For today's manufacturers, warranty management is one of the most tangible customer-facing functions. A next-generation, closed-loop warranty system can help companies automate and integrate warranty-related data to enhance field service and improve the management of returns, repairs and claims.

1. A Next-Generation Approach to Integrated
Warranty Management
For today’s manufacturers, gaining actionable insights from customers’
warranty data requires a closed-loop system that pivots around a
single version of the truth, across all business functions.
Executive Summary
Warranty management is among the most
tangible customer-facing activities — offering
manufacturers the opportunity to enhance the
customer experience by automating the admin-
istration of terms and contracts. Also, warranty
information is an important source of “on-the-
ground” failure data, which is critical for future
product designs.
Nonetheless, the cost of warranty management
continues to rise. High-tech and consumer
electronics companies are among the hardest
hit — subject to escalating warranty management
costsdueinparttorapidlyfallingprices,increasing
product complexity and rising demands from
quality-focused customers.
While claims continue to consume a sizable
portion of revenue earned on each sale, other
factors — identifying the root cause of a product
defect, pinpointing faulty repairs and the lack of a
mechanism for timely supplier recovery — only add
to costs. Distributed applications and functional
silos across the enterprise slow down claims
processing and fraud detection. Furthermore,
they do not provide the failure-related informa-
tion needed from the warranty data — essential
to the development of new and improved next-
generation products.
This white paper details critical elements of a
next-generation warranty management system,
which can help OEMs reduce the total cost of
ownership (TCO) in warranty claims processing,
and utilize data that can be used by product-
engineering teams to ensure the development of
high-quality products.
The Warranty Management Value Chain
The warranty management value chain typically
intersects multiple business functions within the
manufacturing organization: product develop-
ment (i.e., product engineering, quality control);
product management; sales; service; supply chain
management (parts, procurement); contract
management; claims processing; finance, as well
as electronic distribution. For example:
• The product development team is respon-
sible for the overall design and quality of the
product.
• The product management team owns the
terms and conditions of the warranty; updates
content related to the product; creates the
warranty, and assigns asset components or
individual parts to associated warranties.
• The sales team uses data pertaining to terms
and conditions to remain competitive and
boost revenues.
cognizant 20-20 insights | march 2015
Cognizant 20-20 Insights

2. Customer/Distributor
Service Desk
Field Service
Claims
Finance
Plant/Repair Center
Inventory
Register Claim
Request
Dispatch Damaged/
Defective Product
Receive
Claims
Receive Replaced
Product
Create Claim
Validate
Entitlement and
Service Contract
Reject Claim
if Not Entitled
Create Work
Order
Schedule
Technician
Update
Status
Validate Service
Response
Send Field
Technician
Perform Service
Request
Perform Defect
Analysis
Raise Parts
Request
Fix Defect With
Spare Parts
Record
Expenses
Manually
Verify Claim
Manage Process
Claims
Manage Credit/Debit
Customer Account
Generate Settlement
Report
Invoice Claim
Manage Accounting
and Reserving Update AR/AP Process Payment
Update RCA
Database
Perform Repair
Analysis
Update BOM with
Replaced Parts
Dispatch Repaired
Product to Customer
Receive Defective
Product
Update Refurbished
Inventory
Identify New
Product
Update Defective
Product Inventory
Perform Defect
Analysis
• Service executes the promised warranty terms
and creates a job or service order. The service/
work order contains the details of the warranty
or information on the extended warranty.
• Field service reps visit customer sites and
oversee investigations or repairs, based on the
nature of the defect. Reps can also request
spare parts or replaceable product components.
• Repair center technicians perform defect and
repair analyses of products that are returned
by the customer for repair or replacement.
• The supply chain group plans delivery based
on replace, repair or recall requests, and
manages supplier-recovery processes.
• Contract management defines the warranty
terms at the contract stage to support service
chain continuity and overall profitability.
• Claims processing takes care of warranty
claims submitted by customers and service
partners.
• Finance manages the warranty reserves and
performs audits.
• Electronic distributors are often responsible
for supplying design details to the manufac-
turer and ordering parts.
The warranty process flows through various
after-sales services during its lifecycle. It involves
a customer requesting a return, repair or replace-
ment of a product, a goods receipt by the service
center or manufacturer, and repair at the service
center or manufacturer’s site. These steps are
followed by activities that include warranty
identification; claims submission; updating the
materials register; dispatching a product to a
customer; claims adjudication; claims credits;
supplier warranty/recovery, and chargeback.
Figure 1 below represents the processes typically
involved in warranty management.
The Challenges Manufacturers Face
Consumer electronics and high-tech manu-
facturers in particular encounter enormous
obstacles when attempting to increase the speed
of warranty claims processing across business
functions; utilize warranty data to analyze
product performance; assess key warranty cost
drivers; decode field-service issues, and confirm
the serviceability and reliability of products.
The Warranty Management Continuum
Figure 1

