Exploring Recent Trends In Exploring Recent Trends In Warranty Management To Improve Customer Warranty Management To Improve Customer

Satisfaction And Minimize Unnecessary CostsSatisfaction And Minimize Unnecessary Costs

presented at the Interlog meeting in San Diegopresented at the Interlog meeting in San DiegoJune 2009June 2009

Michael N. OlmstedMichael N. OlmstedVP North American Services and QualityVP North American Services and Quality

Michael.olmsted@satisloh.comMichael.olmsted@satisloh.com

Satisloh North AmericaSatisloh North America

SatislohSatisloh

Two companies Satis and LohTwo companies Satis and Loh

Lens GeneratorLens GeneratorVFT OrbitVFT Orbit

Typical automated line with lens Typical automated line with lens polisherspolishers

Conceptual line of lens Conceptual line of lens manufacturing equipmentmanufacturing equipment

Vacuum chamber used to coat eye Vacuum chamber used to coat eye glass lensesglass lenses

Examining the different levels of warranty Examining the different levels of warranty currently being offered by your competitorscurrently being offered by your competitors

Outlining the benefits of creating a different Outlining the benefits of creating a different support structure for in-warranty product vs. out-support structure for in-warranty product vs. out-of-warranty productof-warranty product

Exploring the use of business intelligence and Exploring the use of business intelligence and predictive analytics inpredictive analytics in– warranty management; what are the true cost savings warranty management; what are the true cost savings

of using these technologies to eliminate invalid or of using these technologies to eliminate invalid or excessive claims?excessive claims?

– Identifying how to improve your measurements for Identifying how to improve your measurements for warranty performancewarranty performance

– by benchmarking your current warranty management programby benchmarking your current warranty management program

WarrantiesWarranties

Time FrameTime FrameTime FrameTime Frame

Repair

Labor

Parts

RepairTravel

WorkmanshipReplacementReplacementReplacement

ServiceSoftwareConsumer/SmallCapital Equipment

Examining the different levels of Examining the different levels of warranty currently being offered by warranty currently being offered by

your competitorsyour competitors

Warranty EntitlementWarranty Entitlement Bumper to bumperBumper to bumper Parts only Parts only Parts PlusParts Plus Value AddedValue Added

PM VisitsPM Visits TrainingTraining Oil changes includedOil changes included Free software downloadsFree software downloads Free phone supportFree phone support

Outlining the benefits of creating a Outlining the benefits of creating a different support structure for in-different support structure for in-

warranty product vs. out-of-warranty warranty product vs. out-of-warranty productproduct

Not always a question of tactics but one of Not always a question of tactics but one of strategystrategy

Market concernsMarket concerns Does the customer have the ability to Does the customer have the ability to

move up in status? move up in status? support products for the out of warranty customersupport products for the out of warranty customer

Exploring the use of business Exploring the use of business intelligence and predictive analytics intelligence and predictive analytics ininwarranty management; what are the true warranty management; what are the true

cost savings of using these technologies cost savings of using these technologies to eliminate invalid or excessive claims?to eliminate invalid or excessive claims?

http://http://www.weibull.comwww.weibull.com

Identifying how to improve your Identifying how to improve your measurements for warranty performancemeasurements for warranty performance

by benchmarking your current warranty by benchmarking your current warranty management program management program www.warrantyweek.comwww.warrantyweek.com

Making money when you have a good Making money when you have a good warranty management program is warranty management program is

like bobbing for waterlike bobbing for water

Additional Thoughts to PonderAdditional Thoughts to Ponder

Warranty is a cost of sale or cost of goods Warranty is a cost of sale or cost of goods line item on the product sale.line item on the product sale.

Warranty Percentage Warranty Percentage Warranty Percentage is referred to as the "Claims Warranty Percentage is referred to as the "Claims

Rate".Rate".

Developing a warranty accrual is setting Developing a warranty accrual is setting up a balance sheet entry for an unrealized up a balance sheet entry for an unrealized liability.liability.

Mechanics of Warranty Mechanics of Warranty

Warranty is accrued for by forecasting the Warranty is accrued for by forecasting the support necessary for one unit of a certain support necessary for one unit of a certain product line.product line.

Warranty standard needs to be developedWarranty standard needs to be developed

Warranty accrual needs to be set upWarranty accrual needs to be set up

Internal billing process needs to be set up Internal billing process needs to be set up to allow the support organization to offset to allow the support organization to offset their coststheir costs

Mechanics continuedMechanics continued

Warranty is accrued for by forecasting the Warranty is accrued for by forecasting the support necessary for one unit of a certain support necessary for one unit of a certain product line.product line.

Warranty standard needs to be developedWarranty standard needs to be developed

Warranty accrual needs to be set upWarranty accrual needs to be set up

Internal billing process needs to be set up Internal billing process needs to be set up to allow the support organization to offset to allow the support organization to offset their coststheir costs

Why develop a warranty standard?Why develop a warranty standard?

– Quality feedbackQuality feedback

– RegulatoryRegulatory

– Financial feedback to the corporation on the Financial feedback to the corporation on the quality of the quality of the

– ManufacturingManufacturing– Engineering or designEngineering or design– DocumentationDocumentation– Service personnel trainingService personnel training

How do you make money with How do you make money with warrantywarranty

– Longer warranties as a competitive edgeLonger warranties as a competitive edge– Profitable extended warrantiesProfitable extended warranties– Basis for profitable service contractsBasis for profitable service contracts– Increased dollars to the bottom lineIncreased dollars to the bottom line– Increased dollars to R&DIncreased dollars to R&D

Who has the sweat band?Who has the sweat band?

Reliability or Warranty DepartmentReliability or Warranty Department Quality DepartmentQuality Department Service DepartmentService Department Accounting/FinanceAccounting/Finance Product ManagementProduct Management EngineeringEngineering ManufacturingManufacturing