersin the automobile and appliance industries have experimentedwith programs which offer consumers a direct toll-free tele-phone line to the consumer representative at the company'sheadquarters as an assistance in resolving problems with theirproducts. These programs are still relatively new and their

5 4

"Both manufacturer;and buyersrecognize thatproduct failurewill eventuallyoccur, even inthe most reliableproducts."

43

efficiency and effectiveness in haldling complaints cannot beevaluated on industry-wide basis at.this point, but the systemis worth serious consideration by all major product manu-facturers serving widespread geographic markets.

When consumer problems are not resolvable directly withthe manufacturer or business involved, alternative meansshould be available for review oi the complaint. In these sitkm-tions, both manufacturers and consumers are accepting, inincreasing numbers, the concept of third party arbitration asa fair and appropriate forum for independent redress. Volun-tary arbitration systems can provide a quick and equitablesolution to complaints, therefore, the Sub-Council recom-mends:

RECOMMENDATION 16BUSINESSES SHOULD SUPPORT INDEPENDENT, THIRD-PARTYCOMPLAINT SETTLEMENT PROCEDURES SUCH AS MEDIATIONAND ARBITRATION FOR RESOLVING CONSUMER DISPUTES,ESPECIALLY IF OTHER VOLUNTARY MECHANISMS HAVE BEENTRIED WITHOUT SUCCESS.

The Council of Better Business Bureaus has taken amajor step in the establishment of a national network of theseconsumer arbitration mechanisms. Through local BetterBusiness Bureau offices, arbitration panels have been createdto prnvide an independent resource for complaint resolution.The CBBB program is established as a strictly voluntary sys-tem, which is used only when all informal efforts to bring anend to disputes have failed. Hearings are private, with confi-dential results, and the service is available at no charge. Post-resolution inspection for compliance is available, in the eventof further contention.

Other organized groups in the business community havealso initiated programs to serve as negotiators in business-consumer disputes. Some trade associations have adoptedprograms for this purpose, one of the most successful beingthe Major Appliance Consurier Action Panel (MACAP) es-tablished by the Association of Home Appliance Manufac-turers, the Gas Appliance Manufacturers Association, and theAmerican Retail Federation. MACAP is a volunteer board of

experts, and although sponsored by the industry trade asso-ciations, it is completely autonomous in its review and resolu-tion of consumer complaints. In 1973, more than 35 millionmajor appliances will be sold, most carrying the advice thatMACAP should be contacted if a manufacturer fails to meethis responsibilities for the product.

MACAP insists that consumers first contact the manu-facturer about their problems. If that fails to produce satis-faction, MACAP contacts the manufacturer to request reso-lution of the problem. Failure to achieve a satisfactory resultat this phase leads to a review of the problem by the MACAPpanel itself to product specific recommendations for the manu-facturer.

As of December 31, 1972, MACAP had received a cumu-lative total of 7,413 complaints. Of these, 5,581 were closedsatisfactorily, 1,514 were in process, and only 318 closedunsatisfactorily. The unsatisfactory results were primarilyfrom consumers who were unwilling to accept MACAP'srecommendation.

The success of MACAP stems from three major factors :

1. The consumer panel is made up of individuals from out-side the appliance industry and it operates independently.

2. The competitive firms in the appliance business recog-nized a common problem and have worked cooperativelywith a dedicated interest to see that it would succeed.

3. The program is not limited to complaints alone but servesas a means through which the consumer can make sug-gestions for the improvement of the product and for im-provement of marketing and servicing of the product.

The MACAP approach is one of many currently under-way among the nation's trade associations to take firm actionto deal fairly with consumer complaints. These activitiesshould have the full support of manufacturers and retailers.Accordingly :

5 6 45

RECOMMENDATION 17TRADE ASSOCIATIONS SHOULD SEEK TO COORDINATE IN-FORMATION ON SERVICE PROBLEMS FOR THEIR INDUSTRIES,INCLUDING THE ESTABLISHMENT OF INDEPENDENT COM-PLAINT RESOLUTION MECHANISMS.

Action of this type is a responsible assumption of leader-ship in the consumer's behalf. All trade associations active inconsumer product industries should consider instituting theseprograms, at least on a trial basis.

In cases where direct interaction with the manufacturerfails to result in a resolution of the problem, and where theconsumer does not recognize an independenCalternative fornegotiation, government support is frequently sought as ameans of obtaining redress. These consumer advocate rolesare being increasingly adopted by state and local govern-ments in response to this demand. Reputable businesses shouldseek to establish continuing, constructive contacts with theseagencies to assist wherever possible in the fair disposition ofproblems brought to these Agencies by consumers. Therefore,the Sub-Council recommends :

RECOMMENDATWN 18MANUFACTURERS SHOULD ESTABLISH DIRECT RELATION-SHIPS WITH CONSUMER PROTECTION AGENCIES TO ASSISTIN RESOLVING CONSUMER PROBLEMS WITH PRODUCT PER-FORMANCE AND SERVICING.

Each business involved in the production, sale, and serv-icing of consumer goods should provide established liaisonpersonnel to cooperate with these government agencies whentheir intervention has been initiated by consumers. A promptand complete review of these problems is in everyone's inter-est, and special efforts should be made to assure that the com-munication channels are in place which will allow this tohappen.

In summary, the Sub-Council firmly believes that manu-faUurers, trade associations, and government must expandtheir efforts to reduce consumer dissatisfaction with productperformance and product servicing. Adoption of the recom-mendations made here can contribute significantly to theachievement of that goal.

46 57ir U. S. GOVERNMENT PRINTING OFFICE : 1973 0 - 518 - 544

National Business Council for Consumer Affairs

EXECUTIVE COMMITTEEChairman : Robert E. Brooker.Chairman of the Executive

CommitteeMarcor Inc., and Montgomery

Ward and Co., Inc.

Sub-Council Officers

Advertising and PromotionChairman Robert J. Keith (Deceased)Chairman & Chief Executive OfficerThe Pillsbury CompanyVice-Chmn.: Archibald McG. FosterChairman & Chief Executive OfficerTed Bates & Company

Packaging.and LabelingChairman : James P. McFarlandChairman & Chief Executive OfficerGeneral Mills Inc.Vice-Chmn.: Robert 0. AdersChairmanThe Kroger Company

Warranties and GuaranteesChairman : James W. ButtonSenior Vice PresidentSearS, Roebuck & Co.

-Vice-Chmn. : Robert P. GwinnChairmanSunbeam Corp.

Credit & Related Terms of SaleChairman : Arthur E. RasmussenChairman & Chief Executi.ve OfficerHousehold Finance Corp.Vice-Chmn. : James D. FarleyExecutive Vice PresidentFirst National City Bank

Performance and ServiceChairman: Richard L'.-TerrellExecutive Vice PresidentGimeral Motors Corp.

Vice-Chmn.: Charles M. OdorizziExecutive Vice PresidentRCA Corporation

Product Safety

Chairman: Ruth HandlerCo-ChairmanMattel, Inc.Vice-Chmn.: Stanley C. GaultVice President & Group Executive

Major Appliance Business GroupGeneral Electric Co.

Complaints and Remedies

Chairman: Donald B. SmileyChairman and Chief

Executive OfficerR. H. Macy & Company

Vice-Chmn. : Howard C. HarderChairmanCPC International Inc.

Executive Director

William D. LeeDeputy Assistant Secretary for Business Development

U.S. Department of Commerce

58