Recalls, as well as day-to-day returns and repairs, are a given in the electronics industry. They also have a profound effect on company reputation and bottom line.
According to a recent survey by IBM -On average, warranty costs for electronics companies are close to 3 per cent of revenue. Of that 3 per cent, less than 1 per cent is actually spent on repair or replacement.
For a one-billion-dollar company, that’s USD 20 million in processing and administration costs across the repair cycle.
What’s more, in electronics, there is a high instance of NFF – or no-fault found – where the originally reported defect cannot be reproduced. Calling this a thorny problem is a polite understatement.
But at the same time, warranty management has the potential to be cost-effective and a primary indicator of product quality and brand integrity.
Solutions powered by advanced technologies provide innovative ways to improve performance, with benefits that extend beyond warranty operations.
The survey conducted by IBM on over 300 electronics companies revealed 3 key competencies common among companies with effective warranty management:
- Standardized processes and improved communication to reduce cost and improve insight.
- Increased traceability back from warranty management into manufacturing and the supply chain.
- Broadened interactions and information sharing across the ecosystem.
Where do new warranty management approaches add value?
Reduced operational costs
Average warranty costs for bottom performers are 150 per cent higher than those at the top. That means a bottom performer with USD 1 billion in revenue could expect warranty costs that are USD 27 million (or 150 per cent) higher than a top performer.
Improved brand integrity and customer experience
Source: IBM Institute for Business Value Benchmarking Program
Identification of new revenue streams
Leveraging advanced technologies can increase the potential for new revenue streams through innovative commerce and data insight opportunities.
In 2021, it’s time to make a paradigm shift. If you are not using your Warranty Solution to reap benefits beyond warranty, you might want to know more.
NeuroTags provides you with everything you expect from a complete Warranty Management Solution
Top market leaders are realising the true potential of a sophisticated Warranty Management Solution and getting tremendous results after implementing them.
Want to know more? Book a free consulting session with our experts here.