A Publication of WTVP

Thanks to improved communication and easy access to data, today’s consumers are very discerning. Both the quality of the product and the warranty it carries influence purchasing decision.

Warranties with good coverage can boost sales; however, unless backed by quality and an efficient warranty management system, they may end up proving expensive. Performance management is normally across three zones: problem prevention, problem identification and resolution, and distribution and service.

A holistic approach to managing warranty, through improvements in the above zones, will dramatically reduce costs and improve margins.

In the Product Prevention Zone, the product development team should focus proactively on key warranty prevention activities by:
• Making an effort to reduce the complexity in product design.
• Designing for manufacturability and serviceability.
• Defining and adapting a warranty strategy.
• Using warranty performance targets as part of the design process.
• Using standard validation procedures, like Failure Mode and Effect Analysis (FMEA).
• Ensuring rigorous standards for sourcing and supplier performance.

In the Problem Identification and Resolution Zone, the focus is on accelerated detection, root cause analysis, and problem resolution by:
• Reducing the lead-time from problem identification to resolution.
• Improving effectiveness of problem closure and reducing problem recurrence.
• Understanding failure trends by components.
• Establishing potential cost savings and performance targets and aligning resources accordingly.
• Building “risk sharing of warranty” into the supplier agreements.
• Ensuring availability of warranty information to all key stakeholders.

In the Distribution and Service Zone, focus is on potential warranty issues within the dealership and distribution networks, by:
• Reducing repair cycle time and first pass yields.
• Reducing cost per claim.
• Shortening the part return process.
• Fine-tuning the work order, ensuring accuracy in claim description and promptness of feedback.

The Performance Management Zone encompasses the three zones mentioned above and focuses on performance management and accountability. Key activities include:
• Developing a comprehensive reporting system to provide management visibility and focus.
• Establishing an effective and timely problem tracking system and a cross functional management structure.
• Establishing incentives for warranty improvement.
• Creation of a single ownership/position of warranty for the business.

Maintaining excellence in quality and having a structured warranty management system has become essential in capturing and retaining market share and improve profitability. A holistic approach, using a zone architecture framework, is essential. IBI