Reducing Warranty Tracking Costs With Online Applications


Are your warranty costs higher than you want them to be?

Manufacturers focused on creating an efficient and agile warranty tracking and fulfillment process will yield the highest return in the reduction of warranty costs and a visible increase in product quality improvement.

Warranty costs kept corporate product managers busy in 2008, but one of the biggest struggles American manufacturers continue to face in 2009 is in highlighting the seriousness of the warranty problem within their own executive management teams. Research has shown there is a disconnect between CEO’s perceptions of the true impact warranty costs has on their corporate bottom lines and CIO organizations are equally ignorant as to the magnitude the warranty problem is creating. Consequently those who are in a position to establish corrective programs to minimize warranty costs are actually a hindrance to the resolution.

Executives should be focusing on capturing warranty claim data across the organization and throughout the supply chain. And they should be investing in data analysis to identify emerging issues and fraudulent activity to reduce warranty costs and increase product quality.

The U.S. economy is enthrawed in one of the longest recessions in American history, this coupled with aggressive presssure from expanding global markets has increased manufacturers’ needs to stay competitive. Expanded market resources and knowledge-empowered customers are driving manufacturers to play by new rules. Manufacturers who want to stay competitive can no longer rely on high quality, fast delivery, and low prices to stay on top, these factors are now considered a commodity. Yet many of the quality and production costs continue to rise for these manufacturers; including expensive inventories to track and move, multiple products to design and produce, numerous OEM suppliers to negotiate with, rising raw materials costs, and quality standards to maintain.

In addition manufacturers also have an increasing need to acquire, open, and expand new distribution channels while they retain, attract, and service new customers to remain profitable. Manufacturing organizations are now being forced to find new ways to enhance product life cycle while at the same time reducing their warranty claims. Failing to detect and correct field product failures, operational and distribution problems, fragmented data processes, and fraud can lead to massive losses in unnecessary warranty claims and customer dissatisfaction. Since manufacturers started reporting warranty expenses in 2003, the severity of the problem has been exposed. In 2005 fifty of the top American manufacturers reported warranty reserves in the amount of $22.2 billion. That’s with a “B”, and executives can no longer ignore warranty expenses and treat them as a necessary part of doing business. They must examine the root causes, improve product quality, and implement best practices throughout the operation and distribution chain.

Where do we go from here with online warranty tracking applications?

A paradigm shift must take place to resolve the problem. Manufacturers focused on creating an efficient and agile warranty tracking and fulfillment process will yield the highest return in the reduction of warranty costs and a visible increase in product quality improvement. Creating a web based warranty data tracking solution is a cost effective and agile approach that can assist manufacturers with detecting and resolving problems throughout the design, production, and distribution processes thus ensuring early detection and development of corrective actions that can increase the product quality and customer satisfaction

The data is there, it’s often just dispersed throughout the disparate departments within the manufacturer and supply and distribution chains.  Typically manufacturers have multiple departments that handle specific functions such as engineering, quality assurance, and customer service. These departments manage pieces of the data used for design, production, sales, distribution, and claims; in addition third parties such as distributors, authorized dealers and OEM partners mange other pieces of the data. Each department or party typically operates independently of one another and do not communicate or share their managed information in a collaborative manner. This lack of communication is the root cause of the problem. Creating an agile solution that would allow all of these departments and parties to collectively share information in real time is vital in producing a significant reduction in product failures and warranty costs. Sounds simple, right? It can be, and the primary and secondary results can lead to significant annual cost savings for manufacturers willing to invest in their future.

Maelstrom Solutions warranty tracking methodology provides manufacturers with the ability to create custom business rules for analysis of their data in real time to identify questionable warranty claims and minimize fraud, to forecast warranty costs for more accurate budgeting, and to facilitate internal and government reporting all through a web-based interface that is cost effective and user friendly.

How can we help manufacturers reduce warranty costs?

At Maelstrom Solutions we consult with our manufacturing clients to reduce their overall warranty costs and increase their product quality life cycle. We collaborate with our clients to provide a global view of warranty issues across their supply chain taking them from a reactive and transactional posture to a proactive and analytical environment. By working directly with our client’s management team we assist them with improving their product life cycle quality, extending their sales and marketing outreach, and managing their OEM suppliers and distribution channels. We provide our clients with the ability to create custom business rules for analysis of their data in real time to identify questionable warranty claims and minimize fraud, to forecast warranty costs for more accurate budgeting, and to facilitate internal and government reporting all through a web-based interface that is cost effective and user friendly.

To learn more please contact us at sales@maelstromsolutions.com.