Warranty Management is often a relatively neglected area in total supply chain and is seen more as a liability than a way to reduce cost of production, procurement and returns. Infact, effective warranty management not only satisfies your customers (rather delight them in most cases) but also contributes substantially in cost reduction in above mentioned areas.
By warranty management, I mean creation of warranty structure and pricing, administration of warranty claims, management of claims, OEM parts recovery from suppliers and customer management. So there is a gamut of activities that are part of whole warranty management and if this is handled in an effective manner, we will be able to reduce costs substantially. To manage warranty processes, there is also a need of automation of the processes like:
- Deploy and end to end workflow based process that starts with returns from customer to process the warranty claim – This will ensure that teams are clear about their responsibilities, their turn around times, approvals required etc. and it will save time to process the warranty claims. Result: dollar savings, higher customer satisfaction
- Seamlessly integrate service execution operations with warranty management – All periodic services when integrated with the warranty management process, will provide more opportunities to increase revenue by selling extended warranties to customers and this will also help in reducing warranty related repairs thus reducing cost for the organization. This will also help us to mail down the root cause of the product failures and thus further reducing the warranty incidents
- Implement warranty analytics system to get information on warranty patterns, product feedback and competition data. This will ensure that warranty teams are updated and can initiate actions within the organization to reduce warranty cost for a product and incorporate latest features based on usage patterns of customers. It is a strong tool to also curb the fraudulent claims and facilitate to the speed of recovery of parts claims from the suppliers
- Deploy warranty management software to track performance of warranty settlement in terms of time taken; cost of processing and value added suggestions sent to production to reduce further warranty cost in product. This will help you to improve the product as well as provide data points for further improving the processes
- Create a central knowledge portal which records the best practices for one product’s warranty management and shares with other teams so that successful strategies can be replicated
All above enablers will not only reduce the cost of warranty processing but also will increase revenue (by selling extended warranties) and improve the customer satisfaction to the level of customer delight. We all know that how important is customer satisfaction or delight these days and how it can be converted more revenue in future. So, let us use warranty management to our benefit and deploy the best practices as above for a better managed supply chain.