3. These issues can be traced in part to:
• Ad-hoc processes, including ambiguous
warranty information in service contracts,
manual claims processing, as well as financial
reconciliation and analytics procedures.
• Warranty data is often retained by the
service organization, and not immediately
shared across the product development value
chain. Engineering teams have less time to
incorporate real-time information on defects
into product design.
• Human-dependent warranty processes that
involve manual review and processing
of claims.
• Lack of an automated process for verifying
claims with the verification system to match
claims against policies and detect irregu-
larities — often forcing companies to pay on
fraudulent and invalid claims.
• Risk of under- or over-budgeting for
warranty payouts due to inaccurate forecasts.
Applying Closed-Loop Warranty
Management
Warranty data benefits numerous business
functions. It helps organizations understand
how their products perform vis-à-vis competitive
offerings, identify factors that affect warranty
cost and, most important, confirm the acceptabil-
ity of products from a performance and service-
ability point of view.
Best-in-class organizations use this data across
the warranty value chain to:
• Enhance field service.
• Augment return management.
• Improve the repair process.
• Bring needed changes to product design.
• Improve recall management.
To address the challenges associated with war-
ranty management and fully utilize the power
of warranty data, companies need to focus on
automating their processes and technologies
(see Figure 2).
A Three-Step Approach to Automating Warranty Management
Figure 2
• Align warranty strategies with business and oper-
ational strategies. Provide a longer warranty period
if your strategic objective is to use the warranty T&C
as a competitive tool. Conversely, offer a shorter
warranty period if your strategy is to generate
revenue through extended
warranty sales.
• Build automated processes aided by configurable
rules and process workflows to reduce manual
intervention in different phases of the warranty
management cycle (claim validation, claim approval,
claim routing, reserve
forecasting, etc.).
• Integrate warranty management with all interfacing
business functions and systems, including:
>> Customer Relationship Management.
>> Claims Management.
>> Field Service and Supplier Recovery.
>> The ERP system for Repair and Return Management
and Claims Management.
>> PLM for Quality Improvement.
>> Decision Support Systems/BI for Decision
Automation and Fraud Detection.
>> Finance Systems for Warranty Accounting.
• Incorporate warranty management into the organiza-
tion’s enterprise analytics and decision support systems.
Managing warranties in a reactive mode is no longer
sufficient in today’s hi-tech manufacturing industry,
which is under a lot of pressure from customers’ high
expectations. Proactive warranty management requires
• Perform organizational change management
for aligning people with process and technology
changes.
• Conduct training for business process owners
and supplier stakeholders on managing warranty
functions effectively.
analytics-driven decision support in three major areas:
>> Issue prediction, detection and warning.
>> Warranty and accrual forecasting.
>> Service parts demand management and service contract
optimization.
Based on this data, companies can foresee emerging is-
sues and decide on potential recall, predict future war-
ranty costs, accurately forecast spare parts demand, and
plan inventory and production accordingly.
• Build a portal for submitting claims for customers and
vendors.
• Build a mobile app for customers to log warranty claims
and track warranty status.
• Choose industry standard B2B communication
protocols like EDI, RosettaNet, XML, etc., for integrating
enterprise, supplier and other systems involved in the
warranty management process.
Process
Technology
Change
Management

4. cognizant 20-20 insights 4
Channel
Users
Warranty
Management
System
Field ServiceClaimsEntitlementsService
View Entitlements
Settle Claims
View Claims
Process Claims
Schedule Jobs
Interfaces
Accounting
Desktop PhoneWeb
Claim Creation
Claims Validation
RMA
RMA
Management
Finance Product
Create Work Order
Track Returns
Quality
Logistics
Procurement
EDI/RosettaNet/XML/Web Services/ETL/M2M/IoT Platform
CRM Sales Analytics/
Decision Support
Retail Outlet/
Factory StoreSmart Devices
Defect and
Repair Analysis
Order Parts
Replacements
Perform Service
Requests
View Device
Diagnostics
Validate Warranty,
Contracts
Manage Service
Levels and
Milestones
Claim Status Update
Customer
Support Reps
Distributors and
Customers
Field Service
Reps
Field
Technicians
Smart Devices/
Sensors
Manufacturing
CRM
Marketing
E-mail
{
{
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{{Figure 3
A Next-Generation Warranty System Framework
The key is to build an integrated solution that
encompasses various business functions and
warranty processes. This will enable critical stake-
holders to gain a holistic view of warranty data
from a single platform. Figure 3 below offers a
conceptual architecture that demonstrates the
integration required across all business functions,
processes, systems, stakeholders and communi-
cation channels to support this perspective.
Major Benefits
Various functional areas can realize a number of
benefits from a “closed loop” made possible by
a fully integrated warranty management system:
Product Development
• Early identification of flawed products and
faulty components can help reduce the cost
and effort involved in this process.
• The time it takes to block defective parts in
inventory can be greatly reduced — freeing
resources to focus on other tasks.
• Real-time availability of data pertaining to
product defects helps product teams make
faster decisions on product recalls — improving
customer satisfaction, as well as the company’s
standing in the marketplace.
• Immediate access to defect-related data
enables product design teams to apply this
information when redesigning products.
• Research and development teams have more
visibility into the cause of defects — allowing
them to more accurately analyze problems and
take the necessary steps to avoid recurring
issues.
Sales
• Sales teams can take advantage of new revenue
opportunities through extended warranty
sales.
• With 360-degree insight into customer data,
sales representatives can remain up-to-date on
customer-related information.
Marketing
• Marketing personnel have the opportunity to
acquire new leads for extended warranties.

