Establishing a Future-proof Warranty Management Model for Industrial OEMs

In the ever-growing technological landscape, when businesses can’t afford to say no to the customer-centric approach, warranty management has been playing an excruciating role in fine-proofing the overall customer experience. And unfortunately, many OEMs are not doing enough about this. Among all the challenges OEMs face, warranty claims have always been the toughest to process, manage, or automate. In the US, manufacturers spend around 7% of their overall product revenue on settling warranty claims, which is approximately $23 billion in Manufacturing opportunity. The entire manufacturing industry is still in a conundrum about finding a concrete way to lower the warranty period, assess warranty transactions, and perform warranty analysis. 

If OEMs must stay competitive, they must be well-versed with warranty management solutions. They must incorporate governance plans and a dedicated roadmap to organize warranty investments and leverage warranty development technologies to combat warranty costs and reduce warranty periods. Without an effective system, dealers will spend excessive time on claim submissions and administrative tasks, leading to inefficiencies, duplicate data, and lower customer satisfaction. 

A comprehensive warranty management plan provides:   

But before we talk about how OEMs can pave the path for tackling complex warranty management challenges, let us have an extensive overview of the technological trends that will define warranty management in the future. 

Technological Trends that are Transforming Warranty Management 

• Predictive Maintenance to know potential failures   

By collecting product usage data and performance, manufacturers can identify potential problems before they can cause further product disruptions and failure. Using predictive maintenance, they can reduce warranty repair and improve product reliability, which can further reduce product costs and lead to customer-centric solutions.   

• Automation in warranty claims   

AI/ML-powered automation systems are revolutionizing warranty management solutions, streamlining the warranty process, thereby enhancing the entire operational technology. Using automated systems to assess claim validity and verify warranty coverage makes it possible to reduce human errors, thereby improving customer reliability.   

• Data visibility to improve warranty management   

Data visibility empowers warranty management like never before, shifting from a reactive approach to a proactive approach where they do not have to wait for product failure to know the end results and, therefore, find solutions. When manufacturers have real-time insights into product repair patterns and cost breakdowns, they can identify improvement areas, escalate warranty management processes, and make insightful decisions.  

Taking a leap ahead with Warranty Management Capability Maturity Model  

Businesses need to scale to a more comprehensive approach to turn opportunities into challenges that not only help them fine-tune their current warranty management solutions but also keep up with the warranty management trends. To be precise, they need a warranty management capability maturity model to upgrade the warranty process and make it cost and time-effective.

Warranty Management Capability Maturity Model  

The Warranty Management capability maturity model will allow OEMs to benchmark their capabilities and achieve consistent improvement throughout their warranty process lifecycle. This will not only increase their knowledge about warranty trends but also help them make significant gains when it comes to cost reduction in the manufacturing industry. Based on this model, they will independently assess their ‘as-is’ warranty state and determine a roadmap for the future. Through a standardized approach, businesses can have a higher level of collaboration, thereby resulting in streamlined operations and agile business decisions.   

“It is not just about having an existing warranty program. The real aim is constantly improving it, making it efficient, profitable, and customer-centric.”  

A warranty maturity model is equal to a health checkup, just about your warranty operations, divulging where your organization stands and what your strengths and weaknesses are.    

The five maturity levels describe how organizational behaviors, practices, and methods can reliably and sustainably produce required outcomes. However, to be the warranty champ, you must lead at level 4. 

Level 0: Ad Hoc  

At this initial stage, business processes are unmanaged, reactive, and chaotic. At this stage, OEMs do not really invest in automated warranty management tools. They lack structure and documentation, leading to inconsistent and inefficient warranty management.   

Level 1: Standardized and Repeatable  

At this stage, OEMs have a streamlined warranty process but have poor visibility outside warranty administration. They usually adopt unstructured warranty management tools, thereby leading to poor warranty coverage, delayed claim processes, and increased warranty time period.   

Level 2: Managed  

Organizations that have reached this level have an inconsistent but established warranty quality connection. They are further investing in IT tools to manage basic warranty transactions and cut costs in order to achieve a streamlined warranty process.   

Level 3: Integrated  

At this stage, organizations work on integrating processes, tools, and decision-making across multiple functions and stakeholders, such as quality, service, and sales.  They are now ready to invest in warranty management tools to improve operations and have analytics insights and early fault detections.   

Level 4: Optimized  

At this advanced maturity level, organizations focus on ongoing warranty improvement and optimizing interdisciplinary processes.  They can drive real-time data insights, proactively manage asset quality, and leverage predictive analytics and advanced analytics to create concrete plans that could save on cost and warranty period.  

When OEMs climb to an optimized level, they are ready to build a holistic warranty management solution.   

Benefits of a Warranty Management Solution   

Implementing a comprehensive warranty management system offers significant advantages:  

1. Reduction in Warranty Costs: Potential to cut up to 10% of total warranty expenses.  
2. Lower Manual Processing Costs: Achieve up to a 30% decrease in costs associated with manual claims processing.  
3. Reduced IT System Ownership Costs: Save up to 35% on the total cost of ownership for warranty-related IT systems.  
4. Cost Savings through Quality Insights: Benefit from substantial savings from insights from Early Warning Systems (EWS).  
5. Enhanced Process Efficiency: Streamline warranty and claims management processes for improved visibility and management of warranty information.  
6. Improved Product Quality: Shorten Detection-to-Correction cycles, leading to higher product quality.   
7. Efficient Supplier Chargeback: Increase efficiency in supplier chargeback processes and reduce warranty reserves.  
8. Better Data Exchange and Collaboration: Facilitate effective data exchange between dealers, OEMs, and suppliers, enhancing collaborative resolution of warranty and quality issues and strengthening partner relationships.

Adopting a holistic warranty management approach reduces costs and boosts product quality, customer satisfaction, and brand reputation in the market. OEMs need efficient warranty management to optimize the performance and satisfaction of both dealers and end customers.