Unlocking Your Organization\'s Warranty Management Potential


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Unlocking Your Organization\'s Warranty Management Potential

  1. 1. Unlocking Your Organizations Warranty Management Potential Brought to you by Cognizant Image Featuring: Area July 19th, 2011©2011, Cognizant
  2. 2. Today’s Agenda • Welcome & Introductions • Warranty Management and Its Impact on your organization • IDC Warranty Management Capability Maturity Model • POV and Case studies on how organizations move up the Maturity Model • Q&A2 | ©2011, Cognizant
  3. 3. Speakers Sheila Brennan Program Manager, Product Lifecycle Strategies, IDC Ms. Brennan has over 15 years of experience in process design, performance measurement, product development and quality management, with a strong focus on efficiency and manufacturing. As Program Manager of IDC Manufacturing Insights Product Lifecycle Strategies practice, Sheila Brennan examines business imperatives, best practices and emerging technologies in discrete manufacturing industries. Her research topics center on product lifecycle economics, and include innovation, design and engineering, service and warranty, social product development and product end of life. John Hattery Automotive Business Consulting Practice Leader, Cognizant John has over 24 years of global experience helping clients become more competitive and profitable by applying the appropriate solutions and tools to identify, diagnose and solve supply chain, manufacturing, and service problems. He has experience in automotive and heavy industry as well as durable and non-durable consumer goods industry with functional expertise across supply chain, maintenance, manufacturing, engineering, capital equipment & tooling, and shared services domain. . Imran Masood Manufacturing, Logistics and Technology BPS Practice Leader, Cognizant Imran works closely with business leaders to help create innovative solutions leveraging Cognizant core strengths of Technology, Industry best practices and process reengineering. Imran has over 12 years of professional experience in the areas of business process reengineering, Operations delivery and relationship management. Imran has worked with many Fortune 500 companies, helping them in the areas of shared services setup, offshoring strategy and process innovation with a special focus on technology enabled global environments.3 | ©2011, Cognizant
  4. 4. Cognizant OverviewCorporate FactsMission Cognizants single-minded mission is to dedicate our business process andtechnology innovation know-how, our deep industry expertise and worldwide resources toworking together with clients to make their businesses stronger. Few Facts Global scale to deliver:  Revenues: » $4.59 Billion (Full 2010)  Employees: App. 104,000* Development Center  Active Customers: 712 Regional Sales Office Project Footprint  Over 50 global delivery and development centers Development Recent Awards & Recognition  25 regional sales offices Regional Sales Center Named to Fortune magazine’s World’s Most Admired Office Footprint Project Companies (March 2011)  Over 12,000 projects in Cognizant Ranks among Top Performers in Bloomberg 40 countries Business Week 50 (June 2010) Cognizant ranked among Forbes Fastest growing 25 * As of December 31, 2010 Tech Companies (April 2010) 4 | ©2011, Cognizant
  5. 5. Unlocking Your Organizations WarrantyManagement PotentialSheila Brennan, Program Manager, IDC ManufacturingInsightsJuly 19, 2011
  6. 6. About IDC IDC is the premier independent global market intelligence, events, and advisory firm for information technology, telecommunications, and consumer technology markets since 1964 More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries IDC is a subsidiary of IDG, the worlds leading technology media, research, and events company Insights are industry-focused business units focusing on technology-enabled business innovation within a single industry© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  7. 7. IDC Manufacturing Insights’ Industries View Asset Oriented Engineering Technology Brand Oriented Value Chain Oriented Value Oriented Value Value Chain Chain Chain Value Chains Chemicals, Automotive, Aerospace, Fashion, Food &Process Domains Pharmaceuticals,… Machinery, … High-tech, Semiconductor,… Beverage,… Investigate a segment Operations across domains Supply Chain Investigate a domain across segments Product Lifecycle Sustainability © IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  8. 8. U.S. Manufacturing Warranty Economy  $23.6 B1Q03 Index=100 Source: IDC Manufacturing Insights and SEC filings, 2011 © IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  9. 9. Warranty Claims Variability in Various High Tech SectorsSource: IDC Manufacturing Insights, and SEC filings, 2011© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  10. 10. A Consistent and Objective Method is Needed Perform relevant and objective self-assessment Benchmark performance Identify best practices Across industrial sectors and organization types Establish a continuous improvement program Assess progress© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  11. 