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Here’s what different in next generation warranty systems


Continuing some posts on next generation warranty systems in the build up to speaking at the Warranty Chain management conference I thought I would contrast how current generation warranty systems handle critical decisions with how next generation systems do so.

Decision Today Next Generation
Is Claim Valid? Data validation rules are coded into the user interface that captures claims. Any changes in rules have to be routed to IT. The validation rules for the large number of parameters and multiple warranties are managed by business owners based on published warranty terms and conditions. Changes are made by those who understand the rules.
Is Claim Approved? Relatively few claims are auto-adjudicated, most are routed to representatives. Only simple approvals are handled and these are hard to change. 90% or more of claims are automatically approved and the remainder is routed to a representative. The rules are managed by warranty experts and come from a large range of sources (parent company, regulations, policies, offers, recalls) to ensure completeness
Route Claim Simple routing rules can be defined as part of the workflow to, for instance, route claims related to certain parts to certain experts. Claims are intelligently routed to one of the many potential agents or representatives who could review them. Some specialize in particular kinds of claims; others might cover a particular region. Managers constantly update these rules to manage workloads and skill sets.
Risk of Fraud? Either no checking is done at this decision point or it Is both simplistic and deterministic, such as refusing claims from known fraudsters. Every claim is assessed to see if the risk for that claim is high enough to route for review. An analytic risk score is combined with the value of the customer and the value of the claim. Analytics enhance the rules to catch more potential fraud and manage risk.
Define Recovery Recovery is handled manually for all but the simplest situations, with policy manuals and contracts being used to drive actions. The rules for this can be very complex as, for instance, a claim for a part made by a third party but installed in the original product might go back to the manufacturer where a second claim for the same part goes to the third-party who manufactured the part. Contract experts manage the rules so all claims are recovered appropriately.
Accounting and Reserving Similarly to recovery, this step is a largely manual one. Reserving is manual and conducted no more than quarterly. The rules for accounting change constantly as distributors and accounts change, each with their own rules. These rules are managed by those who own the accounts ensuring they stay up to date. Reserving becomes a precise exercise driven by actual transactions rather than an exercise in averages and reserves are updated more often.
Define Service Response Service requests are allocated using geographic or workload rules coded into the system. Performance-based assignment is integrated with contractual and best practice rules to maximize the effectiveness of service responses.
Allow Part Return? Simple return rules are coded into the system but most returns are manually assessed. All aspects of part return are considered and automated so that the vast majority of returns can be handled without manual intervention.

Of course, to do this requires the classic decision management combination of business rules management and data mining/predictive analytics applied to operational decisions. For an overview of this, check out the white paper I wrote for the conference at decisionmanagementsolutions.com/warranty