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How to Manage Warranty Costs

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Minimizing warranty costs has always been one of the most pressing concerns for organizations. While minimizing the warranty spend helps, it is also important to make an objective estimation of the costs involved. Due to the lack of information about every single step involved in the business process and the associated costs, a principle barrier becomes evident in charting the right budget.

Cost mismanagement in warranty can rise from ad-hoc estimation techniques and planning for warranty reserves. The elements impacting warranty costs go beyond product repair and overflow into other areas. To estimate such hidden costs accurately, without some kind of integrated business logic, is extremely complex.

The need of the hour is quantifiable strategies and techniques that can optimize the effectiveness of the warranty process. Time and again, warranty analytics have proved to show remarkable results by integrating data that helps to improve product and process performance. That helps not just in managing costs, but optimizing overall business profitability as well.

Integrated technology can reflect warranty costs and assist in better operational and strategic business execution. That aids in formulating streamlined warranty management processes, building brand images, reducing operational costs, improving product quality and optimizing organizational efficiency.

Business Case

The Client

One of the world’s fastest-growing automakers.

The Challenge

The existing warranty management system lacked a comprehensive analytics system that could integrate data across business functions. The organization faced a substantial revenue loss, maximizing ROI was a challenge, and organizational credibility was at stake. The team handled issues on the basis of client demands while using traditional legacy systems.

The Solution

With an intention to mitigate warranty costs, the organization integrated warranty data across all the business units into a single process with common business rules. The analytics solution helped reduce costs drastically and provided the organization with quantifiable data that highlighted areas profitable to the business, and the pain points that required immediate process upgrading. The outcome of the analytics system was a whopping cost reduction of close to 40% across all regions.

Additional benefits included:

  1. Customer satisfaction
  2. Greater process transparency
  3. Scalable solutions
  4. Standardization of systems
  5. Quantification of results

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