How to increase profitability and customer retention by leveraging technology that can help save up to 10% of warranty spend.

1. Growth comes knocking…
Growth comes knocking…
How to increase profitability and customer retention
p y
by leveraging Technology
Eric Arnum, Editor, Warranty Week
earnum@warrantyweek.com
www.warrantyweek.com
Manish Arya, CTO, Tavant Technologies
bizdev@tavant.com
bi d @t t
www.tavant.com
Sponsored by:
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2. How to?
How to?
• Reduce Warranty Spend
Reduce Warranty Spend
• Increase Supplier Recovery
S li
• Increase Customer Satisfaction
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3. Worldwide Warranty Claims
2003‐2008, in US$ Billions
i $ illi
$100
$80
$60
$40
$20
$0
2003 2004 2005 2006 2007 2008
USA Rest of World
Source: Warranty Week estimates

4. Worldwide Warranty Claims
Estimates for 2008 in US$ Billions
2008 Auto High Tech Building Other Total
North
$13.2 $10.5 $3.2 $1.9 $28.8
America
Europe &
$25.7 $3.7 $8.7 $5.2 $43.4
Asia
World $38.9
$38 9 $14.2
$14 2 $11.9
$11 9 $7.1
$7 1 $72.2
$72 2
Source: Warranty Week estimates

5. Harley-Davidson Inc.
Warranty Claims & Accruals 2003 2009
Accruals, 2003-2009
$48 1.8%
Quaterly Claims ($ Mil) Claims Rate % Accural Rate %
$40 1.5%
$32 1.2%
$24 0.9%
$16 0.6%
$8 0.3%
$0 0.0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2003 2004 2005 2006 2007 2008 2009
Source: Warranty Week from SEC data

6. Harley-Davidson Inc.
Warranty Reserves 2003 2009
Reserves, 2003-2009
$200 24
Warranty Reserves $ Reserve Capacity (months)
$150 18
$100 12
$50 6
$0 0
2003 2004 2005 2006 2007 2008 2009
Source: Warranty Week from SEC data

7. Caterpillar Inc.
Warranty Claims & Accruals 2003 2009
Accruals, 2003-2009
$450 3.6%
Quaterly Claims ($ Mil) Claims Rate % Accural Rate %
$375 3.0%
$300 2.4%
$225 1.8%
$150 1.2%
$75 0.6%
$0 0.0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2003 2004 2005 2006 2007 2008 2009
Source: Warranty Week from SEC data

8. Caterpillar Inc.
Warranty Reserves 2003 2009
Reserves, 2003-2009
$2,400 24
Warranty Reserves ($Mil) Reserve Capacity (Months)
$1,800 18
$1,200 12
$600 6
$0 0
2003 2004 2005 2006 2007 2008 2009
Source: Warranty Week from SEC data

