Let us consider an example based on a real situation. After a class on design for reliability, a senior manager declared that every component would be fully derated in every product (for both electronic testing and measurement devices). Within a year the design team redesigned all new and existing products, with strict adherence to the derating guidelines provided in the class.

A year after the class, the product line experienced a 50% reduction in warranty claims. The students learned about derating and a manager saw the potential value. However, we often do not have a manager with such foresight, so we need to provide justification for the investment.

Let’s look at how we can view derating as a reliability investment and determine its return.

DERATING

Derating involves the selection of components that have ratings (power, voltage, etc.) above the expected stress. For example, selecting a capacitor that bridges a 5-volt potential that has a voltage rating of 10 volts would be considered a 50% derating.

Selecting components that only match the expected stress and rating generally leads to premature failure of the components, because the ratings provided by vendors only imply that the component can experience the stress at the rated value for a very short time. Derating provides a margin for minimizing the accumulation of damage or the chance exposure of high enough stress to cause a failure. We can apply the same concept to mechanical designs, using safety margins.

CASE STUDY

As an example, at Hewlett-Packard, a study of the effects of various design for reliability tools uncovered a very high correlation between well-executed derating programs and low field failure rates. This contributed to 50% fewer field failures experienced. In one particular division where the design team embarked on a full implementation of derating on all products, a 50% reduction in field failures was achieved in the very first year. They continued to reduce failure rates over subsequent years as more fully derated product designs shipped.

FIELD FAIURE RATE

The specialized test and measurement industry creates very complex electronic equipment. These are expensive tools with total production of perhaps 50 units per year.

Like other high cost, low-volume products the cost of failure is very high. Because the unit costs are very high, the ability to test sufficient numbers of units to failure is severely limited. It is not uncommon to have only one or two units available for all qualification testing. Furthermore, the complexity of the units provides multiple possible failure mechanisms and only rarely does the design provide a clearly dominant failure mechanism on which to focus reliability evaluations.

Given the barriers to conducting physical testing, the reliability team recommends implementing detailed derating analysis for the selection of every electronic component.  The design team does use some derating concepts, yet these are only based on a 50% guideline and no detailed analysis is done. Therefore, the project manager has requested more information about the process, costs, and value.

DERATING COST

Components that are rated higher cost more and are generally larger in size. If the current material cost is $100,000, then implementation of detailed and thorough derating would likely raise this cost to $200,000.

For a production run of 50 units, the total cost increases by $5 million. The additional engineering time for training, circuit analysis, and procurement may add an additional $1 million to the project cost. The total additional cost to the program is thus about $6 million.

 DERATING VALUE

The primary value of component derating is the increase in circuit robustness of the product, which leads to fewer field failures. The cost of a field failure is expensive, owing to the replacement cost, failure analysis, and possible redesign and qualification costs.

Let’s assume that each field failure has an average cost of $2 million (four times the sales price). Reducing a 10% annual failure rate (a low estimate for such complex products) to 5% would result in 2.5 fewer $2 million failures per year for an annual savings of $5 million.

DERATING RETURN ON INVESTMENT

Return on investment (ROI) is the ratio of the expected return over the cost. With a cost of $6 million and a return of only $5 million, ROI < 0.83. If the starting failure rate or cost of failure is low, then this ROI may not exceed the break-even point. Implementing derating may not make sense in this situation.

Of course the products operate for more than one year. For those with warranties extending out two or three years, then the derating program provides a net profit increase.

Also, we have to consider the market and impact on competition. If the high failure rate caused a loss of market share, that may further increase the cost of failure.

Bio:

Fred Schenkelberg is an experienced reliability engineering and management consultant with his firm FMS Reliability. His passion is working with teams to create cost-effective reliability programs that solve problems, create durable and reliable products, increase customer satisfaction, and reduce warranty costs. If you enjoyed this articles consider subscribing to the ongoing series Musings on Reliability and Maintenance Topics.