Defects on individual components are a random phenomenon, and are controlled by the physical characteristics of the products, as well as the nature of experienced loads. Consumer costs vary widely for the defects, and therefore often cause uncertainty and insecurity. The defect variation, however, is less when a whole machine population is considered. Therefore, the supplier/producer is less exposed to unexpected costs. There is a desire to increase the level of comfort for the consumer, and therefore long-time warranties have come to be used as one way of increasing the level of consumer comfort.
Another consumer problem is that load variation, to a great extent, depends on the consumer and the way the machine is used; different users operate the machine differently—some may even abuse the machine. Therefore, to charge a consumer based on use-time (for example by the hour) is not accurate with respect to the corresponding consumption of the wasting component.
It is common in the construction equipment business for suppliers to assure consumers that they can replace a component after breakdown within a certain number of hours (for example 24 hours). On the other hand, if total consumption or failure can be predicted, replacement can be scheduled well in advance, for example, one or two months ahead of the need.
Currently, it is common practice to allow a component to break down or fail; that is, permit exposure to damage until all the product's life is consumed. The breakdown comes unplanned and therefore leads to higher than necessary consequential cost—for example, payments on delays.
Some suppliers replace components before they break down based on time in use which implies that the time for replacement must be chosen with a large margin. This leads to waste due to the fact that substantial life can be left in most components when replaced.
Further, it used to be difficult to establish a value on second hand products because there was no accurate way for determining how much life reducing damage had occurred in the machine and how much life was left in the component. A basic problem with all products is that the components must be dimensioned to endure the worst load to which they may be subjected. However, all components are not loaded to the limit they are dimensioned to withstand. In the instance of a vehicular powertrain, the quota between the worst loaded and easiest loaded machine is 100 percent within 90 percent population. As a result, a machine can be scrapped despite the fact that much operational life still exists in the machine. This is a waste for the consumer, the supplier and society. It is desirable for the use of the machine to be adjustable to the remaining life so that the life of the product is totally consumed when it is scrapped.
In these regards, it may be said that the consumer pays the price of the product twice—once at the time of purchase and once again in the form of costs for renovation—including spare parts.