m-ize 10 best practices to optimize warranty management
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The document outlines best practices for optimizing warranty management, emphasizing improved engagement with customers and suppliers, reduced costs, and enhanced product quality. Key recommendations include automating claims processing, standardizing failure codes, and unifying warranty systems globally to streamline operations and improve efficiency. Implementing these practices aims to boost customer satisfaction, generate new revenue streams, and differentiate the company in the market.
m-ize 10 best practices to optimize warranty management
- 1. Best Practices to Optimize Warranty Management
- 2. Better engagement with customers, channel partners, and employees Increased customer wallet share – accessories, parts, services, related products, upsell/cross-sell 3/1/2016 2 Why implement the Best Practices? Reduce warranty costs • Improve Product Quality • Improve Supplier quality, performance • Enforce Warranty compliance • Reduce excess and fraudulent claims Improve the effectiveness and efficiency of warranty management processes • Streamline or Automate warranty processes • Improve the warranty operations • Reduce cycle time from detection to correction of product issues Enhance Dealer and Customer Satisfaction • Simplify Registration, Claim, Return processes • Increase value to the customer • Get paid for claims faster Generate new revenue and profits • Increase service plan revenues • Differentiate the company’s offerings in warranty and service plans • Revenue growth from satisfied and loyal customers Best Practices in Warranty Management | m-ize copyright 2016
- 3. Warranty Best Practices 3/1/2016 3 1. Manage Warranty entitlements 2. Automate Claims validation & processing 3. Standardize Failure coding 4. Reduce and Automate Parts Returns 5. Increase Supplier participation and recovery 6. Detect and Correct product quality issues 7. Increase Service Plan Sales 8. Create a consolidated global Warranty platform 9. Unify Warranty Lifecycle 10. Optimize Warranty Management Best Practices in Warranty Management | m-ize copyright 2016
- 4. 1) Manage Warranty entitlements 3/1/2016 4Best Practices in Warranty Management | m-ize copyright 2016 Warranty accrual = Cost per unit * Products under coverage Registration Rate = Products registered / Products shipped Product Entitlements Enforce Entitlements Define warranty policy terms & conditions and track all product entitlements through Product registrations, Plan registrations, and Campaigns. • Define structured policy terms & conditions for all warranties • Track all Warranty entitlements at Product Serial level • Authorize and Track Campaigns, Goodwill • Increase Product and Plan registration to accurately track entitlements • Link Warranty entitlements to Warranty accruals and budget • Check Claims against entitlements • Can ensure claim compliance with warranty entitlements • Predictable warranty costs and accruals IMPLEMENTATION BENEFITS
- 5. 2) Automate Claims validation & processing 3/1/2016 5Best Practices in Warranty Management | m-ize copyright 2016 % Claims auto processed = Claims auto processed / Total number of Claims Per Claim process cost = Total processing cost / Total number of claims Costs saved = Sum (Parts, labor Costs saved + rejected claims) Automate claim validation and processing using business rules, product information and workflows. • Validate and correct errors at the source - Identify claim errors before claim is submitted by dealer or service center • Automate approval and rejection of claims based on decision tables • Manage business rules, error severity levels, decision tables and workflows easily without programming changes • Validate claims against product BOM, Parts, Standard Labor Operations, and claims history to ensure claim accuracy • Utilize advanced analytics to identify suspect or fraudulent claims • Reduce warranty administration costs • Enhance dealer satisfaction through faster claim payments • Reduction in warranty cost from ineligible and fraudulent claims IMPLEMENTATION BENEFITS
- 6. 3) Standardize Failure coding 3/1/2016 6 Best Practices in Warranty Management | m-ize copyright 2016 Pareto by Failure codes Problem detection cycle time Warranty Contribution rate = Attributed warranty cost/CPU Standardize failure coding and reporting on claims based on 5Cs – Causal Part, Component code, Complaint, Cause and Corrective Action. • Standardize failure codes across all regions, product lines, manufacturing facilities and suppliers • Link Failure Codes to Product models and cross reference codes to make it easier for servicers and technicians to classify the repair • Link Parts, Standard Repair Times (SRT), coverages and failure coding to Product Bill of Material (BOM) to improve consistency • Improved consistency and data accuracy in claims • Ability to analyze and identify recurring failures early across global platforms IMPLEMENTATION BENEFITS Best Practices in Warranty Management | m-ize copyright 2016
- 7. 4) Reduce and Automate Parts Returns 3/1/2016 7Best Practices in Warranty Management | m-ize copyright 2016 Return Rate = Parts returned / Parts replaced Registration Rate = Products registered / Products shipped Return cycle time = Average (Return Date – Requested Date) Automate Identification of Parts to be returned, generate Return Material/Goods Authorization (RMA) and track Returns and inspection results. • Capture better failure info & pictures to reduce the need to return parts • Setup return policies to meet Quality, Reman, and Supplier requirements • Identify and auto-generate RMA for Parts meeting the criteria • Track and notify dealers of pending Part Returns • Manage reverse logistics by integrating with Carriers, supporting Bar codes, and shipping direct to vendors • Capture and analyze parts inspection results to support Quality and Supplier recovery • Reduction in return shipping costs • Faster return of Parts to support Quality improvement and Supplier recovery • Increased accountability for dealers to return parts IMPLEMENTATION BENEFITS
