> Cross-functional Warranty Management A Closed Loop Approach to Boost Profitability

Presented by Tavant Technologies at Warranty Chain Management Conference 2011, San Diego, CA Author: Devendra Malekar and Roshan Pinto

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Why This Discussion?

The importance of Effective Warranty Management to the Companys Overall Performance

Satisfaction with the Companys Current Approach to Warranty Management

Over 80% OEMs feel that Warranty Management is extremely or very important to the companys performance
Market Pressures Driving Warranty Management

67% OEMs are not completely satisfied with their companys approach to Warranty Management
Process Used in Support of Warranty Management

Customer Satisfaction, Warranty Costs and Profitability are the top concerns

79% OEMs have manual or partially automated Warranty Management process

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Warranty A Critical Value Chain

Profitability Revenues Cash flow

Trust & Loyalty Shareholder Value Customer Satisfaction

Competitive Edge

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Warranty A Critical Value Chain

> Superior Product Quality

> High Reliability & Uptime

> Comprehensive Warranty > Speed & Quality of service

Ever Exceeding Customer Expectations

Controlling warranty spend and ensuring customer satisfaction is always a critical balance

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Factors Affecting Total Warranty Cost

Material Administration Labor

Logistics
Repair jobs

Rentals

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Warranty in Cost of Quality

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Direct CoPQ
> Deficiencies in product engineering / design and analysis

> Manufacturing processes and workmanship defects

> Delay in detection of field issues

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Direct CoPQ
> Field service troubleshooting errors and inefficiency

> Inefficiencies in parts return increase logistics costs and affects reverse logistics processes > Supplier warranty accountability not defined / apportioned well

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Direct CoPQ
> Increasing No Fault Found instances with no collaborative dispute management > Inefficiencies in warranty software system High processing times and lack of automation

> Extended Warranties and Service Contracts cost overrun due to lack of dynamic visibility into cash flow

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Losses Caused by Indirect CoPQ

> Customer satisfaction and goodwill > Time with dissatisfied customers > Customer confidence in products > Loyalty to the brand > Recurring business > Shareholder value

Good news travels fast; bad news travels faster!

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Enablers for Closed Loop System

End-to-End Workflow

Integration

Closed Loop Warranty

Automation

Intelligence

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Process Transformation
Integration Automation

End-to-End Workflow

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Leverage Intelligence
To Analyse KPIs in Expenses Operationa l Efficiency

> Product & Service Performance

> Warranty Costs > Top Warranty Cost Drivers > Top Field Service Issues
Metrics and KPIs Volume FMEA Reliability

> Workmanship
> Products & Parts Reliability > Returns and Recalls > Supplier Performance > Reserves & Cash flow > Aftermarket Sales & Profitability

Quality

Reserves / Cash Flow

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Warranty Cost as a % of sale

Warranty Cost by Product Family

Warranty Cost by Product Model

Intelligence Hidden in Warranty Data

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Warranty Cost as a % of sale

Warranty Cost by Product Family

Warranty Cost by Product Model

Top Causal Parts

Parts return Cycle Time

Mean time between Failures (MTBF)

Intelligence Hidden in Warranty Data

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Warranty Cost as a % of sale

Warranty Cost by Product Family

Warranty Cost by Product Model

Top Causal Parts

Parts return Cycle Time

Mean time between Failures (MTBF)

Open Claims Status

Top Business Rule Failures

EW / Contract Profitability

Intelligence Hidden in Warranty Data

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Initiatives from Intelligence

> Product engineering / redesign > Design for warranty selfrepair / Remote fixes > Design for serviceability > Improve field diagnostics > Review Supplier Performance > Reduce instances of no fault found > Increase service limits > Enhance repair intervals > Refine sales pricing > Data for financial audits > Predictive analysis of costs and reserves > Reduce Detection to Correction cycle time > Cross-selling and Up-selling of Services

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Close the Loop for Crossfunctional Improvements!

Integrate warranty organization more closely with other business functions

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Leverage Technology Process Automation

User Convenience through Configuration
Ad-hoc Query
Routing Rules

Business Rules Engine

Query Builder Rules Editor Business Entities OGNL JBPM

Validation Rules

Processing Rules

Business Conditions

Limits of Authority

Policy Evaluation

Cost Modifiers

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Leverage Technology Warranty Intelligence

Business Results Real-Time Integrated Analytics Early Warning System

Monitoring

Predictive Analysis

Actionable Insight

Dashboards

Strategic and Operational Decision Making

Collaborative Approach

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Conclusion
Closed Loop Warranty

Dealer

Automation
Customer

Supplier

OEM

Integrated Processes Automated System Dynamic Intelligence Steering Committee for Cost Reduction

Intelligence

Stakeholder Collaboration

End-to-End Integrated Work flow

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> Thank You!

Contact Us:W: www.tavant.com/warranty E: bizdev@tavant.com T: (866) 9- TAVANT

PEOPLE. PASSION. EXCELLENCE.