I am going to speaking next week at the Warranty Chain Management Conference (registration is still open) on Next Generation Warranty Systems. I hope to post a couple of product reviews (like the SAS Warranty one already posted) this week but I thought I could also talk a little about my topic.
The basic premise is this: Next generation warranty systems focus on the decisions in the warranty chain, recognize these decisions as reusable assets and make them widely available via Decision Services. Such a decision-centric approach enables warranty feedback and experience to be integrated into the whole product life cycle and brings the company’s know-how and expertise to bear at every step in the warranty chain.
At the heart of this is Decision Management as you would expect. Replacing manual or hard-coded decision points with Decision Services and improving business performance by identifying the key decisions that drive value in the business and improving on those decisions by leveraging a company’s expertise, data and existing systems.
Companies adopting Decision Management can build on their existing systems to build next generation warranty systems that improve warranty chain processes. They focus on warranty chain decisions through, make these decisions available via Decision Services and use business rules to manage these decisions. Using data mining and predictive analytics, especially in fraud detection, allows them to add analytic insight to improve these decisions. Finally, of course, they need to create a continuous improvement loop for these decisions.
Companies that have adopted a Decision Management approach in Warranty have seen a return on their investment in various areas. For instance:
- One auto distributor now automatically approves 85-90% of claims, up from the 60% in the old system, and the percentage continues to climb slowly as more rules are added.
- Another company using a package solution with rules-based claims adjustment and routing reduced their claims backlog by 60-80%.
- One warranty claims processor used a business rules management system to reduce adjudication turnaround from one week to 24 hours.
- Automating and improving the recovery decision has been seen to increase supplier recovery up to 100%
- Feeding back risk and fraud models into the claims adjudication decision saved millions of dollars for a white goods manufacturer.
In addition companies have reduced scrapped parts, restricted fraudulent activities and reduced warranty reserves. The ROI can be further increased as warranty decisions are reused across other processes. For instance, marketing campaigns can be integrated with campaign recalls if the marketing processes can access the warranty claims rules and decisions. This reduces costs and increases effectiveness in processes outside warranty claims.
I’ll post some more on this later in the week. Drop me a line james [at] decisionmanagementsolutions.com if you are coming to the warranty conference.
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Ford was an early pioneer in using rules to process warranty claims. They received an IAAI award in 1990. http://www.aaai.org/Library/IAAI/1990/iaai90-023.php.