Why OEMs Need a Data-Driven Approach to Warranty Management

Introduction

Warranty management was once considered a back-office job that mostly dealt with dealers and customers. Before the digital transformation wave swept in, it was all maintained on paper and ink. This meant a heavy workload of documentation and file management. Limited visibility, few safeguards for fraud prevention, and a high operating cost to maintain the warranty management department were a few of the many challenges faced by OEMs.

For a smooth management of claims, a data-driven approach to warranty management was required. A new, integrated approach was introduced in the form of warranty management software. This enabled OEMs to improve the claim management process, and this digital solution introduced safety measures to reduce fraudulent claims. With further improvements, warranty claim management has improved drastically. OEMs can now manage multiple claim types, automate the supplier recovery process, and also introduce an efficient claim process for dealers. Together, these features make warranty management easy and reduce operating costs for OEMs. 

Now that we have discussed the holistic benefits of a data-driven approach to warranty management, let us delve into the details.

The Complexity of Warranty Management

Technology plays an important part in today's society and is integrated into our lives like a spider web that connects every activity that happens. Similarly, with the automotive sector, modern vehicles have integrated technologies such as ADAS, infotainment systems, and more. This means an increased number of sensors and ICs. This, in turn, increases the complexity of managing the warranty of these intricate parts that make up the modern vehicle, especially electric vehicles. This increases the diagnostic complexity and introduces new failure modes. 

The useful data generated in such vehicles helps OEMs track real-time insights, where the traditional warranty management system fails to deliver.

The Limitations of a Traditional Warranty Management System

Although the automotive sector has made the digital shift, many systems still operate using paper-driven warranty management. Here are a few limitations to traditional warranty management systems:

1. Errors and Delays

As every claim is made on paper and would need to be reviewed manually, this process is prone to errors and delays in responses/submissions. The overall workload of approvers is drastically increased, which hinders the consistency in warranty management.

2. Data Source Fragmentation

The data available is in multiple siloes, further increasing the delays in accessing important information. Increased efforts for data management and heavy workloads often result in further disconnects in the process.

3. Increased Frauds

Duplicate claim forms and incorrect claim information are a few causes for increased warranty fraud.

4. Reduced Efficiency

Traditional warranty management systems often feature fragmented systems, resulting in lower overall process efficiency.

All of these limitations cause losses in profit margins and damage the brand’s reputation, leading to reduced customer trust.

Why is a Data-Driven Approach Needed?

A data-driven warranty management system incorporates advanced AI features that enable faster processing of a large number of claims. This system uses analytics and automation to reduce errors and fraud by making evidence-based decisions. 

Here’s why OEMs need a data-driven warranty management system:

1. Detect Defects Early

This system performs real-time analyses of claims and identifies if there is a spike in the failure of a specific product/variant. By analysing this information, OEMs can identify any issues early to make well-informed decisions and build customer trust.

2. Reduce Warranty Management Cost

With advanced algorithms and rule-based automation, each task is self-sustaining in the technological framework. With automated algorithms for warranty fraud detection and standardising the labour costs, a data-driven warranty management system reduces the costs of warranty management.

3. Improved Dealer Performance and Standardisation

A warranty management system that standardises the warranty documentation and the claim submission process is also made easy. With just a few clicks, the claim submission is completed. In addition to this, the warranty management software also provides deep analytics to show the performance of the dealers of an OEM. This enables the OEMs to take data-backed decisions and enable a better partnership with the partners. 

4. Better Supplier Performance

With advanced analytics, OEMs can evaluate the supplier performance and identify areas of improvement. This software can also enable the identification of chronic part failures and underperforming suppliers. With these advanced features, recovery claims can be justified with clear evidence.

5. Enhanced Brand Trust and Customer Experience

Building trust in a brand is a process that is not just a financial transaction but a reflection of the relationship between the brand and its customers. With better service, transparency, and straightforward communication, customer trust is improved.

6. Follow Compliance: Transform the Recall Process

A system that is unified and transparent can help in maintaining audit trails to centralise all communications, and also automate the compliance process. Better root cause analysis is also one of the benefits of this data-driven warranty management system.

Why Should OEMs Opt for A Data-Driven Warranty Management System

Today, it is crucial for any business to ensure that the operations run smoothly and that customer trust is also improved. To achieve these, OEMs must ensure that automation and transformative technology, such as warranty management systems, are deployed in such a way that it eases the entire process. In the face of rising costs and diminishing brand loyalty, it is essential to implement provisions that both ​reduce warranty costs​ and strengthen customer trust.

A data-driven warranty management system enables transparency in communications, reducing warranty fraud and streamlining the claims process to automate the supplier recovery process. With such systems, the OEM's profitability is increased, which enables a future-forward approach.

Conclusion

With the increasing complexity of vehicles today, it is essential for OEMs to adopt new and innovative methods that streamline their internal processes. Traditional warranty management systems aren’t able to cope with the rising complexity of vehicles today. These systems often are cost-intensive and impact the OEM's financial performance. 

Data-driven warranty management systems are here for the future and enable OEMs to move from hindsight to foresight. Deploying such a solution can deeply impact the profitability and customer trust.​