Warranty claims rate

This measure calculates the total value of warranty claims paid in the 12-month period as a percentage of total business entity revenue for the period. A warranty claim is a claim by a customer/product owner for a product under warranty, and usually entails either repair or replacement. This Process Efficiency measure is intended to help companies minimize waste and refine resource consumption related to the process group "Manage warranties".

Benchmark Data

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Measure Category:
Process Efficiency
Measure ID:
104857
Total Sample Size:
604 All Companies
Performers:
25th
- Median
- 75th
-
Key Performance
Indicator:
Yes

Compute this Measure

Units for this measure are Percent.

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Warranty claims rate

Key Terms

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Process efficiency

Process efficiency represents how well a process converts its inputs into outputs. A process that converts 100% of the inputs into outputs without waste is more efficient than one that converts a similar amount of inputs into fewer outputs.

Median

The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.

Measure Scope

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Cross Industry (7.3.0)

  • 6.3.1 - Register products (20605) - Filing product registrations.
  • 6.3.2 - Process warranty claims (12669) - Identifying, investigating, and processes warranty claims. This process includes: receipt and validation of a warranty claim; definition and diagnosis /root cause analysis of an issue and recommendation for corrective action; the determination of responsibility for settlement of the claim; the transaction being approved or denied; and the originator being notified and payment authorized. In the case of a recurring event, further investigation (definition and diagnosis or root cause analysis) is performed, and a recommendation for corrective action is made and implemented in production/design. It ends when the claim is closed.
    • 6.3.2.1 - Receive warranty claim (20096) - Receiving incoming warranty claims. Route claim to correct department. Document claim.
    • 6.3.2.2 - Validate warranty claim (12671) - Ensuring that the claim falls within the parameters of the warranty in question. After validation is made, the claim must be investigated.
    • 6.3.2.3 - Investigate warranty issues (20097) - Executing investigational and analysis of warranty claims. This involves notification and definition of a warranty issue, includes the scheduling of a field service agent to perform further investigation; the request and receipt of defective parts; and diagnosis/root cause analysis. This concludes with the receipt of the result and recommendation for corrective action.
      • 6.3.2.3.1 - Define issue (20098) - Defining the issue of the claim. The warranty team will look into the issue and understand whether it is covered by the claim code or if more detail is required. Field service will be scheduled to further qualify the definition of the issue and to collect more evidence.
      • 6.3.2.3.2 - Schedule field service (12677) - Scheduling additional investigative field service. This is performed for high priority claims or claims that require additional investigation. Field service engineers will gather additional information, perform further investigation, and qualify the definition of the issue.
      • 6.3.2.3.3 - Request and receive defective part (12678) - Requesting receipt of a defective part for further investigation.
      • 6.3.2.3.4 - Investigate issue/perform root cause analysis (20099) - Investigating claims by an appropriate functional representative. Once the issue has been clearly defined and diagnosed and a recommendation for corrective action is determined, it will be provided to the warranty management team.
      • 6.3.2.3.5 - Receive investigation result/recommendation for corrective action (20100) - Receiving investigative results to assess claim approval or denial. The warranty team will assess the results of the investigation and the recommendations for corrective action.
    • 6.3.2.4 - Determine responsible party (20101) - Identifying responsible party for a claim. There is no negotiation with the supplier at this point. There can be multiple warranties applicable to the same part: a new part warranty, a new product warranty (for the product the part is installed on), and a supplier warranty from the company that last repaired the part. The information required for this decision would be the output of Receive component/part and analyze fault [19728]."
    • 6.3.2.5 - Manage pre-authorizations (20102) - Authorizing claims prior to submittal.
    • 6.3.2.6 - Approve or reject warranty claim (12668) - Following Defining issue [20098], an approval or rejection with be made against the warranty claim. If it is deemed that the claim falls within the warranty parameters, the claim will be approved. If the claim is deemed to fall outside warranty parameters, the claim with be rejected.
    • 6.3.2.7 - Notify originator of approve/reject decision (20103) - Contacting the originator of whether the warranty claim has been approved or rejected.
    • 6.3.2.8 - Authorize payment (20104) - Allowing for a payment to be made to the claimant.
    • 6.3.2.9 - Close claim (20105) - Archiving and closing the warranty claim after a final decision has been made to either approve or reject.
