Warranties are the Pandora’s Box of electronics manufacturing. For starters, determining whether it’s the board, the components or the soldered connections that caused the failure is expensive and cumbersome – and not always definitive. Moreover, the tremendous expense involved to remediate not just the services provided but the components could wreck many companies. As such, most contracts eschew clauses establishing comprehensive terms and conditions surrounding warranties. Circuits Assembly editor-in-chief Mike Buetow recently spoke with Ed Childress, president and CEO of EMS provider Syncro Corporation (syncroems.com), about the issue.

CA: Ed, tell our readers a bit about Syncro’s EMS capabilities and markets.

EC: Syncro has been in the electronics outsourcing business for more than 30 years, focusing primarily in automotive aftermarket, industrial, medical and RF applications. Our typical customer requires a variety of PCB assemblies (medium mix/medium volume) with some type of enclosure. Many of our programs utilize a Kanban model with releases as often as twice a week. Engineering services are flexed into projects at varying degrees from conceptual stage to product enhancement to test development. We have a culture in our organization that allows our customers peer-to-peer communications. We also support the traditional approach of program management for new projects. In a nutshell, we can provide full lifecycle support from product design and manufacturing through distribution and post-manufacturing support as required by each customer.

CA: On the subject of support, product warranties are one of the least discussed elements of the EMS-OEM relationship. Why is that?

EC: Typically, an EMS provider does not take on new business with the expectation of significant warrantable failures. However, OEMs move business quite often due to quality/warranty issues, real or perceived. A clearly defined warranty clause is important when preparing the manufacturing agreement. Another important tool we use to head off potential warranty problems is a vigorous design and process FMEA (Failure Modes and Effects Analysis), completed in conjunction with our customer.

CA: Not long ago, Syncro was involved in a suit concerning a product you built. What is the background on that case, and how did it turn out?

EC: One of Syncro’s OEM customers was named in a product suit a few years back involving one of the customer’s designed products. As may be considered normal, Syncro Corporation, as the EMS provider, was eventually named as an additional defendant. We were able to provide valuable support, including performing an extensive field test at their own facilities, which supported the customer’s position that the product involved performed as designed.

While none of us wishes to be involved in a lawsuit, sometimes that’s just not possible. The necessary systems were in place to demonstrate the product continued to meet defined functionality test requirements and a defined test plan was in place that supported that each product was manufactured under the plan and tested prior to shipping.

CA: Are certain end-products or markets more susceptible to warranty and liability issues? What steps should EMS firms take to mitigate potential problems?

EC: Safety-related and consumer products tend to be more vulnerable to liability exposure. Design stability, product manufacturability and a sound test plan are key areas to help minimize warrantable failures and potential liability risk. Consistently monitoring attributes and first-pass yield data are proactive measures to ensure processes are in control. Be extremely cautious accepting programs that do not require a final test.

CA: Should a liability lawsuit occur, what are the keys to prevailing?

EC: We are a strong proponent of document control/retention practices and lot traceability. We presented a paper on the subject in 2006 at SMTA International titled “Managing Risk in Outsourced Product Development and Manufacturing.” In it, Larry Fleming discusses important facets of development, including critical design review points, product validation elements, process attributes and human factors.

CA: As a rule, when an OEM and its EMS supplier litigate, does that spell the end of the relationship? And if so, should an EMS supplier go to certain lengths to avoid a suit?

EC: Unfortunately, this is typically the case. Preparing a robust and balanced manufacturing agreement that clearly outlines the responsibility of each party should be the foundation of the OEM-EMS partnership. It also builds trust early in the relationship, which motivates everyone to resolve conflict without litigation.