Quality Magazine

IDC Survey: Few Manufacturers Consistently Benchmark Warranty Operations

May 4, 2011

FRAMINGHAM, MA- According to a recent study published by IDC Manufacturing Insights - Methods and Practices: Warranty Capabilities Maturity Model-while most product companies recognize the criticality of effective warranty management practices, very few companies are addressing the problem effectively.

Key findings include:

  • Most product companies do not consistently benchmark their warranty organizations, with less than 20% of companies even benchmarking internally.

  • Low product quality and poor warranty coverage and repair can significantly tarnish a brand. However, only a little over half of leading companies and less than 20% of laggards use warranty management proactively to improve their brand image.

  • Nearly all (92%) of leading companies are pursuing opportunities to improve accrual management, but only 61% of laggard companies do.

  • Approximately 60% of leading companies employ proactive means to improve warranty performance through the use of fraud detection methods and early quality warning systems. Less than 20% of laggard companies do.

    "Based on our research, the manufacturing industry's ability to drive warranty improvement is minimal," says Joe Barkai, practice director for IDC Manufacturing Insights' Product Lifecycle Strategies research service. "The use of benchmarking to assess performance and implement continuous improvement is disappointedly low and the application of IT tools to manage warranty transactions, perform warranty and quality analysis, and improve financial management is very inconsistent. Until now, the industry has not had a set of best practices to rely upon."

    The significant gaps between leading and lagging companies and the dire need for a robust methodology to improve warranty operations has led to the development of the recently released Warranty Management Capability Maturing Model to help companies assess the capabilities of their warranty organization, develop a continuous improvement roadmap, and accelerate business transformation.