For most of us, keeping track of the warranties we hold on dishwashers, cars, and other household items isn't a big deal. A manila folder stored in a handy spot usually does the trick. But for manufacturers managing a large network of production assets or finished products out in the field, it's another story. Without a system to keep track of warranty information and analyze related quality problems, many manufacturers that issue warranties are finding that either their costs are rising or customer satisfaction is suffering.
At the same time, without systems and processes for tracking warranty information, manufacturers managing lots of assets often find themselves asking whether it is even worthwhile to pursue a warranty claim when something goes wrong. But, in today's economic climate, where every bit of capital counts, it's more important than ever to get a handle on warranty-related costs and opportunities.
In a recent survey of 170 service and warranty organizations conducted by research firm Aberdeen Group, 56% said effective warranty management is more important to them than it was two years ago. The same survey found that 38% of all service work orders involve either original or extended warranties. So what can manufacturers do to help balance the need to meet customer satisfaction goals with minimizing warranty-related administrative costs and product defect rates?
To begin with, for manufacturers that extend warranties to customers, it's critical that warranty information and processes be tied in with other business processes, such as sales order entry, purchase orders, and return materials authorization, says James Jones, product manager for EAM product lines at Infor, a provider of enterprise software that offers warranty management functionality as part of its EAM suite.
"Having warranty tied into other processes is going to give you a better notion of, 'Am I providing the right customer service by fulfilling warranties the way I should be, or am I agreeing to too many warranties and it's costing my business money by paying people for things they're not entitled to?' " Jones says. "The big thing is trying to capture these [warranty] transactions in the course of business companies are conducting anyway."
When using an asset registry and management (EAM) system for making work order repairs and replacing parts repetitively on pieces of equipment, manufacturers can incorporate the management of related warranty transactions and inventory eligible for warranty claims, so that processes can be handled simultaneously.
Before incorporating Infor's warranty management application into its maintenance processes, a transportation company that manages a fleet of 20,000 assets relied on a manual process of looking up information to find out whether a warranty even existed. The process was so tedious that the company stopped bothering to pursue warranty claims, says John Murphy, director of global EAM industry and product marketing at Infor.
"They just didn't have time; they had to move on to the next job," Murphy says. "EAM can help automate the process of identifying if a warranty is associated with the work and, therefore, help facilitate and trigger the whole claims process."
At the same time, experts say, it's critical that manufacturers issuing warranties have the processes and technologies in place to pull information out of claims that can be used to improve product quality and ultimately reduce costs. In fact, the Aberdeen survey found that the use of analytics, PLM, and other technologies that tie back to product quality processes is key in helping best-in-class companies to pull ahead of the competition.
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