- 8. 5) Increase supplier participation and recovery 3/1/2016 8Best Practices in Warranty Management | m-ize copyright 2016 Supplier recovery = Supplier Paid Claim amount / Total Claims Paid Supplier claim cycle time = Average (Payment Date – Requested Date) NTF Claim % = Claims rejected/ Total # of claims Supplier Quality Metrics Auto-generate and share supplier claims with suppliers immediately to increase supplier participation and recovery • Setup standard Supplier recovery agreements and policies • Auto-generate supplier claims, RMAs as per supplier terms & conditions • Share claims via supplier portal and file exchange to enable suppliers to quickly process claims • Analyze and share suppler performance to improve supplier collaboration and quality • Capture and Analyze parts return inspection results to reduce or eliminate No Fault Found rejections from suppliers • Increased supplier cost recovery • Improved supplier and product quality • Improved supplier colaboration • Faster processing of supplier claims IMPLEMENTATION BENEFITS
- 9. 6) Detect and Correct product quality issues 3/1/2016 9Best Practices in Warranty Management | m-ize copyright 2016 CPU = Warranty Cost/# of Units Warranty incidents per product Total warranty repair costs Enabler 3 Enabler 4 Utilize Warranty analytics to detect emerging issues early , find root causes and manage corrective action to improve product quality and reduce warranty expense. • Improve the accuracy of warranty data and ease of reporting • Improve visibility and access to warranty analytics for all stakeholders including Manufacturing, Engineering, Quality and Supplier management • Use industry standard KPI or metrics to identify emerging issues early • Identify Root cause for failures by utilizing multi-dimensional analysis and drilling-down to contributing factors • Use advanced analytics and data mining to generate alerts and early warning • Reduced Warranty Expense • Improved Product Quality • Reduction in detection to correction cycle time • Enhanced Customer satisfaction and brand value IMPLEMENTATION BENEFITS
- 10. 7) Increase Service Plan Sales 3/1/2016 10Best Practices in Warranty Management | m-ize copyright 2016 Attach Rate = Products with Service Plan/Products shipped Service Plan Revenue = (Sum of Plan Sales) Loss Ratio = Claims Cost/Plan earnings Manage Service Plan programs and pricing to increase service plan attach rate, renewals, revenue and profitability. • Manage Service Plan offerings and pricing to meet market conditions and customer needs • Use Registrations and post sale marketing to increase service plan sales • Differentiate customer service and experience to clearly demonstrate the value of service plan offerings • Manage the opportunities, offer timing and notifications to drive service plan sales • Analyze and manage the claim costs to increase profitability on service plans • Increased Service Plan revnues and profits • Improved customer loyalty and repeat purchases • Enhanced visibility to extended product lifecycle • Increased parts sales IMPLEMENTATION BENEFITS
- 11. 8) Create a consolidated global Warranty platform 3/1/2016 11Best Practices in Warranty Management | m-ize copyright 2016 Connectedness Errors per n transactions = errors/transactions Efficiency = Automated/total or manual process time Consolidate warranty systems and data globally across regions, product lines and stakeholders • Create a centralized and flexible warranty system to meet the needs of various regions, product lines and stakeholders • Integrate with Engineering and Manufacturing systems to get as-designed and as-manufactured BOM • Integrate with accounting system to accurately process payments • Integrate with Call center system to identify failures early, provide visibility to warranty entitlements and enable seamless customer experience • Integrate with Dealer Management Systems (DMS) to reduce duplicate data entry, enhance data accuracy • More accurate warranty data for all stakeholders • Improved effectiveness and efficiencies in warranty processes • Rreduced warranty costs from better claim validations IMPLEMENTATION BENEFITS
- 12. 9) Unify Warranty Lifecycle 3/1/2016 12Best Practices in Warranty Management | m-ize copyright 2016 Warranty Cycle time = Sum (Warranty processes) CPU = Warranty Cost/Number of Units Process Cost % = Total process cost/Warranty Cost Unify warranty lifecycle by seamlessly integrating all warranty processes including PDI, Registrations, Claims, Returns, Supplier recovery, warranty analysis and warranty administration. • Link all warranty related processes and connect all transactions • Reduce end-to-end cycle time by moving closer to real-time processing and visibility • Simplify the process by bridging the disconnects and eliminating the duplicate and redundant data entry • Break down silos that divide warranty and contract processes • More effective and efficient warranty management • Reduced Warranty Expense • Improved Product Quality • Reduced Systems cost from global consolidation • Seamless flow of warranty information across sorganizational lios IMPLEMENTATION BENEFITS
- 13. 10) Optimize Warranty Management 3/1/2016 13Best Practices in Warranty Management | m-ize copyright 2016 Setup Continuous Improvement program to optimize warranty management and create competitive advantage by performing above Industry Benchmarks • Conduct relevant assessment and implement a continuous improvement program • Identify Key metrics (KPI) and Benchmark against the industry • Capture and analyze product and warranty data across the install base and track Warranty budgets, accruals and expenses • Set goals for Warranty CPU, Warranty cost as % of Sales, Frequency of failures • Expand the scope of organization from warranty Department to Quality, Engineering, Suppliers, Dealer or service network • Provide the critical service and product insights needed to improve service and product outcomes to customers • Capture Feedback from Dealers and Customers to identify and address satisfaction issues (VoC) • Best of Class Warranty performance in the industry • Optimal Warranty Costs • Competitive differentiation through better products, service and quality IMPLEMENTATION BENEFITS Warranty performance = CPU/Industry average Efficiency = Process Cost per Unit/Industry average CSI = Customer Sat Index NPS = Net Promoter Score
- 14. Steps to Transform Warranty Management 143/1/2016 Mission: Optimize Warranty Management Map Assess all warranty processes and create a road map to unify and stream warranty lifecycle management Model ROI Model to reduce warranty costs and improve service revenues & profitability Mobilize Implement m-Warranty to streamline Registrations, Claims, Parts Return, Supplier Recovery and Warranty Analytics Measure Establish a metrics and benchmarking program to drive improvements in warranty, quality and customer experience Best Practices in Warranty Management | m-ize copyright 2016
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