9. Business Challenges
Business Challenges
Policy
Management
Warranty Center
Warranty claims expense
Product
Product
Failure / Cost
Claim
l Staff cost
S ff
Submission
Analysis
Varied processes across business
units
Warranty
y Fraud and duplication
Center Integration with corporate
systems and dealer systems
Changing business needs
Supplier
Part Returns
a t etu s Transparent interaction with
Transparent interaction with
Recovery
R
service partners and customers
Product and service quality
Claim
Processing
g
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10. Business Challenges (contd.)
Business Challenges (contd.)
Policy Management
Policy
Enforcing warranty terms and
E f i t t d
Management entitlement
Efficiently managing service
bulletins, campaigns and safety
Product
Product
Failure / Cost
Claim
l recalls
Submission
Analysis
Claim Submission
Warranty
y Ease‐of‐use
Center Error‐free claim entry
Long claim cycle time
Supplier
Part Returns
a t etu s
Recovery
R Part Returns
P R
Ensuring parts are returned
when required
Claim
Processing
g Tying claim adjudication to part
returns
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11. Business Challenges (contd.)
Business Challenges (contd.)
Product Failure / Cost Analysis
Measuring cost of warranty Policy
Management
Detecting failure trends early
Forecasting warranty expense
Product
Product
Claim
l
Failure / Cost
Submission
Analysis
Supplier Recovery
Efficiently managing
Effi i tl i
Warranty
y
contracts Center
Tracing claims end‐to‐end
Supplier
Part Returns
a t etu s
Recovery
R
Claim Processing
Reducing manual effort Claim
Consistency in adjudication
Consistency in adjudication Processing
g
Tracking detailed claim history
Paying invalid claims
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12. Solutions: Key Features
Solutions: Key Features
Business Functions
Intelligent warranty entitlement
User‐friendly claims submission
U f i dl l i b i i
Business
Functions and real‐time validation feedback
Integrated part returns and
supplier recovery
Integrated user support (service
demos, training manuals) and
customer feedback
Handheld / mobile device
Predictive Warranty
Warranty Platform and compatibility
Analysis Configurability
Center
Platform and Configurability
Flexible and configurable
warranty terms
Process
Flexible adjudication rules
Flexible adjudication rules
Automation Workflow engine
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13. Solutions: Key Features (contd.)
Solutions: Key Features (contd.)
Predictive Analysis
Predictive Analysis
Business
Performance measurement – Functions
products, service partners,
suppliers
Forecasting of warranty expenses
Detection of emerging issues
What‐if analysis
Predictive Warranty
Warranty Platform and
Analysis Configurability
Process Automation Center
End‐to‐end traceability of claims
activity
Automated rules‐based decision‐
making
Auditing
Integrated part returns
I t t d t t Process
Automation
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14. ROI: Real Examples of Savings
ROI: Real Examples of Savings
• Reduction in warranty expenses (up to 20%)
– Duplicate claims elimination (up to 100%)
– Reduction in fraudulent claims (up to 100%)
– Reduction in review time per claim (up to 25%)
Reduction in review time per claim (up to 25%)
– Significant increase in Supplier recovery ( 50% plus)
• R d i i l i
Reduction in claims cycle time (up to 60%)
l i ( 60%)
• Reduction in warranty reserve
Reduction in warranty reserve
– Lower overall warranty expense (up to 20%)
– Better prediction of future expenses
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15. Case Study
Case Study‐ Challenges
• AS 400/JDE (ERP) did not manage warranty policies
Policy
Policy • Claim processors had to manually enforce warranty terms
Management • AS 400 system did not manage service campaigns / product recalls
Claim • AS 400 user experience not intuitive, leading to erroneous data entry
Submission
S b i i •D l h d t
Dealers had to email/fax supporting documents
il/f ti d t
• Claim processors had to manually track part returns
Part Returns • Claim processors had to manually communicate with dealers
• Dealers had to fax the part return freight invoices to OEM
Dealers had to fax the part return freight invoices to OEM
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16. Case Study Challenges (contd.)
Case Study‐ Challenges (contd.)
• Manual processing leading to longer payment cycle
• No consolidated view of claim & equipment history
Claim
Claim • No notification to dealers when more information required
Processing • Manual checking for duplication and fraud
• No pre‐authorization information captured on special consideration claims
Supplier • Manual tracking of supplier recovery through Excel sheets
Recovery
R • L k f i ibilit f
Lack of visibility for suppliers leading to disputes and longer cycle time
li l di t di t dl l ti
Product
• Inadequate data captured in claim to do fault / cause analysis
Failure / Cost • No real time access to data for ad hoc reporting requirements
Analysis
A l i
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17. Case Study Solution & Impact
Case Study‐ Solution & Impact
• All policies setup in system and enforced through system
Policy
Policy • Service campaigns setup and tracked in system reducing campaign
Service campaigns setup and tracked in system, reducing campaign
operations cost by 40% (no paper service manuals mailed to all dealers,
Management no manual effort for business to track the customer)
Claim • Guided data entry UI and validation rules lead to 99% drop in entry errors
Submission
S b i i • O li h l
Online help manual help reduced early training costs by 75%
lh l d d l t i i t b 75%
• Part tracking reduced claim cycle time and improved supplier recovery
Part Returns • Significant reduction observed in claim part return errors
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18. Case Study Solution & Impact (contd.)
Case Study‐ Solution & Impact (contd.)
• 40% claims auto processed
• 100% elimination of duplicate claims using business rules
Claim
Claim • 50% reduction in claim cycle time
50% reduction in claim cycle time
Processing • Supporting documents electronically linked to a claim along with pre‐
authorization information, leading to improved audit process
• Increased supplier recovery by 25% and reduced errors
• Reduced cycle time by more than 50%
Supplier • Integrated system for dealer claims and supplier recovery allowed
Recovery
R business to get supplier advice before paying dealer claim
b i t t li d i b f i d l l i
• Supplier recovery handled in house, saving costs on 3rd‐party collection
agency
• Provided canned reports for:
Product Failure • Measuring cost of warranty
• Early detection of product failure trends
/ Cost Analysis
/ Cost Analysis • Warranty expense forecasting
Warranty expense forecasting
• Supported ad‐hoc reporting, removing dependency on IT
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19. Growth comes knocking…
Growth comes knocking…
Eric Arnum, Editor, Warranty Week
W: www.WarrantyWeek.com | E: earnum@warrantyweek.com
y | y
Manish Arya, CTO, Tavant Technologies
W: www.tavant.com | E: bizdev@tavant.com
W: www tavant com | E: bizdev@tavant com
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