Accenture APO Warranty Management3

Accenture Parts Optimization: Warranty Services Gaining Control Over Warranty Costs 2 . manufacturers must first have the right governance and processes in place—one that ensures the crisp coordination of all the parties involved along the warranty chain. an automobile OEM will spend from two to three percent of their annual revenues on warranty services. To build these advanced data collection and analysis capabilities. improvements around warranty can raise a brand’s value. 3 . The challenges manufacturers face are manifold. from the repair network to the after sales service desk.Accenture Warranty Optimization Services: Gaining Control Over Warranty Costs The numbers are compelling: On average. warranty services receive scant management attention. Despite a compelling business case. not validation and analysis • Too few claims automatically submitted by dealers • Rejected claims because of incomplete or inaccurate data • Long claims processing cycle • Low accuracy of warranty reserves A host of other issues involve high repair costs prompted by: • A high incidence of invalid claims • Poor diagnosis(unnecessary and repeated repairs) • High share of no-fault-found (NFF) claims • Few repaired parts inspected and low supplier recovery And there are product quality symptoms issues like: • A long cycle of issue identification and resolution • Long identification cycles leading to large recall campaigns • Backlog of unaddressed product issues One common theme for many of these problems is the lack of robust data consolidation and analysis that would allow manufacturers to regain control of their warranty costs. but companies can improve warranty costs by as much as 25 percent while boosting overall profit by up to 1 percent thanks to improvements. For some companies. the part supplier. That’s only one reason why gaining control over costs is so crucial. Figures vary. that’s the equivalent of millions or billions of US dollars. Beyond that. but mostly center on inefficient processing caused by: • Warranty teams focused on claims processing. An entire warranty data ecosystem must be established so that parties can collect and share data readily and with minimal margin for error. ensuring customer loyalty and a direct impact on the bottom line. and so on. 4 . percentage of goodwill on overall warranty costs. warranty cost per unit. claim rejection rate • Quality: Repair/incident rate. time to detect. detection to correction time • Financial: Actual claims cost vs. and control through standardized processes and analytics. extended warranty revenue. budget. warranty/revenue ratio 5 . the greatest efficiencies come from having the entire warranty chain collaborate closely. increasing consistency. transparency. Figure 1: Accenture Warranty Optimization High Level Framework Dealer Network Dealer Performance Services Manufacturer Early Detection Services Warranty Operations Services Tier-1 supplier Tier-n supplier Supplier Performance Services Accenture’s operations excellence and analytical services help manufacturers transform and continuously improve warranty processes and gain insights on many key warranty operations performance indicators: • Warranty Process efficiency: Claim automated validation rate. Manufacturers can leverage Accenture’s warranty chain operation capabilities to quickly and costs efficiently centralize and standardize warranty operations.Accenture Warranty Optimization Services The proliferation of data and ever more powerful computing technologies to process it are propelling analytics to a more prominent role in warranty management. percentage of warranty costs recovered from suppliers. Warranty Operations Services: Transform and Operate warranty chain at speed to enable close collaboration of all involved parties Effective warranty management requires collaboration among different functions inside the manufacturer’s organization as well as between its repair network and parts suppliers. But technology is just part of the story. number of issues resolved. claim process time. warranty administration costs. which then inform the decisions and processes that lead to better outcomes. goodwill amounts vs. supplier recovery amount. budget. Ultimately. Data becomes valuable only when it is validated and consolidated and after it’s shaped into insights. peers. Accenture’s dealer performance analytical services help manufacturers create a dealer control center tracking the following KPIs: • Dealer Process efficiency: Claim submission time. Lowering these costs is a challenge to manufacturers since optimization initiatives must often involve numerous. thus eroding profits. “fix-it-right-the-first-time” percentage for warranty repairs. peers. Manufacturers can leverage Accenture’s experience and global reach to collect and consolidate key dealer performance indicators leveraging heterogeneous sources of information to gain sufficient insight to benchmark dealer and repair agents in order to launch targeted improvement programs.Figure 2: Accenture Dealer Performance Improvement Services Collected Inputs • Warranty claims • Repair information • Social media data • Customer surveys • Audit history • Industry benchmarks Accenture Dealer Analytics • Turnkey industry analytical models • Industry expertise • Standard KPIs Outcomes • Regional and local dealer trainings • Improved claim validation rules • Targeted dealer audits • Continuous and granular dealer benchmarks Dealer Performance Services: Improving the performance of the dealer and repair network An estimated 10 to 15 percent of warranty payments result from invalid claims or fraud. claims validated/rejected ratio. percentage of out of warranty repairs and goodwill. warranty repair types vs. percentage of No Fault Found (NFF) vs. peers. promise date adherence • Policy Adherence: Warranty repair cost per vehicle vs. • Financial: Goodwill amount and percentage Dealer performance improvement programs can typically generate warranty costs savings of 5 to 10 percent. peers. 