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March 2014

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New Survey Identifies Ways to Increase Revenues from Product Warranties

To better understand the importance of product warranties in business today, Peerless Research Group (PRG) surveyed 249 top supply chain and logistics executives in US manufacturing and trade businesses. The key findings: warranties are business-critical incentives that can differentiate companies from competitors and may lead to additional revenues, improved customer relationships, and an overall competitive advantage in the marketplace.

However, warranty and returns processes are so complex that businesses may miss out on opportunities to fully tap warranties as revenue streams and carve out unique positions in the marketplace, the PRG analysts say.

These and other findings are presented in the new white paper "Warranty Management: Converting Challenges to Market Differentiators," sponsored by Oracle and Tata Consultancy Services on behalf of Supply Chain Management Review.

The report's authors noted that warranty offerings are part of an overall returns strategy to create a positive customer experience, which explains why 75 percent of the organizations surveyed have a warranty management solution in place. But returns and warranty systems are so complex that 57 percent of those surveyed couldn't determine the impact of returned merchandise in terms of cost, customer satisfaction, and operational expenses.

The authors also found that many organizations can't link information from warranty entitlements, claims, parts return, and supplier recovery. Sixteen percent of the respondents don't pass claims onto suppliers, and 71 percent have a manual process or no defined process for doing so. This capability is critical to positioning warranties as a source of revenue generation and can improve supplier cost recovery, the authors say.

PRG analysts highlight solutions for these management problems. For example, businesses can use technology to view the warranty value chain as a whole, drive better efficiencies, and create new revenue sources. Advanced analytical tools are readily available to predict product failures and optimize warranty reserves, according to the report's authors.

They concluded that a huge opportunity exists for companies to differentiate themselves by delivering unique and responsive warranty returns service.

Read the full white paper "Warranty Management: Converting Challenges to Market Differentiators."

Watch a webcast about converting your warranty business to a revenue generator.

Learn about Oracle's solutions for warranty management.

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