This presentation was presented by Ken Monroe of Ingersoll Rand and Devarapalli Moshe of Tavant Technologies at the Warranty Chain Management Conference 2013. The presentation talks about how customers can improve their business which is coupled between Warranty, part returns and supplier recovery.

1. > Supplier Cost Recovery
Presented By Tavant Technologies at The
Warranty Chain Management Conference 2013
PEOPLE. PASSION. EXCELLENCE.

2. Supplier Cost Recovery Topics
> Overview of Products and Purchased Parts
> Supply Agreements
> Logistics of the Recovery Process
> Communication Strategy
> Continuous Improvement/Issues Resolution
> Recovery Application, Process and Road Map
> Lessons Learned
Tavant Proprietary & Confidential

3. Ingersoll-Rand Products
> Air Compressors (3.7HP – 2,500HP)
— Small Reciprocating
— Rotary Oil-free & Contact-Cooled
— Centrifugal
— PET Blow Molding
— Controls and Automation
Tavant Proprietary & Confidential

4. Ingersoll-Rand Purchased Parts
> Controllers
> Coolers
> Drives
> Fans
> Hoses and Piping
> Motors
> Pressure Vessels and Tanks
> Relays
> Starters
> Transducers
> Transformers
Tavant Proprietary & Confidential

5. Supply Agreements/Contracts
> Most Critical Component of Cost Recovery
— Recovery is limited to contractual obligations
— Partnership with Commodities Management
• “Price is King”
• Warranty Cost Recovery T&C’s must be “Queen”
• Robust “Boiler Plate” Supplier Cost Recovery T&C’s
– Part Cost
– Labor Costs
– Travel Costs
– Freight and Shipping Costs
– Other Incidentals Costs
• A $10 part can create $100K’s in annual warranty costs
– Minimal Recovery if only Part Cost is Covered
Tavant Proprietary & Confidential

6. Recovery Process Logistics
> Requesting Return of Parts from Customers
— Tracking of incoming shipments
> Accepting or Rejecting Returned Parts
> Associating Parts and Generating a Claim
— A part may have multiple suppliers
— A Supplier may have multiple contracts
> Obtaining Supplier RGA’s
— Tracking Shipments to Suppliers
> Supplier Approval or Denial of claims
> Payment/Crediting of Claims
> Closure of Claims
Tavant Proprietary & Confidential

7. Communication Strategy
> Conference Calls with Top 20 Suppliers by $
— Weekly/Bi-weekly based on outstanding claims
• Cross-functional participation for key suppliers
– Technical Service
– Warranty Administration
– Supplier Quality
– Product/Life Cycle Engineering
— Ad hoc calls with other suppliers as needed
— Enhanced Supplier Engagement
> Automated Claims Notification via E-mail
— Implemented 4Q12 as a Continuous Improvement Project
Tavant Proprietary & Confidential

8. CI and Issues Resolution
> Opportunities & Problems Submittal
— Web-based Ticket Entry and Tracking System
• Tavant Support System / JIRA
— Automated E-mail Notifications
— Weekly Conference Call to Review Open Tickets
— Enterprise-wide Review of CI Opportunities
— Testing of Changes Prior to Implementation
Tavant Proprietary & Confidential

9. Help Business In Improving Recovery
> Tightly coupled process between Warranty, Part Return and
Supplier Recovery
> Supplier portal
> Integrated data available for analysis
> Customized recovery reports
> Mass updates of Recovery claim attributes
> Easy to track and follow up
> Effective work flow
> Save recovery claim processing time
Tavant Proprietary & Confidential

10. Warranty & Recovery Process
Tavant Proprietary & Confidential

11. Recovery – Application Setup
> Manage Supplier
— Sync/Create supplier and map supplier to sectors
— Define Supplier site location, associate supplier parts
— Auto generated reports - Total claim#/claim$
> Manage Supplier Contract
— Recovery based on Causal/Removed part
— Supplier response/dispute period
— Compensation terms covered – derived/flat rate
— Minimum % acceptance claim amount to debit supplier
— Associate parts covered in contract(s)
> Supplier Recovery Admin
— Define Business Rule/Condition for Claim routing
— Define supplier groups
Tavant Proprietary & Confidential

12. Recovery Process in Application
> Initiation – Auto generation on warranty pay
— Consider Supplier contract & Part return status
— Claim routing based on Business Rules/conditions
— Auto/Manual assignment of Claim(s) to supplier(s)
> Recovery Claim Processing
— Supplier Recovery Processing team
• Well organized inboxes, review and send to supplier
• Track & act on claim till the closure, reopen supplier accepted. Ability to
send claim to warranty department
— Supplier: Mass update - Accept/Dispute claims
• Request/Receive part
> Recovery Part Return Management
— Track, Inspect and Ship part to Supplier
— Request dealer for part
Tavant Proprietary & Confidential

13. Product Improvement
> Product Road Map
— Inputs: Business users, Suppliers, Market Trend
— Execution: Define yearly road map
• Continuous update/prioritize based on inputs
• Warranty Council / Enterprise Change Council approval
— 2012 Road Map main features
• Customized views of inboxes & download to MS Excel
• Improved work flow / edit recovery claim until ready for debit
• Add/Share attachments to claim by all users
• Generate pdf / print of recovery claim
• Updated help for supplier recovery
• Way to track shipment with carrier/tracking number
Tavant Proprietary & Confidential

14. Lessons Learned & Takeaways
> Robust Supply Agreements are a “MUST”
> Packaged Warranty System is the Way to Go
— Cannot imagine the logistics of a manual system
> What Statute of Limitations on Warranty?
— Unless specified in the Supply Agreement
> There’s Always 50/50
— When you agree to disagree
> Leave no Stone Un-turned
— Warranty is not the only source of Cost Recovery
> If it is to be, It is up to us!
— The Calvary is not Coming
Tavant Proprietary & Confidential

15. > Thank You!
PEOPLE. PASSION. EXCELLENCE.