11. Initiative to Address Industry Needs Develop a Capability Maturity Model (CMM) for Warranty Industry Goals – Develop a self-assessment framework – Determine as-is state – Identify best practices – Gauge information technology applications – Establish a roadmap for continuous improvement – Provide a common language for benchmarking with internal and external peers – Create a business-oriented framework to justify ongoing investment in people, process improvement, and technology Collaborated with Cross-Industry Representatives Utilized Industry-wide Field study to validate model and ensure topical alignment – 100 respondents spanning industries, company sizes and geographies© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  12. 12. Leaders and Laggards Emerge Warranty Warriors Warranty Wannabees Serious about warranty process  Realize the importance of warranty improvement process improvement Fundamentals are in place  Some processes are in place Some improved processes in place or a  “Plan" to implement further improvements firm plan to implement them within 18 but no budget or timeline commitment months© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  13. 13. Warranty Management Capability Maturity Model© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  14. 14. Within Each Stage of Maturity…People, Process, Technology Organization – Organizational structure, role, goals, etc. Governance – Warranty process governance Measurement – How does the organization use performance measurement to manage and improve the warranty process Technology – What technology is in place to support warranty management and what does it enable© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  15. 15. Warranty Management Capability Maturity Model 0. Ad-Hoc • Ad hoc transaction-based processes followed casually • Unsystematic exception management • Hodgepodge communication • No investment in warranty software tools; no automation© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  16. 16. Warranty Management Capability Maturity Model 1. Standardized • Established processes followed • Best practices not recorded • BUs operate independently; poor visibility outside warranty administration • Unstructured tools (fax, email)© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  17. 17. Warranty Management Capability Maturity Model 2. Managed • Warranty-Quality connection established, albeit inconsistently • KPIs focus on transactions, basic finance • Initial benchmarking effort and sharing of best practices • Cost recovery emphasized; structured approach • Investment in IT tools to manage basic transactions and finance© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  18. 18. Warranty Management Capability Maturity Model 3. Integrated • Blended KPIs extending into: transactions, finance, quality, customer sat., etc. • Periodic benchmarking, including external benchmarking • High visibility within the organization (VP or above) • Investment in IT tools to improve operations; analytics, early warning© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  19. 19. Warranty Management Capability Maturity Model 4. Optimized • Warranty data drives quality and design improvement • Proactively manage quality and financials • Predictive analytics; Focus on leading indicators • Enterprise-wide decision making • IT tools: advanced analytics, decision-support systems© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  20. 20. Advance Your Maturity Strategize and Align – Senior management support – Multiple stakeholders, especially outside the warranty organization – Focus on clear value: impact to customer, organization Assess and Plan – Benchmark (internal, external) – Assess risk vs. benefits; prioritize opportunities – Establish business value: financial, quality, customer Execute – Define corporate governance and local rules – Implement holistically (people, process and technology). – Do not lose focus on value: impact to customer, organization; Monitor business value Remain Steadfast but Nimble – Establish Warranty-Quality connection – Assess performance and adjust – Plan next wave (climb the maturity ladder) Plan to invest resources in warranty governance structures, management technologies, and honing benefits of investments© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  21. 21. Learn More IDC MI “Way to Becoming a Warranty Warrior” – Webcast Replay: http://bit.ly/IDCMIWarrantyWC2011 IDC MI Reports – Warranty Management Capability Maturity Model and Industry Assessment – Warranty Spend in U.S. Manufacturing – What Does Your CEO Know About Warranty? – Reap Rewards with Customer Self-Repair Join our IDC Manufacturing Insights Community: http://idc-insights-community.com/manufacturing Sign-up for our monthly newsletter: www.idc-mi.com/newsletter sbrennan@idc.com© IDC Manufacturing Insights. Reproduction forbidden unless authorized.
