Report: Large OEMs struggle with warranty claims

Despite the fact that some estimates place U.S. warranty spend upwards of $2 billion per month, nearly one-quarter of companies have limited to no measures in place to monitor warranty management effectiveness, and another 40 percent rely on ad hoc, reactionary measurement, primarily after the fact, according to the newly published AberdeenGroup report, "Winning with Integrated Warranty Management."

Among the report's key findings are that best-in-class service organizations spend 0.9 percent of annual revenues on warranty, take an average of 1.4 business days to process a warranty claim, and have 2.5 percent of their products returned for repair within the initial warranty period.

"We found that 60 percent of best-in-class companies are working hard to integrate their service organizations more seamlessly with design and manufacturing to effect positive change in the warranty chain," said Mark Vigoroso, chief research officer and senior vice president, Service Chain Research at Aberdeen.

Vigoroso offers manufacturers specific recommendations for warranty chain improvement, which include the following:

  * Account for cultural nuances when defining warranty terms across

    multiple geographies.

  * Invest the time and resources required to establish trust among supplier base.

  * Leverage third parties where appropriate for warranty chain execution.

  * Maintain custom product configurations through repair operation.

  * Do not limit your warranty data management approach to just "reporting."

  * Evaluate next generation technologies like RFID and RPS as potential warranty chain facilitators.

"Winning with Integrated Warranty Management" examines how leading OEMs are differentiating themselves from the rest of the pack in areas such as process definition, organizational alignment, data management, technology integration and performance management.

More than 150 companies participated in the quantitative study, including Whirlpool Canada, Texas Instruments, Sears Holdings, Samsung Electronics, Trane, Alcoa, Roche Diagnostics, Canon, Intel, The Toro Company, ABB, Motorola, John Deere and Bombardier Aerospace.

To obtain a copy of the report, visit: http://www.aberdeen.com/link/source.asp?cid=3181&pid=PR070506

AberdeenGroup Inc. provides fact-based research and insights focused on the global, technology-driven value chain. Aberdeen's benchmarking, market and solution assessments, sales acceleration programs, and conferences support Global 5000 value chain and technology executives and the solution providers who serve them.