Service Lifecycle Management: How Machine Builders (OEM’s) Enhance Their Warranty and Contract Solutions - Part II
In the first installment of this two-part series on service lifecycle management, we evaluated performance-based product solution, its value to the entire manufacturing system, and the first two steps OEMs can take to successfully implement this process. Here in part two, we will show how this approach can improve products and benefit both manufacturers and consumers alike.
Lifecycle for Warranty and Contract Management Around the Product
Information is Power
Machine lifecycle and overall machine information are important to all parties involved in the manufacturing industry. By providing precise data and maintenance information, OEMs and end-users can equally optimize the information.
The drive to secure the newest and best product information has moved many manufacturers to implement warranty and contract management strategies, in addition to processes that are value-driven and product-centric. This information and knowledge is attained through the tracking of a product during the contract period and represents nearly a perfect product history. These insights inform the service organization’s functions and operations, as well as engineering and manufacturing.
The New Approach to Warranty/ Contract Management
The product-centric approach employs a single data warehouse where machine information accumulates. This system allows the warranty lifecycle to center on product information. An analysis of this warranty history will show issues with the product. By analyzing the information, warranty exposure becomes limited, and warranty costs are reduced. Ultimately, manufacturers can boost profits on service while increasing customer value.
The Role of the As-Maintained BOM
The bill of materials (BOM) is critical in listing and taking inventory of all materials and components needed to manufacture an end product. The product-centric approach places emphasis on product knowledge, as it allows end-users to maximize performance at all points in the warranty or contract lifecycle. Manufacturers can use product knowledge to help optimize their performance in every facet of the warranty/contract lifecycle. Product knowledge is collected and used by service teams to help create the “as-maintained BOM.” Widely considered the “secret sauce” in the industry, the as-maintained BOM provides a complete and dynamic product configuration that is easily accessible online and available to users in real time. BOM is critical for service teams – adding efficiencies, minimizing errors, and reducing costs associated with delivery.
Closing the Loop
As illustrated in this series of articles, the product-centric approach effectively serves the warranty process. Additionally, it creates added efficiencies across every facet of service operations. For example, all parties – service planners, the help desk, technicians, etc. – can rely on product knowledge gleaned from the as-maintained BOM. The company’s design, engineering, and manufacturing teams can utilize current product insights to respond in a timely manner to field issues and employ prevention strategies.
Ultimately, the ability to close the loop benefits the end-user with reliable product-centric warranty and contract management. Through product-centric warranty and contract management, manufacturers can establish a continuous process of service and improvement. Ultimately, this approach will benefit the product, the consumer, and the manufacturer by improving quality, adding efficiencies, and generating revenue. Check out these figures from a 2011 study performed by the Aberdeen Group.
- Manufacturers identified as “best-in-class” in warranty and contract management performance retained customers at an average rate of 89% – versus 51% for all other manufacturers surveyed.
- Best-in-class manufacturers renewed 90% of current service contracts, on average; compared to other manufacturers who renewed only 40%.
- Further, the best-in-class performers cut warranty-related return and repair by an average of 2% over the previous 12 months. Others saw a 1% increase in these costs.
The SteamChain Advantage
Utilizing blockchain technology, SteamChain aggregates transparent machine data from multiple platforms to drive business. This transparent data generates trust between OEMs and end-users. Blockchain technology allows for automated transactions between the OEM and end-user based on the lifetime performance of a machine.
Leading the Way
SteamChain’s performance-based data and experience in developing and deploying smart contracts will allow OEMs to sell more advanced machines, which have historically been too expensive for new and small businesses. We help OEMs move more new product with a recurring revenue business model.
Sound like a no-brainer?
Contact us today to learn more or give us a call at (414) 502-8880.