  22. 22. Warranty Value ChainIdentification and Implementation of value creation opportunities Enterprises strive towards an optimized warranty value chain in accordance with their * current organizational objectives and strategic focus ; however these decisions require careful investment decisions. * Different levels of maturity in the warranty value chain demand attention of executive management to a varied list of Focus Areas that need prioritization using a structured method. Different Focus areas prevalent in warranty value chain lead to different value * creation opportunities, that require a holistic approach in investment decision making process. Enterprises need to use a structured Value Discovery approach to make accurate * investment decisions irrespective of their position on the Warranty Capability Maturity Curve. Hence, having the right business partner with deeper understanding of Warranty * Capability Maturity Model and its impact on organizational objectives is essential!22 | ©2011, Cognizant
  23. 23. Organizational Focus Areas in Warranty Value ChainA Level 1 and 2 of Maturity Model Level (2) • Efficiency in transactional operations Managed • Automated / semi-automated claims Achieving higher Processing with efficient adjudications transactional efficiencies • Reverse Logistics / Recovery operations Level (1)  Warranty claims management systems Standardized  Point of Service Solutions Improving Basic  Standardization of field service Structures operations in Place  Technical and Customer Support functions Source : IDC Manufacturing Insights • At Level 1 and 2, focus areas in the warranty value chain demand improvements in productivity and cost reductions. • Important decisions around technology, tools and processes are needed to ensure scalable and global warranty management platforms to meet future needs.23 | ©2011, Cognizant
  24. 24. Organizational Focus Areas in Warranty Value ChainA Level 1 and 2 of Maturity Model • Efficiency in transactional operations Level (2) • Automated / semi-automated claims Managed Processing with efficient adjudications Achieving higher • Reverse Logistics / Recovery transactional efficiencies efficiency Level (1)  Warranty claims management systems Standardized  Point of Service Solutions Improving Basic  Standardization of field service Structures operations in Place  Technical and Customer Support functions Source : IDC Manufacturing Insights • At Level 1 and 2, focus areas in the warranty value chain demand improvements in productivity and few examples of value creation opportunities across three Let’s look at cost reductions. focus areas - “Point of Service Solutions, Claims Processing and Reverse • Important decisions around technology, tools and processes are needed to ensure Logistics”. scalable and global warranty management platforms to meet future needs.24 | ©2011, Cognizant
  25. 25. Value Creation OpportunitiesAt Level 1 and Level 2 Point of Service Trouble shooting systems with technical solutions and failure reason lookups Integration with device diagnostic and equipment historical information Business Process Services partner for level 1 technical support and logging of new issues into information repository Real time information exchange systems for sharing field information SUPPLIERS MANUFACTURER DEALERS / Recover PRODUCTS DISTRIBUTORS Costs File Claim Field Personnel Pay Claim Claims Request & Processing Analytics, Reporting Receive & Compliance Product Parts Reverse Logistics Claims Processing  Focused Module for reverse logistics management  Transactional claims processing system with  System integration to ensure supplier parts ability to limit errors based on static rules mapping and automated part requests  Establishing standard guidelines for processing at  Integration with supplier contract database for least 80% of claims effective decision making in reverse logistics  Business process services partner for handling  Business process Services partner for handling both pre and post adjudication claims processing coordination between different parties25 | ©2011, Cognizant
  26. 26. Value Realized At Level 1 and 2Representative Success Stories Claims Processing Platform Claims Processing Business Services Leading Automotive OEM Leading Insurance Company  Cognizant developed a scalable and global claims  Cognizant selected by the customer as a preferred processing platform with internationalization features partner to improve the claims pre-adjudications and replaced the existing legacy application and processes and reduce outbound call volume. related processes.  Cognizant team modified business process workflows  The new platform enabled 90% automated using call volume data analysis and achieved 38% claims processing compared to earlier manual increase in productivity, 25% decrease in overall processes and reduced human resource call volume and 10% reduction gross call duration. requirements by more than 150%. Point of Service Solutions Reverse Logistics Leading Automotive OEM Leading Brewing Company  Cognizant selected by the customer for support and  Cognizant developed a web based Reverse Logistics enhancements of custom built point of service system to improve efficiency by connecting 1500+ application suite ; These applications include portable distributors. devices for technicians with real-time access to OEM systems for technical information and enterprise  The new Reverse Logistics system improves quality network. customer responsiveness, reduces inventory levels and minimizes operational costs by about 30%  Cognizant generated yearly cost savings of through real-time control of the return and repair 30+% in this multi-Year ongoing engagement cycle. using the right mix of onsite-offshore resources.26 | ©2011, Cognizant
