Quality is not accidental, it is the result of effective business processes by KORN CONSULT GROUP®

Warranty Management

Initial Situation

A well-known supplier of interior components received a reportable delivery status from one of its OEMs. The customer escalated because of an incapable warranty management process.
The customer complained about the supplier’s relatively high rejection rate, in case of significant weaknesses, especially in the application of the warranty analysis process, for the following details:
– Planning of the warranty part analysis according to VDA
– Analysis and reporting of the returned components
– Open and overdue operations
– Systematic reporting structure

The escalated Tier 1 supplier comissioned the KORN CONSULT GROUP to develop and install a capable and sustainable warranty management processfor the entire Group through a holistic project approach.

Project objective:
Installation of a capable and sustainable warranty management process that takes into account the relevant requirements of the automotive industry and the specific procedures of different OEMs, both from a technical and commercial point of view.

Measurement criteria:
Reduction of warranty costs by at least 20%
Passed VDA warranty part analysis audit by the customer

Targets

see Initial Situation

Approach

For the implementation of the project, the team of Consultants chose the KCG 4 Phase Model with the following focal points:

Phase 1 – Analysis:
Determination of the status quo, by means of cross-sectoral expert survey, on the basis of the KCG specific questionnaire. This not only focuses on industry-typical content such as the VDA Band warranty part analysis field or customer-specific requirements but also evaluates commercial processes.

Phase 2 – Concept:
Conduct several workshops to analyse the potential causes and derive relevant measures in the following hierarchy:
-Corrective action to correct the specific observation/determination
-Avoidance measure to avoid the problem in the future
-Discovery measure as a systemic/procedural improvement for similar cases
The measures are then grouped together in work packages and the way to achieve the goals is summarized by means of a roadmap.

Phase 3 – Implementation:
The implementation phase was divided into two key aspects:
1) Working in the company
2) Working on the company
At the beginning of this phase, the focus of the work was on stabilizing the problem-solving process by processing the open processes in a timely manner with a direct connection to the commercial process in order to create a direct positive influence on the liquidity of the company.
In the automotive industry, the crediting procedure used directly offsets warranty claims against outstanding payments, which had a direct impact on the company’s liquidity.
After the sub-phase of the “Direct to get started” the focus is more on the implementation of systemic and process improvements in order to exploit the efficiency potential. In this sub-phase it was more about coaching, training “on the job” and controlling of the project.

Phase 4 – Validation:
In addition to the confirmation of effectiveness by using of an internal audit phase in the respective production facilities, this phase was used to eliminate noticed disturbances and thus to improve the sustainability effect of the measures introduced.

Key factors for the successful implementation of the project proved to be the neutrality, the high level of expertise with the ability to use this pragmatically and purposefully and the pronounced Hands On mentality of the KORN CONSULT GROUP Consultants.

Added Value

Sustainability

If a supplier is in escalation with its customer, it can be observed through the entire supply chain of the automotive industry that the companies focus on counteracting a de-escalation as quickly as possible by increasing the use of its own experts and resources. Unfortunately, as a rule, only immediate measures are taken and the systemic improvement is disregarded, which gradually turns into a kind of “firefighting culture”. The respective companies are very effective in managing crises, but are less and less able to avoid them because the control loops are no longer closed.

With the consistent application of the 4 phase model, the KORN CONSULT GROUP counteracts this effect, as it not only looks at the stitching patch solution, but also works on systemic and sustainable improvements that act on identified root causes.

Accompanied by the practical experience of the Consultants, the control loop is thus finally closed.