Pitfalls In Warranty Management

By Author: Rakesh Kumar
Total Articles: 8
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Warranty is an evidence of the manufacturer's commitment of its product quality to customers. But it is sad that most companies pay very little attention to warranty management, thus missing opportunities for significant bottom-line savings, as well as increased business value through higher level of customer satisfaction. However, high-performance businesses treat warranty management as an asset that can create tangible shareholder value.

Product warranties continue to play an increasingly significant role in product's net profit metrics.

The interaction between consumers and manufacturers define the market for the product. In an effective sales process, warranty and after-sales support are formulated in a way that is profitable to both the customer and the manufacturer. While customers often leverage the benefits of warranty for their product, ironically enough, many OEMs still consider it an afterthought.

Through this article, we have tried to analyze the factors that stand in the way of warranty management. Following points elucidate on why is it that effective warranty ...
... management processes are still not on the radar screens of many manufacturers.

Warranty Policies - Warranty Policies are always in place, but seldom does there seem any measure to check the validation of these policies. This leads to increased number of fraudulent claims and loss of revenue due to inventory consumed in such claims. So sometimes, even when a product is not in its warranty period, the service fees and/or part replacement is the result of fraud or pilferage in the tools used to manage such claims.

Manual Claims Review and Reimbursement - With a large supply chain including OEM (Original Equipment Manufacturer), distributor, retailer and then customer, the warranty claims and reimbursement process sometimes become a lengthy process that sometimes even take few months. Detecting fraudulent claims become a challenge, which results in longer warranty life-cycle, inefficient & higher service cost and dissatisfied customers.

Manual Errors - One of the biggest pitfalls while managing warranty is the error-prone nature of manual data. Manual intervention makes the process slow and inefficient, and increases the TAT. With more than one entity involved in processing warranty of any product, the manual paperwork processing like faxing or mailing often throws a distorted picture. This becomes very costly and time consuming to the manufacturer.

Warranty as an afterthought - Many companies pay attention on managing the warranty of their product line as a necessary evil that has to be tackled. Seldom do they treat it as a revenue generator or a model to insure higher level of customer satisfaction and loyalty. Effective warranty management is not treated as an asset that can create great business value.

The above mentioned points briefly highlight how companies succumb to the mismanagement of after-sales business processes. It is therefore recommended to align entire post sales warranty, service & support, through a well defined process with effective tools that actually help to meet the expectations of the customers.

Rakesh Kumar is a business developer of Zed Service. Zed Service is leading service management software in India. Zed Service have lots of innovative features including repair management software, warranty management software etc.