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Prabhakar Ravishankar
Domain Consultant Manufacturing ISU
28 May 2019

A large manufacturing company receives a warranty claim totaling $2,000 for replacement of faulty car parts. After investigating the claim and processing the request across various departments, the claim is settled with the owner. While most claims maybe genuine, many OEMs and third-party suppliers are increasingly suffering huge losses from fraudulent claims.

In this case too, the manufacturing company failed to detect this as a case of fraud due to its complex warranty management process, which lacked real-time visibility into the warranty systems, dealer management systems, and supplier ecosystem. As a result, what seemed like a simple claim for the replacement of faulty car parts, cost the company dearly.

Many companies face a similar fate with lengthy manual processing cycles supported by the high number of claims processing personnel that result in increased error rates and mismanagement or poor diagnosis of fraudulent claims. In fact, there are cases of OEMs spending up to four percent of their annual revenue on warranty management. Additionally, companies are burdened by poor customer experience and strained supplier relations.

Simplification of the Warranty Claims Management

Warranty claims management is a critical business operation in the manufacturing industry. It comprises multiple steps including warranty applicability, root cause analysis, fault codes, and more, to validate the claims raised. It also involves the identification of faulty material that should be returned and replaced by the OEMs and applicability of supplier chargebacks.

Automation of this process will simplify and streamline the claims management cycle – reduce high warranty costs, improve parts return management, supplier collaboration, and most importantly improve aftersales customer experience.

What’s tricky about applying automation to a process like claims management is that it includes a series of parts such as workflows, alerts, documentation, analytics and so forth. And, each of these parts requires a different type of automation. Implementing a Business Process Management (BPM) platform, however, can help OEMs and dealers ease the case handling process.

BPM platforms address all phases of an organization’s warranty needs – from the assessment of warranty maturity, standardization of warranty processes, the definition of warranty strategy, to the transformation of business rules, building closed loop warranty intelligence, defining the IT roadmap, and much more. Claims raised in the platform, via telephone or web portals – email or chatbots, automatically connect customers to a series of menu options and specialized processing agents using RPA technology. This coupled with image recognition/Optical Character Recognition (OCR) technology enables auto approval of the claims.

Customers can expect swifter remediation in such a claims processing cycle with zero manual intervention, while OEMs and suppliers can benefit by investigating and unearthing fraudulent claims thereby reducing the high warranty expenses.

Key Considerations in the Warranty Claims Cycle

If we look at the claims management process, there are three key considerations that OEMs and suppliers should consider implementing to improve the claims management cycle and guarantee superior aftersales customer experience. A simplified and intelligent warranty management process should include:

1.    Early warning detection using advanced claim analytics

The quality management team, a critical process in the claims management cycle, often faces long detection-to-correction processes sometimes amounting to six months processing time. Compromised quality at this stage has a direct impact on warranty expenses. Companies can tackle this challenge by setting up an advanced claims analytics system to measure and monitor performance. The early warning detection system will harness the data generated earlier in the cycle and calculate an innovative anomaly score. This score, representing the quantum of quality issues in the product, will enable companies to predict failures earlier in the cycle, thereby offering proactive solutions to customers while avoiding product recalls

2.    Increased collaboration for product quality improvement

Product quality issues can also be largely attributed to miscommunication between the warranty claims system, the dealer management systems, and supplier ecosystem. Most often, these entities are not clued into each other’s processes. An increased collaboration, using a common integrated platform that jointly analyzes and shares results, on product quality will reduce the number of post-production quality issues.

3.    Business rules repository across the claims management cycle

A centralized business rules repository running across the various business processes and functions will help standardize repositories in the system enabling automatic approvals/rejections.

Warranting a Smooth Claims Management Process

In today’s digital age where customer expectations are hyped, OEMs and suppliers must focus on aftersales customer experience. Operating with a complex warranty management system, with zero real-time visibility, requiring high manual intervention can grossly impact this experience. A simplified and intelligent warranty management process not only ensures superior customer experience and a healthy supplier relationship but also reduces the cost and effort to support aftersales services.

About the author(s)
Prabhakar Ravishankar
Domain Consultant Manufacturing ISU

Prabhakar Ravishankar is a Domain Consultant with the Innovation and Transformation Group (ITG) in the Manufacturing Industry Solution unit at TCS. He has over 16 years of industry experience in sales, service, parts, warranty, and supply chain management across the manufacturing and IT industry with a demonstrated focus on process improvement and cost-reduction activities. He has been involved in multiple business process consulting assignments for multiple global customers in the manufacturing domain. He holds a master's degree in Computer Science and Engineering and a master's diploma in Business Administration in International Marketing.