Growth comes knocking…
Growth comes knocking…
  How to increase profitability and customer retention 
                   p...
How to?
How to?
• Reduce Warranty Spend
  Reduce Warranty Spend

• Increase Supplier Recovery
           S   li

• Increas...
Worldwide Warranty Claims
2003‐2008, in US$ Billions
           i    $ illi
 $100

  $80

  $60

  $40

  $20

  $0
      ...
Worldwide Warranty Claims
Estimates for 2008 in US$ Billions

 2008    Auto     High Tech   Building       Other Total

No...
Harley-Davidson Inc.
Warranty Claims & Accruals 2003 2009
                  Accruals, 2003-2009
$48                       ...
Harley-Davidson Inc.
Warranty Reserves 2003 2009
         Reserves, 2003-2009
 $200                                       ...
Caterpillar Inc.
Warranty Claims & Accruals 2003 2009
                  Accruals, 2003-2009
 $450                         ...
Caterpillar Inc.
Warranty Reserves 2003 2009
         Reserves, 2003-2009
 $2,400                                         ...
Business Challenges
Business Challenges
                        Policy 
                      Management
                 ...
Business Challenges (contd.)
Business Challenges (contd.)
                                                   Policy Manage...
Business Challenges (contd.)
 Business Challenges (contd.)
Product Failure / Cost Analysis
  Measuring cost of warranty   ...
Solutions: Key Features
Solutions: Key Features
                                              Business Functions
         ...
Solutions: Key Features (contd.)
 Solutions: Key Features (contd.)
Predictive Analysis
Predictive Analysis
               ...
ROI: Real Examples of Savings
ROI: Real Examples of Savings
• Reduction in warranty expenses (up to 20%)
   –   Duplicate ...
Case Study
Case Study‐ Challenges
               • AS 400/JDE (ERP) did not manage warranty policies
  Policy 
  Policy   ...
Case Study Challenges (contd.)
Case Study‐ Challenges (contd.)
                  • Manual processing leading to longer pay...
Case Study Solution & Impact
Case Study‐ Solution & Impact
               • All policies setup in system and enforced thro...
Case Study Solution & Impact (contd.)
Case Study‐ Solution & Impact (contd.)
                   • 40% claims auto processe...
Growth comes knocking…
Growth comes knocking…

                       Eric Arnum, Editor, Warranty Week
    W: www.Warrant...
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Growth Comes Knocking...

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How to increase profitability and customer retention by leveraging technology that can help save up to 10% of warranty spend.

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Growth Comes Knocking...

