Just being a warranty manager is a challenge. Products are shipped out on neat, shrink-wrapped pallets, while the warranty department receives a haphazard collection of returned items in various states of disrepair. Sometimes there’s nothing wrong with the product at all. Nevertheless, the customer who returned it wants it back — or a suitable replacement — yesterday.
As a warranty manager, you deal with multiple, competing priorities on a daily basis. The tools and strategies you use to respond to those challenges can help determine your success.
Challenge #1: Control Costs, But Provide Great Service
Customers expect 100% uptime. Many maintenance contracts include service level agreements (SLAs) that require rapid turnaround and repairs in as little as 24-48 hours. Often less than that. How do warranty managers control costs and meet those expectations?
At first, a central repair center may seem like an ideal “economy of scale” solution. But remember that we’re dealing with global service supply chains. Here are some weak links to consider:
- Transportation costs: Airfreight can cost up to 10 times more than ocean freight, but ocean transport takes weeks compared to days for air shipments.
- Inventory carrying costs: Warranty managers have to accurately predict what types of repair inventory needs to be stocked and where it should be located. If your repair/refurbished inventory is too low, you risk having to replace the returned product with new product.
- Turnaround time cost: There’s a big difference between a 6-week to 8-week repair cycle and a more efficient process that screens products for no trouble found (NTF) near the customer and gets good units back into the field quickly.
In-country or in-region service and support help you meet or exceed SLA requirements, but small to medium-size companies don’t have the expertise and financial resources to manage warehouses and repair depots across the entire globe. A repair partner who can manage reverse logistics and build a cost-effective service supply chain that provides 24/7 support can reduce total cost of ownership (TCO), improve turnaround time, and meet customer expectations.
Challenge #2: Keep Customers Happy
Sales and marketing bring in customers, but product reliability and service keep them coming back:
“Even a single negative customer service experience can deter potential customers from spending money with a company. 60% of US consumers have not completed an intended purchase based on a poor customer service experience. That translates into an estimated $83 billion in lost sales for U.S. retailers.”
A failure in a critical system like order fulfillment can quickly cascade. Your customer’s customers don’t get orders on schedule, which causes problems and damages relationships throughout the global service supply chain.
Not that the customer is always right. Many routinely return products as “defective” that are actually NTF and in good working order. For example, almost 75% of mobile phones returned by users in Europe and North America in 2015 were NTF.
Often, a warranty manager becomes the detective who has to work with other departments to determine why NTF products are flowing back into the warehouse. No customer is satisfied with a failure, real or imagined.
Challenge #3: Drive Product and Service Improvements
Managing warranty processes and controlling costs is a team effort, but the warranty department is the leader. Warranty managers have to keep multiple departments on the same page. Sales may want to over-promise –“Sure, we can support your factory in Romania by next month!” Engineering and manufacturing may need help building relationships with customers’ internal teams.
The warranty department needs access to crucial business intelligence that highlights problem areas:
- Causes of parts malfunctions.
- Variables that contribute to product failures (“Is it a design flaw or “just” the packaging?”)
- Customer service problems and miscommunication.
Consider this real-world example. A customer was experiencing a lot of failures on a part, but couldn’t explain why. Finally, the repair team found the underlying problem. It wasn’t a hardware flaw — it was an issue with the packaging! After a minor packaging modification, the 12% out-of-the-box failure (OBF) rate fell to less than 2%.
Good historical data and dynamic visibility help identify solutions to NTF returns, unexpected repairs, and inflated inventory carrying costs. The cheapest repair and/or air shipment is the one you don’t have to make.
Flash Global Can Help Warranty Managers Excel
Efficient warranty management can strengthen customer loyalty and give your company a strategic advantage. Flash Global can help streamline your warranty operations and control TCO.
We’ve been doing every part of last-mile service logistics for decades, and have specialized in service supply chain solutions for the past 15 years. We deploy our custom service parts logistics and value-added service supply chain solutions to help you compete and excel in the global marketplace. Your mission is our mission. Let’s start talking today.