6 . claim accuracy. independent and geographically dispersed dealers and repair agents. parts return time • Service Quality: Satisfaction with quality of work performed. repair effectiveness vs. 7 . recovery claim processing time. no-fault-found rate vs. number of issues resolved. part inspection cycle time. no-fault-found per part.Figure 3: Accenture Supplier Performance Services Collected Inputs • Warranty claims • Replaced parts information • NFF reports • Supplier audit history • Parts family benchmarks Accenture Parts Supplier Analytics • Parts expertise • Supplier performance analytical models • Standard Supplier KPIs • Parts analysis labs Outcomes • Dealer diagnostics and NFF improvements • Targeted supplier audits • Continuous and granular parts suppliers benchmarks Supplier Performance Services: Improving parts suppliers performance and supplier recovery While finished goods are often assembled from parts purchased from third party suppliers. manufacturers typically only recover 15 to 25 percent of their warranty repair costs from parts suppliers. Manufacturers can leverage Accenture’s supplier analytics and parts expertise to segment supplier parts and benchmark suppliers to gain sufficient insight to launch targeted supplier improvement programs like supplier reviews and parts diagnostic training programs. non-conforming materials percentage • Financial: Actual supplier claims cost vs. warranty costs per part. Improving supplier recovery is often a challenge since it requires collecting and analyzing repair and parts defects information from a disparity of repair agents before costs can be claimed back from parts suppliers. budget Supplier performance improvement programs can typically generate warranty costs savings of 5 to 10 percent. Accenture’s industry specific analytical services help manufacturers monitor and act upon the following suppliers’ performance indicators: • Process efficiency: Supplier recovery rate. In particular. detection to correction time. peers of the same part family group • Quality: Repair / incident rate. analyzed to identify statistically significant exceptions in failure rates. increased warranty repair costs and may cause customers to switch brands. Late detection of product defects may lead to larger recalls. Key performance indicators used are: • Process efficiency: Number of open issues.Figure 4: Accenture Early Detection Services Collected Inputs • Warranty claims • Social media sonar • Customer complaints • Product launch dealer panel • On-board Telematics Accenture Early Detection Analytics • Turnkey quality analytical models • Industry expertise • Standard quality detection • Engineering services • Outcomes • Near real time monitoring of quality issues • Quality issues tracked from occurrence to resolution • Root cause analysis tracking Early Detection Services: Improve quality of parts and components through analysis of after sales information to quickly identify recurring quality issues. collecting and consolidating masses of quality information. Accenture’s experience and reach can be leveraged to build a global. Manufacturers have typically used dealer focus groups and warranty claims analysis tools to identify recurring quality issues. reactive surveillance system. product and parts perceived quality index • Financial: Average repair cost per quality problem. 8 . To reduce the time taken to detect problems. which reduces distribution channel profitability and requires more resources to acquire new customers. Accenture leverages analytical tools to sort through new sources of near real-time information from sources like social media and on-board telematics. warranty reserve accuracy Early detection services can typically help manufacturers reduce quality problem detection times by 50 percent and generate warranty costs savings of 10 to 15 percent. number of open root cause analysis • Quality: Problem detection time. detection to correction time. 9 . 300 250 200 $M 150 100 50 0 Baseline Warranty Cost Warranty operations optimization Dealer performance improvements Supplier performance improvements Early quality problems detection Optimized Warranty Cost $250M $2M $5M $19M $30M $190M } ⧋∆$60M Benefits to manufacturers Effective warranty optimization programs can generate overall warranty costs savings of up to 25 percent. customer surveys. With Accenture’s Warranty Optimization Services.5% of revenues. technology-driven warranty analytics approach that is software and hardware agnostic • Industry specific analytics templates to compile warranty KPIs from heterogeneous data sources (warranty claims. social media feedback.000 analytics professionals with over 500 professionals with advanced analytics skills • Accenture’s global scale. on-board telematics. • Accenture Warranty Optimization assets : • Multi-lingual. historical audit results and so on…) • A network of over 5. warranty operations delivery centers • A business-led.Figure 5: Warranty Optimization Potential Benefits Illustrative example: Auto/Industrial equipment manufacturer with $10B in annual revenue and with warranty expenses at 2. manufacturers benefit from: • Accenture’s significant track record providing warranty operations and optimizations programs as a managed service in the auto. heavy and industrial equipment industry. proven experience and cumulative learning from global and local warranty projects • Accenture’s ability to quickly engage regional/ local country teams to manage warranty optimization programs (dealer performance programs for example) in regions with significant cultural or language differences Figure 6: Enterprise Warranty Analysis Enterprise Warranty Analysis Warranty Business Rules & Processes Claims Sales Data Product Data Dealer Data CRM Data Warranty Information Store Customer Surveys Technician Hotlines Dealer Audits Supplier Audits Corrective Actions 10 . Companies can improve warranty costs by as much as 25 percent while boosting overall profit by up to 1 percent thanks to improvements. 11 . 2011.accenture.Intrigued? Accenture is committed to helping its clients achieve high performance. Our Internet address is www. comprehensive capabilities across all industries and business functions. Accenture.000 people serving clients in more than 120 countries.5 billion for the fiscal year ended Aug. contact: contactAPO@accenture. The company generated net revenues of US $25. 31.com About Accenture Accenture is a global management consulting. and extensive research on the world’s most successful companies. technology services and outsourcing company. its logo. with more than 244. To find out more about how Accenture can help you meet your business imperatives and create a road map for high performance. 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