Warranty Management Software
The recent pressure of cooperation between suppliers and advised Original Equipment Manufacturers, (OEMs) is due to an increase of client demands, competition by an international environment, and bargaining power of a rapidly consolidating automotive quality management industry.
Automotive suppliers often have less bargaining power when negotiating with their customers, especially when it comes to warranty and warranty claims. There are various reasons for that: fear for losing future business, irreversible costs incurred during R&D, the increased strategy deployed by many OEM’s to use common parts. But above all, the lack of transparency and lack of communication.
What Is Warranty Management?
Smaller suppliers in particular, with relatively low bargaining power, will suffer from this development, and nevertheless will report accordingly with an increased number of warranty claims and costs - although in many warranty cases the actual client is found to be at fault. However, the burden of proof always lies with the manufacturer, which results in a lack of transparency and poor communication in a hopeless situation, as any responsibility falls back to the stakeholders with the least bargaining power. A recent survey of supplier companies showed the following problems are crucial to this development:
1) Lack of diagnostic
2) Lack of cooperation and interfaces with the customer
3) Lack of resources on the part of subcontractors
These problems ultimately result in a lack of transparency and insufficient communication, and can be addressed and solved through the implementation of professional warranty management systems.
The development of European OEM's Warranty provisions in relation to revenue generated:
Figure 1: "The development of European OEM's Warranty provisions in relation to the generated revenue"; Source: Warranty Week, 07/2011
What is a Warranty Management System?
Warranty management systems provide an integrated platform between component suppliers and OEMs, as well as supplies content to both manufacturers and customers with all relevant indicators, analysis, trends and reports. While limited warranty management systems may exist in the most innovative of supply companies, the majority of organizations structured solely on the customer works without a single platform and thus multiple customer systems simultaneously (see Figure 2). Consequently, no process standardization is possible.
What benefits do warranty management systems provide?
By standardizing the medium term overhead cost savings, improved quality of warranty claims and employees will be relieved. Furthermore, Warranty Management Systems allow a more efficient supply and use of information, for both the manufacturer and the customer information is always available. Additionally, the reduced cost of rework and unnecessary delays are eliminated. Finally, increasing the transparency of Warranty Management Systems with warranty processes provides for an improved bargaining position of suppliers.
Warranty management systems enable the standardization of warranty processes, better communication between component suppliers and OEMs as well as overall improved process transparency. The integrated platform interfaces between component suppliers and OEMs.
Warranty Management: Recourse and Warranty Management describes the process of settlement of warranty claims between suppliers, OEMs and end users. Often, this processes the complaint, the assessment, reporting, negotiation, and if necessary, the refund of the defective goods - usually based on a technical factor. European OEM's Warranty accruals are on average equal to 2-6% of sales - a relatively large proportion (see Figure 1). in the resulting sum is considerably high, which funds can be released by a shift of the warranty obligations.