Manufacturers’ Spend on Warranty Management to Exceed $1B
BackBy —<p><strong>London —July 31 </strong><br />Investment in warranty management technology solutions in the manufacturing sector is set to grow as manufacturers globally seek out additional cost and revenue opportunities. This is according to the latest report by independent market analyst Datamonitor, “The Waking World of Warranty Management.”<br /><br />The most common benefit associated with warranty management solutions is their ability to increase the visibility of warranty claims and the impact they have on current and future business imperatives. </p><p>While almost all manufacturing companies will have some degree of warranty management established within their businesses, Datamonitor has identified a renewed focus on streamlining processes and technology functionality in the discipline. <br /> <br />“Warranty management is nothing new for a large number of manufacturing companies. However for many, associated processes are often disjointed, inefficient and, to a degree ineffective,” said Adam Jura, manufacturing technology senior analyst and author of the study. <br /><br />“As the cost of production and competition increase, these companies are having to identify business processes that can yield financial benefit through re-engineering or enhancement. In this sense, Datamonitor believes that warranty processes represent an area of untapped opportunity.”<br /> <br /><strong>In-House Systems Still Support Warranty Processes</strong><br />Post sales support has become an important competitive differentiator for manufacturing companies, as they seek to grow revenues and protect margins. If warranty management and customer interaction are optimized, manufacturers can maximize satisfaction, reduce costs, drive repeat business and leave their competitors behind.<br /> <br />The sophistication of in-house systems varies greatly in terms of technology support and process support. Some manufacturers may rely solely upon the use of Excel spreadsheets to track financials, customer interactions and fulfillment. For others, a hybrid approach may have been taken, whereby Excel supports some warranty subprocesses, while others rely upon specifically coded applications. <br /><br />While these systems can effectively be developed to support business processes specific to individual manufacturing companies, they are often difficult to re-engineer or adapt to support new functionality. As such, the logic associated with claims can often be trapped. This can drastically hinder a manufacturer’s “warranty agility” and inhibit efforts to extract benefit. <br /> <br />What is now becoming evident in the industry, however, is a shift toward the adoption of warranty solutions offered by technology vendors. These solutions include functionality that supports claims processes and warranty analytics. <br /> <br />“The implementation of in-house systems to support warranty processes has been a major theme throughout our research. Such a strategy is understandable given a lack of specific functionality offered by technology vendors. However, the solutions on the market today have advanced significantly over the last few years. Implementing a solution from vendors such as SAP and SAS, or looking to business process outsourcing (BPO) and services providers such as Genpact and EDS, is a much more realistic option for manufacturing companies than in the past,” said Jura. <br /> <br /><strong>Some Vendors Have Yet to Define Cohesive Solutions </strong><br />According to Datamonitor, the global warranty management technology market will represent more than $1.1 billion in 2012, compared to $715 million in 2007. A large services component will enable vendors such as HP and IBM to drive success as manufacturers look to match technology procurement with business process re-engineering efforts. <br /> <br />The automotive industry will lead the way in terms of revenue opportunity with both the high-tech and electronics, and aerospace and defense industries representing significant sweet spots as well. <br /> <br />Datamonitor believes some vendors are not ready to take advantage of the opportunity apparent within the warranty management market from a solution perspective. </p><p>Vendors will need to be able to offer manufacturing companies well-defined and cohesive technology solutions that meet the precise needs of the manufacturer. Given the specificity associated with individual warranty processes, technology solutions will have to be highly adaptable and geared towards industry best practices.<br /> <br />Jura concluded: “The warranty management market holds opportunities for a range of different vendor types however our research indicates that many are lacking a clear, well-defined strategic direction in terms of product functionality and go-to-market strategy. One option available to vendors is acquisition, and given the strong presence of pure-play vendors in the market, there are a range of targets that could meet their needs.”<br /></p>
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