Warranties have legal and regulatory implications. Uniform Commercial Code (UCC) and The Magnuson-Moss Act are two regulations that govern warranty in USA. Companies offering warranty have to:
Provide the warranty terms in an easy-to-understand manner.
Ensure customers have some level of protection.
The TREAD Act requires vehicle industry manufacturers who sell in the USA to submit repor ts to the National Highway Traffic Safety Administration (NHTSA) indicating warranty claims involving major injuries.
Best-in-class manufacturers have processes that ensure that there is a close working relationship between those administering warranty and the legal department in all aspects related to defining and administering warranty.
Internet of Things
The Internet of Things (IoT) technology enables products to be connected, having a profound impact on warranty processes.
Products that are connected can be automatically registered. There is no need for a traditional registration process to register the warranty
Sensors that monitor the operating conditions also help ensure that the product is used in the right way and in the right environment. Failure to do so can help in voiding the warranty
The machine data after repair can be immediately verified to see if the repair has been done properly or not, and the alerts that were generated before the repair are not sent after the repair. This is validation of repair, and enables greater first-time fixes. When a service technician leaves the site after this verification, the customer can be assured that the problem has been fixed.
There is a larger lead time to plan for the parts to be replaced before a machine has actual downtime. The data from sensors helps identify potential parts failures well before the actual failure and associated downtime of the machine. This lead time allows for lowering the cost of parts inventory required for warranty.
Monitoring of products helps identify issues well before product failure and warranty service can be provided based on that to avoid downtime.
Manufacturers need to develop a comprehensive framework for warranty that addresses the areas outlined above. Doing so will provide crucial differentiation from its competitors to ensure:
- Increased monetization across the product lifecycle from product purchase till end of life
- Increased monetization across the customer lifecycle value in terms of repeat purchases