  27. 27. Organizational Focus Areas in Warranty Value ChainAt Level 3 and 4 of Maturity Model • Warranty is now a “Visible” function with real chance of improving bottom line and stopping “Value Leakage”. • The focus areas at level 3 and level 4 demand actionable intelligence to improve functions outside of standard warranty operations. • Claim Authenticity to prevent Level (4) fraud and unjustified claims Optimized • Product Quality improvement Proactive and using early warning Enterprise-wide • Social Networking Intelligence decision making • Improvements in Extended Warranty Programs Level (3) Integrated • Automated and Intelligent Supplier High Warranty Visibility Recovery with KPI Focus • Warranty Analytics for Actionable intelligence • Early warning systems for quick response to quality issues Source : IDC Manufacturing Insights27 | ©2011, Cognizant
  28. 28. Value Creation Opportunities At Level 3 and Level 4 Summary of our recent customer workshop findings Corroborates the value creation opportunities  Advanced, dynamic claims authentication to identify claims Claim Processing & Payments with high probability of being unjustified and drive overall HIGH reduction in level of suspect claims (10-15% claims are suspect) with involvement of a Business Process services partner. Point of ServiceAdequacy of Existing Solutions  Early warning using automated, predictive models to accurately capture emerging field failure patterns (You can also leverage social media chatter, learn how to confidently predict MED Reverse Logistics events with less data and integrate early warnings with smart Supplier Recovery products). Actionable Intelligence  Actionable intelligence for generating insights – You can Early create specific modules for insights for reserve management, Warning and Notification quality management, new warranty program design etc – based on multiple source/transaction data. LOW Claims Authenticity  Intelligent Supplier recovery driven by cross-functional integration and workflows to trace part warranty to supplier, LOW MED HIGH Value to customer establish accountability, and proper recovery (current ~40% supplier recovery rate) using a capable Business Process Services Legend partner. Opportunity for Low Medium High manufacturer  These advanced solutions need to integrate seamlessly with existing applications and processes.  Cognizant’s proprietary WISARD framework provides such capabilities along with focused BPaaS offerings to enable Warranty leadership of your organization. 28 | ©2011, Cognizant
  29. 29. Realized Value At Level 3 and Level 4Representative Success Stories Early Warning for a leading Intelligent Supplier Recovery for a automotive OEM leading automotive OEM  Cognizant developed an Early warning module with  Cognizant developed supplier recovery module for the different alarm evaluations logic centered around leading automotive OEM with automated recovery amount gradually increasing claims detection methods. calculators based on supplier cost sharing contracts.  The system detects 10% more real quality  The new system enabled 56% supplier claims alarms that are taken up for investigation and recovery rate compared to earlier 30-40% supplier counter measure implementation with huge cost claims recovery rates. avoidance potential.  The system also reduced recovery time by using  The system also provides rich features for claims workflows for acceptance and rejections of claims by the occurrence trend analysis that are used in product supplier and the OEM personnel. quality related decision making process. Claims Fraud Analytics for a Unjustified Claims identification for leading Auto Insurance Company a leading Insurance company  Cognizant developed a Predictive Fraud Analytics Model based on data from policies, claims and claims  Cognizant developed a new approach to identify suspicious fraud indicators. claims for a leading US based insurance company in the absence of a valid fraud indicator  The predictive model has the ability to classify claims into Fraud and Non-Fraud categories with  Team Cognizant identified 9 major factors impacting 95% accuracy, a significant improvement over the gap between claim event date and claim report static rule based fraud identification methods. date to identify 4 different segments of suspicious claims  Team Cognizant also helped the customer to identify different customer segments and associated fraud characteristics to help design new auto insurance policies.29 | ©2011, Cognizant
  30. 30. Value Creation – Proof of Cognizant’s VisionWISARD- Going Beyond transaction management Warranty Information System for Analysis and Reporting and Decision Making30 | ©2011, Cognizant
