Converting Your Warranty Business from a Cost Center to a Revenue Generator

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Is Warranty Management a positive differentiator for your firm? Or are you challenged by its complexities? Oracle and Tata Consultancy Services took an in-depth look at the results from a recent survey among top supply chain and logistics executives – “Warranty Management: Converting Challenges to Market Differentiators” – to better understand the importance of product warranties in business today. Find out how these executives are responding to the complexities of warranty management, the strategies they’re taking to tackle them and the opportunities they’re uncovering.

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Converting Your Warranty Business from a Cost Center to a Revenue Generator

  1. 1. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.1 Warranty Management Converting Your Warranty Business From a Cost Center to a Revenue Generator
  2. 2. Welcome and Introductions Moderator: Michael Levans Supply Chain Group Editorial Director Stephen Slade Senior Director, Industries Marketing Manufacturing Segments Satish Patil Head, Warranty Business Solutions Tata Consultancy Services (TCS) Tweet @Sladester423 Tweet @TCS_Oracle
  3. 3. Returns Policies Wide Variety of Returns Processes Create Challenge Consumer Returns  Repairs via RMA  Upgrade  Credit  Re-purpose  Warranty return
  4. 4. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.4 Returns Department Need to Sort Inbound Parcels and Categorize Challenges  Insufficient information  Customer segmentation  Obsolescence  Informal policies  Fraud What do you think? Tweet @TCS_Oracle with your opinion.
  5. 5. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.5 Warranty Survey Q4 2013 What Leaders are Doing to Better Control Warranty Findings  75% have a warranty system  85% process in-house  55% have a dedicated department  38% do NOT segment customers  27% do NOT use RMAs See the Warranty Survey here
  6. 6. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.6 Warranty Survey Q4 2013 What Leaders are Doing to Better Control Warranty Revenue Impact  73% under 5% of sales  13% over 5% of sales  14% unsure Cost Recovery  25% recovery from suppliers  57% process manually See the Warranty Survey here
  7. 7. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.7 Benefits of a Warranty Offering What Leaders are Doing to Better Control Warranty Purpose  77% customer sat/ownership  58% standard practice  27% competition offers it  26% after-market sales 89% say ‘extremely or very important’ Why do you offer a warranty? Tweet @TCS_Oracle with your opinion.
  8. 8. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.8 Benefits of a Warranty Offering What Leaders are Doing – Leveraging Warranty Data!  56% improve product quality  53% improve customer service level  49% improve sales, service flow tracker  39% add product value  37% add marketing/brand value  35% expand breadth of service offering  19% monitor IP + fraud 60% say Warranty is a strong or very strong differentiator
  9. 9. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.9 Use Warranty Operations as a Revenue Stream User: “To Preserve Customer Confidence” Yes, leverage warranty claims to generate revenues Do Not 19% 81% Do you leverage warranty claims to generate revenues? Tweet @TCS_Oracle with why or why not.
  10. 10. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.10 Warranty Initiatives Going Forward What Leaders are Doing – Leveraging Warranty  Thorough returns analysis  Monitor product lifecycle  Design & Mfg continuous improvement  Better testing & QA pre-launch  Collaborate on user issues  Better sourcing for better suppliers  Invest in new technology & equipment
  11. 11. 11 Warranty Improves Customer Centricity  Reduce call hold time  Cross/up-sell extended warranty  Track fraudulent claims  Improve product quality  Streamline reverse logistics  Better product design  Greater supplier collaboration  Lower returns cost Source: TCS MISU ITG/Warranty Value Engine, 2009 Any other thoughts? Tweet @TCS_Oracle with your ideas.
  12. 12. 12 Warranty Value Chain - Process Framework Claim Failure Verification Claim link to RMA Fraud Detection Entitlement Verification Supplier Collaboration Predictive Analytics Source: TCS MISU ITG/Warranty Value Engine, 2009
  13. 13. 13 Warranty Value Chain - Process Framework TCS WOPR™ Warranty Operations Process Reference Model Source: TCS MISU ITG/Warranty Value Engine, 2009
  14. 14. 14 Claims Automation & Rules Effectiveness Typical Scenario Warranty Business Rules Reverse Engineering Technical to Business Language Gaps in Warranty Policy Digitization Rules Rationalization Key Improvement Steps Effective Rules  Business- Managed  Scalable  Configurable Source: TCS MISU ITG/Warranty Value Engine, 2009
  15. 15. 15 Warranty Metrics - Process to KPI Traceability L1 to L2 Process Traceability L2 to L3 Process Traceability L3 roll into L2 Metrics L2 roll into L1 Metrics Source: TCS MISU ITG/Warranty Value Engine, 2009
  16. 16. 16 Linking Information Across Enterprise  Measure performance of every link in warranty  360 degree treatment of warranty claims  Warranty sub-processes link to enterprise business functions  Holistic performance coverage Source: TCS MISU ITG/Warranty Value Engine, 2009 Do you agree or disagree? Tweet @TCS_Oracle.
  17. 17. 17 Benefits of Process-Centric Approach Source: TCS MISU ITG /Warranty Value Engine, 2012 Transformation Agents  TCS WOPR™ model  Warranty domain excellence  TCS work efforts in warranty  Comprehensive, holistic process coverage  Ready framework to undertake improvements  Standardization and benchmarking capability Key BenefitsCustomer  Wanted to transform existing warranty application  Requirements were insufficient and focused around claims
  18. 18. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.18 “We have a desire to produce the highest quality product the first time and our warranty process keeps us aware of our progress with world class quality.” - Supply Chain Manager, Auto Parts “Analyzing returns for defects and passing along the information to manufacturing has improved product quality.” - Operations Manager, Furniture “We’re tracking and surveying vendor quality issues and constantly looking at new vendor technologies and opportunities for quality improvement.” Corporate Manager, Apparel Warranty Customer Testimonials
  19. 19. Copyright © 2013, Oracle and/or its affiliates. All rights reserved.19 Contact Information Moderator: Michael Levans Supply Chain Group Editorial Director Peerless Media Stephen Slade Senior Director, Industries Marketing Manufacturing Segments Stephen.slade@oracle.com Satish Patil Head, Warranty Business Solutions Tata Consultancy Services (TCS) satish.p@tcs.com Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Insert Information Protection Policy Classification from Slide 12 Tweet @Sladester423 Tweet @TCS_Oracle

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