    • 6.3.2.10 - Reconcile warranty transaction disposition (12667) - Assuring that the warranty transaction has been completed.
  • 6.3.3 - Manage supplier recovery (20106) - Managing the recovery of costs from suppliers for individual claims.
    • 6.3.3.1 - Create supplier recovery claims (20107) - Raising a supplier recovery claim. This is based off the decision made in Receive investigation result/recommendation for corrective action [20100].
    • 6.3.3.2 - Negotiate recoveries with suppliers (20108) - Arranging the returns of recalled products to suppliers.
  • 6.3.4 - Service products (10218) - Validating specific service requirements for individual customers. Determine and schedule resource to fulfill these requirements. Provide service to specific individual customers. Ensure the quality of service delivery.
    • 6.3.4.1 - Confirm specific service requirements for individual customer (10320) - Acquiring or soliciting information about specific service requirements for individual customers through the customer service function. Obtain information about customer specific requests, process these requests, and create customer profiles to generate a service order.
      • 6.3.4.1.1 - Process customer request (10324) - Soliciting or acquiring information using various sources such as databases, customer interactions, and customer request forms. Hand them further up the hierarchy to deal with them. Categorize the user's request, determining if the request is supportable and prioritizing the request.
      • 6.3.4.1.2 - Create customer profile (10325) - Documenting the individual customer service requirements solicited, along with personal information of the customers, in order to generate customized profiles that hasten the delivery process.
      • 6.3.4.1.3 - Generate service order (10326) - Designing a short-term agreement between the service provider and customer. One-time services are ordered by the service recipient and resource-related billing is performed upon completion. Use the service order to document service and customer service work.
    • 6.3.4.2 - Identify and schedule resources to meet service requirements (10321) - Determining and scheduling the resources required to fulfill customer service requirements. Create a detailed schedule about the service orders and development of these service orders.
      • 6.3.4.2.1 - Create resourcing plan and schedule (10327) - Developing a plan for sourcing and deploying the resources required to fulfill customer service needs. Document a detailed summary of all types of resources (equipment, finance, personnel, time, etc.) required to complete customer service requests and procure these resources. Identify and assess various sources in order to effectively create a resourcing plan.
      • 6.3.4.2.2 - Create service order fulfillment schedule (10328) - Designing a detailed summary of customer service order requirements, along with information concerning the timing and duration for these services. Categorize the customer needs. Monitor the services delivered.
    • 6.3.4.3 - Provide service to specific customers (10322) - Dispatching resources for managing and fulfilling daily service requirements. Manage the progress of order fulfillment. Complete order blocks.
      • 6.3.4.3.1 - Organize daily service order fulfillment schedule (10330) - Laying out a daily plan of specific service orders that need to be fulfilled. Document and systematically order these activities to ensure high effectiveness and efficiency.
      • 6.3.4.3.2 - Execute product repair (10331) - Dispatching and delivering the resources needed for the specific service requirements from the source/warehouse. Manage the dispatch, transportation, and delivery of the services.
      • 6.3.4.3.3 - Manage service order fulfillment (10332) - Handling and managing orders fulfilled, along with the orders are not or partially fulfilled to track the order fulfillment progress. Use electronic devices such as trackers and GPS in order track and ensure delivery of the orders.
    • 6.3.4.4 - Ensure quality of service (10323) - Guaranteeing the quality of service provided to customers. Identify the successful and unsuccessful orders along with the service failures. Collect customer feedback. Process the feedback to ensure the quality of service in the future.
      • 6.3.4.4.1 - Identify completed service orders for feedback (10334) - Determining the service orders that have been successfully delivered. Identify the service orders completed and delivered to the customer. Leverage communication systems to ensure coordination with the customers in order to avoid mishaps.
      • 6.3.4.4.2 - Identify incomplete service orders and service failures (10335) - Determining orders which have not been completed or delivered. Identify the service orders that are partially or entirely incomplete, as well as the orders that have not been delivered to the customer. Use techniques such as project trackers to recognize the progress of the service orders.
      • 6.3.4.4.3 - Solicit customer feedback on services delivered (10336) - Obtaining and procuring customer reviews or feedback on the services delivered. Design a customer feedback form, or communicate with the customer through the phone or online.
      • 6.3.4.4.4 - Process customer feedback on services delivered (10337) - Assessing and incorporating customer reviews/feedback into the service plan to ensure high quality of service.