  31. 31. SummaryCognizant’s Value Proposition With the diversity of Cognizant’s portfolio, we bring cross industry best practices, tools and methodologies from the warranty world We Know  We understand the Warranty capability maturity model and impact of the Warranty maturity level on decision making process  Cognizant has the capability to provide Consulting, Technology and Business Processing solutions to our customers across the Warranty Holistic value chain Solutions based on  Our offerings such as Claims CoE, VisualSpect and Reverse logisitics maturity systems improve efficiencies and reduce operational costs ; Using levels Cognizant’s WISARD framework and targeted BPaaS solution offering, our customers can unlock the hidden value with huge cost avoidance potential  Cognizant has focused on the warranty value chain for a long time and Warranty has developed expertise to help customers to convert warranty into value Leadership creating function from a “cost center” and to get recognition as “warranty Enablement leader” as per the industry benchmarks. Start TodayContact John Hattery / Imran Masood for any questions around your warranty solution needs.John Hattery: John.Hattery@cognizant.comImran Masood: Imran.Masood@cognizant.comYou can also write to us at Warranty@cognizant.com and visit us at www.cognizant.com31 | ©2011, Cognizant
  32. 32. Q&A Session Please ask your question by typing it into the “Ask a Question” box at the bottom of your screen and clicking on the “Submit” button.32 | ©2011, Cognizant
  33. 33. Webinar Appendix33 | ©2011, Cognizant
  34. 34. WISARD Vision Modular to Leverage existing investments Unjustified Supplier Early Warning and Actionable Claims Recovery Notification IntelligenceBPaaS Follow up with Follow up withCOMPONENT dealer for resolution supplier for using the workflow resolution of solution recovery Actionable intelligence on Early warning • Reserve allocationWISARD List of claims with List of line items signals and •Product pricingOUPUT AND high probability of pending recovery notification trigger •Product qualityREPORTS being suspect from supplier •New warranty design • Capture patterns Dynamic analytics engine • Identify supplier or (Related parts failure/ • Customized that flags outliers based warrantor from part Trend across regions) intelligence enablingWISARD specific scenarios like: • Integrate social media better decisionFEATURES • Allocate share of costs • Family of parts failure making for CFO, CSO, based on contracts where necessary • Labor hour mismatch VP Engineering, VP • Disproportionate claims • Notification engine, with • Collate supporting Service etc. to sales ratio supporting data for data/hardware for • Multiple claims on a part stakeholders follow upEXISTINGCUSTOMERDATASOURCES Sales Data Production/ Claims Data Supplier Equipment Social Media Other Data BOM Contracts Diagnostics 34 | ©2011, Cognizant Data used for Unjustified claims analysis Data used for Supplier recovery Data used for Early warning and Notification Data used for Actionable intelligence
  35. 35. Warranty Value Discovery FrameworkDiagnostic Assessment offering from Cognizant Transformation Cognizant’s value discovery framework can Roadmap and Plan help determine existing gaps to address key focus areas and how to leverage investments Value Discovery Assessment CURRENT STATE ANALYSIS WORKSHOP OPPORTUNITY ANALYSIS  Assess current state of overall  Discussion on survey results and  Detailed Assessment and warranty management through key findings Transformation Roadmap PROCESS surveys, interviews and  Discussion with key  Future state definition and discussions with key stakeholders stakeholders for identifying and strategic opportunities  Discussion around key focus areas prioritizing opportunities for  Cost-benefit analysis and and supporting processes value creation business case creation  Provides view of where  Implementation plan OUTPUT  Prioritization of opportunities organizations stand, compared to based on alignment to  Execution program management best-in-class and average levels, organization strategic priorities based on secondary research  Change management35 | ©2011, Cognizant
  36. 36. Value Creation Opportunities - Proof of VisionCognizant Approach Center of Excellence (CoE)  Cognizant establishes a “Claims CoE” to cater to entire claims life cycle business processes – notification, assignment, coverage, investigation, evaluation, resolution, Claims reserve management, payment and recovery; Focus on Processing creation of reusable assets and standard guidelines.  CoE also includes a team of professionals with experience in development of scalable and global claims processing platform. VisualSpect  Cognizant uses its “VisualSpect “ solution framework for providing PDA or other smart device based mobility solution Point of Service to inspectors / auditors who report on product quality issues. Solutions  VisualSpect framework has five modules; one each for data capture, data configuration, data management, alert generation and analysis & reporting. Web Based Systems  Cognizant uses its experience of developing globally accessible systems that allow dealers / distributors to report Reverse on available return parts and inventory. Logistics  This web based Reverse logics and part material tracking system is designed to be fully integrated with internal ERP systems.36 | ©2011, Cognizant
  37. 37. Thank You!!37 | ©2011, Cognizant