Streamline Warranty Management to Improve Product & Service Quality
A recent survey indicated that, in the United States alone, annual warranty costs add up to over $23 Billion, impacting companies’ bottom line.
Elaine Lombardi, based on decades of experience in the industry, shares some best practices for brands to optimize and streamline warranty operations.
Good, credible claims data is the key for claim automation, effective warranty analysis, corrective action, and warranty cost recovery.
Build extensive validations into the claims entry processes to capture accurate and consistent claims data to automatically manage entitlement verification, pre-warranty authorization, claims verification, and approvals.
Using these validations, manufacturers can auto-approve up to 80% of claims to free up staff, decrease the cost, and increase the speed in which claims can be closed.
Improve quality of claim data by:
- Identifying and requiring the key part causing the failure
- Collecting good failure descriptions to include:
- Complaint (operating condition report or symptom)
- Cause (root cause or physical description)
- Corrective action (work accomplished)
- Requiring simple, yet specific information
- Attaching images to assist with failure descriptions
Consolidate Warranty Systems & Processes
An efficient and automated claims process is crucial to streamline warranty management. Instead of maintaining numerous systems, consolidate all aspects of warranty management including registration, claims, part returns, supplier recovery, and analytics. An integrated system will reduce duplicate manual efforts and improve data consistency.
Minimize the Number of Part Returns
Only shipping companies gain value from mass shipments of returned parts. Companies should request returns either to understand early model failures, and parts with new failure trends, or remanufacture parts.
Neither the Original Equipment Manufacturer (OEM) nor suppliers can cost effectively manage large quantities of failed part returns. Instead, use good credible claim data with images of failed parts to drive corrective action, while using returns on a limited basis.
In most cases, complete failure data and confidence in the validity of the claim is sufficient to take corrective action and pay appropriate warranty – not a warehouse full of useless parts.
Automated Supplier Claim Process
It is crucial to automate the supplier claim process, in order to:
- Decrease amount of time from failure to claim, speeding up problem resolution for manufacturers and suppliers
- Shorten the corrective action cycle to avoid continuing to manufacture defective products
- Recover more warranty costs faster from a larger base of suppliers
- Create cleaner and more credible supplier claim data
- Encourage supplier collaboration in reducing warranty costs
Improve Warranty, Quality, and Reliability Analysis
Gaining good failure data from customers, dealers, and distributors will enable brands to improve product quality and recover a greater percentage of warranty costs from suppliers. Analyze warranty data to identify and address emerging issues and factors contributing to warranty costs.
Monitor key warranty metrics such as, warranty as a percentage of revenue, Cost per Unit (CPU), and top 10 causes. Drive corrective actions with the manufacturing, engineering, and suppliers to prevent further warranty failures.
Using these best practices, brands can realize significant reduction in warranties costs, while improving product quality and customer satisfaction.