Viziya is now part of Prometheus Group

Success Through WorkAlign® Warranty Tracker

Posted under Blog by VIZIYA WorkAlign® Warranties Team

The Need for Warranty Tracking

Too little attention is paid to industrial asset warranties. Their existence is often an afterthought, and actual claims tend to be rare. Most companies lack a formal, systematic warranty claims process and it is costing them more than they may realize.

Premature failure of equipment under warranty leads to costly equipment replacement or repairs with the resultant potential loss of production. Warranty claims can offset some of these costs, but the returns of effective warranty management extend far beyond direct cost recovery. The greater long-term value comes from its indirect benefits. Combined, the immediate and extended benefits can deliver as much as 5% savings to a company’s bottom line. Effective warranty management requires cooperation across multiple business functions and responsibilities within an organization. It spans roles traditionally performed by Supply Chain, Maintenance and Finance personnel, and interfaces with key asset management processes.

Effective warranty management is an information-driven process. Consequently, relying on spreadsheets, manual procedures, and memory will not provide sufficient visibility and responsiveness. The limitations of existing enterprise systems may also make warranties too difficult to identify and track. Warranties are therefore best managed within a common, purpose-built information system that is actively integrated with existing maintenance and supply chain solutions. A sizeable portion of direct maintenance spend is recoverable through legitimate warranty claims. 

The VIZIYA WorkAlign® Warranty Tracker Solution

When a decision is made to more effectively track and manage warranty claims, it is important to choose a tool that is best for the task in order to maximize the results. VIZIYA WorkAlign® Warranty Tracker is a purpose-built maintenance warranty tracking solution that not only helps to reclaim valid warranties but also drives business improvement initiatives. It is tied directly to the equipment and suppliers associated with work orders in the existing corporate asset management system (ERP/EAM), allowing warranty claims to be automatically presented for review.

Specifically, VIZIYA WorkAlign® Warranty Tracker is able to:

  • Capture multiple warranty contracts against suppliers
  • Link multiple warranty coverages against a single warranty contract
  • Document coverage durations by calendar or by consumption
  • Link consumption coverages to the measurement points and document in the ERP/EAM
  • Link warranty coverages to equipment, sub-assemblies, and materials without the need to serialize all components
  • Track warranty status of equipment, sub-assemblies, and/or material
  • Flag existing work orders for warranty eligibility on equipment and component/spare levels
  • Create the warranty claim document against the work order and functional location/equipment
  • Document reasons why warranties against eligible work orders are not claimed, canceled or rejected
  • Prioritize warrantable work orders
  • Generate a warranty claim document and capture transactions against the warranty claims
  • Attach all supporting documents against contracts and warranty claim documents
  • Analyze warranty data such as supplier performance, warranty claim success per supplier and equipment type, warranty savings per period, and reasons for non-claims, rejections, and cancellations per supplier
  • Share warranty performance information to promote ongoing reliability analysis and equipment selection process improvements
  • Provide information needed to drive design and manufacturing quality improvements
  • Provide the information needed to improve vendor negotiations and Selection

Let’s look at a sample Warranty Case that revolves around a mining company…

Mining production is accomplished using complex, mission-critical equipment that is expensive to maintain. Great care is required to ensure maximum asset uptime and reliability in order to meet the maintenance budget and production goals. Typically, warranty claims are made on an ad hoc, manual basis.  Now let’s just focus on the 15-20% of equipment types that would produce the greatest returns. Therefore, let’s just look at key production equipment.

For the prioritized equipment, the following warranty related information was used from the existing enterprise resource planning (ERP) system:

  1. The specific equipment and/or components covered by warranties
  2. The various terms and conditions covering each of the items under analysis
  3. When the items were purchased and installed
  4. If a replacement was performed within the applicable warranty period
  5. The reason for the replacement (e.g., component failure)

From there, the following elements were used:

  1. Eleven material groups were selected, covering components such as motors, engines, shafts, gearboxes, and pumps.
  2. Some equipment categories and related material groups were excluded, including items such as agitator spares, crushers, ball mills, compressors, cylinders, conveyor belting, and power transmission.
  3. Historical spend on the chosen equipment was downloaded from the ERP, and the evaluation team took into account the timing of the transactions and an average warranty coverage period of one year across the various equipment gaps.
  4. The quality of work order and warranty data was assessed to identify additional gaps and opportunities for improvement.

Rather than adding new positions or appointing additional resources, the company decided to reorganize the Maintenance Planning department and establish a Rotables Department that would manage the rotating equipment and also be custodians of the new warranty processes.

After successful implementation and go-live, the following results were realized:

­­­­­­

  • Warranty recovery savings of 2.7% of total direct maintenance spend.
  • Engineering-related savings of only 1% of total direct maintenance spend.
  • The 0.2% increase in production revenue could result in an equivalent savings of an additional 2.8% of direct maintenance spend. Approximately 18 months after implementation.
  • The above savings resulted in an ROI of at least 120% over a five-year period with a conservative payback within 12 to 18 months. This assumes that all costs are paid upfront with no risk-sharing model in place. 

What this all means…

Asset-intensive companies have an untapped opportunity: optimize warranty processes and reap both financial and operational benefits. Warranty claim revenue is just the beginning; improved asset reliability and production and better supplier decisions are the ultimate rewards.

Historically, warranty management has been a paper-based, manually intensive administrative task – the kind that is commonly relegated to a nonessential role. Consequently, equipment and fleet assets received service when needed, and the associated maintenance warranties were addressed as an afterthought or missed entirely. Any potential advantages were often perceived to be insufficient to offset the effort to track warranty statuses and pursue warranty claims.

New, software-enabled processes that are intertwined with ERP asset management systems facilitate the coordination and communication of warranty efforts, leading to significant maintenance cost recovery, greater asset uptime and production, and lower asset lifecycle costs.

ERP asset management systems like SAP PM and Oracle eAM contain warranty flag and date fields only, but they lack the ability to systematically capture warranty details and create actionable relationships to work orders.  VIZIYA WorkAlign® Warranty Tracker fills the gaps in the ERP warranty processes. It automates vendor claims for warrantable repairs and facilitates cooperation and communication with other departments as well as the various suppliers.

Want to know more?  Reach out to a VIZIYA expert to learn how you can start recouping lost warranty dollars!

RELATED RESOURCES

To gain full access to all our Resources, just register by following the link below.

REGISTRATION ›

See something missing? We are always happy to listen.

Request a Demo

Resource Area Registration

Provide Your Feedback

Close
loading...