  1. 1. Growth comes knocking… Growth comes knocking… How to increase profitability and customer retention  p y by leveraging Technology Eric Arnum, Editor, Warranty Week earnum@warrantyweek.com www.warrantyweek.com Manish Arya, CTO, Tavant Technologies bizdev@tavant.com bi d @t t www.tavant.com Sponsored by: 1
  2. 2. How to? How to? • Reduce Warranty Spend Reduce Warranty Spend • Increase Supplier Recovery S li • Increase Customer Satisfaction 2
  3. 3. Worldwide Warranty Claims 2003‐2008, in US$ Billions i $ illi $100 $80 $60 $40 $20 $0 2003 2004 2005 2006 2007 2008 USA Rest of World Source: Warranty Week estimates
  4. 4. Worldwide Warranty Claims Estimates for 2008 in US$ Billions 2008 Auto High Tech Building Other Total North  $13.2 $10.5 $3.2 $1.9 $28.8 America Europe &  $25.7 $3.7 $8.7 $5.2 $43.4 Asia World $38.9 $38 9 $14.2 $14 2 $11.9 $11 9 $7.1 $7 1 $72.2 $72 2 Source: Warranty Week estimates
  5. 5. Harley-Davidson Inc. Warranty Claims & Accruals 2003 2009 Accruals, 2003-2009 $48 1.8% Quaterly Claims ($ Mil) Claims Rate % Accural Rate % $40 1.5% $32 1.2% $24 0.9% $16 0.6% $8 0.3% $0 0.0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2003 2004 2005 2006 2007 2008 2009 Source: Warranty Week from SEC data
  6. 6. Harley-Davidson Inc. Warranty Reserves 2003 2009 Reserves, 2003-2009 $200 24 Warranty Reserves $ Reserve Capacity (months) $150 18 $100 12 $50 6 $0 0 2003 2004 2005 2006 2007 2008 2009 Source: Warranty Week from SEC data
  7. 7. Caterpillar Inc. Warranty Claims & Accruals 2003 2009 Accruals, 2003-2009 $450 3.6% Quaterly Claims ($ Mil) Claims Rate % Accural Rate % $375 3.0% $300 2.4% $225 1.8% $150 1.2% $75 0.6% $0 0.0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2003 2004 2005 2006 2007 2008 2009 Source: Warranty Week from SEC data
  8. 8. Caterpillar Inc. Warranty Reserves 2003 2009 Reserves, 2003-2009 $2,400 24 Warranty Reserves ($Mil) Reserve Capacity (Months) $1,800 18 $1,200 12 $600 6 $0 0 2003 2004 2005 2006 2007 2008 2009 Source: Warranty Week from SEC data
  9. 9. Business Challenges Business Challenges Policy  Management Warranty Center Warranty claims expense Product  Product Failure / Cost  Claim  l Staff cost S ff Submission Analysis Varied processes across business  units Warranty  y Fraud and duplication Center Integration with corporate  systems and dealer systems Changing business needs Supplier  Part Returns a t etu s Transparent interaction with  Transparent interaction with Recovery R service partners and customers Product and service quality Claim  Processing g 9
  10. 10. Business Challenges (contd.) Business Challenges (contd.) Policy Management Policy  Enforcing warranty terms and  E f i t t d Management entitlement Efficiently managing  service  bulletins, campaigns and safety  Product  Product Failure / Cost  Claim  l recalls Submission Analysis Claim Submission Warranty  y Ease‐of‐use Center Error‐free claim entry Long claim cycle time Supplier  Part Returns a t etu s Recovery R Part Returns P R Ensuring parts  are returned  when required Claim  Processing g Tying claim adjudication to part  returns 10
  11. 11. Business Challenges (contd.) Business Challenges (contd.) Product Failure / Cost Analysis Measuring cost of warranty Policy  Management Detecting failure trends early Forecasting warranty expense Product  Product Claim  l Failure / Cost  Submission Analysis Supplier Recovery Efficiently managing  Effi i tl i Warranty  y contracts Center Tracing claims end‐to‐end Supplier  Part Returns a t etu s Recovery R Claim Processing Reducing manual effort Claim  Consistency in adjudication Consistency in adjudication Processing g Tracking detailed claim history Paying invalid claims 11
  12. 12. Solutions: Key Features Solutions: Key Features Business Functions Intelligent warranty entitlement User‐friendly claims submission  U f i dl l i b i i Business  Functions and real‐time validation feedback Integrated part returns and  supplier recovery Integrated user support (service  demos, training manuals) and  customer feedback Handheld / mobile device  Predictive  Warranty  Warranty Platform and  compatibility Analysis Configurability Center Platform and Configurability Flexible and configurable  warranty terms Process  Flexible adjudication rules Flexible adjudication rules Automation Workflow engine 12
  13. 13. Solutions: Key Features (contd.) Solutions: Key Features (contd.) Predictive Analysis Predictive Analysis Business  Performance measurement – Functions products, service partners,  suppliers Forecasting of warranty expenses Detection of emerging issues What‐if analysis Predictive  Warranty  Warranty Platform and  Analysis Configurability Process Automation Center End‐to‐end traceability of claims  activity Automated rules‐based decision‐ making Auditing Integrated part returns I t t d t t Process  Automation 13
  14. 14. ROI: Real Examples of Savings ROI: Real Examples of Savings • Reduction in warranty expenses (up to 20%) – Duplicate claims elimination (up to 100%) – Reduction in fraudulent claims (up to 100%) – Reduction in review time per claim (up to 25%) Reduction in review time per claim (up to 25%) – Significant increase in Supplier recovery ( 50% plus) • R d i i l i Reduction in claims cycle time (up to 60%) l i ( 60%) • Reduction in warranty reserve Reduction in warranty reserve – Lower overall warranty expense (up to 20%) – Better prediction  of future expenses 14
  15. 15. Case Study Case Study‐ Challenges • AS 400/JDE (ERP) did not manage warranty policies Policy  Policy • Claim processors had to manually enforce warranty terms Management • AS 400 system did not manage service campaigns / product recalls Claim  • AS 400 user experience not intuitive, leading to erroneous data entry Submission S b i i •D l h d t Dealers had to email/fax supporting documents il/f ti d t • Claim processors had to manually track part returns Part Returns • Claim processors had to manually communicate with dealers • Dealers had to fax the part return freight invoices to OEM Dealers had to fax the part return freight invoices to OEM 15
  16. 16. Case Study Challenges (contd.) Case Study‐ Challenges (contd.) • Manual processing leading to longer payment cycle • No consolidated view of claim & equipment history Claim  Claim • No notification to dealers when more information required Processing • Manual checking for duplication and fraud • No pre‐authorization information captured on special consideration claims Supplier  • Manual tracking of supplier recovery through Excel sheets Recovery R • L k f i ibilit f Lack of visibility for suppliers leading to disputes and longer cycle time li l di t di t dl l ti Product  • Inadequate data captured in claim to do fault / cause analysis Failure / Cost  • No real time access to data for ad hoc reporting requirements Analysis A l i 16
  17. 17. Case Study Solution & Impact Case Study‐ Solution & Impact • All policies setup in system and enforced through system Policy  Policy • Service campaigns setup and tracked in system reducing campaign Service campaigns setup and tracked in system, reducing campaign  operations cost by 40% (no paper service manuals mailed to all dealers,  Management no manual effort for business to track the customer) Claim  • Guided data entry UI and validation rules lead to 99% drop in entry errors Submission S b i i • O li h l Online help manual help reduced early training costs by 75% lh l d d l t i i t b 75% • Part tracking reduced claim cycle time and improved supplier recovery Part Returns • Significant reduction observed in claim part return errors 17
  18. 18. Case Study Solution & Impact (contd.) Case Study‐ Solution & Impact (contd.) • 40% claims auto processed • 100% elimination of duplicate claims using business rules Claim  Claim • 50% reduction in claim cycle time 50% reduction in claim cycle time Processing • Supporting documents electronically linked to a claim along with pre‐ authorization information, leading to improved audit process • Increased supplier recovery by 25% and reduced errors • Reduced cycle time by more than 50% Supplier  • Integrated system for dealer claims and supplier recovery allowed  Recovery R business to get supplier advice before paying dealer claim b i t t li d i b f i d l l i • Supplier recovery handled in house, saving costs on 3rd‐party collection  agency • Provided canned reports for: Product Failure  • Measuring cost of warranty • Early detection of product failure trends / Cost Analysis / Cost Analysis • Warranty expense forecasting Warranty expense forecasting • Supported ad‐hoc reporting, removing dependency on IT 18
  19. 19. Growth comes knocking… Growth comes knocking… Eric Arnum, Editor, Warranty Week W: www.WarrantyWeek.com | E: earnum@warrantyweek.com y | y Manish Arya, CTO, Tavant Technologies W: www.tavant.com | E: bizdev@tavant.com W: www tavant com | E: bizdev@tavant com 19

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