A High-Tech Way to Back Up Your Warranty

Oct. 8, 2008
Manufacturers are discovering a reliable revenue stream from warranty management.

Warranty management solutions will become increasingly popular among manufacturers due to their ability to increase the visibility of warranty claims and the impact they have on current and future business imperatives, according to analyst firm Datamonitor. The firm projects that the global warranty management technology market will top $1 billion by 2012, compared to $715 million in 2007.

While warranty management itself isn't necessarily new within manufacturing, for many companies, the processes associated with it tend to be disjointed, inefficient and somewhat ineffective, notes Adam Jura, Datamonitor's manufacturing technology senior analyst. "As the cost of production and competition increase, these companies are having to identify business processes that can yield financial benefit through reengineering or enhancement. In this sense, Datamonitor believes that warranty processes represent an area of untapped opportunity."

As manufacturers look to post-sales support as a reliable revenue stream, optimizing warranty management and customer interactions can be a key strategic asset to help reduce costs, drive repeat business and gain a competitive edge. Part of that strategy, of course, depends on the functionality of the solutions.

When it comes to warranty management, some manufacturers stick to the basics, namely Excel spreadsheets and the like to track financials, customer interactions and fulfillment. Lately, however, thanks to the emergence of analytic software, technology vendors have begun offering manufacturers warranty solutions that support claims processes.

"The implementation of in-house systems to support warranty processes has been a major theme throughout our research," Jura notes. "Such a strategy is understandable given a lack of specific functionality offered by technology vendors. However, the solutions on the market today have advanced significantly over the last few years. Implementing a solution from vendors such as SAP and SAS, or looking to business process outsourcing and services providers such as
Genpact and EDS is a much more realistic option for manufacturing companies than in the past."

Jura believes that the automotive industry will pioneer revenue opportunities from warranty management solutions, with the high-tech and aerospace & defense manufacturers also being early adopters.

"The warranty management market holds opportunities for a range of different vendor types," Jura notes, but adds, "however, our research indicates that many are lacking a clear, well defined strategic direction in terms of product functionality and go-to-market strategy."

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