Balancing Warranty Costs with Customer Loyalty | Tech Mahindra

Balancing Warranty Costs with Customer Loyalty

The world today is living in the age of hyper customer satisfaction; original equipment manufacturers (OEMs) are enhancing customer value and product quality with continuous innovation and the adoption of digital technologies. Top priorities for manufacturing companies today are managing the customer expectation and ensuring customer confidence in the product. Product Warranty and post-sales service play an important role in enhancing customer confidence and loyalty.

While product warranty plays a big role in customer satisfaction, it has become a big industry in its own rights. It is estimated on average global manufacturers spend 4% of the sales revenue as warranty cost. Manufacturers globally are looking for options to optimize the spending on the warranty to improve the bottom line. This has led to the need for an integrated warranty analytics solution that can issue an early warning and provide timely inputs for quality improvement. Such solutions can help in reducing overall warranty cost up to 20% with help of advance analytics-based solutions.

Managing The Thin Line

Warranty Cost Optimization versus Customer Satisfaction versus Regulatory Compliance

The liability laws vary across regions, resulting into differing regulations related to warranty. Every organization must adhere to these regulations while addressing warranty issues. Manufacturers globally are facing humongous challenges in servicing warranties; on one side they must ensure customer satisfaction and loyalty; on the other, they must reduce the warranty cost and the claim rate to optimize profitability.

At Tech Mahindra, we have been working on a solution that can help customers reduce warranty costs, minimize product breakdowns, enhance dealer performance.  Warranty 360  is a result of recent workshop with leading global automotive manufacturer where we learnt about the challenges they were facing in terms of huge revenue leakages from non genuine warranty services. These challenges often impact the brand if not serviced properly, do not get complete visibility.

Some of the other key issues manufacturers face today are:

  • Dealer Issues: Services provided by the dealers impact the part performance, Customer perception, and warranty cost /claim
  • Production Issues:  Warranty claims are higher for products manufactured at certain plants/geography, specific to a production process
  • Component/Supplier Issues: Warranty claims are higher for certain suppliers or component categories (part of the problem statement)
  • Customer Usage Issues: Products that fail at a higher rate in the field due to unanticipated customer usage, specific to customer demography

As leaders in enabling ease of technology use across industries, we continue our quest for excellence through the use of digital and data analytics.  Tech Mahindra's IBM  and Manufacturing CoE teams in collaboration with IBM Labs have crafted the Warranty-360 solution – a unique blend of industry knowledge, digital technology, ease of use, backed by in-depth analysis to provide actionable insights and enable a culture of data-driven decision making at every level in manufacturing lifecycle.

Transforming Warranty Management

Ushering in a new age of customer loyalty

Warranty-360 aims to transform the way warranties are managed today, by adopting digital and analytical products. It will elevate the manufacturers to a common digital platform and empower them to get meaningful insights, employing an expandable analytics framework on top of the existing IT platform.

Warranty-360 empower manufacturers by:

  • Using proven statistical algorithms to deliver consistent high-quality insights which in turn reduces warranty cost
  • Aggregating and analysing data from manufacturers, suppliers
  • Potentially halving warranty costs over next 3-5 years
  • Establishing closed-loop process to improve product quality, self-funding transformation initiative
  • Improving supplier chargeback process, ensuring high level of automated claims processing

Tech Mahindra Warranty-360  provides integrated and in-depth insights of the end-to-end process of manufacturing to after-sales service, helping manufacturers to:

  • Reduce the warranty cost and the claim rate
  • Enhance dealer performance and customer service
  • Eliminate the product call back and part replacement
  • Enhance visibility on warranty reserve and claim rate and Type
  • Identify areas where efficiency can be improved and cost reduced (root cause analysis)
  • Minimize product breakdowns
  • Offer personalized warranty packages and increase service revenue

Warranty-360 brings Tech Mahindra's unmatched value proposition to global manufacturers, by creating a unique assortment of domain expertise, cutting-edge digital technology, and partnership with IBM.  This assortment empowers us to innovate and co-create unique solutions for our customers. With a robust strategic approach combined with our industry expertise, we enable our customers/organizations to be future-ready.

About  Tech Mahindra- IBM Relationship

Tech Mahindra-IBM global partnership spans over two decades. We are IBM GSI and Platinum Business Partner. The synergy has resulted in several unique solutions and cutting-edge accelerators to help our joint customers. Our comprehensive offerings across IBM products aligned with their strategic imperatives enable us to deliver more innovation and value to our customers. Our connected solutions on Blockchain, Watson IoT, Watson Cognitive, and Security have empowered our customers to comprehend quicker, act smarter, and faster by unlocking data to actionable insights.
Our in-depth domain and consulting experience in providing IBM based solutions across industries and geographies have bagged Tech M multiple awards including:

  • India South Asia THINK 2020-  IBM Partner Ecosystem Summit under Business Excellence Award for "Best in Class - System Integrator".
  • Finalists in the prestigious IBM Beacon Awards 2020 for Outstanding Solution driving client innovation and  transformation with IBM Power Systems
  • IBM Beacon Award for Outstanding Security solution in PWLC -San Francisco (2019)
  • Best Europe Security SaaS partner by IBM (2018)
About the Author
Ravi Sharma
VP – Growth Initiatives - IBM & Red Hat Business - EMEA, Tech Mahindra