Caused by increasing customer demand, intensified competition through international markets, and an increasing bargaining power of the consolidating automotive industry, cooperations between automotive suppliers and OEMs have come under pressure.
Particularly in the course of processing guarantee and warranty cases, suppliers are clearly sitting at the shorter end of the lever and are thus forced to agree on various concessions. There are several reasons for accepting this negotiating position: Fear of losing follow-up orders, increasing standardization on the OEM side, high sunk costs (irreversible costs through research and development) but above all lacking transparency and insufficient communication
What is Warranty Management about?
Especially small and medium-size suppliers with a relatively low bargaining power suffer from this development and consequently report about an increasing number of warranty claims and expenses, even though many warranty cases appear only though customer defaults. However, the burden of proof always lays with the producer/supplier. Due to lacking transparency and insufficient communication, this results in an almost hopeless situation since every responsibility falls to the suppliers, the stake holder with the lowest bargaining power. A representative survey among German suppliers has shown which problems had been crucial for this development:
- Lacking diagnostic data
- Insufficient cooperation and missing interfaces with OEMs
- Lack of resources on the part of the suppliers themselves
These problems identified in the course of the survey result in lacking transparency and insufficient communication between suppliers and OEMs and can be addressed by implementing professional Warranty Management Systems.
What characterizes a professional Warranty Management System?
A Warranty Management System is an integrated platform for suppliers and OEMs which provides both parties with all relevant figures, KPI’s, analyses, trends, and reports. Although there are some few innovative and clear-sighted suppliers which use a Warranty Management System with integrated tools and customer interfaces, most suppliers are still exclusively orientated to the needs of the OEMs and are thus forced to work with several customer systems at the same time (Figure 2). Consequently, no process standardization is possible, transparency not achievable and the realization of experience effects on the part of the employees impossible.