5. cognizant 20-20 insights 5
Figure 4
Determine To-Be Process
Identify Technology
Build
Change Management
Engage
Set an organization-level
goal to create an integrated
and seamless warranty
management process.
Identify key metrics for
process improvements and
customer satisfaction.
Assess the current IT
landscape and warranty
process, and identify
pain points.
Architect/develop/configure an
integrated warranty
management solution per the
to-be process and technology
recommendations.
Determine whether to use an
off-the-shelf warranty
management product or
develop a custom solution.
Consider cloud, social,
analytics, collaboration, digital
and smart devices.
Initiate organizational change
management to align people
withbusiness-process and
technology changes.
Engage key stakeholders
throughout the
implementation to effect
adoption of the changes.
Strategize
Change
Management
Select the
Right
Technology
Redesign
Process
Assess “As-Is” Technology
and Process
A Structured Discovery Approach
• With fully integrated customer information,
marketing teams can better target customers’
needs and improve customer communications.
Service/Claims
• Automated fraud detection can help assure
that only valid claims are processed, and lessen
the need for manual intervention.
• Reducing human errors during claims
processing can lead to significant cost savings.
• With a 360-degree view of customer data,
service personnel can more accurately address
and resolve service/claims issues.
• Service teams can turn their attention to
up-selling and cross-selling products, rather
than manually working their way through
warranty claims processing — enabling manu-
facturers to transform the service channel
from a cost center to a revenue center.
• Faster supplier chargeback results in faster
credit to accounts.
• Faster claims settlement leads to happier
customers.
Field Service
• Detailed product documentation is immediate-
ly available to field service personnel — at the
customer site or the repair shop.
• Real-time access to this information makes it
easier to correctly diagnose and repair defects
from remote locations.
Finance
• Real-time availability of claims data enables
more accurate reserve forecasting.
Looking Forward
The proliferation of smart/connected devices
and sensors that comprise the Internet of Things1
(IoT), as well as the reams of metadata generated
by machine-to-machine (M2M) communications
networks will offer manufacturers the level of
insight needed to intelligently streamline the
warranty claims process and deliver a seamless
customer experience.
Figure 4 outlines the steps manufacturers must
take to achieve next-generation, integrated war-
ranty management and gain the benefits of a fully
automated, cross-function, closed-loop process.
To gain a distinct edge over the competition, it
is important that all manufacturers, particularly
those in the consumer electronics and hi-tech
spaces, offer a warranty plan that establishes or
reinforces the company’s brand image.
We help manufacturing organizations identify
and take advantage of opportunities to create
more value through a structured discovery
approach. Our end-to-end, KPI-driven approaches

6. About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business
process outsourcing services, dedicated to helping the world’s leading companies build stronger business-
es. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction,
technology innovation, deep industry and business process expertise, and a global, collaborative work-
force that embodies the future of work. With over 75 development and delivery centers worldwide and
approximately 211,500 employees as of December 31, 2014, Cognizant is a member of the NASDAQ-100,
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fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.
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About the Author
Sougata Chakraborty is a Cognizant CRM Product Manager. With fifteen-plus years of experience
in CRM consultancy, Sougata focuses on pre-sales and solution development, and is the acting
product manager for MedVantageTM
, Cognizant’s proprietary business cloud solution. He holds a
Bachelor of Engineering degree in metallurgical engineering from the Indian Institute of Engineer-
ing, Science and Technology (formerly Bengal Engineering College, Shibpur). He can be reached at
Sougata.Chakraborty@cognizant.com.
Footnotes
1 The Internet of Things (IoT) is the network of physical objects that contain embedded technology to
communicate, sense or interact with their internal states or the external environment.
http://www.gartner.com/it-glossary/internet-of-things/.
and methodologies for next-generation warranty
management can provide manufacturers with
a definite edge over the competition while
addressingkeybusinessprioritiessuchasreducing
costs, increasing after-sales revenue, enhancing
customer satisfaction and loyalty, and designing
products driven by real-time field data. We offer
a wide range of consulting and implementation
services for companies looking to adopt the next
generation of warranty management — helping all
stakeholders involved benefit by working towards
a common goal.
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