How to Become a Warranty Warrior Industry Assessment and the Warranty Management Capability Maturity Model
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1 How to Become a Warranty Warrior Industry Assessment and the Warranty Management Capability Maturity Model Joe Barkai November 17, 2011
2 About IDC IDC is the premier independent global market intelligence, events, and advisory firm for information technology, telecommunications, and consumer technology markets since 1964 More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries IDC is a subsidiary of IDG, the world's leading technology media, research, and events company Insights are industry-focused business units focusing on technology-enabled business innovation within a single industry
3 IDC Manufacturing Insights Industries View Asset Oriented Value Chain Engineering Oriented Value Chain Technology Oriented Value Chain Brand Oriented Value Chain Value Chains Process Domains Chemicals, Pharmaceuticals, Automotive, Aerospace, Machinery, High-tech, Semiconductor, Fashion, Food & Beverage, Operations Investigate a segment across domains Supply Chain Product Lifecycle Investigate a domain across segments Sustainability
4 U.S. Manufacturing Warranty Economy Claims ~ $23 B 2.00% 1.50% % % Q06 1Q07 1Q08 1Q09 1Q10 1Q03 Index=100 Revenue Index Warranty Claims Index Claims/Revenue 0.00% Source: IDC Manufacturing Insights and SEC filings, 2011
5 Organizations are Dissimilar and averages lie
6 Variability Within Every Industry Warranty claims as % of product sales Aerospace Semiconductor High Tech Automotive Source: IDC Manufacturing Insights and SEC filings, 2011
7 The Reality High warranty costs Difficult to predict and control Fraudulent and inaccurate claims Inability to efficiently recover cost from suppliers Delayed and poor input to product quality and to customer experience
8 A Consistent and Objective Method is Needed Perform relevant and objective self-assessment Benchmark performance Identify best practices Across industrial sectors and organization types Establish a continuous improvement program Prioritize process improvement needs Justify investment in process improvement and IT
9 Industry Study 100 respondents spanning industries, company sizes and geographies Industries Revenue Geographies Source: IDC Manufacturing Insights, 2011 Valid N=100
10 What We Measured Benchmarking practices Frequency, internal vs. external, competitive assessment, other industries, Metrics used Transactional, financial, quality, Leading vs. lagging indicators Process consistency Organizational structure Reporting structure Most senior position Process improvement initiatives Efficiency, quality, fraud detection, financial planning, IT tools in place and planned
11 Leaders and Laggards Emerge Warranty Warriors Warranty Wannabees Serious about warranty process improvement Fundamentals are in place Improved processes in place or a firm plan to implement within 18 months Realize the importance of warranty process improvement Some processes are in place Plan" to implement further improvements but no budget or timeline commitment
12 Warranty Management Capability Maturity Model (Simplified View) 0. Ad-Hoc 1. Standardized 2. Managed 3. Integrated 4. Optimized The organization establishes process accountability and capturing of best practices to drive/initiate continuous improvement. Reactive to warranty events and focuses solely on executing warranty transactions. Processes are unstructured and exception management is common. Balanced and blended key performance indicators (KPIs) are used, extending into transactions, finance, quality, customer satisfaction, etc. Integrated processes, tools, and decision making exist for continuous improvement across an extended set of stakeholders. Some warranty processes and business rules are defined, yet enforcement is inconsistent. Transformation Effort & Cost Focus is on interdisciplinary process optimization, improving predictive decision making and agility through the aggregation and analytics of enterprise-wide information.
13 Within Each Stage of Maturity: People, Process, Technology Organization Organizational structure, role, and goals Governance Warranty process governance Measurement Performance measurement to manage and improve the warranty process Technology IT to support warranty management
14 Current State Jumpstart Program Custom Projects Continued Development You are Welcome to Join!
15 A Tale of Two Cars: Unleashing the Power of Analytics 0.35% 0.30% Day 0 Cost: Vehicle A 2.6% Vehicle B 1.0% 0.25% % of total clamis paid 0.20% 0.15% 0.10% A B 0.05% 0.00% Age in Days Source: We Predict, 2010
16 Become a Warranty Warrior Assess and Plan Self-assess Benchmark (internal, external) Establish clear business value: financial, quality, customer Assess risk vs. benefits; prioritize opportunities Execute Implement holistically (people, process and technology) Implement gradually, establishing a foundation for growth Monitor business value: financial, quality, customer Remain Steadfast but Nimble Establish Warranty-Quality connection Explore the role and value of analytics (and be realistic) Assess performance and adjust Plan the next wave (climb the maturity ladder)
17 Benefits Improved processing time and efficiency Reduction in unjustified and fraudulent claims Shorter detection time Detection to correction time? Supplier cost recovery? Very important intangibles Improved warranty-quality connection Better product and customer insight Overall business visibility and agility
18 Learn More This presentation slides IDC Reports Warranty Management and Warranty Analytics MarketScape (forthcoming) Warranty Management Capability Maturity Model and Industry Assessment Real-Wrold Challanges in Warranty Analytics Warranty Spend in U.S. Manufacturing, 2010 Reap Rewards with Customer Self-Repair What Does Your CEO Know About Warranty?
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