m-ize 10 best practices to optimize warranty management

Best Practices to Optimize Warranty Management

Better engagement with customers, channelpartners, 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

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


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 withwarranty entitlements

• Predictable warranty costs and accruals

IMPLEMENTATION BENEFITS

2) Automate Claims validation & processing


% 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


3) Standardize Failure coding

3/1/2016 6

Best Practices in Warranty Management | m-ize copyright 2016Pareto 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 accuracyin claims

• Ability to analyze and identify recurringfailures early across global platforms



4) Reduce and Automate Parts Returns


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


5) Increase supplier participation and recovery


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


6) Detect and Correct product quality issues


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


7) Increase Service Plan Sales


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 repeatpurchases

• Enhanced visibility to extended productlifecycle

• Increased parts sales


8) Create a consolidated global Warranty platform


Connectedness Errors per n transactions =

errors/transactionsEfficiency = 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 efficienciesin warranty processes

• Rreduced warranty costs from betterclaim validations


9) Unify Warranty Lifecycle


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 warrantymanagement

• Reduced Warranty Expense• Improved Product Quality• Reduced Systems cost from global

consolidation• Seamless flow of warranty information

across sorganizational lios


10) Optimize Warranty Management


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 Warrantyperformance in the industry

• Optimal Warranty Costs• Competitive differentiation

through better products, service and quality


Warranty performance = CPU/Industry average

Efficiency = Process Cost per Unit/Industry average

CSI = Customer Sat Index

NPS = Net Promoter Score

Steps to Transform Warranty Management

143/1/2016

Mission: Optimize Warranty Management

MapAssess all warranty processes and create a road map to unify and stream warranty lifecycle management

ModelROI Model to reduce warranty costs and improve service revenues & profitability

MobilizeImplement m-Warranty to streamline Registrations, Claims, Parts Return, Supplier Recovery and Warranty Analytics

MeasureEstablish a metrics and benchmarking program to drive improvements in warranty, quality and customer experience


3/1/201615

Contact us 8610 Hidden River Parkway Suite 200 Tampa, FL 33637

www.m-ize.com

+1 813-971-2666

[email protected]

m-ize 10 best practices to optimize warranty management

Business