The average warranty cost ranges from 0.5 – 4 percent of sales across the manufacturing industry. Manufacturing organizations are realizing the growing importance of effective warranty management and its role in improving the bottom line. The top challenges in undertaking warranty initiatives are lack of consistent process definition, senior leadership involvement and inadequate analytics. As a first step for achieving the state of ‘One Warranty’ organizations should perform due diligence in benchmarking their processes and defining a baseline.
The ‘One Warranty’ Vision
‘One Warranty’ is a vision to bring an organization to a common platform of warranty business processes and technology with a view towards improving customer satisfaction. ‘One Warranty’ means establishing a common process framework, IT platform, and benchmarking practices to devise a common business language across product lines, geographies, and business units in a way that it acts as a single source of truth for reference. The benefits of One Warranty include Consistent Customer Experience and Reduced Warranty Cost.
Implementing ‘One Warranty’
An integrated warranty function extends beyond technology rationalization and encompasses a comprehensive process design strategy. These overarching factors need to be addressed to achieve One Warranty:
- Governance: The first step towards initiating a transformation program is executive commitment. The program needs to be seen as an enterprise-wide initiative with clear ownership delineation
- Benchmarking: Studying warranty processes and performance and comparing them both internally and externally helps in assessing the current state and creating a vision of the ‘to-be’ state
- Change Management: Clear articulation of benefits to all the stakeholders and creating readiness for change is imperative to take the team along in this journey
- Global View: A global view of customers and processes is essential for a ‘One Warranty’ organization
Enablers of Transformation to ‘One Warranty’
The following key enablers aid the achievement of an integrated and holistic warranty management function and a successful transformation to the ‘One Warranty’ state:
- Process Definition: The as-is and to-be processes should be well thought out and structured
- Information Management: Seamless information flow across the warranty management function should be achieved
- Business Rules: Robust and consistent business rules across functions should be laid out and proper attention should be paid to rationalize and streamline existing business rules
- Technology Considerations: Right product for Warranty Management should be selected based on current IT landscape and integration needs
- Closed Loop Feedback: Seamless integration between processes and systems helps drive closed loop information flow across processes such as warranty and facilitates increased visibility into product defects
- Analytics: The organization should define hierarchical KPIs and metrics for all the warranty processes that can be viewed by warranty managers and senior management with the requisite level of detail
A ‘One Warranty’ Organization and its Warranty Maturity
Transitioning towards the ‘One Warranty’ state holds the potential to take a manufacturing organization towards higher maturity by improving collaboration between functions such as reliability, manufacturing, service, warranty, and purchasing. This eventually impacts the four different dimensions of the industry wide accepted maturity model, i.e., Governance, Organization, Technology, and Measurement.
‘One Warranty’ extends the role of the warranty function and converts it into an enabler of customer experience. By unifying warranty processes, manufacturers can not only lower costs but also improve efficiency across the function while delivering a consistent experience. ‘One Warranty’ is an ongoing process, and done right can serve as a competitive differentiator in the marketplace.