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5 Ways to Decrease Your Business’s Warranty Costs

By: SmallBizClub

 

5 Ways to Decrease Your Warranty Costs

Customer warranties can cost small manufacturers greatly because of repairs and replacements. It also puts goodwill and brand value at stake. And when handled improperly, warranties make companies lose business and revenue almost irretrievably. Manufacturers have to estimate warranty costs before incurring them and sometimes price the products accordingly. Various studies have estimated warranty costs to be between 1.5 and 4 percent of sales revenues, depending on the industry and product segment.

Warranty processes and costs are dynamic. Sticking to strategies for containing costs is a real challenge. However, manufacturers the world over are striving to cut warranty costs and experts have come up with various ways which require technology. Here we examine five ways that use information technology:

Automate Claims Processing

Manual processes are time consuming and manpower intensive. Both keep the costs increasing. Build or subscribe to a fully automated claim processing software integrated with your CRM platform. Working on a properly catalogued database of customers, equipment, and parts has many advantages:

  • Using the database auto-fills a great part of the forms
  • Processes the claims many times faster than the manual way
  • Detects fraudulent and duplicate claims
  • Makes the verification process much easier

Eliminate Fraudulent Claims Using Predictive Technologies

About 10-15 percent of warranty claims are classified as intentionally fraudulent (as against typos or accidental errors, which are easily detected during verification). By eliminating fraudulent claims early in processing, you save not only money, but precious time and resources as well.

Improve Product Quality

Using analytics on warranty data and SPC (statistical process control) in the manufacturing phase, you can find great improvements in product quality. More than warranty cost savings, it ultimately leads to greater customer loyalty and business growth. Predictive analytics helps to quickly identify design flaws and make corrections rather than maintaining the habit of spending on recalls and repairs.

Improve Processes

Insights from warranty management analysis help to precisely identify the root cause of defect, and find out the equipment or operators involved in various stages of manufacturing. Thus the company can fix root problems and improve the health of the process and the product.

Go Fully Online

Keep all your catalogues online. Printing, distributing, archiving, and cataloging everything on paper will add to the already heavy costs. By discarding the habit of paper cataloging, you can make your brand a popular one in the environmental concerns context.

A stitch in time saves nine. But where to stitch and when? You can know that only if you have intelligent, integrated systems in place. New-age warranty management systems integrated with CRM platforms like Salesforce.com are the best option for added advantage, because such software services are deployed on cloud platforms. You don’t have to invest heavily, and there is no need for high-end servers and local installations. For a thin subscription to Silicon Valley companies, based on the number of users, you can get excellent services with the latest upgrades to match the latest industry developments and warranty legislation.

Author: Anand Subramanian is Senior Business Architect at Tavant Technologies. Anand has worked in several process improvement projects involving multi-national teams for global customers. He has over 15 years of experience in supply chain warranty management, as SME, client advisor, IT consultant, business analyst and as a practicing manager of business analysts and has successfully executed several projects in logistics management, logistics integration, reverse logistics, supplier collaboration and Warranty Administration.

Published: November 10, 2015
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