A new study, Methods and Practices: Warranty Capabilities Maturity Model, reveals that while most product companies recognize the criticality of effective warranty management practices, very few companies are addressing the problem effectively.

Key findings resulting from IDC Manufacturing Insights' Worldwide Warranty Survey conducted in conjunction with WarrantyWeek.com, include:

• Most product companies do not consistently benchmark their warranty organizations, with less than 20 percent 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 percent of laggards use warranty management proactively to improve their brand image.

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

• Approximately 60 percent 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 percent of laggard companies do.

"Based on our research, the manufacturing industry's ability to drive warranty improvement is minimal," said Joe Barkai, practice director, at IDC Manufacturing Insights. "The use of benchmarking to assess performance and implement continuous improvement is disappointingly 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 road map, and accelerate business transformation.

"Our survey results emphasize the need for organizations to take deliberate actions to elevate the considerable financial and management burden of warranty operations," said Sheila Brennan, program manager, Product Lifecycle Strategies, at IDC Manufacturing Insights. "The Warranty Management Capability Maturity Model can help companies begin an improvement journey and provide insight into what to measure, what to invest in, and how to organize, in order to improve their warranty operation."

Source: IDC Manufacturing Insights