This measure calculates warranty costs (repair and replacement) as a percentage of sales. Warranty costs include materials, labor, and problem diagnosis for products returned for repair or refurbishment. This measure is part of a set of Process Efficiency measures that help companies optimize the performance of their "produce/manufacture/deliver product" process by minimizing waste and refining resource consumption.
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Warranty costs as a percentage of sales
Process efficiency represents how well a process converts its inputs into outputs. A process that converts 100% of the inputs into outputs without waste is more efficient than one that converts a similar amount of inputs into fewer outputs.
The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.