Technology + Warranty Management = better bottom lines and improved business operations (IBM IBV Electronics Report)

Let’s start off with a picture that will save you (and me) 1000 words. It will also lay out why this is so very important.

My colleague, Lisa Giane Fisher and I released a report today based on her great research in the best practices and top performers in Warranty Management. When I first saw her initial findings, I knew electronics companies were letting money slip through their fingers in less than optimal warranty practices. It seems like a trivial topic amid competing priorities but an electronics company spends 3% on Warranty management — yet only 1% of that is to repair or replace devices…so where’s the rest of it going and what is your company getting out of it?

We surveyed over 300 electronics companies across the globe to benchmark industry warranty performance and explore how companies are leveraging new technology in warranty and supply chain operations. Our research revealed three key competencies common among companies with highly effective warranty management:

1. Standardized processes and improved communication across organizations to reduce cost and improve insight.

2. Increased traceability back from warranty management into manufacturing and the supply chain.

3. Broadened interactions and information sharing across the ecosystem, including support for customers, service providers and the original equipment manufacturer (OEM).

We broke those three competencies into 11 practices. These require new capabilities, including significant collaboration and digitization of warranty processes. This digital transition is the central enabler to automation, traceability and broad communication — allowing participants to share analytics and access answers. In our report, we reveal how top performers are already reaping benefits from implementing these competencies.

Warranty management practices organized by competency area

We then walk through each area with recommendations and use cases. My personal favorite concept is around the resolution room:

Warranty management resolution rooms bring light to dark data: A resolution room is a virtual space attached to the corpus that enables business users to search dark data — documentation, conversations and intelligence relevant to a specific problem.
The goal in any recall is to quickly get in front of it — determine the pattern, develop a policy for repair and determine the defense strategy. The resolution room illuminates insights that can lead to faster pattern detection and reaction. An industrial automation company faced thousands of high-end machines failing unaccountably. After the company recalled all of them, it took 12 weeks and USD 15 million using paper-based methods to trace the issue to a USD 5 part.
Instead of paper trails or data silos, resolution rooms present a comprehensive and connected historical and organizational context, enabling better human decisions. Warranty management resolution rooms should focus on three key data areas: exception processing, trend insights, and process or outcome changes that are important to highlight for each area.

We include specific guidance for those looking to improve warranty performance — but also build a more connective, collaborative and efficient organization.

We hope you’ll read it and share your opinions and insights with us. In my next post in this series, I’ll share more about how IoT is changing the game in Warranty Management.

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