Key Takeaways
- Effective warranty management can help cut maintenance costs, but some may not be aware of their warranty claims and recoveries
- Challenges stem from inadequate tracking and management processes, particularly for older equipment and urgent repairs
- COSOL can help implement tools and processes to ensure best practices in optimising warranty management
For asset-intensive organisations, managing warranties effectively can minimise overall maintenance costs. Asset management software specialist COSOL calls warranty management a ‘crucial’ process to benchmark companies looking to save costs.
In a blog post, COSOL said manufacturers would typically reserve two to three percent of their sales for warranty claims, but only a few asset-intensive organisations know what percent of their maintenance spend results in warranty claims and recoveries.
COSOL said most organisations would recover less than one percent of their maintenance spend when it comes to warranty recoveries, while high performing companies would recover more than four percent of their spend.
The main challenges organisations face with warranty recovery is a lack of systematic tracking and management, which are both often done manually, if at all. COSOL identified the following complications impacting the process:
New vs. Old Equipment
Organisations often focus on warranties for new equipment as it is easier to track based on age, while older equipment gets replaced without knowledge of component age and warranty status
Record Keeping
Usually done offline, if they’re even kept at all
Urgent Repairs
Quick repairs are prioritised to get equipment back up and running instead of checking if it’s under warranty first.
How to improve your warranty management process
The first step is to set up notifications for your warranty master data system to trigger alerts of any potential warranty claims. The claims however, would still have to be manually researched – and in some cases, the paperwork is still completed manually and are tracked offline through spreadsheets. Any recoveries received are also processed without properly crediting the original equipment that failed.
Next is to set up a warranty claim management process, which can start identifying if warranty claims are being resolved and which suppliers are responsible for premature component failures. COSOL said this stage is often where organisations would realise the process’s complexity, suggesting a more robust solution that integrates with an ERP system like SAP that provides some automation capabilities.
Research from SAPinsider (note: Mastering SAP and SAPinsider are part of the Wellesley group of companies) found the top drivers for global organisations to modernise their enterprise asset management platforms were because their data was complex and scattered (49 percent of respondents), and to improve managing asset lifecycles and reliability (49 percent).
Comprehensive master data management tools
To track components, parts and equipment that are under warranty and for how long they are covered
System-generated alerts
For both planned and unplanned equipment that captures all necessary information to review and validate a claim
A warranty workbench
Helps identify open alerts and converts them into a claim that would be communicated to the supplier
A comprehensive claims management system
To track each claim to resolution, ensuring credits are correctly applied to the work order and the equipment that failed
Robust reporting tools and KPIs
Tracks alert and claims data by supplier, equipment and component to help analyse failures and identify areas for improvement. The tools also identify suppliers with frequent warranty claims and those who reject claims, as well as provide insights into how the claims process has been performing.
Ready to roadmap your journey from SAP ECC to S/4HANA?
With over two decades of rich asset management systems experience with SAP, COSOL has the expertise to help you navigate through the transition from SAP ECC to SAP S/4HANA.
Read COSOL's article on 'The essential first step for SAP ECC to S/4HANA migration' or get in contact with COSOL today to have a confidential consultation to discuss your challenges and potential opportunities.
