Returns, Repair and Warranty Processes for Consumer Electronics – More complex than you might have thought!
Imagine an apparently simple scenario: you are a consumer and your nice new tablet computer is broken. As it is still under warranty you would like to have it repaired or swapped.
Typically there are two ways of how you can get this issue resolved:
- Bring the tablet to the brick-and-mortar shop where you have bought it (or any other shop that is authorized by the manufacturer)
- Issue an online return request at the web shop where you have bought it and then send it in.
So this seems to be quite a simple constellation: we have 3 parties that are involved:
- the consumer
- the manufacturer – let’s name it the Banana Corp. – and
- the (physical or web) shop. This one either is an independent shop or a brand store, belonging to the manufacturer’s company.
The tablet surface is scratched and in the shop the decision is made to repair the tablet. So the customer won’t receive a swap device. And the shop isn’t able to do the repair so the device needs to be sent to a repair center.
Now let’s put ourselves in the shoes of the manufacturer, Banana Corp., the producer of these nice tablets.
As a manufacturer we would like to know where our products go and who our end customers are. And we need to manage the device logistics as well as fulfil our warranty obligations.
And now the process becomes being complicated!
Why that? Because typically now some more internal or external players become involved:
- The drop-off points where the shops can send in the defective devices, and from where they receive repaired devices. Typically the relevant drop-off point is determined by the shop’s location and the device type.
- The logistics hubs where devices are being sent to next. Again there may be different possible logistics hubs. In the logistics hub an inspection may be performed. Based on the outcome of this inspection the next process step is determined: swap the device or repair it (and also where to repair it).
- The repair centers where the repair is performed.
Drop-off points, logistics hubs and repair centers can be internal, i.e. they belong to the manufacturer’s organization or 3rd parties. The latter typically use their own software solutions for the logistics and repair planning, control and monitoring. And they want to be compensated for the activities they perform on behalf of the manufacturer.
From a pure device logistics perspective the flow for the defective and the repaired device may look as follows:
Of course again several variations are possible. The device might leapfrog one or several positions, so it might be sent directly back from the repair center to the shop.
To orchestrate the complete process and to have transparency about the current status a lot of information needs to be exchanged between the different parties:
And as friendship ends when it comes to money each involved party finally would like to have a clean wallet:
- The customer wants compensation if the device cannot be repaired
- The customer might want compensation for any other expenses related to the warranty case
- The shop wants to be compensated for any warranty-related efforts
- The drop-off points and logistics hubs want to be compensated for each device they move and inspect
- The repair centers want to be compensated for each device they repair, also for the spare parts they consume for the repair
To clear this some money needs to be transferred between the parties involved:
So if we look at the different aspects of the overall process – the logistics flow, the information flow and the money flow – we can see that it can be quite complex:
So what are the main requirements for returns, repair and warranty processing from the manufacturer’s perspective? The manufacturer requires to…
- Know the status and history of each individual product that has been sold
- Know the end customers of these individual products
- Be able to register and manage cases for returns and warranty
- Perform warranty validity checks and reduce warranty fraud
- Efficiently collaborate with the shops who drive the direct customer interactions
- Manage the device logistics across the different involved parties
- Exchange information with these parties and the systems being used by them
- Have transparency through the complete process:
- Where is the device currently?
- What is the status of the device?
- Where will the device go next? And when?
- Be supported to make the right decisions – with a primary focus on customer satisfaction, thereby not neglecting cost efficiency and profitability
To meet these requirements an end-to-end software solution for returns, repair and warranty processing needs to contain these building blocks:
With an integrated software solution for returns, repair and warranty processing main KPIs can be improved, like:
- Reduce warranty costs
- Improve customer satisfaction and retention
- Improve loyalty of shops and partners
- Reduce turnaround and processing times
- Reduce logistics, transportation and inventory costs
- Improve accuracy in financial compensation
If you would like to discuss how returns, repair and warranty processing can be optimized using SAP solutions feel free to contact me!