At a glance:
- For asset intensive organisations, asset warranty management is a crucial process when striving to reduce overall maintenance costs
- Tracking and managing vast numbers of warranties and associated claims, manually leads to time and cost inefficiencies
- The key to warranty management excellence is setting up warranty master data, implementing a warranty claims management process and integrating this process with the organisations ERP or EAM.
In the dynamic landscape of modern maintenance practices, warranty management is a crucial process to benchmark for companies striving to reduce overall maintenance cost. Manufacturers typically reserve 2-3% of their sales for warranty claims, but few asset intensive organisations know what percent of their maintenance spend results in warranty claims and recoveries.
When it comes to warranty recoveries...
Most organisations will recover less than 1% of their maintenance spend... while, high performing organisations will recover more than 4% of their spend.
The warranty challenge
As companies begin to assess their warranty management processes, they realise that warranties are manually tracked and claimed - if they can be identified at all! We have found that for asset intensive organisations:
- Most of the focus is on new equipment - where warranties are known based on the equipment age.
- Many parts and components for older equipment are replaced without knowledge of the component age and warranty status.
- Records, if kept at all, are often maintained offline.
- A rush to get the equipment back up and running often precludes taking the time to research warranty records.
Steps towards warranty process excellence
Setting up warranty master data
The essential first step to developing better warranty management processes in asset-intensive organisations, is to setup your warranty Master Data that allows warranty notifications to be triggered. These notifications create the awareness of a potential warranty claim, however the claim still must be manually researched, and if warranted, the claim paperwork must be filled out by hand. These claims are often tracked offline in a tool like Excel and if dollars are received, the recoveries are processed without crediting the original equipment that experienced the failure.
Implementing a warranty claims management process
The next major step is to implement a Warranty Claim Management process within your organisation. At this point, reporting available is often rudimentary, but organisations can begin to identify if warranty claims are being resolved and what suppliers may be responsible for pre-mature component failures.
However, it is when these initial warranty processes are being put in place that organisations begin to realise the level of work involved in maintaining the different components of the warranty management process.
While manageable, this level of effort really does require a more robust solution that integrates with an ERP system (such as SAP) - allowing warranty management work to be done with minimal effort and with the benefit of system automation.
Components of Warranty Process Excellence
Organisations that fully embrace warranty management and develop the necessary processes to maximise warranty recoveries have 5 key process components in common:
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Comprehensive Master Data Management tools - to assign warranties to key components, parts and equipment.
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System generated alerts - for both planned and unplanned parts that capture all the necessary information to review and determine if a claim is valid.
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A warranty workbench - that allows the identification of open alerts and allows them to be easily converted into a claim and communicated to the supplier.
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A comprehensive claims management system - that tracks each claim to resolution and makes sure the credit is tracked back to the work order and equipment that experienced the failure.
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Finally, and most importantly is a set of robust reporting tools and KPIs that allow:
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Tracking of alert and claims data by supplier, equipment, component, etc. to facilitate failure analysis and identify areas of improvement.
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Identification of suppliers that consistently have warranty claims or are rejecting those claims.
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Operations to better understand how they are performing at each stage in the claims process and identify areas for improvement.
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Tracking of total outstanding claims, credits generated from approved claims, and the overall impact on maintenance cost.
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How to get started and unlock warranty recoveries
COSOL are global providers of end-to-end asset management solutions that span across the people, process, systems, and data elements of asset management.
Our teams of asset management specialists can work with your organisation to assess where you are current at with your warranty management process journey. They then review the current state of your master data, identify what systems you have in place, and develop a plan to help you achieve Warranty Process Excellence that reduces costs, improves equipment uptime, and drives operational efficiencies.
